Parkway Life REIT's 2H FY24 Result Review

$ParkwayLife Reit(C2PU.SI)$

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Parkway Life REIT (PLife REIT) reported a slight decline in gross revenue and NPI year-on-year, primarily due to the depreciation of the Japanese Yen. However, this was partially offset by revenue contributions from newly acquired nursing home properties in Japan (October 2023 and August 2024) and 11 nursing homes in France (acquired in December 2024). While the amount available for distribution improved slightly, DPU declined marginally due to an enlarged unitholder base following an equity fundraising exercise.

Acquisition

On December 20, 2024, PLife REIT completed the acquisition of 11 freehold nursing homes in France. These properties, spread across six regions, are leased to DomusVi, a leading pan-European nursing home operator, under a 12-year sale and leaseback agreement with indexed rent escalations.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Favorable

• REIT Manager's Shareholding: Less Favorable

• Directors of REIT Manager's Shareholding: Favorable

Lease Profile

• Committed Occupancy: Favorable

• Highest Annual Lease Expiry in 4 Years: Favorable

• WALE: Favorable

• Weighted Average Land Lease Expiry: Moderate

Debt Profile

• Adjusted Interest Coverage Ratio: Favorable

• Cost of Debt: Favorable

• Gearing Ratio: Favorable

• Fixed Rate Debt Proportion: Favorable

• Unsecured Debt Proportion: Favorable

• Highest Annual Debt Maturity in 4 Years: Moderate

• WADM: Favorable

Diversification Profile

• Top Geographical Weightage: Less Favorable

• Top Property Weightage: Moderate

• Top 5 Properties' Weightage: Less Favorable

• Top Tenant Weightage: Moderate

• Top 10 Tenants' Weightage: Less Favorable

Key Financial Metrics

• Property Yield: Moderate

• Operating Distributable Income over Manager's Fees: Moderate

• Operating Distributable Income on Capital: Favorable

• Operating Distributable Income Margin: Favorable

• Operating Distribution Proportion: Favorable

DPU Breakdown

• TTM Distribution Breakdown:96.7% from Operation0.1% from Management Fees Paid in Units3.2% being Retained

Trends (Up to 10 Years)

• Uptrend: DPU from Operations, NAV per Unit, Adjusted Interest Coverage Ratio, Operating Distribution Proportion

• Slight Uptrend: None

• Flat: Committed Occupancy, Top 5 Properties' Weightage, Property Yield

• Slight Downtrend: Top 10 Tenants' Weightage, Operating Distributable Income Margin

• Downtrend: Operating Distributable Income over Manager's Fees, Operating Distributable Income on Capital

Price Range & Relative Valuation Metrics

• Dividend Yield: Below -1SD for 1y; Average for 3y, 5y & 10y

• P/NAV: Above +1SD for 1y; Average for 3y, 5y & 10y

Author's Opinion

PLife REIT’s performance remains stable compared to the previous half-year. The slight dip in DPU is due to an enlarged unitholder base following the equity fundraising for the French acquisition. On the debt front, only 2% of total borrowings will mature in 2025.

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decision.