ParkwayLife REIT 2Q2020 Financial Results

ParkwayLife REIT Logo

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.

ParkwayLife REIT Portfolio Occupancy 2Q2020

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%.

ParkwayLife REIT Share Price on 30th July 2020

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.

ParkwayLife REIT 1Q2020 Financial Results – Stable In Times of Uncertainties

Parkway Life REIT Logo

ParkwayLife REIT is a healthcare REIT. If you are familiar with ParkwayLife REIT, you know that their major assets are the nursing homes in Japan. Japan is not spared from the COVID-19 pandemic either.

ParkwayLife REIT has announced their 1Q2020 financial results on 22nd April 2020. Although the financial results are not as impressive as industrial REITs, ParkwayLife REIT had performed pretty well.

Gross Revenue increased by 5.2% to S$29.9 million in 1Q2020. Net Property Income (“NPI”) grew by 4.5% to S$27.7 million due to rental from newly acquired properties in 4Q2019. Distributable amount increased by 5.7% to S$21.0 million. Even though ParkwayLife REIT had planned to set aside S$1.7 million as part of COVID-19 related relief measures to support their tenants where necessary, they only retained S$850,000 in 1Q2020. Distribution Per Unit (“DPU”) still grew 1.4% to 3.32 cents after the capital retention.

1Q2020 Financial Results

1Q2020
(S$’000)
1Q2019
(S$’000)
YoY(%)
Gross Revenue 29,869 28,390 5.2%
Net Property Income 27,746 26,542 4.5%
Distributable amount before capital distribution
retention
20,951 19,829 5.7%
Distributable Amount 20,101 19,829 1.4%
Distribution Per Unit (“DPU”) (cents) 3.32 3.28 1.4%

Occupancy

Occupancy for Singapore and Japan stood at 100% while the occupancy for Malaysia stood at 31%. Thus the average occupancy is 99.7% which is still healthy.

Debt

Gearing ratio stood at 38.5%.

Current Valuation

ParkwayLife REIT has paid out a total of 13.12 cents in FY19. Based on the current share price of S$3.31, this translate to a current dividend yield of 3.96%.

If you managed to buy ParkwayLife REIT at the low of S$2.61 when the market crashed last month, this will give you a current dividend yield of 5.03%.

ParkwayLife REIT 1Q2020 Financial Results - Stable In Times of Uncertainties

Summary

You can never be wrong with ParkwayLife REIT. This is one REIT whereby the management had proven track records of growing its DPU and NPI year on year. The “Up only” rent review
is provisioned for most of their nursing homes and nursing homes is where ParkwayLife REIT’s crown jewel is.

Although the dividend yield is low at 3.96%, what you gain is stability and good sleep at night without worrying about its performance.