SINGAPORE (Jan 28): The manager of Parkway Life Real Estate Investment Trust (PLife REIT), one of Asia’s largest listed healthcare REITs, announced Distribution per Unit (DPU) of 3.28 cents and 12.87 cents for the 4Q18 and FY18 ended Dec 2018 respectively.
DPU for 4Q18 and FY18 declined y-o-y by 2.9% and 3.5% respectively, due to the absence of one-off distribution of divestment gain. Excluding the one-off gain, DPU from recurring operations registered a y-o-y increase of 3.9% and 3.4% from 4Q17 and FY17 respectively.
Gross revenue rose 3.7% y-o-y in 4Q18 to $28.6 million, mainly due to revenu contribution from the Japan nursing rehabilitation facility acquired in February 2018, higher rent from the Singapore properties and Japanese Yen (JPY) appreciation compared to the same period last year.
After deducting property expenses, the group recorded a net property income of $26.7 million in 4Q18, which was 3.8% higher than 4Q17. Similarly, gross revenue for FY18 was $112.8 million, a y-o-y increase of 2.7% from FY17.
The growth was largely attributed to the contribution from the Japan acquisition, higher yielding properties acquired from the asset recycling initiative completed in February 2017 and higher rent from the existing properties, offset by the depreciation of the JPY.
For the FY 2018 period, net property income edged up 2.7% y-o-y.
Despite the portfolio growth, finance costs decreased by 12.7% and 15.3% y-o-y in 4Q18 and FY18 respectively largely due to cost savings arising from refinancing initiatives in 4Q17, 1Q18 and 3Q18.
The net income hedges put in place for the Japan portfolio continue to act as effective shield against JPY currency fluctuation. In FY18, the group registered a realised foreign exchange gain amounting to $0.7 million from the delivery of Japan forward contracts.
Following the acquisition of a yield-accretive nursing rehabilitation facility in FY 2018, the group has an enlarged portfolio of 50 quality healthcare and healthcare-related properties in Singapore, Japan and Malaysia.
In addition, an annual independent valuation performed for all properties brought about a portfolio revaluation gain of $77.9 million, an increase of 4.4% in the total portfolio value. As a result, PLife REIT’s total portfolio size stands at $1.86 billion as at Dec 31 2018.
In its outlook, Yong Yean Chau, CEO of Parkway Trust Management, says long-term outlook of the healthcare industry in Asia remains strong. Nonetheless, the manager remains cautious and vigilant given the current uncertainties in the macro economy and volatility in the financial markets.
“We will continue to adopt prudent financial risk management to manage our exposure to interest rate and foreign currency risks, in order to enhance the defensiveness of our portfolio,” says Yong.
Units in Parkway Life REIT closed at $2.79 on Monday, 27.4% higher compared to Jan 2 2018.
