Parkway Life REIT - The Safest S-REIT



Key Highlights:

  • Parkway Life REIT (SGX: C2PU)'s 3Q19 DPU grew 1.9%

  • The annualised yield and price to book ratio are 4.1% and 1.73 respectively


1. Dividends


Net property income was up 3.9% to $27.6m. The was mainly due to:

  • Higher rent from Singapore hospitals

  • One off insurance proceeds to reimburse the repair expenses of certain Japanese assets

  • Strengthening of JPY


The annualised yield is 4.1%. As a healthcare REIT, Parkway Life has been delivering very consistent results to the unit holders. Both the DPU and price has been in the uptrend over the years,


Source: reitscompass's REITs Insider ratings



2. Portfolio


Portfolio occupancy remains full at 100%. The portfolio leverage is currently at the healthy side of 37.2%. It maintains one of the lowest interest cost at 0.81%, with 88% of the loans are on fixed rates.


It is currently trading at a price to book ratio of 1.73.



3. Growth Catalyst


With no refinancing needs till 2020, Parkway Life REIT has a debt headroom of $274.9m before reaching the 45% gearing limits. It will help the REIT for future acquisitions.

While the long-term outlook is bullish for the healthcare sector, the REIT manager remains cautious on the market condition and volatility moving ahead.

Most of its properties are pegged with a Consumer Price Index linked formula, which provides some stability on its property income.


Summary


Parkway Life REIT is one of the most stable S-REIT, with low interest cost and high interest coverage. For investors who are looking for a 4% yield, Parkway Life REIT would be a potential consideration.



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