5 Key Points About Parkway Life REIT


Parkway Life REIT is one of Asia's largest healthcare REIT and one of Singapore's most popular REITs among dividend investors. Parkway Life REIT's portfolio consists of 53 properties valued at $1.96 billion. It invests in real estate used primarily for healthcare and healthcare-related purposes. Some notable properties in Singapore include Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital. It also has many hospitals, medical centers, nursing homes, and pharmaceutical product distributing and manufacturing facilities located in Japan. Parkway Life REIT is currently trading at $3.63 per share and has a market capitalization of $2.1 billion. Here is my analysis of Parkway Life REIT. 


Consistent Dividend History

Parkway Life REIT has a 13-year consistent dividend history (>10 years). This means that they have been paying out dividends consistently without fail to shareholders for 13 years in a row. This attracts dividend investors as it shows that the REIT is stable and has a proven track record. Moreover, a long consistent dividend history proves that the REIT management can maintain healthy cash flow and sustain its dividends to shareholders. The last thing you would want as a dividend investor is for the company to suddenly stop paying out dividends. One of the appealing features of Parkway Life REIT is its long consistent dividend history. 


Strong Sponsor

Parkway Life REIT is sponsored by Parkway Pantai. Parkway Pantai is one of Asia's fully integrated healthcare providers and owns one of the largest portfolios of hospitals and healthcare services in Asia. It operates 29 hospitals located in Singapore, Brunei, India, China, and Malaysia. It is part of IHH Healthcare, one of the world's largest healthcare groups by market capitalization with a portfolio of 77 Hospitals worldwide. A sponsor is a company that provides the properties into the initial portfolio of the REIT and may continue to provide more properties for the REIT in the future. Furthermore, a sponsor can provide financial support to the REIT in times of difficulty and lower the risks associated with the REIT. Parkway Life REIT's attractiveness to investors is definitely increased due to its strong sponsor by Parkway Pantai

 

Diversified Tenant Portfolio and High Occupancy Rate

Parkway Life REIT has an extremely diversified tenant portfolio consisting of more than 30 tenants contributing to its portfolio income. This is extremely good for a REIT as it would not be overly dependent on a single tenant and experience cash flow problems if that tenant defaults on its rent. It is especially beneficial in times of economic difficulties (current COVID-19 pandemic) as it ensures that the REIT has a lower risk of having cash flow problems or significant decreases in its income. Also, Parkway Life REIT has an impressive 99.7% occupancy rate (>90%). This occupancy rate is exceptionally good compared to other popular REITs in Singapore. This shows that it is maximizing all of its properties to generate as much income as possible and definitely adds to its attractiveness. Parkway Life REIT diversified portfolio and high tenant occupancy rate undoubtedly draw investors. 



 

Appropriate Debt Gearing Ratio

Parkway Life REIT has a debt gearing ratio of 38.3% as of June 2020 (<40%). REITs use debt as leverage to acquire more properties to expand its portfolio at a faster rate. A high debt gearing ratio would put the REIT at a higher risk of not being able to pay back its debt and face cashflow issues. On the other hand, a low debt gearing ratio could imply that the REIT is not maximizing its potential to expand its portfolio. Parkway Life REIT's debt gearing ratio of 38.3% is slightly higher than most other REITs in Singapore (33-35%) but it is still within my appropriate range of 40% (Monetary Authority of Singapore requires Singapore REITs to have a debt gearing ratio below 45%).




Dividend Yield

Parkway Life REIT's average dividend yield for the past 5 years is 3.5%. This is slightly below the average Singapore REIT dividend yield of 4-6%. However, Parkway Life REIT has continuously increased its dividend per unit (DPU) since its Initial Public Offering. This is remarkable as not many REITs can boast this incredible feat of increasing its DPU every year without fail. It reflects Parkway Life REIT's capable management style and is one of the key reasons Parkway Life REIT can maintain its position as one of Singapore's most popular REIT. Dividend investors can be confident of stable increasing dividends over time boosted by Parkway Life REIT's strong balance sheet and excellent management style. 




Verdict

I personally feel that Parkway Life REIT is definitely worth adding to your portfolio if you are looking to diversify into healthcare REITs. It is one of the most stable and largest healthcare REITs with a proven track record. You can absolutely consider adding this healthcare REIT to diversify and strengthen your dividend portfolio.


You can read more about Parkway Life REIT financials here.


What do you think of Parkway Life REIT?


Comments

  1. Vince20 August 2020 at 11:50

    It is indeed a solid REITs with good assets, growing steadily. I see you haven't add this into your portfolio though, adding soon at desirable price ?

    ReplyDelete
    Replies
    1. Dividend Is King20 August 2020 at 14:17

      Hi Vince!

      I am currently thinking of divesting Frasers Hospitality Trust from my portfolio due to its poor performance in the COVID-19 pandemic and replacing it with a more stable resilient REIT such as Parkway Life REIT by next year. I feel that the hospitality sector in Singapore would need more than a year to recoup their losses from the COVID-19 pandemic. I am definitely incurring an opportunity cost at the moment by keeping Frasers Hospitality Trust in my portfolio. Haha.

      Cheers!

      Delete
    2. Vince20 August 2020 at 17:01

      Why need to be next year? Still got 4 months to go. Haha, too pain to cut loss

      Delete

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