Parkway Life Real Estate Investment Trust · SGX:C2PU
Parkway Life Real Estate Investment Trust — Q2 2014 Earnings Presentation
54 slides from Parkway Life Real Estate Investment Trust's earnings presentation, July 2014
Slide 1: Investor Relations Presentation Q2 2014 Results
(“PLife REIT”) INVESTOR RELATIONS PRESENTATION Q2 2014 RESULTS
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 2014 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 Largest listed healthcare REIT in Asian region with an enlarged portfolio of S$1.5 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 yiel
Slide 6: 2. 2Q 2014 Key Highlights
(“PLife REIT”) 2. 2Q 2014 Key Highlights 6
Slide 7: 2Q 2014 Key Highlights
2Q 2014 Key Highlights Strong DPU Growth for 2Q and 1H 2014 ― DPU for 2Q 2014 at 2.90 cents; DPU for 1H 2014 at 5.72 cents ― DPU grew by 10.2% (2Q Y-O-Y) and 8.5% (1H Y-O-Y) Pre-emptive Terming Out of FY2015 Debt Facilities ― Successful terming out 52% of FY2015 refinancing requirements in July
Slide 8: 2Q 2014 Key Highlights (cont’d)
2Q 2014 Key Highlights (cont’d) Minimum Guaranteed Rent for Singapore Hospitals to increase by 2.81% ― With CPI growth of 1.81%, 8th Year Minimum Guaranteed Rent set to increase by 2.81% above total rent payable for 7th Year of Lease Term based on (CPI + 1%) formula ― Effective for the period 23
Slide 9: Strong Revenue Growth
Strong Revenue Growth 2Q 2014 revenue grew by 12.2% to $25.3 million 1H 2014 revenue grew by 9.5% to $49.9 million 2Q Revenue (S$’000) 1H Revenue (S$’000) 28,000 25,339 56,000 49,943 24,000 +12.2% +12.2% 22,583 48,000 +9.5% +9.5% 45,612 20,000 40,000 31,332 15,000 15,666 30,000 16,000 32,000 12,
Slide 10: Strong Net Property Income Growth
Strong Net Property Income Growth Increase in NPI is mainly due to: Rent contributions from properties acquired in 2H 2013 and 1Q 2014 Upward minimum guarantee rent revision of Spore hospitals by 4.44%1 2Q NPI 1H NPI 23.6 50.0 46.6 24.0 21.1 42.6 40.0 +12.0% +12.0% +9.4% +9.4% 16.0 30.0 8.8 9.
Slide 11: Strong Distributable Income Growth
Strong Distributable Income Growth 2Q 2014 DI grew by 10.2% to $17.5 million 1H 2014 DI grew by 8.5% to $34.6 million 2Q DI (S$’000) 1H DI (S$’000) +10.2% +10.2% +8.5% +8.5% 36,000 34,608 19,000 17,542 15,925 31,890 16,000 33,000 13,000 30,000 2Q 2013 2Q 2014 1H 2013 1H 2014 11
Slide 12: Strong DPU Growth Since IPO
Strong DPU Growth Since IPO DPU has grown steadily at a rate of 70.9%1 since IPO2 DPU (cents) 12.0 +70.9% 10.31 3 10.75 Represents 9.60 53% of 10.0 8.79 FY2013 DPU 7.74 6.83 8.0 6.32 5.72 6.0 4.0 2.0 0.0 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 1H 2014 (annualised) Note: 1. Since IP
Slide 13: Recent Developments
Recent Developments =a + Fitch affirmed Plife REIT’s long term issuer default rating, senior unsecured rating and the MTN Programme at “BBB”, with “stable” outlook. 8 May 20 1 4 * Moody assigned Plife REIT a Baa2' issuer rating as well as a provisional (P)Baa2? senior unsecured rating tothe MTN Prog
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$1.0 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 Khazanah1 Approx. 44%6 Management & Other 35.8%7 Services IHH2 Parkway Life REIT3 100% Net Property Income Ownership of Assets Master Lessee Master Lease The Manager (PTML)4 Singapore Hospitals PHSPL5 Wholly owned subsidiary of IHH Rental Payments Footnote: 1 Khazanah Nasio
Slide 17: 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$12.20 billion as at 31 December 2013 In Sing
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
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: Our Properties – Japan
Our Properties – Japan A portfolio of 43 high quality healthcare properties worth 1 S$493 million , comprising: 1 pharmaceutical product distributing and manufacturing facility P-Life Matsudo (P-Life Matsudo) 42 private nursing homes Master tenancy with 19 lessees Nursing Home Properties B
Slide 22: 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 p
Slide 23: Our Properties - Japan
Our Properties - Japan 2 Unique features of our Japan assets: Favorable Lease Structure Long term lease structure with weighted average lease term to expiry of 1 13.75 years “Up only” Rental Review Provision for most of our nursing homes Master Tenanted Signifies 100% committed occupancy N
Slide 24: Our Properties – Japan
Our Properties – Japan Approximately 75.6% of revenue from Japan portfolio is downside- protected Revenue from Japan portfolio (as at 30 June 2014) 75.6%1 Downside- protected 24.4%2 Subject to market revision Notes: 1. Based on Gross Revenue (as at 30 Jun 2014) of 31 properties 2. Based on Gross R
Slide 25: Diversified Nursing Home Operators
Diversified Nursing Home Operators 18 high quality nursing home operators Diversifies tenant risk Back-up operator arrangements Minimises operator default risks Rental guarantee by vendors For a period of seven years, capped at 5% of the purchase price for properties acquired from Kenedi
Slide 26: Key Nursing Home Operators
Key Nursing Home Operators Key nursing home operators contributed 66.6% 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 hom
Slide 27: Our Properties – Malaysia, Kuala Lumpur
Our Properties – Malaysia, Kuala Lumpur 1 A portfolio of high quality healthcare assets worth S$8.6million 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
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 29
Slide 30: 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 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 i
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- for
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 END GOALS: To mitigate immediate refinancing risks post-acquisition 2. PLife REIT’s S$1.5billion1 portfolio is unencumbered Minimise short or Ensures financing flex
Slide 35: Debt Maturity Profile
Debt Maturity Profile 2 With the terming out of 52% of FY2015 refinancing requirements to 2H FY2019, the weighted average term to maturity is extended from 2.88 years to 3.48 years Current effective all-in cost of debt of 1.46% Interest cover ratio of 10.4 times Note: 1. Successful terming out
Slide 36: Additional Debt Capacity
Ample Debt Headroom Debt headroom of S$124.1 million, S$279.8 million and S$980.4 million before reaching 40%, 45% and 60% gearing respectively PLife REIT has ample funding to support future acquisitions and growth opportunities Additional Debt Capacity Asset 980.4 (S$ ’M) (S$’M) 124.1 279.8 35.
Slide 37: 6. Appendix
(“PLife REIT”) 6. Appendix 37
Slide 38: 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 Total Area (sq m) 1 58,139 49,003 10,994 Beds 2 345 272 113 Operating theatres 2 13 12 4 Strata Units / Car Park Lots 30 strat
Slide 39: 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 Net Lettable Area (sq m) 3,240 3,
Slide 40: Our Portfolio - Japan
Our Portfolio - Japan Senior Chonaikai Himawari Home Property Palmary Inn Akashi Palmary Inn Suma Makuhari Kan Kamakura Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 5,891 2,676 2,853 1,307 Net Lettable Area (sq m) 6,562 4,539 4,361 1,689 N
Slide 41: Our Portfolio - Japan
Our Portfolio - Japan Smiling Home Medis Fureai no sono Smiling Home Medis Property Musashi Urawa Nerima Takanodai Koshigaya Gamo Type Paid nursing home with care service Land Tenure Freehold Land Area (sq m) 802 2,282 1,993 Net Lettable Area (sq m) 1,603 2,526 3,824 Number of Units (Rooms) 44 64 10
Slide 42: Our Portfolio - Japan
Our Portfolio - Japan Supercourt Takaishi- Maison de Centenaire Property Amille Nakasyo Supercourt Kadoma Hagoromo Ishizugawa Type Paid nursing home with care service Land Tenure Freehold 50 years 30 years Freehold Land Area (sq m) 2,901 1,518 2,010 1,111 Net Lettable Area (sq m) 3,259 2,794 3,021 2
Slide 43: 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 Net Lettable Area (sq m) 1,263 2,912 1,
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) 1,786 1,042 2,813 Net Lettable
Slide 45: Our Portfolio - Japan
Our Portfolio - Japan Property Sawayaka Nokatakan Sawayaka Nogatakan Sawayaka Sakurakan Sawayaka Fukufukukan Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Freehold Land Area (sq m) 5,748 2,707 6,276 1,842 Net Lettable Area (sq m) 4,566 3,147 5,044 3,074 Number of Un
Slide 46: Our Portfolio - Japan
Our Portfolio - Japan Property Sawayaka Higashikagurakan Sawayaka Hirakatakan Sawayaka Parkside Shinkawa Type Paid nursing home with care service Land Tenure Freehold Freehold Freehold Land Area (sq m) 4,813 1,850 1,445 Net Lettable Area (sq m) 5,335 3,696 2,855 Number of Units (Rooms) 110 108 58 20
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 Land Area (sq m) 1,762 935 951 Net Lettable Area (sq m) 2,692 1,847 2,828 Number of Units (Rooms) 64 47 71 Year of Completion 2006 2
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 Net Lettable Area (sq m) 1,560 1,688 Number of Units (Rooms) 44 49 Year of Completion 2006 2004 Committed Occupancy 100% Name of Le
Slide 49: Our Portfolio - Japan
Our Portfolio - Japan Property Heart Life Toyonaka Palmary Inn Shin-Kobe Type Paid nursing home with care service Land Tenure Freehold Freehold Land Area (sq m) 628 1,034 Net Lettable Area (sq m) 1,254 3,964 Number of Units (Rooms) 42 71 1992 Year of Completion 2007 Conversion works were completed i
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 Net Lettable Area (sq m) 7,360 7,382 2,246 Number of Units (Rooms) 129 135 50 Year of Complet
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 Net Lettable Area (sq m) 2,133 5,661 Number of Units (Rooms) 61 108 Year of Completion 2012 2013 Committed Occupancy 100% Nam
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 Net Lettable
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 Strata Area of Property (sq m) 2,444 (owned by Parkway Life REIT) Number of Car Park Lots 69, all of which owned by Parkway Life REIT Year of Completion 199
Slide 54: 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
Parkway Life Real Estate Investment Trust — Q2 2014 Earnings Presentation on 6ix