Financial Statements And Related Announcement :: Full Yearly Results

(Constituted in the Republic of Singapore pursuant to a Trust Deed dated 12 July 2007 (as amended))

PARKWAY LIFE REAL ESTATE INVESTMENT TRUST

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 UNAUDITED FINANCIAL STATEMENT & DISTRIBUTION ANNOUNCEMENT

INTRODUCTION

Parkway Life Real Estate Investment Trust ("Parkway Life REIT") is a real estate investment trust constituted by the Trust Deed entered into on 12 July 2007 (as amended) between Parkway Trust Management Limited as the Manager and HSBC Institutional Trust Services (Singapore) Limited as the Trustee. Parkway Life REIT was listed on the Singapore Exchange Securities Trading Limited ("SGX-ST") on 23 August 2007 ("Listing Date").

Parkway Life REIT is one of the largest listed healthcare REITs in Asia by asset size. It was established to invest primarily in income-producing real estate and/or real estate-related assets in the Asia-Pacific region (including Singapore) that are used primarily for healthcare and/or healthcare-related purposes (including but not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices), whether wholly or partially owned, and whether directly or indirectly held through the ownership of special purpose vehicles whose primary purpose is to own such real estate. In Singapore, Parkway Life REIT owns the largest portfolio of private hospitals comprising Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital (collectively, the "Singapore Hospital Properties").

In Japan, Parkway Life REIT owns one pharmaceutical product distributing and manufacturing facility in Chiba Prefecture, as well as 49 high quality nursing home and care facility properties located in various prefectures of Japan. This is inclusive of the nursing home acquired in December 2020 (collectively, the "Japan Properties").

As at 31 December 2020, Parkway Life REIT owns a well-diversified portfolio of 54 properties located in the Asia-Pacific region, including three hospitals in Singapore, 50 healthcare and healthcare-related assets in Japan and strata titled units/lots in MOB Specialist Clinics, Kuala Lumpur, Malaysia. Its total portfolio size stands at approximately S$2.0 billion as at 31 December 2020.

Parkway Life REIT's policy is to distribute at least 90% of its taxable income and net overseas income, with the actual level of distribution to be determined by the Manager. An amount of S$3.0 million is retained for capital expenditure on existing properties each year.

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PARKWAY LIFE REAL ESTATE INVESTMENT TRUST

2020 FULL YEAR UNAUDITED FINANCIAL STATEMENT & DISTRIBUTION ANNOUNCEMENT

SUMMARY OF PARKWAY LIFE REIT'S RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

			2020	2019	Increase
		Notes	S$'000	S$'000	S$'000		%
	Gross Revenue		120,892	115,222	5,670		4.9
	Net Property Income		112,528	108,225	4,303		4.0
	Amount Available for Distribution	(a)	83,887	79,822	4,065		5.1
	Amount retained for COVID-19 related relief	(b)	(478)	-	478		n.m.1
	measures
	Distributable Income to Unitholders		83,409	79,822	3,587		4.5
	Distribution per unit (cents)	(c)	13.79	13.19	0.60		4.5
	Distribution yield (%), based on		3.56	3.41			4.5
	- Closing market price of S$3.87 as at
	31 December 2020
Note(s):

1. Net of amount retained for capital expenditure on existing properties amounting to S$3.0 million each year.
2. As part of the S$1.7 million COVID-19 related relief measures for tenants announced in 1Q 2020. The retention sum will be released as and when the COVID-19 related support has been utilised and recognised in the Statement of Total Return.
3. In computing the Distribution per Unit ("DPU"), the number of units in issue as at the end of each period is used.

• The term "n.m." used throughout the financial statement and distribution announcement denotes "not meaningful".

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PARKWAY LIFE REAL ESTATE INVESTMENT TRUST

2020 FULL YEAR UNAUDITED FINANCIAL STATEMENT & DISTRIBUTION ANNOUNCEMENT

1(a) Statement of Total Return (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year

Consolidated Statement of Total Return

		4Q	4Q	Inc/	2020	2019	Inc/
	Notes	2020	2019	(Dec)	(Dec)
	S$'000	S$'000
		S$'000	S$'000	%	%
Gross revenue		30,566	28,039	9.0	120,892	115,222	4.9
Property expenses		(2,107)	(716)	194.3	(8,364)	(6,997)	19.5
Net property income		28,459	27,323	4.2	112,528	108,225	4.0
Management fees	(a)	(3,213)	(3,024)	6.3	(12,647)	(11,881)	6.4
Trust expenses	(b)	(789)	(765)	3.1	(3,739)	(3,074)	21.6
Net foreign exchange gain/(loss)		40	(217)	n.m.	90	(114)	n.m.
Interest income		1	2	(50.0)	7	10	(30.0)
Finance costs	(c)	(1,351)	(1,713)	(21.1)	(5,237)	(6,617)	(20.9)
Other expenses	(d)	(905)	-	n.m.	(1,218)	-	n.m.
Non-property expenses		(6,217)	(5,717)	8.7	(22,744)	(21,676)	4.9
Total return before changes in fair		22,242	21,606	2.9	89,784	86,549	3.7
value of financial derivatives and
investment properties	(e)	1,126	4,102	(72.5)	(823)	2,436	n.m.
Net change in fair value of financial
derivatives	(f)	7,444	43,019	(82.7)	7,428	43,019	(82.7)
Net change in fair value of
investment properties
Total return for the period before		30,812	68,727	(55.2)	96,389	132,004	(27.0)
tax and distribution	(g)	(3,309)	(2,732)	(21.1)	(9,165)	(8,607)	6.5
Income tax expense
Total return for the period after tax		27,503	65,995	(58.3)	87,224	123,397	(29.3)
before distribution

Note(s):

1. Management fees comprise Manager's management fees and asset management fees payable to the asset managers of the Japan Properties.
2. Trust expenses comprise mainly of Trustee's fees, professional fees and travelling expenses.
3. Finance costs largely consist of interest expense on loans, settlement on interest rate swaps that provide fixed rate funding on loans, amortisation of costs of interest rate caps, amortisation of transaction costs of establishing debt facilities and the finance costs on lease liabilities.
4. COVID-19related support and targeted assistance extended to tenant(s).
5. The Group entered into foreign currency forward contracts to hedge its net foreign income from Japan. The changes in fair value of the foreign currency forward contracts and any ineffective portion of changes in the fair value of designated hedging instrument were recognised in Statement of Total Return.
6. Valuations were performed by independent professional valuers for all investment properties as at 31 December 2020. The net change in fair value of investment properties represented a gain of 0.4% in the total portfolio value. The net change in fair value of investment properties in 2020 also included the right-of-use adjustment for a Japan leasehold property acquired in December 2019.
7. Included in 4Q 2020 income tax expense is the withholding tax of S$1.3 million (4Q 2019: S$1.1
   million) and deferred tax of S$2.0 million (4Q 2019: S$1.6 million) in respect of the Japan investment

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PARKWAY LIFE REAL ESTATE INVESTMENT TRUST

2020 FULL YEAR UNAUDITED FINANCIAL STATEMENT & DISTRIBUTION ANNOUNCEMENT

properties for the temporary differences between the fair value and the tax written down value at the applicable tax rate.

Distribution Statement
			4Q	4Q	Inc/	2020	2019	Inc/
		Note	2020	2019	(Dec)	(Dec)
		S$'000	S$'000
			S$'000	S$'000	%	%
	Total return after tax before		27,503	65,995	(58.3)	87,224	123,397	(29.3)
	distribution
	Non-taxdeductible/(non-taxable) items:
	Trustee's fees		86	82	4.9	339	322	5.3
	Amortisation of transaction costs		152	151	0.7	623	688	(9.4)
	relating to debt facilities		(1,126)	(4,102)	(72.5)	823	(2,436)	n.m.
	Net change in fair value of financial
	derivatives		(5,507)	(41,427)	(86.7)	(3,456)	(39,315)	(91.2)
	Net fair value gain on investment
	properties (net of deferred tax impact)		12	308	(96.1)	13	292	(95.5)
	Foreign exchange loss
	Others		253	(12)	n.m.	1,176	(126)	n.m.
	Net effect of non-tax		(6,130)	(45,000)	(86.4)	(482)	(40,575)	(98.8)
	deductible/(non-taxable) items
	Rollover adjustment	(a)	64	-	n.m.	145	-	n.m.
	Amount available for distribution to		21,437	20,995	2.1	86,887	82,822	4.9
	Unitholders	(b)	(750)	(750)	-	(3,000)	(3,000)	-
	Amount retained for capital expenditure
	Amount available for distribution		20,687	20,245	2.2	83,887	79,822	5.1
	(net of capex retention)	(c)	905	-	n.m.	(478)	-	n.m.
	Amount released/(retained) for COVID-
	19 related relief measures
	Distributable income to Unitholders	(d)	21,592	20,245	6.7	83,409	79,822	4.5

Note(s):

1. The rollover adjustment in 2020 represented the difference between the taxable income previously distributed and the quantum finally agreed with the Inland Revenue Authority of Singapore ("IRAS") for the Year of Assessment 2018 and 2019. Differences have been adjusted under the rollover mechanism agreed with the IRAS.
2. An amount of S$3.0 million is retained for capital expenditure on existing properties each year.
3. As part of the S$1.7 million COVID-19 related relief measures for tenants announced in 1Q 2020. The retention sum will be released as and when the COVID-19 related support has been utilised and recognised in the Statement of Total Return.
4. Parkway Life REIT's distribution policy is to distribute at least 90% of its taxable income and net overseas income, with the actual level of distribution to be determined at the Manager's discretion.

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