On 6 August 2025, Parkway Life REIT (“PLife”) announced their half year result for FY2025. DPU saw a decrease on a quarter-to-quarter basis, attributable to an increase in finance costs. Market consensus is that the Bank of Japan may raise interest rates over the next few quarters, something that PLife will need to manage given that a notable portion of their loans are denominated in Japanese Yen. There were no other significant changes to their financial position.
In the latest announcement, management has established the Nursing Homes in France as the third pillar for PLife. As they continue to build their foothold in France, management has disclosed on their intention to develop footprint in other European countries and UK. Given that these countries have also been facing an aging population over the last few years, this is an opportunity for PLife to enhance long-term growth and portfolio diversification.
Subsequent to quarter end, on 12 August 2025, PLife announced the completion of the divestment of strata units and lots in Malaysia. No significant impact on their financial position is expected from the divestment.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Half Yearly Results
Website: General Announcement::Completion Of The Divestment Of Strata Units And Lots In Malaysia
Photo source: https://fifthperson.com/2021-parkway-life-reit-agm/
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | -0.8% | +6.1% |
| Rating | Neutral | Favorable |
For PLife, DPU disclosed are as follows:
- Second Quarter of FY2025: SGD0.0381 per unit
- First Quarter of FY2025: SGD0.0384 per unit
- Fourth Quarter of FY2024: SGD0.0362 per unit
DPU for the second quarter of FY2025 has decreased by 0.8% to SGD0.0381 per unit from SGD0.0384 per unit in the previous quarter. The decrease is attributable to the increase in finance costs, as noted that net property income for the quarter amounted to SGD37.0 million, a slight increase from the previous quarter of SGD36.8 million. This metric has shifted towards Neutral.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 100.0% | 100.0% |
| Rating | Favorable | Favorable |
On 12 August 2025, PLife announced the completion of divestment of the strata units and lots in Malaysia. This was the only portfolio that does not have 100% committed occupancy. With this disposal, the remaining portfolios which consists of Singapore, Japan and France will have an overall occupancy rate as of 30 June 2025 of 100.0%. This metric remains Favorable.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 35.4% | 36.1% |
| Rating | Favorable | Favorable |
Gearing ratio as of 30 June 2025 has decreased to 35.4%. The decrease is likely due to the depreciation of Japanese Yen against Singapore Dollar. This metric remains Favorable.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 9.1x | 9.3x |
| Rating | Favorable | Favorable |
The interest coverage as of 30 June 2025 has decreased to 9.1 times. This metric remains Favorable and is attributable to their reported low cost of debt of 1.50% as their loans and borrowings are mainly Japanese Yen denominated.
The Bank of Japan have kept interest rates steady at 0.50% since the increase on 24 January 2025, the highest in 17 years. However, according to nearly two-thirds of economists in a Reuters poll, the Bank of Japan will raise its key interest rate by at least 25 basis points again later this year.
Website: BOJ to raise interest rates again in Q4, possibly in October, say economists – Reuters poll
Website: Bank of Japan raises interest rates to highest in 17 years, yen jumps
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.0 years | 3.3 years |
| Rating | Favorable | Favorable |
The weighted average term to maturity of their debt as of 30 June 2025 has shortened to 3.0 years. This metric remains Favorable as there is sufficient time for the REIT to refinance their debts as they fall due. Do note that 27% of their debt due to mature by the end of FY2026.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.73 | 1.75 |
| Rating | Unfavorable | Unfavorable |
The Price to Book (“P/B”) ratio has become slightly cheaper at 1.73. This is computed using the closing share price of SGD4.22 on 29 August 2025 and the net asset value per share of SGD2.44 as of 30 June 2025. The P/B ratio is Unfavorable.
It was worth noting however that the share price continued to rise despite being grossly overvalued. We will cover more in the “Key Things to Note” section.
As of 29 August 2025, the Market Capitalization is approximately SGD2,753 million.
Website: Yahoo Finance: Parkway Life Real Estate Investment Trust (C2PU.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 2.38% | SGD 0.100 |
| 2024 | 4.74% | SGD 0.200 |
| 2023 | 3.46% | SGD 0.146 |
| 2022 | 2.52% | SGD 0.106 |
| 2021 | 3.34% | SGD 0.141 |
| 2020 | 3.21% | SGD 0.136 |
Do note that the dividend paid out in the calendar year 2024 was higher due to an advance distribution of SGD0.050 per unit that was provided with the equity fund raising in 2024. If the advance distribution was excluded from the calendar year 2024 and included in the calendar year 2025, both years will see a dividend paid out of approximately SGD0.150 per unit. This is aligned to the previous article as a stable and conservative estimate.
With the closing share price of SGD4.22 on 29 August 2025, this translates to a dividend yield of 3.55%. For my benchmark, a reasonable yield would be around 4.75%. PLife yield sounds similar to growth equity stocks from other industries. The dividend yield is Unfavorable.
Website: Reasonable Dividend Yield 2025Q3 – 4.75%
Nonetheless, there is an interesting rationale for the dividend yield to be compressed and will be covered more in the “Key Things to Note” section.
Possible Expansion Targets
Third Pillar
During the quarter, PLife has established their 3 main pillars supporting PLife REIT as below:
- Hospitals in Singapore
- Nursing Homes in Japan
- Nursing Homes in France
Based on the announcement of 6 August 2025, management is looking to strengthen their existing market. PLife will be building on its foothold in France and grow strategically, while looking to develop footprint into other European countries and UK to enhance long-term growth and portfolio diversification.
Based on their financial results, they are in a good position to do so. PLife is still trading at a high P/B ratio, and it will not be difficult for them to find a yield accretive target. It was worth noting as well that it will work in management’s favor to issue rights to capitalize on the high P/B ratio should they choose to continue to do so.
Key Things to Note
Expensive getting more expensive
PLife is a relatively more expensive REIT compared to others that are available in the market. A dividend yield of 3.55% and P/B ratio of 1.73 exposes investors to higher risks. Given the straightforward business of REITs, their fair value usually should trade around their net asset value.
The key thing to note however, unlike most other REITs, PLife have income visibility. With their 20 years lease, this contributes a substantial portion of their income and serves as a bulwark for PLife as they explore new initiatives. Not to mention that this lease agreement also takes into consideration the Consumer Price Index (“CPI”) and is designed to increase overall rent payable based on the CPI. This is an effective hedge against inflation, which has been breaking historic highs recently.
Based on its dividend records, we can also see that they have steadily increase dividend payout over the years. Its stability and transparency are the reason for its high premium.
Nonetheless, it is still expensive, and something that investors should take note off and decide if they are comfortable with it before investing. If the market decides to crash, PLife’s can easily lose a significant portion of its market value.
Tenant concentration
Parkway Hospitals Singapore Pte. Ltd. is their top tenant contributing 59.2% of gross revenue. This indicates a heavy concentration of revenue and puts the REIT at the mercy of their customer.
While they have renewed the lease for 20 years, they are still dependent on the financial position of their customers. Cashflows have been tightening for all businesses and rental expense is one of the significant overheads that tenants will wish to cut down on. This might adversely affect the DPU of the REIT moving forward.
It is worth nothing however that the top tenant is a wholly owned subsidiary of Parkway Pantai Limited, who is a wholly owned subsidiary of Kuala Lumpur-based IHH Healthcare, Asia’s largest private healthcare group. IHH Healthcare is also in a good financial position, based on their latest financial highlights.
Website: IHH Healthcare Financial Highlights
The largest shareholders of IHH Healthcare are Mitsui of Japan (one of the largest sogo shosha in Japan) and then followed by the Malaysian government’s sovereign wealth fund Khazanah Nasional. This leads me to not expect the tenants to run into cash flow problems in the short term.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | -0.8% | Neutral |
| Occupancy | 100.0% | Favorable |
| Gearing Ratio | 35.4% | Favorable |
| Interest Coverage | 9.1x | Favorable |
| Debt Maturity Profile | 3.0 years | Favorable |
| Price to Book Ratio | 1.73 | Unfavorable |
| Overall | Favorable |
The overall metric has remained Favorable. Key factor to look out for over the next few quarters is on the interest rates of Japanese Yen denominated borrowings. An increase in interest rate may result in further decreases to DPU.
Background
PLife is one of Asia’s largest listed healthcare Real Estate Investment Trusts (“REIT”). It invests in income-producing real estate and real estate related assets that are used primarily for healthcare and healthcare-related purposes (including, but not limited to, hospitals, nursing homes, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices).
It owns the largest portfolio of strategically located private hospitals in Singapore comprising Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. In addition, it has high-quality nursing home and care facility properties across various prefectures in Japan, as well as strategically located nursing homes in France. Managed by Parkway Trust Management Limited, PLife REIT has been listed on the Mainboard of the Singapore Stock Exchange since August 2007.
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Website: Parkway Life REIT (SGX: C2PU): 2025 First Quarter Business Update
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