26 May 07 Parkway unveils Reit worth at least $765m Initial assets: Mt Elizabeth, Gleneagles, East Shore hospitals PARKWAY Holdings, the largest operator of private hospitals in Singapore, yesterday said that it will put all three of its hospitals here into a new real estate investment trust (Reit) worth at least $765 million. Parkway Life Reit will initially consist of Mount Elizabeth Hospital, Gleneagles Hospital and East Shore Hospital as well as adjoining medical and associated shops. The Reit will buy the properties, which are valued between $765 million and $775 million. Once the Reit is set up, Parkway will hold a stake of 30-45 per cent in it. Parkway, which is South-east Asia's biggest healthcare group by market value, intends to use the proceeds to acquire hospitals and healthcare assets in the region, said managing director Lim Cheok Peng. Some of the money will also be distributed as special dividends to shareholders and used to refinance debt, he said. 'The proceeds can be used to grow our business in Singapore, China and India,' Dr Lim said. 'Medical tourism will be a very strong impetus of growth for us.' In Singapore, Parkway is interested in bidding for new hospital sites that the government could release. Health Minister Khaw Boon Wan told Parliament earlier this year that Singapore is moving to expand its medical capacity to capitalise on the market for medical tourism, which involves selling more land to private hospital operators. It is widely expected that one or two sites will be put up for sale to private hospital operators such as Parkway soon. Parkway sees ageing populations and increasing affluence across Asia as growth opportunities. The company intends to look for acquisition opportunities together with the new Reit. 'While the Reit will initially consist of portfolio assets here, the intention is to diversify out of Singapore,' said Choo Oi Yee, Parkway's senior vice-president for strategic planning and business development. At the moment, Parkway has 10 hospitals in Malaysia, as well as a hospital each in Brunei, China and India. Each of these is a joint venture and cannot be immediately injected into the Reit. The three initial properties will be sold to the Reit on a leasehold basis. Gleneagles and East Shore each come with a 75-year reversionary lease, while Mount Elizabeth has a 67-year lease. Parkway intends to lease the properties back from Parkway Life Reit for an initial term of 15 years, with the option to extend the lease for another 15 years. For the first year, the rent paid will be at least $45 million, said Parkway. Shares of Parkway closed eight cents down at $4.50 yesterday. The stock has climbed 43.3 per cent since the start of the year.
25 May 07 PARKWAY HOLDINGS ESTABLISHES PARKWAY LIFE REIT
Parkway to sponsor the establishment of Asias largest healthcare REIT Proposed sale and leaseback of three landmark properties with Parkway Life REIT SINGAPORE, 25 May 2007 Parkway Holdings Limited (Parkway or the Group), one of Asias leading healthcare service providers, is pleased to announce its intention to sponsor the establishment of a real estate investment trust to be known as Parkway Life REIT. In connection with the establishment of Parkway Life REIT, Parkway will grant to Parkway Life REIT long-term leases in three properties, which are the Mount Elizabeth Hospital Property (a 67-year term), the Gleneagles Hospital Property (a 75-year term) and the East Shore Hospital Property (a 75-year term) (collectively, the Properties), for consideration in the form of cash and units. The aggregate consideration for the Properties will not be lower than S$765 million, and not more than what is permitted under the Property Funds Guidelines (issued by the Monetary Authority of Singapore ("MAS") as Appendix 2 to the Code on Collective Investment Schemes). In conjunction with the long-term leases in the Properties, Parkway intends to lease the Properties back from Parkway Life REIT for an initial term of 15 years, with an option to extend the lease for a further term of 15 years. Furthermore, it is proposed that Parkway Trust Management Limited (currently known as PHR Management Pte. Ltd.), a wholly-owned subsidiary of the Group be appointed the manager of Parkway Life REIT. The proposed transactions will be subject to shareholders approval at an extraordinary general meeting to be convened. The establishment of Parkway Life REIT will create an integrated and synergistic platform that will spur the acquisition of hospitals and healthcare-related assets in the region, thus enabling Parkway to expand its footprint and position the Group for potential growth in the healthcare sector across Asia Pacific, said Dr Lim Cheok Peng, Managing Director of Parkway. Parkway intends to use the net proceeds from the disposal of the Properties to pursue investment opportunities in the Asia-Pacific healthcare markets, distribute 2 special dividends to shareholders, refinance existing debt obligations and/or general corporate and working capital purposes. Additionally, Parkway will retain a stake in Parkway Life REIT, allowing the Group to enjoy steady and growing distributable income as the REITs strategy is to pursue yield accretive acquisitions in the Asia-Pacific region.
Parkway hires banks for hospital Reit PARKWAY Holdings, South-east Asia's biggest healthcare group by market value, has hired Citigroup and UBS to arrange the listing of a Singapore property trust based on its hospitals, sources close to the deal said. The initial portfolio would contain Parkway's three hospitals in Singapore, which earned a combined S$356 million in revenue last year. 'The banks were mandated as arrangers,' one source said, adding that 'the IPO (initial public offering) could happen before August', said a source close to transaction. Singapore's biggest bank, DBS Group Holdings, is also expected to join the deal as an arranger. Parkway could not be reached for comment. In February, Parkway said it may divest the three hospitals into a real estate investment trust or Reit when it finds a substantial acquisition target. Earlier this month, the firm said it would expand its foothold in China through organic growth and acquisitions. The Reit would be Singapore's second property trust based on hospital assets following the listing in December of First Reit by the Lippo Group, controlled by Indonesia's Riady family. - Reuters
