ParkwayLife REIT: 2Q10’s DPU works out to 2.09 cents, up from 1.89 cents a year back, mainly boosted by contributions from the Japan acquisitions and higher rent from existing properties in Singapore. Q2 . At half year, PREIT posted $25.1m in distributable income, which is 50% of our house's full year forecast. We expect a stronger 2H as the minimum guaranteed rent for its Singapore hospitals is set to increase by 2% and the two Japan acquisitions in June and July will contribute to revenue.
PREIT’s enlarged portfolio of 32 properties has a committed occupancy of 100% and a weighted average lease term to expiry of 13.6 years, which underpins the defensive nature of its income. Gearing level has risen to 34.4%, factoring in its July acquisitions. We estimate PREIT has debt headroom for only $121.5m before reaching 40% gearing. Hence, any potential major acquisition is likely to be funded by debt and equity. Kim Eng has a BUY rating with TP of $1.64.
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