Long-term social demographic shift favours healthcare stocks. A silver tsunami is coming over the next few decades. Due to the rapidly aging population in Singapore, hospitals and nursing homes will be in greater demand. By 2030, around 27% of Singapore’s population will be over 65 years old.
Secondly, the demand for better healthcare is increasing due to the emergence of the middle-class population in countries such as China, Indonesia and India. The rich patients from China, India and Indonesia want the best medical treatment money can buy. High-end private hospitals such as Mount Elizabeth and Gleneagles Hospital stand to benefit from this trend.
1. First REIT
· Acquired 2 new yield-accretive properties in 2012. These new properties are starting to contribute rental income.
· Gearing is still at a low level of 27%. Room for future growth.
· Increase in distributable income.
· Forex risk. Weakening Indonesian rupiah against the Sing dollar.
· Trading above NAV.
· Risk of earthquakes in Indonesia. Covered by insurance though.
· Pipeline of possible future acquisitions from its sponsor.
2. PLife REIT
· Increase in distributable income
· Gearing remains healthy at 32.9%
· Rental rate is pegged to the CPI (inflation rate). Therefore, it will benefit from Singapore’s high inflation rate.
· Forex risk. Weakening Japanese Yen against the Sing dollar (Plife REIT has some properties in Japan)
· Trading way above NAV.
· Risk of earthquakes in Japan. Covered by insurance though.