Parkway Life REIT Review @ 1 February 2021

Basic Profile & Key Statistics

Parkway Life REIT (PLIFE) is a healthcare REIT that invests mainly in hospitals, medical centres and nursing homes. PLife owns 54 properties across Singapore, Japan and Malaysia.

Performance Review

Gross revenue and NPI increased YoY by 9% and 4.2% respectively due to contributions from properties acquired in 4Q 2019 and 4Q 2020 as well as upward rent revision. Distributable income and DPU both increased by 6.7% YoY. 

Lease Profile

• Occupancy is high at 99.7%.
• WALE is long at 5.74 years where the highest lease expiry of 57.4% falls in 2022.
• Weighted average land lease expiry is slightly long at 73.65 years.

Debt Profile

• Gearing ratio is moderate at 38.5%.
• Cost of debt is low at 0.53%.
• Fixed rate debt % is high at 87%.
• All debts are unsecured debts.
• WADE is long at 3.5 years where the highest debt maturity of 29% falls in 2022.
• Interest coverage ratio is high at 18.1 times.

Diversification Profile

• Top geographical contribution is moderate at 57.4%
• Top property contribution is high at 36.8%.
• Top tenant contribution is high at 57.4%.
• Top 10 tenants contribution is high at 85.3%.

Key Financial Metrics

• Property yield is moderate at 5.6%
• Management fees over distribution is moderate at 15.2% in which unitholders receive S$ 6.58 for every dollar paid.
• Distribution on capital is high at 4.3%
• Distribution margin is high at 69%.

Trends

• Uptrend - DPU, NAV per Unit, Interest Coverage Ratio
• Flat - Distribution Margin
• Slight Downtrend - Property Yield, Distribution on Capital

Relative Valuation

• Dividend Yield - Past 4 quarters DPU @ 13.79 cents / average yield @ 4.6% = S$ 3.00
• Price/NAV - NAV @ S$ 1.956 x average P/NAV @ 1.59 = S$ 3.11

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
Long WADE
High Interest Coverage Ratio
High Distribution on Capital
High Distribution Margin
DPU Uptrend
NAV per Unit Uptrend
Interest Coverage Ratio Uptrend

It is another solid quarter performance by PLIFE. Few days after the result release, PLIFE has announced to divest the Matsudo property which is a pharmaceutical product distributing and manufacturing facility. This property contributes 3.3% of Japan's gross revenue, which is around 1.4% of total gross revenue. The sales price of S$ 37.1 million is 12% above the purchased 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 the 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.