First Ever Equity Fund Raising By ParkwayLife REIT

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So, the magic has been broken.  Since its Initial Public Offering (IPO), ParkwayLife REIT (PWLR) has pride itself as the only REIT that has not launched any equity fund raising of any sorts, be it private placement or preferential offering.  

However on 22nd October 2024, PWLR announced its first ever equity fund raising via public placement to acquire 11 freehold nursing homes in France, with 100% committed occupancy.  For quite some time, the manager has already planned to expand their strategic foray into a new third pillar besides Singapore and Japan, as a form of diversification to concentration risk and forex risk.  Therefore, this announcement came as no surprise (though investors were hoping that the manager decides to buy over a part of Mount Elizabeth Novena Hospital).

As the largest REIT holding in my portfolio, it is crucial that I take an in-depth understanding of this acquisition, and take a look at how this is beneficial to PWLR in the longer term, which in turn helps to boost my returns via improvements in distribution per unit (DPU).  As I am not financially trained, I will let PWLR's "Investor Presentation" do the talking to prevent any misinterpretation of any information or data by me.


So with all the promising information and data points regarding the acquisition, as a long-term investor in PWLR, it is also crucial for me to know how this acquisition will benefit investors like myself in the form of DPU, and how this acquisition will impact the financials of the REIT.

Based on the information presented, it is no doubt that the acquisition is beneficial to the REIT in the long run, and in turn, beneficial to investors like myself in the longer term too.  However, one downside is that retail investors like myself is unable to participate in this fund raising exercise to accumulate more shares at a discount to market price (fixed at SGD 3.80 per share), because PWLR decided to carry out this equity fund raising via private placement, which is only available to accredited investors and clients of bookrunners for this placement, namely Development Bank of Singapore (DBS), Oversea-Chinese Banking Corporation (OCBC) and HongKong and Shanghai Banking Corporation (HSBC).

So for interested investors and supporters of this acquisition deal like myself, probably the only way we can participate in this is to purchase shares in the open market to minimize any share dilution.  However, on a happier note, due to this private placement, there will be an advance distribution for the period 1st July 2024 to the day immediately preceding the date of issue of the new units pursuant to the private placement.  The quantum of distribution per unit in PWLR is currently estimated to be between SGD 0.048 to SGD 0.052.  So this will be one event that I can look forward to, to boost my dividends in 4th quarter of 2024, payable on 26th November 2024.  However, this will also mean that my dividends in 1st quarter of 2025 (which is the usual date of semi-annual dividend payout by PWLR) will be much lower than expected due to the lower distribution by PWLR (and CICT) as a result of their respective advance distribution because of their equity fund raising.

All in all, I am supportive of this fund raising by PWLR, and will definitely be even more supportive of any equity fund raising PWLR intends to carry out for the future acquisition of a stake in Mount Elizabeth Novena Hospital.  I shall hope that the manager continues to perform with investors' interest at heart, so that the performance of PWLR can continue to improve in the years ahead, both in terms of share price and in terms of DPU.  Barista FIRE, here I come...!

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