Parkway Life Real Estate Investment Trust · SGX:C2PU
Parkway Life Real Estate Investment Trust — Q2 2015 Earnings Presentation
56 slides from Parkway Life Real Estate Investment Trust's earnings presentation, Jul 28, 2015
Slide 1: Investors Presentation 2Q 2015 Results
(“PLife REIT”) INVESTORS PRESENTATION 2Q 2015 RESULTS (28 July 2015)
Slide 2: Disclaimer
Disclaimer This document is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for units in Parkway Life Real Estate Investment Trust (“Parkway Life REIT” and the units in Parkway Life REIT, the “Units”). The value of the Units and the income derive
Slide 3: Agenda
Agenda 1. Overview of PLife REIT 2. 2Q 2015 Key Highlights 3. Our Properties 4. Growth Strategy & Core Markets 5. Capital & Financial Management 6. Appendix 3
Slide 4: 1. Overview of PLife REIT
(“PLife REIT”) 1. Overview of PLife REIT 4
Slide 5: PLife REIT Portfolio
PLife REIT Portfolio One of the largest listed healthcare REIT in Asian region with an enlarged portfolio of S$1.6 billion1 Core Strengths: Defensive long term lease structure with downside protection Stable income stream supported by regular rental revision Diversified portfolio of high quality and
Slide 6: 2. 2Q 2015 Key Highlights
(“PLife REIT”) 2. 2Q 2015 Key Highlights 6
Slide 7: 2Q 2015 Key Highlights: Continued DPU Growth Since IPO
2Q 2015 Key Highlights Continued DPU Growth Since IPO DPU for 2Q 2015 3.35 cents - Recurring operations1 2.98 cents - Distribution of divestment gain 0.37 cents of (2nd Recurring operations 2.84 cents 4 tranches) Benefiting from the completion of the asset recycling initiative in March 2015, DPU fro
Slide 8: Enhanced Defensiveness with Pre-emptive Refinancing of Debts
2Q 2015 Key Highlights (cont’d) Enhanced Defensiveness with Pre-emptive Refinancing of Debts ― Pre-emptive refinanced and termed out the SGD long term loan (due in 2Q 2016) and some short term loans via a mix of 4 and 6 years committed loans ― No long-term debt refinancing needs till FY2017 ― Mainta
Slide 9: Minimum Guaranteed Rent for Singapore Hospitals Continues to Increase
2Q 2015 Key Highlights (cont’d) Minimum Guaranteed Rent for Singapore Hospitals Continues to Increase ― Even as inflation eases, 9th Year Minimum Guaranteed Rent is set to increase by at least 1.0% above total rent payable for 8th Year of Lease Term based on CPI + 1% formula1 ― Effective for the per
Slide 10: Revenue Growth
Revenue Growth Notwithstanding the divestment of 7 Japan properties, revenue grew by 1.2% and 1.0% to $25.6 million and $50.4 million for 2Q 2015 and 1H 2015 respectively. 2Q Revenue (S$’000) 1H Revenue (S$’000) 50,421 25,339 25,648 56,000 49,943 28,000 +1.0% +1.2% 48,000 24,000 20,000 16,106 40,000
Slide 11: Net Property Income Growth
Net Property Income Growth Increase in NPI is largely due to: Upward minimum guarantee rent revision of Spore hospitals by 2.81%1 2Q NPI 1H NPI 23.6 24.0 50.0 46.6 47.2 24.0 40.0 +1.5% +1.1% 16.0 30.0 9.2 9.4 18.4 19.0 8.6 8.6 16.6 16.3 20.0 8.0 4.9 5.1 9.9 10.1 10.0 0.8 0.8 1.5 1.6 0.1 0.1 0.2 0.2
Slide 12: Distributable Income Growth
Distributable Income Growth 2Q 2015 DI1 grew by 15.6% to $20.3 million 1H 2015 DI1 grew by 14.8% to $39.7 million 2Q DI (S$’000) 1H DI (S$’000) +15.6% +14.8% 39,736 20,273 40,000 21,000 17,542 38,000 19,000 34,608 36,000 17,000 34,000 15,000 32,000 2Q 2014 2Q 2015 1H 2014 1H 2015 Note: 1. Including
Slide 13: Strong DPU Growth Since IPO
Strong DPU Growth Since IPO DPU has grown steadily at a rate of 82.3%1 since IPO Accumulated DPU payout since IPO, including 2Q 2015 is 74.37 cents2 DPU (cents) +82.3% Recurrent DPU of 5.82 cents 10.31 10.75 11.52 3 represents 51% of 2014 DPU 12.0 8.79 9.60 10.0 6.83 7.74 8.0 6.32 0.74 4 6.0 4.0 5.8
Slide 14: Recent Developments
Recent Developments • Announced 2Q 2015 results: Gross revenue increased 1.2% year-on-year to S$25.6 million. Distributable income increased 15.6% year-on-year to S$20.3 million which included the gain from divestment of seven Japan nursing homes in December 2014. DPU of 3.35 cents for the period 28
Slide 15: 3. Our Properties
(“PLife REIT”) 3. Our Properties 15
Slide 16: Our Properties - Singapore
Our Properties . Singapore 1 A portfolio of 3 strategically-located world-class local private hospitals worth S$1.05 billion Master Lease with Parkway Hospitals Singapore Pte. Ltd, a wholly owned subsidiary of Parkway Pantai Limited (“Parkway”), the largest private healthcare operator in Singapore a
Slide 17: Master Lessee – IHH Group
Master Lessee – IHH Group Khazanah1 Approx. 44%6 Management & Other Approx. 35.7%7 Services IHH2 Parkway Life REIT3 100% Net Property Income Ownership of Assets Master Lease Master Lessee The Manager (PTML)4 Singapore Hospitals PHSPL5 Wholly owned subsidiary of IHH Rental Payments Footnote: 1 Khazan
Slide 18: Master Lessee – IHH Group (continued)
Master Lessee – IHH Group1 (Continued from previous slide) IHH Majority owned by Khazanah, the investment holding arm of the Government of Malaysia Dual listing in Malaysia and Singapore on 25 Jul 2012 with a market capitalization of approximately S$18.3 billion as at 31 March 2015 In Singapore, it
Slide 19: Our Properties – Singapore
Our Properties – Singapore 3 Distinct features of our Singapore Hospital Properties: Long-term Master 15 + 15 years with effect from 23 August 2007 Leases with c.f. average industry lease period of 3-5 years Parkway Hospitals 100% committed occupancy Singapore PLife REIT does not bear these costs -
Slide 20: Singapore Hospital Properties – Rent Review Mechanism
Singapore Hospital Properties – Rent Review Mechanism Illustration Annual Rent Review Mechanism Year 1 Year 2 (23 Aug 07 – 22 Aug 08) (23 Aug 08 – 22 Aug 09) PH to pay higher of : Base Rent + Variable Rent formula Base Rent + Variable Rent formula Base Rent + Variable Rent formula Base Rent Base + V
Slide 21: Singapore Hospital Properties – Rent Review Mechanism
Singapore Hospital Properties – Rent Review Mechanism (Continued from previous slide) Example: CPI + 1% kicker in the event of deflation Year 2 Rent (23 Aug 08 – 22 Aug 09) CPI + 1% formula S$47.5 million x [1 + (0+ 1)%] = In the event of negative CPI, or deflation, CPI will be reset to Minimum guar
Slide 22: Our Properties – Japan
Our Properties – Japan A portfolio of 43 high quality healthcare 1 properties worth S$527 million , comprising: 1 pharmaceutical product distributing and manufacturing facility (P-Life Matsudo) 42 private nursing homes P-Life Matsudo Master tenancy with 22 lessees Comply with strict seismic safety s
Slide 23: Introduction to Japan Properties – Cont’d
Introduction to Japan Properties – Cont’d Why Japan nursing homes? Acute aging population in Japan 1 in 3 Japanese to be over 65 years old by 2050 Well established laws and regulations Diversified rental sources complement Singapore hospital revenues to enhance revenue stability of overall portfolio
Slide 24: Our Properties – Japan
Our Properties . Japan 2 properties have annual revision linked to Japan CPI; if CPI is negative, rent will remain 2 Unique features of our Japan assets: unchanged 5.9% of Japan Favorable Lease Structure Gross Revenue1 Long term lease structure with weighted average “Up only” 30 properties have P-Li
Slide 25: Our Properties – Japan
Our Properties – Japan Approximately 81.3% of revenue from Japan portfolio is downside- protected Revenue from Japan portfolio (as at 30 June 2015) 81.3%1 Downside- protected 18.7%2 Subject to market revision Notes: 1. Based on Gross Revenue (as at 30 Jun 2015) of 33 properties 2. Based on Gross Rev
Slide 26: Monthly Rental Contribution
Diversified Nursing Home Operators ¥70,000 Thousands 21 high quality nursing K.K Sawayaka Club home operators K.K Habitation ¥60,000 K.K. Asset Diversifies tenant risk Miyako Enterprise Co., Ltd. K.K. Riei Back-up operator Monthly Rental Contribution Benesse Style Care Co., Ltd ¥50,000 Green Life Hi
Slide 27: Key Nursing Home Operators
Key Nursing Home Operators Key nursing home operators contributed 69% of total Japan revenue, namely Benesse Style Care Co., Ltd Part of the listed company Benesse Holdings Inc (the “Group”) Market capitalisation is about JPY403,667 million (S$5,001 million) The largest private nursing home operator
Slide 28: Our Properties – Malaysia, Kuala Lumpur
Our Properties – Malaysia, Kuala Lumpur 1 A portfolio of high quality healthcare assets worth S$8.3 million within Gleneagles Intan Medical Centre Kuala Lumpur, next to the 330-bed Gleneagles Hospital Kuala Lumpur Multi tenancies with lessees Gleneagles Hospital (Kuala Lumpur) Sdn. Bhd. and CIMB Ban
Slide 29: 4. Growth Strategy & Core Markets
(“PLife REIT”) 4. Growth Strategy & Core Markets 29
Slide 30: PLife REIT’s Next Phase of Growth
PLife REIT’s Next Phase of Growth Consolidate assets in Japan, generate operating synergies and derive further cost savings Proactive asset management to Actively seek new improve opportunities in performance, other regional enhance markets competitiveness and extract further value from overall port
Slide 31: Our Long Term Strategy
Our Long Term Strategy PLife REIT plans to undertake the following strategies: Acquisition GROWTH Strategy ASSET MANAGEMENT Strategy Third Party Acquisition Sponsor’s Acquisition • Sustain Revenue • Focused on acquiring • Focused on acquiring • Grow revenue organically quality assets from 3rd assets
Slide 32: Asset Class Diversification & Allocation
Asset Class Diversification & Allocation Objective – To protect PLife REIT against concentration risks due to over- exposure in any asset class Basis – Invest in properties used for healthcare and healthcare related purposes Diversification – The Manager plans to further diversify within the investm
Slide 33: Strategic Investment Approach
Strategic Investment Approach Partnership Clustering PLife REIT is a Imperative for PLife REIT specialised REIT where: to achieve economies of scale in its countries of 1) Properties tend to be investment in order to: purposed-built (e.g. hospital, medical centre) 1) Establish a country HQ Two-Prong
Slide 34: 5. Capital and Financial Management
(“PLife REIT”) 5. Capital and Financial Management 34
Slide 35: Capital & Financial Management Strategy
Capital & Financial Management Strategy 5 Key principles : 1. Acquisition financing has to be long-term: at least 3 years or more To mitigate immediate refinancing risks post-acquisition END GOALS: 2. PLife REIT’s S$1.6billion1 portfolio is unencumbered Minimise short or Ensures financing flexibilit
Slide 36: Debt Maturity Profile
Debt Maturity Profile As at 30 June 2015 * Termed out SGD short term loans & S$80 million loan due in FY2016 via a mix of 4 and 6 years loans; further extended approximately S$6.2 million of existing JPY loans due in FY2017 for another 5 years. Weighted average term to maturity of 4.0 years Current
Slide 37: Ample Debt Headroom
Ample Debt Headroom Debt headroom of S$161.5 million and S$325.5 million before reaching 40% and 45% gearing respectively 1,000 Asset 325.5 500 161.5 (S$’M) 0 560.1 560.1 560.1 34.1% 40% 45% Gearing Gearing Gearing Debt Balance as at 30 June 2015 37
Slide 38: 6. Appendix
(“PLife REIT”) 6. Appendix 38
Slide 39: Our Portfolio – Summary
Our Portfolio . Summary Portfolio Singapore Japan Malaysia Total 42 nursing homes; 4 Hospitals & medical centre; 1 pharmaceutical product 42 nursing homes; Hospital & Medical Type distribution & manufacturing Medical Centre 1 pharmaceutical product Centre facility distributing & manufacturing facili
Slide 40: Our Portfolio – Singapore
Our Portfolio . Singapore Property Mount Elizabeth Hospital Gleneagles Hospital Parkway East Hospital Type Hospital and Medical Centre Land Tenure 67 years 75 years 75 years Floor Area (sq m) 1 58,139 49,003 10,994 Beds 2 345 270 106 Operating theatres 2 13 12 4 Strata Units / Car Park Lots 30 strat
Slide 41: Our Portfolio – Japan
Our Portfolio . Japan Property P-Life Matsudo Bon Sejour Shin-Yamashita Bon Sejour Ibaraki Pharmaceutical product distributing & Type Paid nursing home with care service manufacturing facility Land Tenure Freehold Freehold 50 years Land Area (sq m) 8,450 1,653 3,051 Floor Area (sq m) 3,240 3,273 3,6
Slide 42: Our Portfolio – Japan
Our Portfolio . Japan Property Palmary Inn Akashi Palmary Inn Suma Senior Chonaikai Makuhari Kan Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 5,891 2,676 2,853 Floor Area (sq m) 6,562 4,539 4,361 Number of Units (Rooms) 96 59 1082 1987; 1992; Year
Slide 43: Our Portfolio – Japan
Our Portfolio . Japan Smiling Home Medis Smiling Home Medis Amille Nakasyo Maison de Centenaire Property Musashi Urawa Koshigaya Gamo Ishizugawa Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 802 1,993 2,901 1,111 Floor Area (sq m) 1,603 3,8
Slide 44: Our Portfolio – Japan
Our Portfolio . Japan Maison de Centenaire Fiore Senior Residence Property Hapine Fukuoka Noke Iyashi no Takatsuki Kan Haruki Hirakata Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 801 1,396 727 2,023 Floor Area (sq m) 1,263 2,912 1,155 3,9
Slide 45: Our Portfolio – Japan
Our Portfolio . Japan Property Sawayaka Obatake Ichibankan Sawayaka Obatake Nibankan Sawayaka Shinmojikan Paid nursing home Short stay / Paid nursing home Type with care service Day care facility with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 1,786 1,042 2,813 Floor Area (
Slide 46: Our Portfolio – Japan
Our Portfolio . Japan Sawayaka Property Sawayaka Nogatakan Sawayaka Sakurakan Sawayaka Fukufukukan Higashikagurakan Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 2,707 6,276 1,842 4,813 Floor Area (sq m) 3,147 5,044 3,074 5,335 Number of Un
Slide 47: Our Portfolio – Japan
Our Portfolio . Japan Fureai no Sono Legato Higashi Property As Heim Nakaurawa Musashi Nakahara Sumiyoshi Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 1,762 935 951 Floor Area (sq m) 2,692 1,847 2,828 Number of Units (Rooms) 64 47 71 Year of Comple
Slide 48: Our Portfolio – Japan
Our Portfolio . Japan Property Royal Residence Gotenyama Legato Katano Type Paid nursing home with care service Land Tenure Freehold Freehold Land Area (sq m) 794 1,139 Floor Area (sq m) 1,560 1,688 Number of Units (Rooms) 44 49 Year of Completion 2006 2004 Committed Occupancy 100% Name of Lessee (s
Slide 49: Our Portfolio – Japan
Our Portfolio . Japan Property Happy Life Toyonaka 1 Palmary Inn Shin-Kobe Type Paid nursing home with care service Land Tenure Freehold Freehold Land Area (sq m) 628 1,034 Floor Area (sq m) 1,254 3,964 Number of Units (Rooms) 42 71 1992 Year of Completion 2007 Conversion works were completed in 200
Slide 50: Our Portfolio – Japan
Our Portfolio . Japan Property Sawayaka Seaside Toba Sawayaka Niihamakan Sawayaka Minatokan Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 2,803 4,197 3,551 Floor Area (sq m) 7,360 7,382 2,246 Number of Units (Rooms) 129 135 50 Year of Completion 201
Slide 51: Our Portfolio – Japan
Our Portfolio . Japan Property Sawayaka Mekari Nibankan Sawayaka Kiyotakan Type Paid nursing home with care service Land Tenure Freehold Freehold Land Area (sq m) 1,354 2,597 Floor Area (sq m) 2,133 5,661 Number of Units (Rooms) 61 108 Year of Completion 2012 2013 Committed Occupancy 100% Name of Le
Slide 52: Our Portfolio – Japan
Our Portfolio . Japan Maison des Centenaire Property Maison des Centenaire Hannan Sunhill Miyako Ohhama Paid nursing home with care Paid nursing home with care Type Extended-stay lodging facility service service Land Tenure Freehold Freehold Freehold Land Area (sq m) 7,827 10,867 1,281 Floor Area (s
Slide 53: Our Portfolio – Japan
Our Portfolio . Japan Property Habitation Jyosui Ocean View Shonan Arasaki Type Paid nursing home with care service Land Tenure Freehold Freehold Land Area (sq m) 3,2591 3,067 Floor Area (sq m) 6,0762 5,304 Number of Units (Rooms) 85 79 Year of Completion 2005 2013 Committed Occupancy 100% Name of L
Slide 54: Our Portfolio – Japan
Our Portfolio . Japan Property Habitation Hakata I, II and III Excellent Tenpaku Garden Hill Type Paid nursing home with care service Land Tenure Freehold Freehold Land Area (sq m) 15,336 6,593 Floor Area (sq m) 21,415 4,000 Number of Units (Rooms) 318 94 Year of Completion 1984 to 20031 2013 Commit
Slide 55: Our Portfolio – Japan
Our Portfolio . Japan Property Liverari Shiroishi Hana Ichigokan1 Liverari Shiroishi Hana Nigokan2 Ajisai Misono Paid nursing home with care Paid nursing home with care Type Group Home service service Land Tenure Freehold Freehold Freehold Land Area (sq m) 628 436 429 Floor Area (sq m) 1,056 747 724
Slide 56: Our Portfolio – Malaysia
Our Portfolio . Malaysia Property Gleneagles Intan Medical Centre, Kuala Lumpur Type Medical Centre Land Tenure Freehold Land Area (sq m) 3,450 Floor Area (sq m)1 2,444 Number of Car Park Lots 69, all of which owned by Parkway Life REIT Year of Completion 1999 Committed Occupancy 100% (excluding car
Parkway Life Real Estate Investment Trust — Q2 2015 Earnings Presentation on 6ix