ParkwayLife REIT has announced their 2Q2020 financial results on 28th July 2020. Being a Healthcare REIT, it has proven to be resilient despite the COVID-19 pandemic. Another reason for its resiliency is the minimum guaranteed rent for Singapore hospitals that is baked into the REIT which will continue to increase. With Consumer Price Index (“CPI”) growth picking up at 0.17%, 14th Year minimum guaranteed rent is set to increase by 1.17% above total rent payable for 13th Year of Lease Term based on CPI + 1% formula.
Gross revenue increased by 4.9% to S$30.3 million for 2Q2020. This comprised of the contribution from three nursing rehabilitation facilities acquired on 13 December 2019 and higher rent from the Singapore properties. In addition, gross revenue has increased as compared to 2Q2019 due to appreciation of the Japanese Yen.
Net property income increased by 5.3% to S$28.2 million for 2Q2020, which was S$1.4 million higher than 2Q2019.
ParkwayLife REIT has retained the remaining S$850,000 in 2Q2020 as part of the S$1.7 million COVID-19 related relief measures for tenants announced in 1Q2020. The management highlighted that the retention sum will be released as and when the COVID-19 related support has been utilised.
A distribution per unit (“DPU”) of 3.36 cents was declared in 2Q2020 which is 2.5% higher than 3.27 cents in 2Q2019.
Let us look at the 2Q2020 financial results below.
2Q2020 Financial Results
| 2Q2020 (S$’000) | 2Q2019 (S$’000) | YoY(%) | |
| Gross Revenue | 30,277 | 28,864 | 4.9% |
| Net Property Income | 28,222 | 26,807 | 5.3% |
| Amount available for distribution to Unitholders | 21,612 | 20,582 | 5.0% |
| Amount available for distribution (net of capex retention) | 20,862 | 19,832 | 5.2% |
| Distributable income to Unitholders | 20,329 | 19,832 | 2.5% |
| Distribution Per Unit (“DPU”) (cents) | 3.36 | 3.27 | 2.5% |
Debt
As of 30th June 2020, the gearing ratio stood at 38.3%. This means there is a debt headroom of $250.1 million and $479.0 million before reaching 45% and 50% gearing respectively.
About 88% of interest rate exposure is also hedged against interest rate fluctuations.
Occupancy
Overall portfolio occupancy stood at 99.7%. Occupancy for the properties in Singapore and Japan are 100%. The occupancy for the medical centre in Malaysia is 31%, dragging down the overall portfolio occupancy.
Current Dividend Yield
At the current share price of S$3.56 and FY19 full year distribution of 13.19 cents, this translates to a current dividend yield of 3.71%.
Summary
This is one stellar REIT that I never regretted adding to my stock portfolio. Despite COVID-19, ParkwayLife REIT continues to grow its DPU. While other REITs slashes their DPU, the current dividend yield of 3.71% is attractive.
DPU will continue to grow as there is the minimum guaranteed rent baked in for Singapore hospitals.
I agree with you that this is the best REIT around. I have only a small holding – difficult to get it at the price that I wanted. Maybe I would set up a regular investment scheme to buy small portion each month rather than one lot. And wait for an opportunity to buy in lot size when the price drops.