UBS raises Parkway Life REIT (C2PU.SG) target price to $1.89 from $1.77, keeps Buy rating. Says 3Q DPU of 2.25 cents, +18% on year, +8% on quarter, in line with estimates, boosted by Japanese acquisitions, while net property income boosted by contribution from Japanese nursing homes acquired in June, July as well as rental growth of 1.73% from 23 August.

Says asset enhancement initiative at one of its Japanese nursing homes (converting clinic space to three income-producing rooms) “marks the start of a new phase in its asset management strategy.” 

 

Adds, with low cost of debt, may be opportune for P-REIT to explore acquisitions in next year; factors in $250 million of acquisitions by mid-2011 at NPI yield of 7%, funded by 60:40 debt/equity structure. Raises 2011/2012/2013 DPU estimates from 9.8 cent/9.9 cent/10.1 cent to 10.2 cent/10.8 cent/10.9 cent. REIT flat at $1.70.