Highlights from Parkway Life REIT’s Latest Quarterly Earnings Release

Parkway Life

Parkway Life REIT (SGX: C2PU) is a real estate investment trust which owns healthcare and healthcare-related properties in Singapore, Japan, and Malaysia. In all, it has some 47 properties in its portfolio and counts Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital under its banner in Singapore. The REIT offers some 730 beds in our island.

With the release of its second quarter earnings yesterday, let’s see how it fared. The REIT’s gross revenue for the quarter rose 12.2% year-on-year to S$25.3 million as higher rent from its Singapore-based hospitals and contributions from its acquisitions (properties in Japan were acquired in the second half of 2013 and the first quarter of this year) lent a helping hand.

Consequently, Parkway Life REIT’s net property income had increased by 12% year-on-year to S$23.6 million. The growth allowed the REIT to announce a record-high quarterly distribution of S$0.029 per unit, which represents a 10.2% increase compared to a year ago. With Parkway Life REIT’s current unit price of S$2.41, investors would be getting an annualised distribution yield of 5%.

It is notable that the REIT’s distribution per unit (DPU) had grown by a cumulative 70.9% from 2007 (the year the REIT got listed) to 2013.

On a half-year basis, Parkway Life REIT’s revenue went up 9.5% to S$49.9 million while net property income increased around the same rate to S$46.6 million. DPU came in 8.5% higher to S$0.0572 per unit.

As of 30 June 2014, Parkway Life REIT’s gearing ratio stood at 35.3%, with the average interest rate of its loans at 1.46%. Those two figures are almost unchanged from the REIT’s previous sequential quarter. To put things into perspective, First Real Estate Investment Trust (SGX: AW9U), another healthcare REIT listed here, has a lower gearing ratio at 32.9%. All things equal, that may suggest that First REIT is less risky than Parkway Life REIT.

Investors worrying about any adverse impact from the depreciation of the Japanese Yen need not fret (one-third of the REIT’s assets by value is located in Japan). The healthcare REIT said it has already locked in the Japan net income hedge for the next few years”.

Going forward, Parkway Life REIT wants to “consolidate assets in Japan to generate operating synergies and achieve greater cost savings. Similarly it will actively seek new opportunities in other regional markets and continue with proactive asset management to improve performance, enhance competitiveness and extract greater value from overall portfolio”.

The REIT’s currently trading at a price-to-book ratio of 1.4 as it ended the quarter with a net asset value of S$1.68.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.