Parkway Life Real Estate Investment Trust · SGX:C2PU
Parkway Life Real Estate Investment Trust — Q1 2016 Earnings Presentation
54 slides from Parkway Life Real Estate Investment Trust's earnings presentation, Apr 26, 2016
Slide 1: Investor Presentation 1Q 2016 Results
(“PLife REIT”) INVESTOR PRESENTATION 1Q 2016 RESULTS (26 April 2016)
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 ge da 1. Overview of PLife REIT 2. 1Q 2016 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. 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. 1Q 2016 Key Highlights
(“PLife REIT”) 2. 1Q 2016 Key Highlights 6
Slide 7: 1Q 2016 Key Highlights
1Q 2016 Key Highlights Continued DPU Growth Since IPO ― DPU for 1Q 2016 at 2.99 cents ― DPU from recurring operations has grown by 5.1% (1Q Y-O-Y) ― Overall DPU has declined by 7.0% (1Q Y-O-Y) due to the absence of one-off distribution of divestment gain1 Strengthening of Japan Portfolio ― Completed
Slide 8: 1Q 2016 Key Highlights (cont'd)
1Q 2016 Key Highlights (cont’d) Maiden Issuance of JPY-denominated Fixed Rate Notes ― Issued a 6-year JPY3.3 billion (approximately S$40.7 million1) senior unsecured fixed rate notes at competitive rate of 0.58% per annum ― Proceeds used for pre-emptive refinancing of loan due in 1Q 2017 and financi
Slide 9: Revenue and Distributable Income (DI) Growth
Revenue and Distributable Income (DI) Growth Arising from the completion of asset recycling in March 2015, revenue grew by 8.6% to $26.9 million Overall DI has declined by 7.0% to $18.1 million due to absence of one-off distribution of divestment gain1 (S$’000) (S$’000) +8.6% (7.0%) 28,000 26,901 19
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 1Q 2015 Upward minimum guarantee rent revision of S’pore hospitals by 1.05%1 +8.6% 25.1 28.0 23.2 24.0 20.0 16.0 9.4 9.6 9.5 12.0 5.1 5.1 7.8 8.0 0.8 0.8 0.1 0.1 4.0 0.0 Mount Gleneagles
Slide 11: Strong DPU Growth Since IPO
Strong DPU Growth Since IPO DPU has grown steadily at a rate of 86.6%1 since IPO DPU (cents) +86.6% 13.29 14.0 11.52 1.5 4 10.313 10.75 Representing 12.0 9.60 8.79 25% of 2015 10.0 7.74 recurrent DPU 6.32 6.83 of 11.79 cents 8.0 11.79 6.0 2.99 4.0 2.0 0.0 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2
Slide 12: Recent Developments
Recent Developments • Announced 1Q 2016 results: Gross revenue increased 8.6% year-on-year to S$26.9 26 April 2016 million. Distributable income decreased 7.0% year-on-year to S$18.1 million due to absence of one-off divestment gain. DPU of 2.99 cents for the period declared. • Announced the maiden
Slide 13: 3. Our Properties
(“PLife REIT”) 3. Our Properties 13
Slide 14: Our Properties – Singapore
Our Properties 0 Singapore 1 A portfolio of 3 strategically-located world-class local private hospitals worth S$1.04 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 15: Master Lessee – IHH Group
Master Lessee – IHH Group Khazanah1 Approx. 43.4%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 Khaz
Slide 16: Master Lessee – IHH Group (Continued)
Master Lessee – IHH Group1 (Continued from previous slide) IHH 43.4% 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 3 approximately S$17.1 billion as at 31 December 2015 In Singapore, t
Slide 17: 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 18: 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 19: Singapore Hospital Properties – Rent Review Mechanism (Continued)
Singapore Hospital Properties – Rent Review Mechanism (C ti (Continued d ffrom previous i slide) lid ) 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 rese
Slide 20: Introduction to Japan Properties
Introduction to Japan p Properties p 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 portfo
Slide 21: Our Properties – Japan
Our Properties – Japan A portfolio of 44 high quality healthcare 1 properties worth S$605 million , comprising: 1 pharmaceutical product distributing and manufacturing facility (P-Life Matsudo) 43 private nursing homes P-Life Matsudo Master tenancy with 23 lessees Comply with strict seismic safety s
Slide 22: Our Properties – Japan
Our Properties 0 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 5.8% of Japan Favorable Lease Structure Gross Revenue1 Long term lease structure with weighted average “Up only” 31 properties have P-Li
Slide 23: Our Properties – Japan
Our Properties – Japan Approximately 81.8% of revenue from Japan portfolio is downside- protected Revenue from Japan portfolio (as at 31 Dec 2015) 81.8%1 Downside- protected 18.2%2 Subject to market revision Notes: 1. Based on Gross Revenue (as at 31 March 2016) of 34 properties 2. Based on Gross Re
Slide 24: Monthly Rental Contribution
Diversified Nursing Home Operators ¥70,000 Thousands K.K Sawayaka Club 22 high quality nursing K.K Habitation home operators K.K. Asset ¥60,000 Diversifies tenant risk Miyako Enterprise Co., Ltd. K.K. Riei Benesse Style Care Co., Ltd Back-up operator Monthly Rental Contribution Green Life Higashi Ni
Slide 25: 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 26: Our Properties – Malaysia, Kuala Lumpur
Our Properties – Malaysia, Kuala Lumpur 1 A portfolio of high quality healthcare assets worth S$7.4 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. / Gleneagles
Slide 27: 4. Growth Strategy & Core Markets
(“PLife REIT”) 4. Growth Strategy & Core Markets 27
Slide 28: 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 29: Our Long Term Strategy
Our Long g Term Strategy gy 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 a
Slide 30: 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 31: 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 32: 5. Capital and Financial Management
(“PLife REIT”) 5. Capital and Financial Management 32
Slide 33: 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$1.7billion1 portfolio is unencumbered Minimise short or Ensures financing flexibilit
Slide 34: Debt Maturity Profile
Debt Maturity Profile A att 31 M As March h 2016 Weighted average term to maturity of 3.5 years Current effective all-in cost of debt of 1.5% Interest cover ratio of 8.9 times About 98% of interest rate exposure are hedged Successfully termed out 34% of FY2017 refinancing requirements and
Slide 35: Ample Debt Headroom
Ample Debt Headroom Debt headroom of S$101.5 million and S$265.4 million before reaching 40% and 45% gearing respectively 1,000 265.4 (S$’M) 500 101.5 0 619.7 619.7 619.7 36.4% 36 4% 40% 45% Gearing Gearing Gearing Debt Balance as at 31 March 2016 35
Slide 36: 6. Appendix
(“PLife REIT”) 6. Appendix 36
Slide 37: Our Portfolio Summary
Our Portfolio 0 Summary Portfolio Singapore Japan Malaysia Total 43 nursing homes; 4 Hospitals & medical centre; 1 pharmaceutical product 43 nursing homes; Hospital & Medical Type distribution & manufacturing Medical Centre 1 pharmaceutical product Centre facility distributing & manufacturing facili
Slide 38: Our Portfolio – Singapore
Our Portfolio 0 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 92 Operating theatres 2 13 12 4 Strata Units / Car Park Lots 30 strata
Slide 39: Our Portfolio – Japan
Our Portfolio 0 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 40: Our Portfolio – Japan
Our Portfolio 0 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 41: Our Portfolio – Japan
Our Portfolio 0 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 42: Our Portfolio – Japan
Our Portfolio 0 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 43: Our Portfolio – Japan
Our Portfolio 0 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 44: Our Portfolio – Japan
Our Portfolio 0 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 45: Our Portfolio – Japan
Our Portfolio 0 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 46: Our Portfolio – Japan
Our Portfolio 0 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 47: Our Portfolio – Japan
Our Portfolio 0 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 48: Our Portfolio – Japan
Our Portfolio 0 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 49: Our Portfolio – Japan
Our Portfolio 0 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 50: Our Portfolio – Japan
Our Portfolio 0 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 51: Our Portfolio – Japan
Our Portfolio 0 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) 87 79 Year of Completion 2005 2013 Committed Occupancy 100% Name of L
Slide 52: Our Portfolio – Japan
Our Portfolio 0 Japan Property Liverari Shiroishi Hana Ichigokan1 Liverari Shiroishi Hana Nigokan2 Liverari Misono3 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
Slide 53: Our Portfolio – Japan
Our Portfolio 0 Japan Property Habitation Hakata I, II and III Excellent Tenpaku Garden Hills Silver Heights Hitsujigaoka Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 15,336 6,593 5,694 Floor Area (sq m) 21,415 4,000 9,013 Number of Units (Rooms) 3
Slide 54: Our Portfolio – Malaysia
Our Portfolio 0 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
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