What Investors Should Know Now About Parkway Life REIT’s Latest Earnings and Valuation
Parkway Life REIT (SGX: C2PU) is one of the largest listed healthcare real estate investment trusts in Asia by asset size.
As of 31 March 2017, the REIT’s portfolio contains 49 properties, 45 of which are healthcare-related assets in Japan. The other four are private hospitals in Singapore (there are three, namely, Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital) and Malaysia (the Gleneagles Intan Medical Centre; the REIT owns strata-titled uints/lots in this hospital).
There are two things about the REIT that investors may want to know now: Its latest financial performance and valuation.
Here’s a table showing important items from Parkway Life REIT’s income statements for the first quarters of 2017 and 2016:
Source: Parkway Life REIT 2017 first quarter earnings
We can see that the REIT’s gross revenue and net property income were both flat, despite the sale of four Japanese properties in December 2016. The proceeds from the sale were used to acquire five new properties in Japan in February 2017.
The REIT reported solid growth in distribution per unit, due largely to the distribution of divestment gains.
There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.
The table below shows Parkway Life REIT’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 39 REITs that are in Singapore’s stock market.
Source: SGX Stock Facts; Data as of 12 June 2017
We can observe that Parkway Life REIT has a premium valuation, given the fact that the REIT has an above-average PB ratio and distribution yield.