Parkway Life REIT’s Latest Earnings: Another Quarter of Distribution Gains
Parkway Life REIT (SGX: C2PU) released its second-quarter earnings report this morning. The reporting period was from 1 April 2017 to 30 June 2017.
Parkway Life REIT is one of the largest listed healthcare real estate investment trust (REIT) in Asia by asset size. At the local front, the REIT has ownership over three private hospital properties while overseas, Parkway Life REIT has stakes in 44 healthcare-related assets in Japan, and strata-titled unit or lots in Gleneagles Intan Medical Centre in Malaysia.
The following’s a quick take on the REIT’s latest financial figures:
1. Gross revenue rose to $27.7 million in the second quarter, up 1.1% compared to the same quarter a year ago.
2. For the reporting quarter, net property income (NPI) was also up 1.4% year-on-year. NPI for the second quarter came in at $25.9 million, up compared to the $25.5 million recorded a year ago.
3. Distribution per unit (DPU) grew 10.3% year-on-year to 3.32 cents per unit. To be sure, the current DPU includes a divestment gain of 0.22 cents per share. If we strip out the divestment gain, DPU from recurring operations would have increased 2.9% year-on-year.
4. As of 30 June 2017, the portfolio size stood at $1.7 billion. The trust had an adjusted net asset value per unit of $1.68.
Foolish investors might want to keep up an eye on the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded and its sensitivity to the interest rate environment. This is summarised below:
Source: Parkway Life REIT’s presentation
Parkway Life REIT’s effective all-in cost of debt fell from 1.4% a year ago to 1.1% in the latest quarter. The interest cover ratio was 10.7 times, higher than a year ago. The REIT also said that its debt was “largely hedged” against interest rate fluctuations. There is also no refinancing needed for 2017 and 2018, save for a $14 million short term loan in 2017.
The REIT recorded minor revenue gains and NPI in its Singapore and Japan portfolio. Yong Yean Chau, Chief Executive Officer of the REIT manager, shared his thoughts on the reporting quarter:
“With global interest rates set to rise, we are taking proactive steps to manage our cost of debt and spread our debt maturity profile. With prudent capital and risk management strategies, our interest rate exposure has been largely hedged, insulating us from any related headwinds. We seek to continue delivering stable, long-term growth for our Unitholders and will continue looking out for suitable opportunities as they come along to strengthen our portfolio.”
Units of Parkway Life REIT opened at $2.68 this morning. This translates to a historical price-to-book ratio of around 1.6 and a trailing yield of 4.7% per unit. Investors should note that the trailing DPU includes two quarters worth of divestment gains.