ParkwayLife REIT's (PLife REIT) gross revenue in 1QFY2026 for the three months to Mar 31 declined by 2.1% y-o-y to $38.2 million mainly due to JPY FX depreciation and lower rental income from the Japan portfolio due to tenant exit affecting five Japan nursing home properties, partially offset by contributions from the Singapore properties. Net property income (NPI) declined by 2.7% y-o-y to $35.85 million. Distributable income rose by 15.1%, largely attributed to Singapore hospitals following the cessation of the three-year rent rebates and the rent review formula kicked in. In addition, the France properties with step-up lease arrangements also contributed to higher distributable income in 1Q2026.
As the REIT has hedged its net income from Japan, the drop in revenue will be compensated by the FX gains from the settlement of the forward contracts. Hence DPU grew by 15.1% y-o-y to 4.42 cents but it will be paid in 1H2026.
One of PLife REIT’s Japan tenants, Miyako Group, entered liquidation proceedings due to financial challenges. The rental income from these properties represents approximately 1.6% of the FY2026 portfolio gross revenue. The security deposits of 4 to 8 months held are largely sufficient to offset outstanding rental obligations, significantly mitigating downside risk. Actions to re-possess the five properties in Osaka to safeguard landlord rights while preserving flexibility to pursue re-leasing or alternative asset strategies are underway. Leasing discussions for the properties are ongoing.
PLife REIT’s manager says the repossession has unlocked value-creation optionality, including asset rejuvenation, upgrading operator quality, lease restructuring with built-in rental escalations, and potential divestment, consistent with the manager’s portfolio optimisation strategy
PLife REIT’s Sustainable Financing Framework was established in early 2026. The REIT issued its inaugural 5-year $70.0 million fixed-rate green bond at 2.103% p.a. and secured a maiden 10-year JPY8.8 billion (approximately $70.9 million) social loan. This has extended weighted average debt term to maturity from 3.0 years to approximately 3.8 years.
Income FX risk is mitigated with JPY and EUR net income hedges put in place till 1Q2029 and 1Q2030 respectively with about 96% of interest rate exposure hedged.
See also: MLT's 4Q2026 DPU fell 7% y-o-y while FY2025's DPU fell by 9.8%
The all-in debt cost in 1Q2026 is 1.66%, with interest cover at 8.4 times. Aggregate leverage as at Mar 31 stood at 34.2%.
