Phillip Securities downgrades Parkway Life REIT (C2PU.SG) to Hold vs Buy, raises target to $1.78 vs $1.66.  “Although we like the fundamentals of Plife, we think price action will be taking a breather.” Adds, improved earnings (3Q NPI of $19.4 million +26.5% on-year, +12.3% on-quarter) due to Japan buys (11 purchases in Japan this year), rental reversions in Singapore. 

Says REIT has been active on acquisition trail, capitalizing on ability to take on debt (listed with gearing of just 4.0%) in low interest rate environment, but current gearing at 35% “nearing comfort level” of 40%, leaving another US$84 million ($108 million) of debt headroom.

Adds, REIT has had “amazing run-up” recently; at FY10E, FY11E DPU, unit trades at yields of 5.1%, 5.6% respectively, “putting it at the low-end of the yield curve among S-REITs.” 

 

REIT flat at $1.70.