Sunday, November 3, 2019

Dividend Warrior's Top Defensive REIT - The King Of S-REITs!

Singaporean parents want their children to become successful and well-paid lawyers, doctors and bankers. Some people do not end up in these top-tier professions. That's just life. So, what's the next best thing to do. Well, we can try to milk them for rental income. For example, Mount Elizabeth Hospital and Gleneagles Hospital have some of the best healthcare talents in the region. By investing in ParkwayLife REIT, unit-holders are essentially banking on the earning abilities of specialist doctors and rising demand for better healthcare services. Furthermore, the huge number of Japanese nursing homes in ParkwayLife REIT's portfolio also allows unit-holders to benefit from Japan's aging population, which is pretty much a guaranteed long-term trend. It is not cyclical. There are other reasons why this premium healthcare REIT is my top 'defender'.



  • The manager has never sought a general mandate to issue new units. In other words, they were able to grow the DPU and NAV of the REIT without using private placements, preferential offerings or rights issues, ever. Their focus is sustainable, modest growth over long-term. Their track record is hard proof. 11 consecutive years of DPU growth. They even managed to generate capital gains from divesting older assets.
  • Their Singapore hospitals are operated under very long leases of (15 + 15) years since 2007. Their Japanese nursing homes have a WALE of 12.8 years.
  • Leases are structured in a way that 90% of the rents for the entire portfolio have downside protection. 60% of rents are pegged to inflation rate. Its Singapore hospitals have a guaranteed 1% growth in minimum rent annually. Yes, guaranteed. How awesome is that!
  • Debt maturity profile is well spread out over 3 years. Very little refinancing needs this year and next. All-in cost of debt is ridiculously low at 0.93%, compared to other S-REITs. The interest cover is 13.5 times, highest among S-REITs.


2 comments:

huglau said...

Dear warrior,
Their have an other defensive reit call First Reit, how do you think about it, because ParkwayLife is trading as higher p/b.

Passive dividend give freedom said...

Hi

"Their Singapore hospitals are operated under very long leases of (15 + 15) years since 2007. "

What will happen after the long lease expired 30 years later from 2007 which is 2037?

Is it parkway REITS no longer the owner of the Mount Elizabeth and Gleneagles hospital?

Tks