SINGAPORE (Jan 26): CIMB is maintaining its “add” call for Parkway Life REIT, saying it has one of the most resilient income structures in the local REIT sector, with a deflation-protected Singapore revenue stream and defensive long-term lease structure in Japan.
Meantime, its balance sheet remains strong, with gearing of 36.3% and low 1.4% effective cost of debt, says lead analyst Lock Mun Yee in a Wednesday report. And following the sale of the four Japan assets, Parkway Life REIT intends to distribute the $5.3 million net disposal gain to unitholders in FY17F too.
In 4Q16, Parkway Life REIT reported higher revenue and NPI of $27.7 million and $25.6 million respectively. Better earnings performance by Singapore and Japan nursing homes was partly offset by lower contributions from Malaysia and Japan pharmaceutical due to a one-off marketing commission paid for the renewal of a lease that expired in Dec 16. Reported 4Q/FY16 DPU of 3.06/12.12 cents both declined 9% yoy due to the absence of divestment gains. On like-for-like basis, 4Q/FY16 DPU would have been 2.2%/2.7% higher y-o-y.