As Parkway Life REIT registered another quarter of growth in the 2QFY2021 ended June, CGS-CIMB Research analysts Lock Mun Yee and Eing Kar Mei have kept “add” on the REIT with an unchanged target price of $5.05.
See: Parkway Life REIT posts 0.7% higher 2Q21 DPU of 3.38 cents; 4% higher 1H21 DPU of 6.95 cents
The REIT’s 1HFY2021 distribution per unit (DPU) of 6.95 cents stood within their expectations at 49.2% of their FY2021 forecast, they write in a July 27 report.
The analysts have also kept their DPU estimates for the FY2021 to FY2023 unchanged.
“We like Parkway Life REIT for its stability, backed by its defensive income structure with inbuilt escalation features,” they write.
“Potential re-rating catalysts include accretive acquisitions, while downside risks include deflationary periods, whereby Singapore rent revisions would revert to 1%,” they add.
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In addition, Lock and Eing say they expect to see a h-o-h increase in the REIT’s Japan rental income from its recent purchases of two nursing homes in July.
“These properties are expected to add $3.2 million (around 6.6%) of gross rental income to Parkway Life REIT’s Japan income stream. Parkway Life REIT’s balance remains robust with a gearing of 37% at end 2QFY2021 and weighted average debt maturity of 4.1 years. Assuming a 45% gearing limit, Parkway Life REIT has further debt headroom of $292.4 million to fund potential new purchases,” they say.
Units in Parkway Life REIT closed flat at $4.69 on July 28, or 2.38 times P/BV, according to CGS-CIMB’s estimates.
