ParkwayLife REIT Distribution

ParkwayLife REIT 1Q2024 Business Update

On 30th April 2024, ParkwayLife REIT released their 1Q2024 Business Update. Currently, ParkwayLife REIT makes up 5.80% of my stock portfolio in terms of value. It is also one of the earliest REIT that I bought when I started investing in REITs. This is one REIT with performance that is so stable that I seldom look at it. I wonder what is ParkwayLife REIT’s current share price and current dividend yield?

If this healthcare REIT is alien to you, let me give you a quick introduction. ParkwayLife REIT is one of the largest listed healthcare REITs in Asia with an enlarged portfolio of S$2.23 billion. In Japan, it has 59 high quality nursing home properties worth S$717.2 million. The step-up rent for its nursing home is what makes it possible to grow its Distribution Per Unit (DPU) year-on-year since IPO.

Now, let us take a look into its business updates.

1Q2024 Financial Performance

In 1Q2024, ParkwayLife REIT’s Gross Revenue and Net Property Income (“NPI”) decreased 2.7% and 2.8% respectively year-on-year mainly due to depreciation of the Japanese Yen. The decrease was partly offset by contribution from nursing homes acquired in October 2023.

Similar to other REITs, finance costs for ParkwayLife REIT have increased 4.4% year-on-year. This was mainly due to funding of Capex and new acquisitions in 2023 and higher interest costs from Singapore dollar and Japanese Yen debts partially offset by depreciation of JPY.

The good news here is that Distribution Per Unit (“DPU”) increased 4.0% year-on-year to 3.79 cents.

1Q2024
(S$’000)
1Q2023
(S$’000)
Change
Gross Revenue36,32237,335(2.7%)
Net Property Income34,27635,275(2.8%)
Finance Costs(2,616)(2,505)4.4%
Amount Available for Distribution22,94922,0754.0%
Distribution Per Unit (“DPU”) (cents)3.793.654.0%

Debt

ParkwayLife REIT 1Q2024 Debt

As of 31st March 2024, ParkwayLife REIT’s gearing stood healthy at 36.4%. This is below my personal threshold of 40%. It has ample debt headroom of S$361.4 million and S$629.2 million before reaching 45% and 50% gearing respectively.

As you can see from the above chart, ParkwayLife REIT has no long-term debt refinancing needs till March 2025. Current weighted average debt term to maturity stood at 3.4 years.

Occupancy

ParkwayLife REIT 1Q2024 Occupancy

As of 31st March 2024, ParkwayLife REIT’s overall portfolio occupancy stood strong at 99.7%.

ParkwayLife REIT’s Current Dividend Yield

ParkwayLife REIT Share Price 24-May-2024

As you can see from the price chart above, ParkwayLife REIT share price closed at S$3.60 on Friday, 24th May 2024. Based on the current share price and FY23 full year distribution of 14.77 cents, ParkwayLife REIT’s dividend yield is 4.10%.

Summary of ParkwayLife REIT 1Q2024 Business Update

Since this is a business update, there not much financial information to analyse. Based on the above, the pros are:

  • DPU increased 4.0% year-on-year to 3.79 cents.
  • Healthy gearing at 36.4%.
  • No long-term debt refinancing needs till March 2025.
  • Overall portfolio occupancy stood strong at 99.7%.

The cons are:

  • Gross Revenue and Net Property Income (“NPI”) decreased 2.7% and 2.8% respectively year-on-year mainly due to depreciation of the Japanese Yen.
  • Current dividend yield is 4.10% which is considered low for a REIT.

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