Parkway Life Real Estate Investment Trust · SGX:C2PU
Parkway Life Real Estate Investment Trust — Q2 2020 Earnings Presentation
54 slides from Parkway Life Real Estate Investment Trust's earnings presentation, Jul 28, 2020
Slide 1: Investor Presentation 2Q 2020 Results
(“PLife REIT”) INVESTOR PRESENTATION 2Q 2020 Results (28 July 2020)
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 Parkway Life REIT 2. 2Q 2020 Key Highlights 3. Our Properties 4. Growth Strategy & Core Markets 5. Capital & Financial Management 6. Appendices 3
Slide 4: 1. Overview of Parkway Life REIT
(“PLife REIT”) 1. Overview of Parkway Life REIT 4
Slide 5: PLife REIT Portfolio S$1.96 billion
PLife REIT Portfolio One of the largest listed healthcare REITs in Asia with an enlarged portfolio of S$1.96 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 2020 Key Highlights
(“PLife REIT”) 2. 2Q 2020 Key Highlights 6
Slide 7: 2Q 2020 Key Highlights
2Q 2020 Key Highlights DPU Growth of 2.5% for 2Q 2020 ― Amount available for distribution grew by 5.2% (2Q Y-O-Y) and 5.4% (1H Y-O-Y) 1 ― Retained the remaining S$850,000 in 2Q 2020 as part of the S$1.7 million COVID-19 related relief measures announced in 1Q 2020 ― Notwithstanding, DPU grew by 2.
Slide 8: 2Q 2020 Key Highlights: Strong Capital Structure
2Q 2020 Key Highlights Strong Capital Structure 1 ― Extended JPY net income hedge till 2Q 2025 ― No long-term debt refinancing needs till June 2021 ― Gearing remains optimal at 38.3% ― Interest coverage ratio of 15.8 times2 ― About 88% of interest rate exposure is hedged ― Low all-in cost of debt
Slide 9: Revenue Growth
Revenue Growth Revenue grew by 4.9% and 5.1% to $30.3 million and $60.1 million for 2Q 2020 and 1H 2020 respectively 2Q Revenue (S$’000) 1H Revenue (S$’000) +4.9% +5.1% 9
Slide 10: Net Property Income (NPI) Growth
Net Property Income (NPI) Growth Increase in NPI is largely due to: Rent contribution from properties acquired in 4Q 2019 Upward minimum guarantee rent revision of Singapore hospitals by 1.61%1 2Q NPI 1H NPI +5.3% +4.9% Note: 1. In 13th year of lease commencing 23 August 2019 to 22 August 2020
Slide 11: Distributable Income to Unitholders
Distributable Income to Unitholders DI grew by 2.5% and 1.9% to $20.3 million and $40.4 million for 2Q 2020 and 1H 2020 respectively 2Q DI (S$’000) 1H DI (S$’000) +2.5% +1.9% 11
Slide 12: Un-interrupted Recurring DPU Growth Since IPO
Un-interrupted Recurring DPU Growth Since IPO DPU has grown steadily at a rate of 108.7%1 since IPO DPU (cents) +108.7% 13.29 13.35 Representing 50.6% of 2019 recurrent DPU of 13.19 cents Note: 1. Since IPO till YTD 4Q 2019 2. Since FY2012, S$3.0 million per annum of amount available for distribut
Slide 13: Recent Developments
Recent Developments • Announced 2Q and 1H 2020 results: Gross revenue increased 4.9% and 5.1% year on-year to S$30.3 million (2Q 2020) and S$60.1 million (1H 2020) respectively. 28 July 2020 • Total distributable income increased by 2.5% and 1.9% year-on-year to S$20.3 million (2Q 2020) and S$40.4 m
Slide 14: 3. Our Properties
(“PLife REIT”) 3. Our Properties 14
Slide 15: Our Properties - Singapore
Our Properties - Singapore 1 A portfolio of 3 strategically-located world-class local private hospitals worth S$1.21 billion Master Lease with Parkway Hospitals Singapore Pte. Ltd.a wholly owned subsidiary of Parkway Pantai Limited (“Parkway”), the largest private healthcare operator in Singapor
Slide 16: Master Lessee – IHH Group
Master Lessee – IHH Group Mitsui1 Khazanah2 Approx. 32.91%7 Approx. 26.03%7 Management & Other Services IHH3 Parkway Life REIT4 Approx. 35.6%7 100% Net Property Income Ownership of Assets Master Lease Master Lessee The Manager (PTML)5 Singapore Hospitals PHSPL6 Wholly owned subsidiary of IHH Rental
Slide 17: Master Lessee – IHH Group (Continued)
Master Lessee – IHH Group1 (Continued from previous slide) IHH 32.91% owned by Mitsui & Co., Ltd, rated (P)A3 by Moody’s, is Japan’s 2nd largest trading company by assets 26.03% owned by Khazanah, the investment holding arm of the Government of Malaysia Dual listing in Malaysia and Singapore o
Slide 18: 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 (“PHS”) PLife REIT does not bea
Slide 19: 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) PHS to pay higher of : Base Rent + Variable Rent formula Base Rent + Variable Rent formula Base Rent + Variable Rent formula Base Rent Base +
Slide 20: Singapore Hospital Properties – Rent Review Mechanism (Continued)
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 21: Introduction to Japan Properties
Introduction to Japan Properties 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 22: Our Properties - Japan
Our Properties - Japan A portfolio of 49 high quality healthcare 1 properties worth S$746.5 million , comprising: 1 pharmaceutical product distributing and manufacturing facility (P-Life Matsudo) P-Life Matsudo 48 private nursing homes Favorable lease structure with 26 lessees Comply with
Slide 23: Our Properties - Japan
Our Properties - Japan 1 property with annual revision linked to Japan CPI; if CPI is negative, Unique features of our Japan assets: rent will remain unchanged 2.6% of Japan Long term lease Gross Revenue1 structure with weighted “Up only” average lease term to P-Life Matsudo Rent Review 40 propert
Slide 24: Our Properties – Japan
Our Properties – Japan Approximately 87.2% of revenue from Japan portfolio is downside- protected1 Notes: 1. Based on existing lease agreements and subject to applicable laws 2. Based on Gross Revenue (as at 30 June 2020) of 42 properties 3. Based on Gross Revenue (as at 30 June 2020 2020) of 7 pr
Slide 25: Diversified Nursing Home Operators
Diversified Nursing Home Operators K.K Silver Heights Monthly Rental Contribution Sapporo, 2.3% Medical Corp Misaki‐kai, 2.3% As at 30 June 2020 25 high quality nursing Medical Corp Shojin‐kai, 2.4% Others (operators contributing less than 2%), home operators 7.7% K.K. M.C.S., Diversifies tenant
Slide 26: Key Nursing Home Operators
Key Nursing Home Operators Key nursing home operators contributed 53.4% of total Japan revenue, namely K.K. Sawayaka Club Part of the listed company Uchiyama Holdings Co., Ltd Market capitalisation is about JPY13,485 million (S$167 million) Sawayaka currently operates 75 care services facili
Slide 27: Our Properties - Malaysia
Our Properties - Malaysia 1 A portfolio of high quality healthcare assets worth S$6.8 million within MOB 2 Specialist Clinics , next to the 369-bed Gleneagles Hospital Kuala Lumpur Note: 1. Based on latest appraised values 2. Formerly known as Gleneagles Intan Medical Centre Kuala Lumpur 27
Slide 28: 4. Growth Strategy & Core Markets
(“PLife REIT”) 4. Growth Strategy & Core Markets 28
Slide 29: 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 30: Our Growth Strategy
Our Growth Strategy PLife REIT undertakes the following strategies: PROACTIVE ASSET ASSET RECYCLING TARGETED INVESTMENT MANAGEMENT AND DEVELOPMENT Third Party Acquisition Sponsor’s Acquisition • Sustain Revenue • Re-balance and optimize portfolio • Focused on acquiring • Focused on • Grow revenue or
Slide 31: 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 (Parkway Trust Management Limited) plan
Slide 32: 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 33: 5. Capital and Financial Management
(“PLife REIT”) 5. Capital and Financial Management 33
Slide 34: 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$1.96 billion1 portfolio is unencumbered Minimise short or Ensures financing fl
Slide 35: Debt Maturity Profile
Debt Maturity Profile1 As at 30 June 2020 Weighted average term to maturity of 2.3 years Current effective all-in cost of debt of 0.60% Interest coverage ratio of 15.8 times4 About 88% of interest rate exposure is hedged Note: 1. Excludes lease liabilities, if any 2. Refers to a 6-year S$75.
Slide 36: Debt Headroom
Debt Headroom Debt headroom of $250.1 million and $479.0 million before reaching 45% and 50%1 gearing respectively. 1,500 Asset (S$’M) 1,000 479.0 250.1 500 779.9 779.9 779.9 38.3% 45% 50% Gearing Gearing Gearing Debt Balance as at 30 June 2020 Note: 1. On 16 April 2020, the MAS has raised the lev
Slide 37: 6. Appendices
(“PLife REIT”) 6. Appendices 37
Slide 38: Our Portfolio - Summary
Our Portfolio - Summary Portfolio Singapore Japan Malaysia Total 4 Hospitals & medical centre; 48 nursing homes; 48 nursing homes; 3 Hospitals & Medical 1 pharmaceutical product Type Medical Centre 1 pharmaceutical product Centres distribution & distributing & manufacturing manufacturing facility fa
Slide 39: 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 2 345 257 106 Operating theatres 2,3 13 12 5 Strata Units / Car Park Lots 30 str
Slide 40: Our Portfolio - Japan
Our Portfolio - Japan Bon Sejour Yokohama Property P-Life Matsudo Palmary Inn Akashi Shin-Yamashita Pharmaceutical product distributing & Type Paid nursing home with care service manufacturing facility Land Tenure Freehold Freehold Freehold Land Area (sq m) 8,450 1,653 5,891 Floor Area (sq m) 3,240
Slide 41: Our Portfolio - Japan
Our Portfolio - Japan Senior Chonaikai Smiling Home Medis Property Palmary Inn Suma Musashi Urawa Makuhari Kan Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 2,676 2,853 802 Floor Area (sq m) 4,539 4,361 1,603 Number of Units (Rooms) 59 108 2 44 1992
Slide 42: Our Portfolio - Japan
Our Portfolio - Japan Smiling Home Medis Maison de Centenaire Property Sompo no Ie Nakasyo3 Koshigaya Gamo Ishizugawa Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 1,993 2,901 1,111 Floor Area (sq m) 3,834 3,231 2,129 Number of Units (Rooms) 100 75
Slide 43: Our Portfolio - Japan
Our Portfolio - Japan Maison de Centenaire Hapine Fukuoka Fiore Senior Iyashi no Property Haruki Noke Residence Hirakata Takatsuki Kan 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 44: 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) 1,769 1,047 2,395 Floor Area (
Slide 45: Our Portfolio - Japan
Our Portfolio - Japan Fureai no Sono Property Sawayaka Nogatakan Sawayaka Sakurakan As Heim Nakaurawa Musashi Nakahara Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 2,702 6,276 1,762 935 Floor Area (sq m) 3,147 5,044 2,712 1,847 Number of U
Slide 46: Our Portfolio - Japan
Our Portfolio - Japan Sawayaka Property Sawayaka Fukufukukan Happy Life Toyonaka 1 Palmary Inn Shin-Kobe Higashikagurakan Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 1,842 4,813 628 1,034 Floor Area (sq m) 3,074 5,467 1,254 3,964 Number o
Slide 47: Our Portfolio - Japan
Our Portfolio - Japan Sawayaka Mekari Property Sawayaka Seaside Toba Sawayaka Niihamakan Sawayaka Minatokan Nibankan Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 2,803 4,197 3,551 1,354 Floor Area (sq m) 7,360 7,382 2,246 2,133 Number of U
Slide 48: Our Portfolio - Japan
Our Portfolio - Japan Maison des Centenaire Maison des Centenaire Property Sawayaka Kiyotakan Sunhill Miyako Hannan Ohhama Extended-stay lodging Paid nursing home with Type Paid nursing home with care service facility care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 2,59
Slide 49: Our Portfolio - Japan
Our Portfolio - Japan Ocean View Shonan Liverari Shiroishi Hana Liverari Shiroishi Hana Property Habitation Jyosui Arasaki Ichigo-kan1 Nigo-kan2 Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 3,2593 3,067 628 436 Floor Area (sq m) 6,0764 5,3
Slide 50: Our Portfolio - Japan
Our Portfolio - Japan Excellent Tenpaku Silver Heights Property Sunny Spot Misono1 Habitation Hakata I, II, III Garden Hills Hitsujigaoka Type Group Home Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 429 15,336 6,593 5,694 Floor Area (sq m) 724
Slide 51: Our Portfolio - Japan
Our Portfolio - Japan Property Kikuya Warakuen Sanko Habitation Wakaba1 Habitation Hakusho2 Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 4,905 1,680 6,574 15,706 Floor Area (sq m) 3,641 2,018 5,431 6,959 Number of Units (Rooms) 70 53 135 1
Slide 52: Our Portfolio - Japan
Our Portfolio - Japan Konosu Nursing Home Property Group Home Hakusho Kyoseien Type Group Home Nursing Rehabilitation Facility Land Tenure Freehold Freehold Land Area (sq m) 2,859 8,715 Floor Area (sq m) 416 5,634 Number of Units (Rooms) 9 120 Year of Completion 2004 2015 Committed Occupancy 100% 10
Slide 53: Our Portfolio - Japan
Our Portfolio - Japan Property Haru no Sato Hodaka no Niwa Orange no Sato Type Nursing Rehabilitation Facility Land Tenure Freehold Freehold Leasehold2 Land Area (sq m) 4,241 39,955 2,377 Floor Area (sq m) 3,568 6,117 4,005 Number of Units (Rooms) 100 100 98 2000; Year of Completion Additional works
Slide 54: Our Portfolio - Malaysia
Our Portfolio - Malaysia Property MOB Specialist Clinics1, Kuala Lumpur Type Medical Centre Land Tenure Freehold Land Area (sq m) 3,450 Floor Area (sq m)2 2,444 Number of Car Park Lots 69, all of which owned by Parkway Life REIT Year of Completion 1999 Committed Occupancy 31% (excluding car park) •
Parkway Life Real Estate Investment Trust — Q2 2020 Earnings Presentation on 6ix