FINANCIAL
REVIEW
STRONG PERFORMANCE
PLife REIT continued to deliver resilient earnings and
steady growth despite the challenging environments
and currency headwinds in FY2014. Distribution Per
Unit (“DPU”) for the year rose 7.1% year-on-year
to 11.52 Singapore cents, setting another record
high since its IPO.
The REIT reported a 7.1% increase in gross
revenue to S$100.4 million, compared to S$93.7
million in the previous year (“FY2013”). This was
mainly attributable to the full year rental income
contributions from the Japanese properties acquired
in second half 2013 and additional contributions
from the 4 new properties acquired in 2014. From an
organic perspective, PLife REIT continues to benefit
from the minimum guarantee rent revision of the
Singapore Hospital Properties, under the CPI+1%
rental review mechanism, at 2.81% for its eighth
year of lease term commencing on 23 August 2014.
As a result, FY2014 net property income increased
by 7.1% to S$93.8 million.
During the year, the Japanese Yen continued to
be under pressure due to the Bank of Japan’s
quantitative easing program. However, these
exchange rate exposures on PLife REIT’s Japanese
Yen income were mitigated by its income hedge
strategy that it has consistently applied since the
first acquisitions in Japan. As a result, PLife REIT had
registered a realised foreign exchange gain of S$2.3
million in FY2014 from its income hedges negating
any impact of the depreciation in Japanese Yen on
its Japanese income, ensuring stable distributions
to Unitholders. PLife REIT had also protected its
Japanese investments from exposure to foreign
currency fluctuations by adopting a natural hedge
strategy, borrowing Japanese Yen to finance its
Japanese investments, enabling it to maintain a
stable net asset value.
As part of PLife REIT’s maiden asset recycling
initiative, the disposal of 7 nursing homes in Japan
has also contributed a gain of $13.7 million (before
tax) to the Group’s earnings. These properties were
sold at 28.1% higher than the original purchase
price and 8.3% above the latest valuation.
Accordingly, distributable income increased by
7.1% to S$69.7 million in FY2014.
ROBUST BALANCE SHEET
Through prudent and pre-emptive capital
management measures, PLife REIT continued to
maintain its robust financial position in FY2014.
Leverage and Borrowings
As part of ongoing efforts to strengthen its balance
sheet, PLife REIT continued to proactively refinance
its maturing long term debts ahead of time to
eliminate any near-term refinancing risks. To that
end, PLife REIT has successfully completed the
pre-emptive terming out all of its long-term debts
due in FY2015 by 30 September 2014. To further
enhance the resiliency of our balance sheets, we
had carefully selected the maturity dates of the new
loans secured for financing the new acquisitions
executed during the year as well as the loans for
terming out the maturing debts in order to achieve
a well-spread out debt maturity. There was no more
than 30% of total debt due in a single year, as at
31 December 2014.
As at 31 December 2014, PLife REIT’s total debt
was S$586.7 million, with a weighted average term
to maturity of 3.7 years and effective all-in cost of
debt of 1.4%. The increase in total debt, compared
to S$503.7 million as at 31 December 2013, was
due mainly to the drawdown of loan facilities to
fund the acquisitions in March and December 2014.
34
PA R K WAY L I F E R E I T
