Perennial Holdings: Refinancing risk remains despite promise of healthcare ramp-up

• Perennial is supported by a sizeable real estate and healthcare asset base across Singapore and China.
• FY25 revenue improved, though quality of revenue was mixed as it was helped by lumpy property development sales.
• Perennial’s strategic focus on the healthcare segment could offer longer-term upside, but remains in a transition phase, and requires strong execution over several years.
• We remain mindful of weak cash flow, short maturities, pledged assets and JV look-through debt.
• We think Perennial’s bonds are only suitable for investors comfortable with an issuer with higher leverage. Among Perennial’s bonds, we prefer the 2028 bonds, as longer tenors offer limited additional yield for the added risk.

About Perennial Holdings

Perennial Holdings Private Limited (‘Perennial’) is an integrated healthcare and real estate company. Its portfolio spans over 29,000 medical and eldercare beds, alongside more than 85 million square feet of real estate across China, Singapore, Malaysia, and Indonesia.

Its business model is primarily built around synergies between its healthcare and real estate divisions, with management believing there are strong demographic and structural policy tailwinds behind China’s healthcare sector. Its healthcare-centric transit-oriented developments (TODs) combine transport-linked real estate with medical care, eldercare, hospitality, retail and residential components, creating potential synergies across patient catchment, operating infrastructure and asset monetisation. Nonetheless, Perennial also has non-healthcare-related properties in its portfolio, such as The Skywaters and Golden Mile in Singapore.

This makes Perennial a slightly more complex business than a typical developer or REIT-style landlord. It derives revenues from rental income, property development sales, asset management fees, and occasional asset recycling, as expected from a real estate player. However, it also makes a growing share of revenue from providing healthcare services.

Significant revenue improvement in FY25 driven by property development and healthcare

Perennial’s revenues rose 54% y/y to $179m in FY25, driven mainly by property development sales and its healthcare ramp-up. We look at its revenue breakdown in two ways: (i) by statutory revenue as reflected over the past few years (Chart 1); and (ii) an alternate operating segment breakdown newly defined by Perennial (Table 1). Management introduced this alternate approach in FY25 to better reflect its healthcare-led strategy.

On a statutory basis, the largest driver was $54m of property development sales (FY2024: nil), mainly from its Eden Residences Capitol development. However, from a credit perspective, we note that property development sales are inherently lumpy as they are tied to handover recognition; in other words, the $54m uplift is not necessarily ‘recurring’ income for Perennial.

Property rental income remains Perennial’s most stable revenue line, but it dipped -7% y/y to $79m. Management segment commentary suggested this weakness was likely driven by China retail assets, where revenue fell amid a weaker Chinese market and lower contribution during asset enhancement works. This was partly offset by improved rental income from Perennial Business City in Singapore. Overall, Perennial’s alternate segmental breakdown tells a similar story, where Singapore revenue rose +141% y/y, and China revenue fell 46% y/y (Chart 2).

(Excluding $54m of property development sales, Singapore revenue would still have grown +17% y/y.)

Healthcare is still a strategic growth driver, and FY25 showed a sharp ramp-up in healthcare services. Under statutory reporting, healthcare services revenue increased significantly to $21m in FY25 (FY24: $1m). Under the new segmental breakdown, healthcare revenues (including TODs) rose +118% y/y from $17m to $37m. Effectively, this means the growth was driven almost entirely by healthcare services amid its ramp-up, rather than by property or hospitality revenue within the healthcare-centric TODs.

Overall, FY25 revenue growth was positive but mixed in quality. The upside is that Perennial is showing early traction in China healthcare, while Singapore also supported headline growth. Nonetheless, a large part of FY25’s revenue increase came from lumpy development sales, while the recurring property rental line faced headwinds from China retail. To us, the key question is whether the healthcare segment can scale further into another source of recurring revenues and cashflow.

Chart 1: Perennial revenue breakdown (statutory reporting)

Table 1: Perennial revenue breakdown (operating segment)

Earnings weakened despite stronger revenue

Despite the strong 54% revenue increase, FY25 earnings deteriorated sharply. Gross profit fell -17% y/y to $49m in FY25, implying gross margin compression from 51% to 28%. EBIT turned negative to -$14m in FY25 (FY24: $187m) – we discuss the main segmental drivers below (Table 2).

The primary drivers were non-cash and non-recurring in nature, including two items recorded in FY24 that were not repeated in FY25, namely: (i) a fair value gain of $114m for Capitol Singapore; and (ii) a one-time $50m tax provision reversal. These led to significantly lower EBIT in the Singapore segment, though Singapore EBIT would have increased +44% y/y without these two items.

Healthcare EBIT, including healthcare-centric businesses, saw losses worsen to -$33m in FY25 (FY24: -$25m). Management disclosed that healthcare EBITDA would have been positive ($15m) on a proportionate consolidation basis. This is not directly comparable with reported EBIT as it excludes depreciation and also includes Perennial’s proportionate share of healthcare businesses held through JVs. Nonetheless, it suggests that some parts of the healthcare platform may be closer to operational breakeven than the reported EBIT loss implies.

(Note: Management’s proportionate estimate only covers EBITDA, but the reported segmental breakdown was for EBIT instead.)

Share of associates and JVs also moved against Perennial, swinging from a $67m profit in FY24 to a -$7m loss in FY25, despite revenue improvements. Renshoutang, a key eldercare JV, remained profitable but contributed less (FY24: $33m / FY25: $16m); some other JVs like PRE 13 (-$27m loss), GMC (-$11m loss), and PHCH (-$2m loss) delivered losses after tax. This suggests that while parts of the healthcare platform may be scaling at the revenue / EBITDA level, this has not yet translated consistently into bottom-line profitability across the broader JV portfolio.

Overall, Perennial’s FY25 net profit after tax deteriorated significantly, sliding to a loss of -$161m (FY24: $21m profit). These reflected the lower gross profit & EBIT, and negative share of associates and JVs mentioned above, though lower finance costs helped to mitigate the profit hit (Table 3).

Table 2: EBIT breakdown by segment

Table 3: Profit bridge from revenue to PAT

Outlook: Strategically improving, but some way to go

Perennial’s profit outlook is expected to improve as healthcare assets ramp up, though we do not expect a quick return to strong profitability. Its largest strength lies in the strong operating momentum thus far, including the full launch of Perennial Healthcare City Tianjin in FY25, and the commencement of operations elsewhere (e.g. Kunming). Management has also guided for a rapid expansion, targeting to open more than 10 hospitals across 2026 – 2027. Over time, this healthcare revenue could become more recurring in nature and support the quality of Perennial’s earnings.

Nonetheless, this healthcare ramp-up is subject to execution risks, and may also involve near-term headwinds as more capex may be required for the ramp-up. For instance, Perennial Healthcare City Tianjin has commenced operations for 1,100 eldercare beds compared to its 1,700 bed capacity, while average occupancy remains at 40% as at December 2025. We also expect its upcoming expansion pipeline (e.g. 10 hospitals in 2026 – 2027) to incur initial start-up costs. The weaker JV contribution despite higher healthcare revenue supports the point that business growth may not translate immediately into higher profits.

While Perennial ramps up its healthcare segment, we expect its property rental business to remain an important earnings stabiliser. It remains Perennial’s largest statutory revenue line at $79m in FY25, or 44% of group revenue. Its Singapore assets also continue to display positive momentum, helped by its portfolio of iconic properties including Golden Mile Singapore and Capitol Singapore.

Overall, we believe Perennial’s profit outlook remains gradual and uneven. In a positive scenario, Perennial is able to maintain sustained growth in its healthcare segments, while working toward narrowing losses and ultimately accounting profitability. However, for now, Perennial’s earnings profile remains a transition story: for us to become more constructive, healthcare revenue needs to translate into narrower EBIT losses and stronger cash conversion, not just higher reported revenue.

Weak cashflows amid ramp-up

Perennial’s underlying cashflows remained weak, primarily bridged through debt and shareholder support in FY25. This was clearest from the $338m in financing cash inflows reported in FY25, supported by another year of capital injections and capital contributions totalling $143m (FY24: $138m), as well as net proceeds from additional loans and borrowings totalling $376m in FY25 (FY24: $41m).

Operating cash inflows stood at just $5m (FY24: $20m) after working capital. This was not surprising considering the backdrop of weaker EBIT and profitability highlighted above, despite a partial offset from non-cash items like fair value changes. Meanwhile, investment cash outflows remained heavy at -$325m (FY24: -$106m), reflecting Perennial’s ongoing healthcare build-out pipeline.

Importantly, free cash flow (FCF) remained materially negative in FY25 (Table 4). Operating cashflow was only $5m, versus $222m of capex on investment properties, resulting in FCF of -$218m. Our expanded FCF measure including $67m in acquisitions suggests a deeper cash burn of close to $300m. Altogether, coverage remains extremely thin, with operating cash flow coverage at 0.03x, and free cash flow coverage negative.

(We include acquisitions in our expanded FCF calculation because they relate to the ongoing healthcare growth build-out, which is expected to persist for some time.)

Overall, we believe Perennial is in a period of transition, and bondholders should be prepared for continued weak cashflows in the near-term while the healthcare ramp-up is ongoing. We would need to see the healthcare ramp-up translating into significantly improved cashflows before turning more positive in this area.

Table 4: Negative free cash flow and weak cashflow coverage

One of the more leveraged issuers within the SGD space

Gearing ratios are on the higher side

We see Perennial as a more leveraged issuer within the SGD issuer space. At end-FY25, we estimate Perennial had net debt of $3,705m compared with total equity of $4,167m, implying a net-debt-to-total-equity (gearing) ratio of around 0.89x (end-FY24: 0.74x). Similarly, its net-debt-to-total assets ratio worsened to 0.42x (end-FY24: 0.38x) (Table 5).

Our estimate (0.89x) is more conservative compared to Perennial’s reported net gearing of 0.83x at end-FY25, as we include lease liabilities and exclude restricted cash. However, the direction is similar: both our and Perennial’s estimates indicate that gearing worsened in FY25. Furthermore, we note that Perennial’s reported net gearing ratio generally sits at he higher end compared to other SGD property issuers (Table 6).

Table 5: Net debt ratios generally worsened in FY25

Table 6: Net gearing comparison across SGD property issuers

Headline debt levels may not include JV-level debt

The reported ratio also does not fully capture Perennial’s equity-accounted JV debt. Under standard accounting, Perennial records associates and JVs as a net investment asset, rather than consolidating their gross debt and assets line by line. This means reported debt excludes project-level debt sitting inside these JVs. Based on Perennial’s disclosures, we estimate its associates and JVs held about $3,125m of underlying debt at end-FY25, or around $1,209m on a proportionate basis. After adjusting for Perennial’s proportionate share of JV net debt, we estimate that adjusted (look-through) net gearing would remain above 1.0x.

We acknowledge this is a more conservative estimate than usual, as JV debt is not equivalent to Perennial debt. However, it remains credit-relevant because JV refinancing, shareholder-loan recovery and future equity support can still affect Perennial’s credit profile. The $2,614m total guarantees provided by Perennial reinforce this point, although the company does not split guarantees between subsidiaries and JVs. The subsidiary portion is likely already linked to reported Group debt, while the JV portion would represent incremental contingent exposure.

Much of asset base already pledged

Perennial disclosed it had about $4,621m of assets pledged or charged, comprising investment properties, development properties, and cash. This represents around 83% of its property + cash holdings, or 53% of total assets (including JVs and associates) (Table 7).

While pledging is standard for property-heavy issuers, the 83% figure indicates a meaningful level of encumbrance. This limits future secured borrowing headroom (e.g. to fund more capex for its healthcare expansion) and weakens recovery prospects for unsecured bondholders.

Table 7: Assets pledged by Perennial

Short maturity profile

Perennial’s short maturity profile adds an element of risk to its balance sheet. Its weighted average debt maturity was 1.82 years (as of end-December). In particular, it had $1,360m in current liabilities and $2,401m in non-current liabilities (both including leases), compared with just $56m in unrestricted cash. This creates a meaningful refinancing requirement for Perennial, especially considering future investment needs regarding its healthcare expansion.

Summary of balance sheet metrics

Overall, we consider Perennial’s balance sheet to be asset-backed but stretched. Net gearing is already on the higher side versus SGD issuer peers, especially after including look-through JV debt. Furthermore, high encumbrance and short average maturity reduce its financial flexibility. Until the healthcare expansion produces stronger recurring cashflows Perennial remains reliant on refinancing and asset recycling.

Final thoughts & bond comparison

To summarise, we think Perennial’s bonds are only suitable for investors comfortable with a higher-leverage, refinancing-dependent real estate issuer. Perennial’s profitability and cashflows are supported by its long-standing property rental and property development businesses, while its planned healthcare expansion represents significant promise but requires strong execution. Meanwhile, from a credit angle, its cashflow and coverage metrics looked fairly weak in FY25, while its balance sheet is also fairly levered, suggesting its credit profile still depends heavily on refinancing access and execution of its healthcare ramp-up.

We encourage selectivity on Perennial’s bonds. Perennial’s bonds offer higher yields than lower-levered property peers such as OUE and Frasers Property, and are broadly comparable with other higher-yielding SGD credits such as Aspial Lifestyle, IREIT Global and Thakral (Table 9). Between the different Perennial tenors, we would prefer the shorter-tenor 2028 bonds, as the yield pickup(s) for 2030 & 2031 bonds appear insufficient to compensate for heightened maturity risks.

Table 9: Bond comparison (Perennial bonds bolded)

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds positions in TSHSP 7.500% 02Nov2027 Corp (SGD). The analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.