Parkway Life REIT

Parkway Life REIT: 3Q13 distributable income and DPU each rose 3.5% y/y to $16.1m and 2.66cts, respectively, on the back of yield accretive Japan and Msian acquisitions, higher rent from existing properties and positive effect of its net income hedge. Net property income however, declined 2.4% to $21.8m, primarily due to a weaker yen which more than offset recognition of rental income from new properties acquired during the quarter, as well as higher rent from the Spore properties. Bolstered by successful policies under Abenomics, mgt notes Japan’s recovering economy bodes well for the group’s growth plans. In Jul and Sep, the group purchased a total of 7 nursing home properties in Japan for an aggregate $82.3m, with attractive net property yield of ~7%. This brings PLife’s total properties in Japan to 40, amounting to $485.6m as at Sep ’13. Overall, as Asia’s population ages and becomes more affluent, mgt sees robust demand for quality private healthcare services that will drive the group’s expansion. As part of its efforts to strengthen balance sheet, PLife has been proactively lengthening its debt maturity profile, by pre-emptive terming out its FY14 debt for the next 4-5 yrs, to eliminate near term refinancing risks. As at 3Q13, PLife’s gearing level stood at 35.2%. PLife trades at 1.5x P/B, and offers 4.4% annualized 3Q13 yield, a premium to its smaller peer, First REIT at 1.2x P/B, 6.4% yield.