Total operating expenses
1
for the year were S$28.5
million, which represented 2.8% of PLife REIT’s net asset
value as at the end of the financial year. Tax incurred for
the year was S$11.9 million.
Arising from the divestment of seven Japan properties
in December 2014, the divestment gains (after tax) of
S$9,110,000 has been fully distributed to Unitholders
throughout the four quarters in FY2015, boosting PLife
REIT’s DPU.
Accordingly, distributable income increased by 15.3% to
S$80.4 million in FY2015.
Healthy Balance Sheet
Through prudent and pre-emptive capital management
measures, PLife REIT continued to maintain its robust
financial position in FY2015.
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 this end, as at 31 December 2015, PLife REIT had
pre-emptively termed-out of all its long-term debts due
Financial
Review
1 Made up of property expenses, management fees, trust expenses and finance costs
Strong DPU Growth
FY2015 had been a challenging year for the global
financial markets, culminated from the threat of an
economic slowdown in China and the negative impacts
arising from a global commodity glut. Despite this difficult
macroeconomic backdrop, PLife REIT had strived
and continued to deliver strong growth and earnings
in FY2015. Distribution Per Unit (“DPU”) for the year,
including distribution of divestment gains, rose 15.3%
year-on-year to 13.29 cents, setting another record high
since its IPO.
The REIT’s gross revenue increased by 2.3% to S$102.7
million, compared to S$100.4 million in the previous
year (“FY2014”). This was mainly attributable to the
revenue contribution from the properties acquired in 1Q
2014 and the net effect from higher yielding properties
acquired from the asset recycling initiative completed in
March 2015. In addition, PLife REIT also continued to
benefit from the minimum guarantee rent revision of the
Singapore Hospital Properties, under the CPI+1% rental
review mechanism. As a result, FY2015 net property
income increased by 2.4% to S$96.0 million.
Furthermore, due to the prudent financial risk
management adopted by PLife REIT, the adverse impact
from the depreciation of the Japanese Yen (“JPY”) has
been mitigated as PLife REIT has hedged its Japan
net income for the next few years. PLife REIT had also
protected its Japanese investments from exposure
to foreign currency fluctuations by adopting a natural
hedge strategy with borrowings in JPY or utilising a
cross currency swap to re-align the Singapore dollars
borrowing facility back into an effective JPY loan to
finance its Japanese investments, enabling it to maintain
a stable net asset value.
In the reporting year, PLife REIT registered a realised
foreign exchange gain amounting to S$2.7 million
from the delivery of Japan net income hedges. As of
31 December 2015, the Group has put in place Japan
net income hedge till 1Q 2020 to shield against the
volatility in JPY, enhancing the stability of distribution to
Unitholders.
ParkwayLife REIT
Annual Report 2015
32
