Parkway Life REIT’s Latest Earnings: What Investors Should Know

Parkway Life REIT (SGX: C2PU) released its third quarterly earnings report this morning. The reporting period was from 1 July 2015 to 30 September 2015.

Parkway Life is one of the largest listed healthcare real estate investment trust (REIT) in Asia by asset size. At the local front, the REIT has ownership over three private hospital properties while overseas, Parkway Life has stakes in 43 healthcare-related assets in Japan, and strata-titled unit or lots in Gleneagles Intan Medical Centre in Malaysia.

You can read more about the REIT here and here. Also, catch the previous quarter earnings here.

Financial Highlights

The following’s a quick take on Parkway Life’s latest financial figures:

  1. Gross revenue rose to almost $26 million in the third quarter, up 2.5% compared to the same quarter a year ago.
  2. For the reporting quarter, net property income (NPI) was also up 2.4%. NPI for the third quarter came in at $24.3 million, compared to $23.7 million recorded a year ago.
  3. Distribution per unit (DPU) registered a good 15.6% year on year increase to 3.36 cents per unit. The spike in DPU was due to an additional 0.38 cents per unit divestment gain. If we back out the divestment gain, the REIT’s recurring DPU was 2.98 cents per unit, or a modest 2.8% gain year on year.   
  4. As of 30 September 2015, the portfolio size was appraised at $1.6 billion. The trust had an adjusted net asset value per unit of $1.66.

Foolish investors might want to keep up an eye with the REIT’s debt profile . The debt profile may provide clues on how the REIT is funded, and its sensitivity to the interest rate environment. This is summarized below.

2015-11 Parkway Life REIT Table

Source: Parkway Life REIT’s earnings presentation

Parkway Life’s debt profile remains solid, with effective all-in cost of debt of 1.5% and a interest cover ratio of 9.9 times. The REIT added that 78% of its debt is hedged against interest rate exposure.

Operational Highlights

Gross revenue rose on the back of growth from its Singapore properties and Japan properties. The former increased its topline 2% year on year while the latter recorded a 3.4% year on year rise.

In terms of NPI, its Mount Elizabeth and Gleneagles properties both grew at around 2% year on year. The Japan properties lead the way with a 3.5% increase over the previous year.

Yong Yean Chau, Chief Executive Officer of the REIT manager, shared the following thoughts on the reporting quarter and outlook:

“We are pleased to announce another good quarter with continued success and steady growth in distribution to our Unitholders. Our DPU has grown steadily since IPO and this is indicative of our robust fundamentals and growth drivers, despite economic uncertainties

Our robust portfolio fundamentals and sound financial metrics have allowed us to deliver consistent attractive results and rewards to our Unitholders. Moving ahead, while we seek to be nimble to market changes, we will continue to build on our successful strategies to enhance our overall value and growth potential in a sustainable way.”

Foolish summary

Parkway Life had an opening price of $2.34 this morning. This translates to a historical price-to-book ratio of around 1.4 and a trailing yield of 5.5% per unit. If we adjust the distribution yield for its divestment gain, the distribution yield for Parkway Life would be about 5% per unit.

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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 Chin Hui Leong owns shares in Parkway Life REIT.