Parkway Life REIT to snap up more Japanese properties as healthcare facilities drive growth

It's a staeady ship in turbulent times.

Parkway Life REIT will continue to put its money on Japanese properties after engaging in a portfolio recycling exercise that saw the divestment of several properties in the country.

According to DBS, Plife REIT offers one of the strongest earning visibilities among S-REITs thanks to its long weighted average lease expiry, low gearing ratio, and strong business fundamentals.

"Its Singapore operations (c.67% of revenues) are forecasted to grow at CPI + 1%, ensuring that rental income keeps pace with inflation growth. The remaining 40% are derived from its nursing homes and healthcare facilities in Japan which offer long-term certainty given a weighted average lease expiry of 14 years," said DBS.

"The manager is aiming to acquire and bulk up its exposure in Japan. Given a low gearing ratio of around 34.1% as of 3Q15, we see opportunities to grow via debt-funded acquisitions," DBS added.

"Plife REIT has been proactively refinancing its maturing debts in advance to prevent any near-term refinancing risks. As a result, the REIT has no need for refinancing until 2016, with a weighted average debt to maturity of 3.6 years and a low 1.5% cost of debt which is fully hedged," DBS noted.