Habitation Jyosui is part of an integrated development
(comprising retail, commercial, residential and
nursing home units) and is strategically situated
above the Yakuin Odori train station in the central
district of Fukuoka city. It is advantageously located
within a high-end residential area with close proximity
to retail malls, hospitals and clinics. Ocean View
Shonan Arasaki is a well-situated bay view property
within the residential area of Yokosuka City, one of
the major cities in Kanagawa prefecture. The long
balance master lease term of 20 years for Habitation
Jyosui and fresh 20-year master lease arrangement
for Ocean View Shonan Arasaki serve to further
enhance the earnings resiliency of the REIT.
Furthermore, the acquisitions see the addition of two
new well-established operators – Kabushiki Kaisha
Habitation (for Habitation Jyosui) and Oueikikaku
Kabushiki Kaisha (for Ocean View Shonan Arasaki),
paving the way for new business partnerships while
further diversifying PLife REIT’s tenant risk exposure.
DYNAMIC CAPITAL AND FINANCIAL
MANAGEMENT: PRESERVING RESILIENCY
To ensure that PLife REIT remains well cushioned
against the volatile financial market, we continue
to proactively execute prudent capital and financial
management strategies during the year.
As part of ongoing efforts to strengthen PLife REIT’s
balance sheet, we successfully termed out all the
long-term loans due in FY2015 by 3Q 2014. As such,
PLife REIT will not face any significant immediate
refinancing risks till FY2016. In addition, to achieve
a well spread out debt maturity profile to avoid a
“bunching” effect of a significant amount of loan
expiries in a single year, we carefully calibrated the
loan maturity of each facility being put in place. As at
31 December 2014, PLife REIT’s weighted average
debt term to maturity stands at 3.7 years, with no
more than 30% of total debt due for refinancing
in any year.
During the year, leveraging on the availability of
favourable funding conditions in Singapore dollars
("SGD"), PLife REIT embarked on its maiden
initiative to refinance approximately half of the
maturing Japanese Yen ("JPY") facilities using SGD
denominated facility. To maintain the natural hedge,
we utilised a cross currency swap to re-align the
SGD facility back into a JPY denominated loan to
match our underlying JPY denominated assets.
Through this initiative, PLife REIT was able to secure
a comparatively lower overall funding cost and
expand its funding sources from the JPY funding
pool to the deeper SGD funding pool. Armed with
investment grade ratings of ‘BBB’ by Fitch and
‘Baa2’ by Moody’s, PLife REIT continues to enjoy
strong access to capital. With enhanced diversity
in our funding sources, our average all-in cost of
debt remains low at 1.4% as at 31 December 2014.
To date, PLife REIT has been conservative
and proactive in our currency and interest rate
approaches. Cognisant of our Japan exposure, we
have consistently put in place net income hedges
for our Japan portfolio over the last few years which
continued to serve as an effective shield against
the JPY depreciation in FY2014. With interest rates
expected to increase in the coming years and as
currency volatility persists, we extended PLife
REIT’s net income hedges and interest rate hedges
for the next few years in FY2014. Grounded on
defence with a stringent framework of financial risk
management, we endeavour to maintain a stablised
net asset value for PLife REIT. Coupled with a healthy
gearing level of 35.2% as at 31 December 2014,
the ample debt headroom will enable PLife REIT to
seize growth opportunities and deliver continued
growth for our unitholders over the coming years
in a timely manner.
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