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Is First Real Estate Investment Trust Or Parkway Life REIT A Better Buy Now? Part 1

Parkway Life REIT (SGX: C2PU) and First Real Estate Investment Trust (SGX: AW9U) are real estate investment trust (REIT) focusing on healthcare and healthcare-related real estate assets throughout Asia.

In general, healthcare related Singapore REITs have stable earning power by owning assets like hospitals and nursing homes. Such stability of income would appeal to conservative income investors, especially those who seek to generate sustainable dividend from their investments.

For those investors, they might want to know which of the following two Singaporean REITs is a better buy is now. Clearly, there is no easy answer to the above question. After all, we do not know what will happen in the future.

Nevertheless, we will like to put the duo to a test that is made up of three parts. In this article, we will focus on the first part – the track record of growth in distribution per unit (DPU) in the last decade.

The showdown

Let’s begin with Parkway Life REIT.

From FY2008 to FY2017, Parkway Life REIT has grown its DPU from 6.83 cents to 13.35 cents. In other words, DPU was up by 95.5% during that period, giving an investor a compounded annual growth rate (CAGR) or 7.7%.

And now for First REIT.

From FY2008 to FY2017, First REIT has grown its DPU from 3.39 cents (adjusted for the right issues in 2010 of 5 shares for every existing 4 shares) to 8.57 cents. In other words, DPU was up by 152.8% during that period, giving an investor a compounded annual growth rate (CAGR) or 10.9%. Here, we assume that investors subscribed to the additional right issues in 2010.

Conclusion

In sum, both REITs did well in the last decade in growing their DPU. Among the two, First REIT grew its DPU at a higher rate during that period.

Check out the 2nd part of the comparison, looking at their debt profile

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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. Motley Fool has recommendations for Parkway Life REIT and First Real Estate Investment Trust.