PLife – BT

PLife Reit Q3 DPU rises 6.7%; revenue up 4.1%

Trust cautious about acquisition prospects due to uncertainties

PARKWAY Life Real Estate Investment Trust (PLife Reit) yesterday posted a 6.7 per cent rise year on year in distribution per unit (DPU), from 2.25 cents to 2.40 cents, for the third quarter ended Sept 30.

Gross revenue for the period went up by 4.1 per cent to $22 million, on the back of full-quarter revenue contributions from its Japan properties acquired in July 2010, as well as higher rent from its Singapore properties. Net property income rose 3.6 per cent to $20 million.

As a result of the yield-accretive acquisitions in Japan, higher rent from Singapore properties and savings from lower financing costs, distributable income for Q3 2011 rose 6.8 per cent, from $13.6 million to $14.5 million.

For the quarter, earnings per unit dropped to two cents, compared to 2.09 cents in the previous corresponding quarter.

For the nine months ended Sept 30, DPU was 7.13 cents compared to 6.41 cents in the same period last year. This accounted for 74 per cent of DMG & Partners Research’s estimates, which said that PLife Reit’s results were in line with expectations.

Gross revenue was 10.9 per cent higher at $64.9 million, while net property income climbed 10.2 per cent to $59.5 million.

Income available for distribution grew 11.4 per cent to $43.1 million, up from $38.7 million in the corresponding nine months last year.

In July this year, PLife Reit completed its second Japan nursing home asset enhancement initiative, to help drive more revenue for that property. At a capital outlay of $150,000, the converted area is expected to yield an annual return on investment of at least 10 per cent.

While it remains cautious about its near to medium-term acquisition prospects due to ongoing uncertainties in the global markets, PLife Reit said that the long-term prospects of the regional healthcare industry continue to be robust due to rising demand for better quality private healthcare services, driven by growing affluence and fast-ageing populations.

DMG & Partners Research said that PLife Reit is currently trading at 5.4 per cent yield. The research house maintained its ‘buy’ call on the counter, with a target price of $2.07.

PLife Reit units closed flat yesterday at $1.79 per unit.