Parkway Life Reit Q1 DPU up 15.1% at S$0.0442 on higher Singapore hospital rents

[SINGAPORE] Parkway Life Real Estate Investment Trust (Reit) on Thursday (Apr 30) reported a 15.1 per cent rise in first-quarter distribution per unit (DPU) to S$0.0442, from S$0.0384 in the year-ago period.

Distributable income stood at S$28.8 million, up 15.1 per cent year on year from S$25 million. Revenue fell 2.1 per cent to S$38.2 million, dragging net property income down 2.7 per cent to S$35.8 million.

The Reit’s manager attributed the higher DPU and distributable income to greater rental contributions from Singapore hospitals, which followed the cessation of three-year rent rebates, as well as the implementation of a new rent review formula.

However, the growth was partially offset by the depreciation of the Japanese yen and lower rental income from the trust’s Japan portfolio.

Under the annual rent review formula, the minimum rent for Singapore hospitals will climb to S$99.1 million from the 2026 financial year. This represents a 24.3 per cent increase from the actual rent payable in FY2025.

The revision comes after master lease renewals with sister company Parkway Hospitals Singapore for a term of 20.4 years from Aug 23, 2022.

The healthcare provider is the master lessee of the Reit’s Mount Elizabeth, Gleneagles and Parkway East hospitals.

As Parkway Life Reit makes distributions on a semi-annual basis, there is no distribution for Q1. The DPU of S$0.0442 will form part of the distribution for the first half of FY2026.

During the quarter, the trust completed its S$350 million rejuvenation of Mount Elizabeth Hospital.

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It also pre-emptively repossessed five nursing home properties in Osaka after a tenant, Miyako Group, entered liquidation proceedings. However, the manager noted that the security deposits held are “largely sufficient” to offset the outstanding rent.

Finance costs for Q1 FY2026 rose 7 per cent to S$3.5 million from S$3.3 million previously. This was due to funding capital expenditure and higher interest costs from yen-denominated debts, though these were partly offset by the Japanese currency’s depreciation.

Expansion in growing healthcare markets

As at March 2026, the Reit’s portfolio size was S$2.57 billion, accounting for 74 properties and 30 lessees.

By revenue, 67.6 per cent of its properties are in Singapore, 24.7 per cent in Japan, and 7.7 per cent in France.

The bulk of its portfolio asset mix by value is taken up by hospitals and medical centres at 67.8 per cent, with nursing homes comprising the remaining 32.2 per cent, as at Mar 31.

Its weighted average lease to expiry by revenue was 14.85 years. Not more than 3 per cent of the Reit’s leases is due to expire each year over the next five years, the manager noted.

Parkway Life Reit’s weighted average debt term to maturity stood at 3.8 years as at March. The manager said gearing was healthy at 34.2 per cent, with ample debt headroom.

It added that the Reit is targeting expansion in growing healthcare markets, particularly in the countries in which it has investments.

It intends to leverage its first-mover advantage and strong network in Japan to expand in the country, as well as build a third key market that can contribute to its enhanced growth in the mid to long term, the manager said.

Units of Parkway Life Reit closed at S$4.02 on Thursday, lower by 1 per cent or S$0.04.