Find out the truth about Parkway Life REIT's 7.4% DPU growth

Robust results ended the year for the group.

According to Phillip Securities Research, DPU grew 7.4% from 9.60 cents in FY11 to 10.31 cents in FY12. The increase was largely due to the purchase of three Japan properties, higher rent collected from Singapore properties and cost-savings on financing.

The portfolio assetwas revalued at S$1.4bn and recognized revaluation gains of 3.1% compared to last year.

FY12 DPU exceeded our estimates by 3.8%, principally due to lower-than-expected finance and trust expenses. It is encouraging to see FY12 DPU continued to grow at 7.4% after five years of portfolio expansion since the IPO in 2007.

Here's more from Phillip Securities:

Marching towards 2013, the trust is poised to repeat and build on its past successes on account of (i) potential rental increase for Japan properties under the “Refurbishment AEI” concept (ii) CPI+1% rental revision for Singapore properties owing to elevated inflation rate in Singapore, and (iii) enlarged debt headroom of S$173.5mn to drive inorganic growth.

Currency movement is not likely to erode the DPU going forward especially due to the significant depreciation in Japanese yen lately.

Natural hedge strategy to match its assets (investment properties in Japan) and liabilities (yen-denominated loan) and net income hedge (extend to 1Q17), are the two forex hedging tools being used by the management to insulate against volatile currency movements.