CGS-CIMB Research is upgrading its call on Parkway Life REIT (PREIT) to "add" from "hold" with a higher target price of $4.80 from $4.11 previously. 

In a May 10 report, lead analyst Lock Mun Yee says, "We revisit our DPU projections for PREIT in view of the upcoming review of its Singapore hospitals’ master lease agreement (MLA). We expect the MLA to be renewed upwards given the strong operating performance of the Singapore hospitals during the current lease tenure. Based on our assumptions, we project PREIT to deliver a DPU CAGR of about 4.8% over FY2020-2023 when its new MLA becomes effective."

According to Lock, the Singapore hospitals' MLA is likely to be renewed with its lease structure maintained when the inital MLA expires on Aug 22, 2022. This renewal could be an opportunity for the REIT to review its rents and possibly mark to market given the strong performance of the Singapore hospitals during the initial lease term.


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