Quarterly Financial Highlights

2012 FIRST QUARTER UNAUDITED FINANCIAL STATEMENT & DISTRIBUTION ANNOUNCEMENT

Financials Archive

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Balance Sheet

	Notes	Group 31/03/12 S$'000	Group 31/12/11 S$'000
Current assets
Trade and other receivables		9,021	8,393
Cash and cash equivalents		36,624	36,184
		45,645	44,577
Non-current assets
Investment properties	(a)	1,397,872	1,384,032
Investment in subsidiaries		-	-
Advances to subsidiary		-	-
Security deposit receivable		917	1,004
Financial derivatives		435	-
Total assets		1,444,869	1,429,613
Current liabilities
Financial derivatives		109	-
Trade and other payables		13,622	12,757
Current portion of security deposits		1,943	2,129
Loans and borrowings	(b)	58,532	5,800
		74,206	20,686
Non-current liabilities
Financial derivatives		1,738	4,063
Non-current portion of security deposits		14,707	13,227
Loans and borrowings	(b)	449,313	489,181
Deferred tax liabilities		6,057	6,280
Total liabilities		546,021	533,437
Net assets		898,848	896,176
Represented by:
Unitholders' funds		898,848	896,176
Total equity		898,848	896,176

Notes:

1. The increase in investment properties is mainly due to the acquisition of three nursing home properties in March 2012, offset by the depreciation of Japanese Yen. The aggregate market value of the existing investment properties was last valued by independent valuers at S$1.4 billion as at 31 December 2011.
2. The increase in borrowings is mainly due to the drawdown of loan facility to finance the March 2012 acquisition, offset by the depreciation of Japanese Yen. Further, the S$50 million Floating Rate Notes issued in March 2010 will mature in the next 12 months, hence was reclassified to current liabilities as at 31 March 2012.

Review of Performance

	1Q 2012 S$'000	1Q 2011 S$'000	Inc/ (Dec) %
Gross revenue	22,776	21,492	6.0
Property expenses	(1,946)	(1,772)	9.8
Net property income	20,830	19,720	5.6
Manager's management fees	(2,001)	(1,887)	6.0
Trust expenses	(522)	(636)	(17.9)
Foreign exchange (loss)/gain	(364)	(49)	642.9
Interest income	4	7	(42.9)
Finance costs	(2,044)	(2,276)	(10.2)
Non-property expenses	(4,927)	(4,841)	1.8
Total return before changes in fair value of financial derivatives	15,903	14,879	6.9
Net change in fair value of financial derivatives	2,489	1,017	144.7
Total return for the period before tax and distribution	18,392	15,896	15.7
Income tax expense	(1,277)	(1,065)	19.9
Total return for the period after tax before distribution	17,115	14,831	15.4
Net effect of (non-taxable)/non-tax deductible items	(1,443)	(534)	170.2
Rollover Adjustment	588	-	100.0
Amount available for distribution to Unitholders	16,260	14,297	13.7
Amount retained for capital expenditure	(750)	-	100.0
Distributable income to Unitholders	15,510	14,297	8.5
Distribution per Unit (cents)	2.56	2.36	8.5
Annualised Distribution per Unit (cents)	10.24	9.44	8.5

1Q 2012 vs 1Q 2011

Gross revenue for 1Q 2012 was S$22.8 million, which exceeded 1Q 2011 by S$1.3 million. The higher revenue was primarily due to a full quarter's revenue contribution from the Japan property acquired in January 2011 and contribution from a further acquisition made in March 2012. Further, higher revenue was also driven by higher rent from the Singapore properties mainly due to increased growth rate of CPI + 1% (ie 5.3%) in Year 5 of lease commencing 23 August 2011.

Property expenses for 1Q 2012 were S$2.0 million, an increase of S$0.2 million over 1Q 2011. The higher property expenses were in tandem with the growth of the portfolio.

The result was a net property income of S$20.8 million for 1Q 2012, which was S$1.1 million higher than 1Q 2011.

The increase in the Manager's management fees were mainly due to higher deposited property value and higher net property income from the addition of new properties in March 2012, as well as valuation gains on the existing property portfolio, which led to a corresponding increase in deposited property.

Finance costs have decreased despite the growth of the portfolio mainly due to interest cost savings from the lower locked in hedged rates arising from the extension of interest rate hedges completed in August 2011. This was offset by additional financing costs incurred to finance the properties acquired in March 2012.

Overall, annualised distribution per unit (DPU) of 10.24 cents for 1Q 2012 outperformed 1Q 2011's DPU of 9.44 cents by 8.5% or 0.80 cents, mainly due to the yield accretive acquisitions made in Japan, higher rent from Singapore properties, and savings from lower financing costs. In addition, for FY2012, approximately S$3 million (S$0.75 million per quarter) of amount available for distribution will be retained for capital expenditure of existing properties, which is offset by the one-off IRAS adjustment for the Years of Assessment 2008 to 2010 in 1Q 2012.

Commentary

Parkway Life REIT remains cautiously optimistic about its near-term to medium-term acquisition prospects. In spite of ongoing uncertainties in the global markets, the long-term prospects of the regional healthcare industry continues to be robust due to rising demand for better quality private healthcare services driven by growing affluence and fast-ageing populations.

Parkway Life REIT's enlarged portfolio of 36 high-quality healthcare and healthcare-related assets places it in a good position to benefit from the resilient growth of the healthcare industry in the Asia Pacific region.

In addition, Parkway Life REIT is supported by favourable rental lease structures, where at least 89% of its Singapore and Japan portfolios have downside revenue protection and 64% of the total portfolio is pegged to CPI-linked revision formulae, ensuring steady future rental growth whilst protecting revenue stability amid uncertain market conditions.