Is Parkway Life REIT (SGX: C2PU)'s 3.5% Yield A Good Deal

Source: Parkway Life REIT's website

Parkway Life REIT (SGX: C2PU) has recently announced its third-quarter 2020 financial results. It is trading at 3.5% dividend yield based on its last traded of $3.91 on 13 Nov.

Key Highlights:

  • Distribution per unit (DPU) and Dividend Yield (3.5%)

  • Price to book ratio (2.1)

  • Gearing (38.6%)

  • Portfolio Occupancy (99.7%)

  • Interest coverage ratio (17x)

  • Growth catalyst

Background of Parkway Life REIT

Parkway Life REIT is one of Asia’s largest listed healthcare REITs, which owns and manages 53 properties in Singapore, Japan, and Malaysia. In Singapore, Parkway Life REIT operates Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital.

1. Distribution per unit and dividend yield

Its net property income grew 2% to $28.1m. This was mainly due to the contributions from three Japan nursing rehab facilities acquired last year, higher rental from the Singapore properties as well as the appreciation of JPY.

Based on its latest price, the REIT is currently trading at about 3.5% dividend yield. Historically, the REIT has been delivering strong performance with increasing DPU over the years. The average yield was 4.96%.

2. Price to book ratio

Over the past 5 years, Parkway Life REIT has been trading at an average price to book ratio of 1.44. The recent price appreciation has increased the ratio to 2.1, indicating a 45% overvalued based on its historical valuation.