Parkway Life REIT Analysis @ 12 November 2020

Basic Profile & Key Statistics

Parkway Life REIT (PLIFE) is a healthcare REIT that invests mainly in hospitals, medical centres and nursing homes. PLife owns 53 properties across Singapore, Japan and Malaysia.

Performance Review

Gross revenue and NPI increased YoY by 0.8% and 2% respectively. The increase is due to rental contributions from 3 Nursing Rehabilitation Facilities which were acquired in December 2019. Distributable income and DPU increased by 7.4% YoY, mainly due to interest cost saving.

Lease Profile

Occupancy is high at 99.7%. WALE is long at 5.94 years where the highest lease expiry of 57.6% falls in 2022. This 57.6% is for the 3 Singapore Hospitals. Weighted average land lease expiry is slightly long at 73.9 years.

Debt Profile

Gearing ratio is moderate at 38.6%. Cost of debt is very low at 0.54% even with 100% unsecured debt. Fixed rate debt is high at 88%. Interest cover ratio is high at 17 times. WADE is slightly short at 2.7 years where the highest debt maturity falls in 26.6%.

Diversification Profile

Singapore properties are from the same tenant which contributes 57.7% of PLIFE income. Top property and top 10 tenants contributions are high at 36.8% and 85.3% respectively.

Key Financial Metrics

Property yield is slightly high at 5.6%. Management fee is slightly less competitive in which unitholders receive S$ 6.58 for every dollar paid to the manager. Distribution on capital and distribution margin are high at 4.2% and 69.3% respectively. 

Trends

Uptrend - NAV per Unit, Interest Cover Ratio

Slight Uptrend: DPU

Flat - Distribution Margin

Sligh Downtrend - Property Yield

Relative Valuation

i) Average Dividend Yield  - Average yield at 4.72%,  apply the past 4 quarters DPU of 13.56 cents will get S$ 2.87. 

ii) Average Price/NAV - Average value at 1.55, apply the latest NAV of S$ 1.631will get S$ 3.01.

Author's Opinion

Favorable	Less Favorable
High Occupancy	Concentrated Lease Expiry
Long WALE	High Top Property Contribution
Low Cost of Debt	High Top Tenant & Top 10 Tenants Contributions
100% Unsecured Debt
High Interest Cover Ratio
Well Spread Debt Maturity
High Distribution on Capital
High Distribution Margin
NAV per Unit Uptrend
Interest Cover Ratio Uptrend

PLIFE performance and fundamentals remain solid as per usual. It is the only SREIT that has never increase outstanding shares for 8 years (since 3Q 2012); there is no equity fundraising, no management fees in units, no SCRIP/DRIP in the recent 8 years. The recent inclusion in FTSE EPRA NAREIT Global Developed Index on 18 September has also boosted its share price to a new high of S$ 4.52 before it retracted back to the current price. 

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss, or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.