First Real Estate Investment Trust vs. Parkway Life REIT: Healthcare REIT With Lower Valuation And Gearing

First Real Estate Investment Trust (SGX: AW9U) and Parkway Life REIT (SGX: C2PU) are both REITs in Singapore’s stock market that focus on healthcare assets.

While they may seem similar on the outset with their healthcare label, there are actually some slight but important differences between them.

For instance, First REIT has 17 properties in its portfolio, of which 13 are hospitals, three are nursing homes, and one is a hotel & country club. Its properties are mainly located in Indonesia. Parkway Life REIT on the other hand, has 48 properties in all and they are located in Singapore, Japan, and Malaysia.

There are other differences in the business fundamentals of the two REITs as well, such as their price-to-book (PB) ratios, distribution yields, and gearing levels.

Here’s how First REIT looks like:

  • The net asset value stood at S$1.03 per unit as of 31 March 2016. With a current unit price of S$1.23, this would imply a P/B ratio of 1.2.
  • First REIT has a trailing distribution of 8.35 Singapore cents, which would result in a distribution yield of 6.8%.
  • The REIT currently has total debt of S$452 million and total assets of S$1.32 billion, resulting in a gearing ratio of 34%.

Next here’s Parkway Life REIT:

  • At the end of March 2016, the REIT’s net asset value per unit was S$1.68. This gives rise to a P/B ratio of 1.43 at the REIT’s current unit price of S$2.41.
  • The trailing distribution per unit is 13.07 Singapore cents, which gives a distribution yield of 5.4%.
  • Parkway Life REIT ended the first-quarter of 2016 with a gearing ratio of 36.4%.

So as you can see, First REIT has the lower P/B ratio, higher distribution yield, and lower gearing when compared to Parkway Life REIT.

It must be noted though, that what you’ve seen above about the two REITs should not be taken as the final word on their investing merits.

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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 Esjay does not owns shares in any company mentioned.