ParkwayLife REIT 1H2023 Financial Results

ParkwayLife REIT Portfolio

On 26th July 2023, ParkwayLife REIT released their 1H2023 financial results. A Distribution Per Unit (DPU) of 7.29 Singapore cents was announced for 1H2023, representing an increase of 3.3% year-on-year (“y-o-y”).

ParkwayLife REIT was once of the earliest REIT that I bought for my stock portfolio. The REIT is well known for its portfolio of nursing homes in Japan. Over the years, ParkwayLife REIT was able to grow its DPU y-o-y, providing me with excellent passive income. Recently, ParkwayLife REIT was quoted as one of the 10 Outperforming S-REITs in 1H2023.

With the weakening Japanese Yen against Singapore Dollar, it was a surprise ParkwayLife REIT was still able to grow its DPU. Let us look in details at its 1H2023 financial performance below.

ParkwayLife REIT 1H2023 Financial Results

Gross Revenue grew 23.6% to S$74.4 million on the back of contribution from five nursing homes acquired in September 2022 and higher rent from the Singapore properties under the new master lease agreements which commenced in August 2022. This was partially offset by the depreciation of the Japanese Yen.

For the above similar reasons, Net Property Income (NPI) also grew 25.1%.

Overall, distributable income to Unitholders grew by 3.3% to S$44.1 million in 1H 2023, as compared with S$42.7 million in the previous corresponding period.

1H2023
(S$’000)
1H2022
(S$’000)
Change
Gross Revenue 74,402 60,175 23.6%
Net Property Income 70,084 56,036 25.1%
Amount Distributable To Unitholders 44,084 42,696 3.3%
Distribution Per Unit (“DPU”) (cents) 7.29 7.06 3.3%

Debt

As of 30th June 2023, ParkwayLife REIT’s gearing ratio is low at 35.3%. There is ample debt headroom of $404.3 million and $673.6 million before reaching
45% and 50% gearing respectively.

77% of interest rate exposure remains hedged.

ParkwayLife REIT 1H2023 Debt Maturity Profile

In terms of debt maturity profile, there is no long-term debt refinancing needs till February 2024. Current weighted average term to maturity stood at 2.9 years.

Occupancy

As of 30th June 2023, ParkwayLife REIT’s overall portfolio occupancy stood strong at 99.7%. The occupancy of the Medical Centre in Malaysia continue to be a drag at 31% occupancy rate.

ParkwayLife REIT 1H2023 Occupancy

Current Dividend Yield

At the current share price of S$3.88 and 2022 full year distribution of 14.38 cents, this translate to a current dividend yield of 3.71%.

ParkwayLife REIT Share Price 28 July 2023

Summary of ParkwayLife REIT 1H2023 Financial Results

The pros are:

  • Gross Revenue grew 23.6% to S$74.4 million.
  • Distribution Per Unit (DPU) grew 3.3% to 7.29 Singapore cents in 1H2023.
  • Gearing ratio is low at 35.3%.
  • No long-term debt refinancing needs till February 2024.
  • 77% of interest rate exposure remains hedged.
  • Overall portfolio occupancy stood strong at 99.7%.

The cons are:

  • Depreciation of the Japanese Yen.
  • Low current dividend yield of 3.71%.

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