Parkway Life REIT - Steady growth in distribution per unit

Higher distribution per unit in 2H25. 

Parkway Life REIT delivered another resilient performance, with 2H2025 gross revenue rising 7.1% YoY to S$78.0m and net property income increasing 7.9% YoY to S$73.6m. 

This translated into distributable income growth of 8.8% YoY to S$49.9m, driving a 3.5% YoY increase in 2H2025 DPU to 7.64 cents (FY2025 DPU: 15.29 cents). 

Singapore portfolio anchors long-term income visibility and DPU resilience. 

The Singapore hospitals remain the earnings backbone, contributing ~65% of gross revenue, underpinned by a 20.4-year master lease (to Dec 2042). 

The lease structure provides fixed 2–3% annual rent step-ups through FY2025, transitioning to a CPI-linked framework from FY2026 with built-in downside protection and variable upside. 

Management guidance indicates minimum rent stepping up by ~24% from ~S$79.7m in FY2025 to ~S$99.1m in FY2026, supporting a clear step-change in income visibility. Triple-net lease terms further shield margins from operating cost inflation.

Japan portfolio offers defensive lease protection. 

The Japan nursing home portfolio continues to provide stable, diversified income, supported by long lease tenors, predominantly “up-only” reviews, meaningful downside protection mechanisms, and a broad operator base. 

The management is looking at a rejuvenation plan, aiming to refresh ageing assets through selective disposals, lease restructuring and AEIs to enhance long-term returns.

Europe emerges as a third growth pillar via France. 

The France nursing home portfolio contributes ~8% of gross revenue, anchored by 11 freehold assets (~850 beds) acquired in December 2024. 

The acquisition adds geographic diversification while maintaining the REIT’s focus on regulated, defensive healthcare assets. 

Management has indicated openness to further acquisitions and targeted AEIs (e.g. annex expansions) to enhance returns.

Strong balance sheet. 

The REIT maintains conservative leverage with gearing at 33.4%, a low all-in cost of debt of 1.59%, and strong interest cover of 8.6x. Interest rate risk is actively managed with ~93% of debt hedged, while FX exposure is mitigated through natural hedging and income hedges extending to 1Q2029 (JPY) and 1Q2030 (EUR).

Maintain BUY at S$4.60. 

We continue to like Parkway Life REIT for Its exposure to the growing healthcare sector, with a track record of generating consistent DPU growth since its IPO in 2007. It currently trades at a price-to-book valuation of 1.59x with forward dividend yield of 4.1%.

Related links:

• Parkway Life REIT share price history and share price target
• Parkway Life REIT history and dividend forecasts

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