Wednesday, July 29, 2015

Parkway Life REIT

Parkway Life REIT: 2Q15 distributable income and DPU jumped 15.6% y/y to a quarterly high of $20.3m and 3.35¢ respectively, primarily lifted one-off gains of $2.3m from the divestment of seven Japanese properties in Dec '14. Stripping these out, normalised distributable income would show a 2.6% growth.

Gross revenue and NPI edged higher to $25.6m (+1.2%) and $23.9m (+1.5%) respectively, buoyed by higher rental from Singapore portfolio and its recently recycled Japanese assets, completed in Mar '15. It also recorded a $1.3m FX gain which arose from its hedging of net Japanese income.

Overall occupancy remained at 100%, benefitting from committed master tenants, backed by its long weighted average lease to expiry of 9.53 years.

While aggregate leverage and all in cost of debt held steady at 34.1% and 1.5% respectively, the REIT has refinanced its loans and extended its debt tenor to 4.0 years from 3.6 years in the previous quarter, whereby 78% of its interest rate exposure is now fixed.

Going forward, PLife will continue to reap benefits from the master lease of its Singapore hospitals which has a built-in minimum rental step-up of 1% annually. In addition, the trust plans to consolidate its Japanese assets for greater operating and cost synergies.

The REIT’s enlarged portfolio of 47 high quality assets places it in a favourable position to capitalise on the robust growth of the healthcare industry in Asia.

The healthcare REIT trades at an annualised 2Q15 yield of 5.7% and 1.4x P/B.

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