Parkway Life REIT’s Annual Report: 19 Numbers Investors Should Know

Parkway Life REIT  (SGX: C2PU) is one of the many companies and real estate investment trusts (REITs) that have released their latest annual reports over the past few weeks.

The annual report is a great place to learn more about a stock. Parkway Life REIT’s latest 2015 annual report had a chock-full of interesting numbers. Here are 19 that may be worth knowing for investors:

  1. Parkway Life REIT is the one of the largest listed healthcare REITs in Asia. At the end of last year, the REIT had a total portfolio size of S$1.6 billion. The REIT’s portfolio includes 47 properties in Singapore, Japan and Malaysia. In 2015, Parkway Life REIT sourced 63% of its total gross revenue from Singapore and 38.5% from Japan. The remainder comes from Malaysia.
  2. Demand for healthcare services is expected to increase. Parkway Life REIT noted that 12.3% of the global population is currently aged 60 and above. This figure is expected to rise to almost 22% by 2050, according to the United Nations Population Fund.
  3. This rising trend is evident in Singapore as well.  In Parkway Life REIT’s annual report, it’s stated that the number of citizens aged 65 and above has doubled from 220,000 in 2000 to 440,000 in 2015. This stat is expected to climb further, reaching 900,000 by 2030. Subsequently, Singapore’s healthcare spending could rise to over S$13 billion by 2020, up from S$9 billion today. Meanwhile, Malaysia’s market for medical tourism has nearly doubled since 2010.
  4. Parkway Life REIT benefits from long-term lease structures. The REIT boasts a weighted average lease expiry (WALE) of over nine years. Its latest acquisitions, five nursing homes in Japan, netted five new leases with a WALE of over 18 years.
  5. There are more tenant lease stats to consider. According to the annual report, 64% of its leases by gross revenue have a CPI-linked (consumer price index) revision formulae. Meanwhile, 93% of its leases (by gross revenue) have downside protection while 98% of leases (by nett lettable area) come with a rent review provision.
  6. Moving on to debt management. Parkway Life REIT has “no immediate long-term financing needs till 2017.” As of the end of last year, the REIT said that its average debt term to maturity stands at 3.5 years, with no significant loans due in a single year. Parkway Life REIT is also guarding against interest rate hikes by increasing its interest rate hedge ratio for its loans from 78% to around 95%.
  7. The REIT’s gearing was just above 35% as of 31 December 2015, a figure that is on the higher end of the scale. That said, Parkway Life REIT may have one of the lowest cost of debt amongst Singapore-listed REITs. The REIT’s effective all-in cost of debt stood at 1.6% at the end of last year.
  8. The board of directors has also decided against the disclosure of the remuneration of the chief executive officer, executive director and key management personnel on a named basis, whether in exact quantum or in bands of S$250,000 for talent retention reasons. The REIT argues that poaching of executives is commonplace in the REIT industry.

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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 units in Parkway Life REIT.