Parkway Life REIT

Parkway Life REIT: Parkway Life REIT 3Q15 came in line with distributable income and DPU both up 15.6% y/y to $18m (-11.2% q/q) and 3.36¢ (-0.3% q/q), respectively, boosted by partial distribution of divestment gains from the sale of seven Japan properties in Dec '14.

Gross revenue and NPI grew steadily to $26m (+2.5% y/y, +1.4% q/q) and $24.3m (+2.4% y/y, +1.7% q/q), on contribution from higher rent from Singapore properties, consisting Gleneagles Hospital, Mount Elizabeth Hospital and Parkway East Hospital.

However, the gains were partially offset by the depreciation of the Japanese Yen.

Portfolio occupancy remained at 100% with WALE of 9.39 years, while aggregate leverage rose to 35.8% (1.7ppt q/q) with all-in cost of 1.5% and debt tenor of 3.7 years.

Going forward, the reit expects to continue to reap benefits from robust demand for private healthcare services, supported by favourable rental lease structures, where at least 93% of its Singapore and Japan portfolios have downside revenue protection and 64% of the total portfolio is pegged to CPI-linked revision formulae, ensuring steady future rental growth.

Among the three healthcare REITs listed on SGX, Parkway Life is trading at a premium with an indicative yield of 5.1% and 1.4x P/B, compared with First REIT's 6.8% yield and 1.2x P/B, and Religare Health Trust's 7.1% yield and 1.1x P/B.