In connection with the Master Lease Agreement, and the proposed capital expenditure of $150 million to upgrade the properties (renewal capex), PLife REIT’s sponsor IHH Healthcare will grant the REIT a right of first refusal for Mount Elizabeth Novena Hospital Property for a period of 10 years. Mount Elizabeth Novena was valued at RM3.96 billion as at Dec 31, 2020.
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The renewal capex works will start in January 2023 and last for three years. The bulk of the renewal works is likely to be at Mount Elizabeth Hospital.
The New Master Lease Agreements will be for a term of approximately 20.4 years from Aug 23, 2022 to Dec 31, 2042. There is also an option to renew for a further 10 years from Jan 1, 2043 to Dec 31, 2052. This will provide a steady stream of quality rental income by ensuring 100% committed occupancy for the Singapore Hospitals over a long lease term. The Renewal Capex is part of the new agreement.
Yong Yean Chau, CEO of the manager says, “We are pleased to extend our longstanding strategic lease arrangement with our master lessee. With its extensive experience and repute, the Singapore Hospitals will continue to deliver quality operating performance, thereby underpinning the organic income growth of PLife REIT to deliver strong and stable distributions for the benefit of our Unitholders. More importantly, on an overall, the strategic arrangement marks a solid step in our growth journey and we look forward to further collaborations with IHH Healthcare.”
Kelvin Loh, managing director and CEO of IHH adds, “Our Singapore hospitals are top performers for the group as they provide world-class treatment and service, and generate strong, stable earnings even amid Covid-19. Partnering PLife REIT to extend the lease agreements for three of our hospitals in Singapore represents business continuity and operational stability for IHH Healthcare. They are key to IHH continuing to earn the trust of our patients, employees and shareholders. The $150 million in upgrades to our facilities will further enhance the top-notch service offerings we are known for and we look forward to collaborating closely with PLife REIT to ensure our Singapore operations remain positioned for future growth.”
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As at July 14, units in PLIfe REIT closed at $4.77, while shares in IHH closed at $1.80.
Photo: Parkway Life REIT
