Here’s why Parkway Life REIT’s earnings hinges on the SGD’s strength

36% of its healthcare earnings are from Japan.

While the healthcare giant resembles a steady ship amid an uncertain sea with one of the strongest earnings visibility profile among Singapore real estate investment trusts, (REITs) one factor can drastically dent its earnings.

According to analysts from DBS, foreign exchange volatility could hit Parkway Life REIT’s earnings as distributions are based on and SGD, while it derives 36% of its earnings from healthcare assets in Japan.

“However, we note that the trust has conservatively hedged its foreign income exposures on a long-term basis,” DBS said.

Meanwhile, Parkway Life REIT is also expected to benefit from the medical tourism boom in Singapore, an industry which is expected to double from $1b by 2020 in the city-state.

“We anticipate Plife REIT to leverage on its specialisation in medical care properties as it acquires opportunistically to meet the growing demand which would provide higher distributions to buoy its share price,” DBS said.