Perennial Real Estate Holdings' profits slid 22.2% to $78.06m in 2018

Steep finance costs following the consolidation of Capitol Singapore’s debt hit earnings.

Perennial Real Estate Holdings (PREH) ended 2018 on a dismal note as its profits dropped 22.2% YoY to $78.06m from $100.23m, an announcement revealed. Revenue however edged up 5% YoY to $78.26m from $74.51m.

In Q4, profits crashed 42% YoY from $27.59m to $15.99m, whilst revenue climbed 43.6% YoY to $22.96m from $15.98m during the same period in 2017.

The drop in profits for FY18 was blamed on the absence of divestment gain, higher finance costs arising from the consolidation of Capitol Singapore’s debt post-acquisition of the 50% stake to take full ownership of the asset, on top of new loans to fund investments, higher interest rates and the non-capitalisation of interest expenses for Perennial International Health and Medical Hub (PIHMH) in Chengdu.

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FY18’s strong revenue performance was attributed to the consolidation of revenue from Capitol Singapore with new revenue stream from PIHMHM which was r partially offset by the absence of revenue from TripleOne Somerset and lower management fee post-sale of its 20.2% equity stake in FY17.

“FY18 marked a new and exciting chapter on many fronts ranging from the launch of PIHMH, acquisition of two new high-speed rail (HSR) projects in Tianjin and Kunming by the Perennial-led healthcare joint venture, to the acquisition of the remaining 50% stake in Capitol Singapore to take full ownership of the prime property,” PREH’s CEO Pua Seck Guan said in a statement.

In 2018, PREH focused on its core markets in China and Singapore which constituted approximately 65% and 34% of total assets, respectively.

In China, the firm continued to pursue its asset-light healthcare services business with its portfolio of total operating beds leaping 64.6% to reach 6,381 in-patient beds from 3,877 in 2017. “The increase was mainly driven by Renshoutang, the Group’s eldercare and senior housing business arm, which added 2,350 in-patient beds to the portfolio,” the firm explained.

To-date, Renshoutang has secured a committed pipeline and potential pipeline of beds of over 9,650 and 13,500, respectively.

“Going forward, the Group will continue to focus on two main healthcare business lines, being Hospitals and Medical Centres, and Eldercare and Senior Housing, to drive the implementation of the Group’s integrated real estate and healthcare strategy in China,” PREH said.