CFA Society Singapore
SINGAPORE (Oct 26): DBS Group Research is maintaining Parkway Life REIT (PLife REIT) at “buy” given the REIT offers one of the strongest earnings visibility profiles among S-REITs, with a weighted average lease expiry of close to nine years.
In a Friday report, lead analyst Rachel Tan believes that PLife REIT will be able to deliver steady growth in returns through its three-pronged growth plans of asset recycling, new markets and potential acquisition pipeline from its sponsor while maintaining its defensive stance in expansion.
According to Tan, PLife REIT has a gearing of 38% with debt headroom of $241 million, assuming 45% gearing. In addition, PLife REIT has benefitted from lower interest rates in Japan following the renewal of interest rate hedge, with cost of debt now below 1%.
“We maintain our ‘buy’ rating but lowered its target price to $3.10 from $3.15 as we roll forward our DCF valuation,” says Tan.
Year to date, units in PLife REIT are down 11.7% to $2.63, giving it an FY19F yield of 4.9%.