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PERENNIAL REAL ESTATE HOLDINGS LIMITED
Annual Report 2015
BUSINESS REVIEW
HEALTHCARE BUSINESS
Overview of Presence
Perennial expanded its business into the healthcare
sector in China and is now invested in and co-manages
the Modern Hospital Guangzhou in Guangzhou, the
St. Stamford Plastic Surgery and Aesthetic Hospital and
the Chengdu Xiehe Home in Chengdu.
Key Developments in the Period
In July 2015, Perennial entered into a 40-60 JV with a
subsidiary of China Boai Medical Group (“
BOAI
”), one
of the largest private hospital and medical services
operators in China, to acquire, develop and manage
healthcare businesses in China.
The JV, St. Stamford International Medical (“
SSIM
”), will
focus on eight core medical fields at its hospitals and
medical centres, being (1) Oncology, (2) Fertility Medicine,
Obstetrics and Gynaecology (3) Plastic Surgery and
Aesthetic Medicine, (4) Orthopaedics, (5) Paediatrics,
(6) Ear, Nose, Throat and Eye Specialty Medicine,
(7) Dentistry, and (8) Cardiology and Cardiovascular Surgery.
SSIM also acquired its first operational medical business,
Modern Hospital Guangzhou, a leading private general
and cancer hospital from BOAI. Modern Hospital
Guangzhou has enjoyed steady YOY growth of 10% to
12% in Earnings Before Interest, Tax, Depreciation and
Amortisation since 2011. The in-patient bed capacity at
Modern Hospital Guangzhou is expected to be increased
from its current 246 to close to 300 following its upgrading
plans. Perennial’s 40% stake in SSIM amounted to
RMB286.7 million (approximately S$61.7 million).
SSIM has immediate access to BOAI’s existing portfolio
of over 100 hospitals in major cities and future acquisition
pipeline across China, as well as Perennial’s portfolio of
greenfield and/or completed integrated developments.
SSIM is therefore able to tap on BOAI’s local knowledge
and management expertise to expand rapidly and
steadfastly into the large China healthcare market.
Leveraging on its access to the pipeline of projects to
grow the business, SSIM leased a space of about
90,400 sq ft at PIHMH to operate the St. Stamford Plastic
Surgery and Aesthetic Hospital in Chengdu. The facility is
expected to commence operations by the first half of 2017.
In January 2016, Perennial further expanded its healthcare
business scope to include eldercare and senior housing
by entering into a Memorandum of Understanding
with Shanghai Summit Property Development Limited
(“
Shanghai Summit
”) and Shanghai RST Chinese
Medicine Co., Ltd (“
Shanghai Renshoutang
”) to
establish a 40-40-20 JV management company to
operate Chengdu Xiehe Home at Chengdu Plot D2.
Perennial and Shanghai Summit jointly-own (50-50)
Chengdu Plot D2. Shanghai Renshoutang is one of
the largest quality private eldercare home operators
in Shanghai. The JV’s total investment sum amounts
to approximately RMB150 million (approximately
S$32.3 million). Correspondingly, Perennial’s 40% stake
in the total investment sum amounts to RMB60 million
(approximately S$12.9 million).
The JV will master lease at least 914,000 sq ft in GFA on
Chengdu Plot D2 to operate the premium Chengdu Xiehe
Home. The Xiehe brand of eldercare and retirement home
is well-known as one of the top private senior housings
in Shanghai catering to middle-to-upper income customers.
For a start, Chengdu Xiehe Home will be housed in three
of the six blocks on Chengdu Plot D2, with subsequent
phases to be rolled out to the remaining blocks at a later
stage. Chengdu Xiehe Home, which will have a capacity
of about 3,000 beds in the first phase, will comprise a
Retirement Home (for occupants who are independent),
a Nursing Home (for occupants who require round-the-
clock professional continuing care) and a Rehabilitation
Home (for occupants who require special care, such
as medical treatment or rehabilitation). Chengdu Xiehe
Home is expected to commence operations in 2017.
Strategic Priority in 2016
This year, Perennial will actively continue to explore
strategic partnerships with established local and
international medical and healthcare-related operators
in China who have extensive local and international
networks to scale the business and offer a wider range of
offerings. Perennial is committed to growing its presence
in key gateway cities to ride on China’s rising healthcare
consumption demand.
Besides growing in scale, Perennial is also committed
to work with its partners to improve the quality of the
offerings by bringing in international best practices and
the latest technology to enhance our hospitals and senior
housing projects. This will enable Perennial to lead in the
evolving private healthcare market, and offer better care
for its customers and patients.
