Parkway Life Real Estate Investment Trust · SGX:C2PU
Parkway Life Real Estate Investment Trust — Q4 2018 Earnings Presentation
53 slides from Parkway Life Real Estate Investment Trust's earnings presentation, Jan 28, 2019
Slide 1: Investor Presentation 4Q 2018 Results
(“PLife REIT”) INVESTOR PRESENTATION 4Q 2018 Results (28 January 2019)
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. 4Q and Full Year 2018 Key Highlights 3. Our Properties 4. Growth Strategy & Core Markets 5. Capital & Financial Management 6. Appendices 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 REITs in Asia with an enlarged portfolio of S$1.86 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 yield
Slide 6: 2. 4Q and Full Year 2018 Key Highlights
(“PLife REIT”) 2. 4Q and Full Year 2018 Key Highlights 6
Slide 7: 4Q and Full Year 2018 Key Highlights: Continued DPU Growth Since IPO
4Q and Full Year 2018 Key Highlights Continued DPU Growth Since IPO DPU (Cents) 4Q 2018 4Q 2017 • Recurring operations1 3.28 3.15 • Distribution of divestment gain2 0.00 0.23 Total DPU for the period 3.28 3.38 ― DPU from recurring operations has grown by 3.9% (4Q Y-O-Y) and 3.4% (full year) ― Overal
Slide 8: 4Q and Full Year 2018 Key Highlights (cont'd): Strong Capital Structure
4Q and Full Year 2018 Key Highlights (cont’d) Strong Capital Structure 1 ― No long-term debt refinancing needs till 2020 ― Interest rate exposure are largely hedged ― Interest cover ratio of 13.7 times ― Fully hedged the JPY net income till 1Q 2023 ― Gearing remains optimal at 36.1% ― Low all-in cos
Slide 9: Revenue Growth
Revenue Growth Revenue grew by 3.7% and 2.7% to $28.6 million and $112.8 million for 4Q 2018 and FY2018 respectively. 4Q Revenue (S$’000) Full Year Revenue (S$’000) +2.7% +3.7% 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 1Q 2017 & 1Q 2018 Higher rent contribution by Parkway East Hospital Upward minimum guarantee rent revision of S’pore hospitals by 1.38%1 4Q NPI Full Year NPI +3.8% +2.7% Note: 1. In 12th
Slide 11: Distributable Income (DI) Review
Distributable Income (DI) Review Overall, DI has declined by 2.9% and 3.5% to $19.8 million and $77.9 million for 4Q 2018 and Full Year 2018 respectively, due to absence of one-off distribution of divestment gain1. 4Q DI (S$’000) Full Year DI (S$’000) -2.9% -3.5% Note: 1. Divestment gain was equally
Slide 12: Uninterrupted Recurring DPU Growth Since IPO
Un.interrupted Recurring DPU Growth Since IPO DPU has grown steadily at a rate of 103.6%1 since IPO DPU (cents) +103.6% 13.29 13.35 2 Note: 1. Since IPO till YTD 4Q 2018 2. Since FY2012, S$3.0 million per annum of amount available for distribution has been retained for capital expenditure 3. One-off
Slide 13: Recent Developments
Recent Developments • Announced 4Q 2018 results: Gross revenue increased 3.7% year-on-year to S$28.6 million. 28 January 2019 • Total distributable income decreased 2.9% year-on-year to S$19.8 million, due to absence of one-off distribution divestment gain. • DPU of 3.28 cents for the period declare
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$1.16 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 16: Master Lessee – IHH Group
Master Lessee – IHH Group Khazanah1 Approx. 42.1%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 17: Master Lessee – IHH Group (Continued)
Master Lessee – IHH Group1 (Continued from previous slide) IHH 2 42.1% 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$15.5 billion as at 31 December 2018 In Singapore,
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 PLife REIT does not bear these costs -
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) 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 20: 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 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 21
Slide 22: Our Properties - Japan
Our Properties . Japan A portfolio of 46 high quality healthcare 1 properties worth S$692.8 million , comprising: 1 pharmaceutical product distributing and manufacturing facility (P-Life Matsudo) 45 private nursing homes P-Life Matsudo Single-tenanted properties with 24 lessees Comply with strict se
Slide 23: Our Properties - Japan
Our Properties . Japan 1 property with annual revision linked to Japan CPI; if CPI is negative, rent will remain unchanged 2 Unique features of our Japan assets: 2.7% of Japan Favorable Lease Structure Gross Revenue1 Long term lease structure with weighted average “Up only” P-Life Matsudo Rent Revie
Slide 24: Our Properties – Japan
Our Properties – Japan Approximately 86.9% of revenue from Japan portfolio is downside- protected Notes: 1. Based on Gross Revenue (as at 31 December 2018) of 39 properties 2. Based on Gross Revenue (as at 31 December 2018) of 7 properties with market revision subject to Lessor/Lessee mutual agreeme
Slide 25: Diversified Nursing Home Operators
Diversified Nursing Home Operators Monthly Rental Contribution As at 31 December 2018 23 high quality nursing K.K. Silver Heights Sapporo, home operators 2.5% Others (operators Diversifies tenant risk K.K. M.C.S., 2.8% contributing less than 1%), 9.8% Benesse Style Care Back-up operator Co., Ltd, 2.
Slide 26: Key Nursing Home Operators
Key Nursing Home Operators Key nursing home operators contributed 57.7% 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 facilities The
Slide 27: Our Properties - Malaysia
Our Properties . Malaysia 1 A portfolio of high quality healthcare assets worth S$7.4 million within Gleneagles Intan Medical Centre Kuala Lumpur, next to the 369-bed Gleneagles Hospital Kuala Lumpur Note: 1. Based on latest appraised values 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 plans to further diversify within the investm
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$1.86 billion1 portfolio is unencumbered Minimise short or Ensures financing flexibil
Slide 35: Debt Maturity Profile
Debt Maturity Profile As at 31 December 2018 Weighted average term to maturity of 2.9 years Current effective all-in cost of debt of 0.97% Interest cover ratio of 13.7 times Interest rate exposure are largely hedged 35
Slide 36: Ample Debt Headroom
Ample Debt Headroom Debt headroom of $121.5 million and $304.8 million before reaching 40% and 45% gearing respectively 1,000 Asset 121.5 304.8 (S$’M) 500 0 684.7 684.7 684.7 36.1% 40% 45% Gearing Gearing Gearing Debt Balance as at 31 December 2018 36
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; 45 nursing homes; 45 nursing homes; 1 pharmaceutical product Type Hospital & Medical Centre Medical Centre 1 pharmaceutical product distribution & distributing & manufacturing manufacturing facility facili
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 2 345 258 106 Operating theatres 2,3 13 12 5 Strata Units / Car Park Lots 30 str
Slide 40: Our Portfolio - Japan
Our Portfolio . Japan Property P-Life Matsudo Bon Sejour Shin-Yamashita Palmary Inn Akashi 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 3,273 6,5
Slide 41: Our Portfolio - Japan
Our Portfolio . Japan Smiling Home Medis Property Palmary Inn Suma Senior Chonaikai Makuhari Kan Musashi Urawa 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 1082 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 Garden Silver Heights Property Liverari Misono1 Habitation Hakata I, II, III 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 21
Slide 51: Our Portfolio - Japan
Our Portfolio . Japan Property Kikuya Warakuen Sanko Wakaba no Oka Hakusho no Sato 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 53 135 124 Year o
Slide 52: Our Portfolio - Japan
Our Portfolio . Japan Konosu Nursing Home Property Group Home Hakusho Kyoseien Type Group Home Nursing Rehabitation 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% 100%
Slide 53: 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 94% (excluding car
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