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3 Things Parkway Life REIT’s Management Wants You To Know About Its Business

In late April, Parkway Life REIT (SGX: C2PU) released its 2018 first quarter earnings update. As a quick introduction, Parkway Life REIT owns healthcare assets across Asia. Its portfolio currently includes three private hospitals in Singapore, 46 healthcare-related assets in Japan, and strata-titled units/lots in Gleneagles Intan Medical Centre in Malaysia.

The Manager of Parkway Life REIT had given a presentation on the REIT’s latest results. In the presentation deck, I saw three slides on the REIT’s business that I think investors should pay attention to.

The first slide shows a high-level summary of the REIT’s income statement for the first quarter of 2018:

Source: Parkway Life REIT 2018 first quarter earnings presentation

We can see that the REIT delivered a mixed performance in 2018’s first quarter. Although gross revenue and net property income both increased, the total distributable income to unitholders and distribution per unit (DPU) had declined.

Parkway Life REIT said that its net property income had increased due to rental contributions from new properties and upward revision of rents in its Singapore hospitals. Its DPU had fallen mainly due to the absence of divestment gains that was present in 2017’s first quarter.

The next slide I want to discuss shows a breakdown of the REIT’s net property income by geography:

Source: Parkway Life REIT 2018 first quarter earnings presentation

The Mount Elizabeth, Gleneagles, and Parkway East hospitals are all located in Singapore. From this, we can see that Singapore accounted for 61.2% of Parkway Life REIT’s total net property income in 2018’s first quarter. Japan is the next largest geographical market for the REIT, as it accounted for 38.5% of its total revenue.

The last slide I want to talk about shows Parkway Life REIT’s gearing level:

Source: Parkway Life REIT 2018 first quarter earnings presentation

As of 31 March 2018, Parkway Life REIT had a gearing level of 36.4%, which is a safe distance from the regulatory gearing ceiling of 45%. As such, this gives the REIT room to borrow more money for future acquisitions, if needed. Given Parkway Life REIT’s current finances, it has debt headroom of S$231.5 million.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation on Parkway Life REIT.