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Parkway Life REIT - In the pink of health
Sunday, May 24, 2009
PLife REIT's 1Q09 results were in line with consensus and our expectations. DPU of 1.89 cts forms 25% of our forecast of 7.54 cts, up 16.3% yoy. Net property income of S$15.2m was up 36.6% yoy driven by its CPI-linked lease structure for the Singapore hospitals. Refinancing issues are cleared until 2H10 and funding remains available from a S$100m revolving credit facility and a S$500m MTN programme. We like PLife REIT as it remains one of the few REITs with clear visibility on earnings, and continued positive growth in the medium term based on its inflation-linked lease structure; Its strong balance sheet and the management's tamed stance on growth via acquisitions strategy puts PLife in a favourable position to ride out the downturn. PLife offers a forward yield of 8.7% at a P/BV of 0.65x. Maintain Outperform and DDM-based target price of S$1.20 (discount 8.09%).
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