SINGAPORE (Apr 30): ParkwayLife REIT (PLife REIT) on Apr 26 announced a DPU of 3.28 cents for 1Q19, 3.5% higher compared to the 3.17 cents DPU for 1Q18.
See: ParkwayLife REIT reports 3.5% rise in 1Q DPU to 3.28 cents
This was the result of a 3.5% rise in distributable income to $19.8 million mainly led by contribution from a Japan property -- Konosu Nursing Home Kyoseien -- acquired in 1Q18, rental growth of existing properties, and financing cost savings.
Gross revenue for the quarter rose 2.1% y-o-y to $28.4 million, bringing net property income to $26.5 million, 2.2% higher than the previous year.
In addition, the REIT has managed to refinance all its JPY debt due in 2020 and extended its debt maturity profile to 2025, as well as reduced its all-in-cost debt to 0.91%.
About 88% of its interest rate exposure is hedged while its net income in JPY is fully hedged till 1Q23.
PLife REIT’s gearing also remained healthy at 36.4%, offering a debt headroom of about $295.4 million to finance acquisition before gearing hits the 45% regulatory limit.
UOB Kay Hian and CGS-CIMB Research expects this will provide ample debt headroom to pursue inorganic growth opportunities.
Currently, the REIT is looking for opportunities to acquire hospitals in developed and mature markets with many profitable hospital operators. It is currently focusing on the Malaysian and Australian markets.
In a Monday report, UOB lead analyst Jonathan Koh says, “PLife REIT benefits from growth in the healthcare industry due to ageing populations in Singapore and Japan.”
UOB is maintaining its “buy” recommendation on PLife REIT with a target price of $3.25.
“PLife REIT is resilient due to its long weighted average lease expiry (WALE) of 7.3 years. Its Japan assets have long lease structure with WALE of 12.6 years. Income visibility is highly valued given current uncertain macro outlook and volatility in financial markets,” adds Koh.
Meanwhile, CGS-CIMB has kept its “hold" call on PLife REIT with a target price of $3.05.
In a Friday report, lead analyst Lock Mun Yee says, “PLife REIT offers investors stable yield backed by its defensive income structure. It is currently trading at 1.57 times price-to-book and offers a total return of about 9.5%.”
As at 11.43am, units in PLife REIT are trading 1 cent lower at $2.88.
