Analysis of 3Q 2017 results for Parkway Life REIT

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Healthcare landlord Parkway Life REIT reported on 9 November that it has achieved a distribution per unit (DPU) of 3.37 Singapore cents for the quarter, an increase of 10.1% over the 3.06 cents achieved in the corresponding period of the previous financial year.

However excluding effects of one-time divestment gains, the REIT’s DPU growth from recurring operations came in at 2.8% year-on-year for 3Q 2017, and 2.6% for year-to-date 3Q 2017.

Parkway Life REIT also saw a decline in gross revenue for the quarter, which slid by 1.4% to SGD27.7 million for 3Q 2017, and 0.1% to SGD82.3 million for year-to-date 3Q 2017.

“Gains from higher rent received from the Singapore properties and contributions from the asset recycling exercise were offset by the depreciation of the Japanese Yen”, said the REIT.

Parkway Life REIT has had a track record of delivering consecutive quarters of increasing gross revenue, NPI and DPU figures, and this performance is aptly reflected in unit prices of the REIT, which has increased by as much as 20% in the year-to-date.

The latest round of results, which saw a decline in gross revenue, has raised questions on the REIT’s ability to deliver consecutive quarters of increasing DPUs.

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Ridzwan Rahmat has been analysing Singapore-listed REITs and business trusts, since 2008. For disclosure purposes, Ridzwan is currently vested in Mapletree Greater China Commercial Trust, Mapletree Industrial REIT and Mapletree Logistics Trust.

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