Broker: UOB Kay Hian
Date of Report: 18 August 2025
Parkway Life REIT: Robust Growth and Strategic Expansion into Europe Bolster Defensive Strength
Overview: Defensive Growth Anchored by Strategic Healthcare Assets
Parkway Life REIT (PREIT) stands as one of Asia’s largest listed healthcare REITs, focusing primarily on income-producing real estate for healthcare and related purposes. With a diversified geographic footprint and a reputation for defensive income streams, PREIT’s latest results reflect continued resilience and growth momentum.
- Share Price: S\$4.04
- Target Price: S\$5.34 (+32.2% upside)
- Market Cap: S\$2,635.8m (US\$2,055.7m)
- Major Shareholders: Parkway Holdings (32.7%), Cohen & Steers (4.9%)
- GICS Sector: Real Estate
- Bloomberg Ticker: PREIT SP
- Units Outstanding: 652.4 million
1H25 Results: Higher Distributions and Enhanced Geographic Diversification
PREIT delivered a strong financial performance in 1H25, with significant contributions from recent acquisitions:
- Gross Revenue: S\$78.3 million (+8.1% YoY)
- Net Property Income (NPI): S\$73.8 million (+8.0% YoY)
- Distributable Income: S\$49.9 million (+9.5% YoY)
- DPU: 7.65 S cents (+1.5% YoY)
Key drivers of growth included:
- Acquisition of one nursing home in Japan (Aug 2024) and 11 freehold nursing homes in France (Dec 2024).
- Stable annual 3% step-up in rents from three core Singapore hospitals.
- Foreign exchange gains offsetting yen depreciation against SGD.
Strategic Expansion: Entry into European Market
A pivotal milestone for PREIT was the acquisition of 11 nursing homes in France for €111.2m (S\$159.9m). Operated by DomusVi under 12-year leases with fixed and indexed rent escalations, these assets provide an attractive NPI yield of 6.5% and contributed 7.4% of total revenue and 7.8% of group NPI in 1H25. This move diversifies PREIT’s overseas income base beyond Japan and positions the REIT for further international growth.
Core Singapore Portfolio: Stability and Predictability
Singapore remains the cornerstone of PREIT’s portfolio, anchored by three hospital properties on long-term master leases with a WALE of 20.4 years. These assets ensure stable, predictable cash flows and reinforce PREIT’s disciplined growth strategy.
Financial Highlights and Key Metrics
| Year |
Net Turnover (S\$m) |
EBITDA (S\$m) |
Operating Profit (S\$m) |
Net Profit (Rep./Act.) (S\$m) |
Net Profit (Adj.) (S\$m) |
EPU (S\$ cents) |
DPU (S\$ cents) |
PE (x) |
P/B (x) |
DPU Yield (%) |
Net Margin (%) |
ROE (%) |
| 2023 |
147 |
122 |
122 |
100 |
103 |
17.0 |
14.8 |
23.7 |
1.7 |
3.7 |
68.1 |
7.1 |
| 2024 |
145 |
119 |
119 |
95 |
101 |
16.3 |
14.9 |
24.7 |
1.7 |
3.7 |
65.4 |
6.4 |
| 2025F |
157 |
130 |
130 |
197 |
109 |
16.7 |
15.1 |
24.1 |
1.5 |
3.7 |
125.4 |
12.0 |
| 2026F |
158 |
132 |
132 |
196 |
112 |
17.1 |
17.8 |
23.6 |
1.5 |
4.4 |
124.4 |
11.3 |
| 2027F |
161 |
135 |
135 |
114 |
114 |
17.5 |
18.1 |
23.1 |
1.5 |
4.5 |
70.8 |
6.4 |
Tax Exemption and Financial Risk Management
PREIT secured tax exemption from IRAS for foreign-sourced dividends and interest income from seven of its 11 French nursing homes, resulting in estimated annual tax savings of S\$1.26m (0.19 S cents). Discussions continue for the remaining four assets, potentially adding S\$0.44m in annual savings.
Financial stability remains strong:
- Aggregate leverage: 35.4% (improved 0.7ppt QoQ)
- Interest coverage: 9.1x
- Average cost of debt: 1.5% (2Q25)
- 97% of interest rate exposure hedged
- Foreign income from Japan and France fully hedged until 1Q29 and 1Q30, respectively
Singapore Healthcare Market: Sustained Growth Prospects
Singapore’s healthcare system, globally renowned for its standards and outcomes, is poised for robust expansion. By 2030, 24% of Singapore’s population will be aged 65 or older, with healthcare expenditure projected to climb at a CAGR of 8.9% to S\$30 billion. Medical tourism remains strong, attracting 500,000 visitors annually, half from Indonesia.
Asset Enhancement Initiatives and Portfolio Optimization
- Mount Elizabeth Hospital (MEH) Upgrade: Project Renaissance is near completion, with all beds back online since mid-2025. Enhanced layouts and 56 additional single-bed wards boost operating efficiency and capacity for local and foreign patients.
- Gleneagles Hospital AEI: Potential asset enhancement is under evaluation, targeting improved efficiency and revenue. The initiative should be finalised by 1H26.
- Potential New Acquisitions: PREIT is exploring day surgery, rehabilitation, and ambulatory centres in Singapore.
Strategic Divestment: Exit from Malaysia
PREIT completed the sale of specialist clinic units in Kuala Lumpur to Pantai Medical Centre for RM20.1m (S\$6.1m), 4.6% above the latest valuation and 25.6% above the original purchase price, yielding a pre-tax gain of S\$0.1m.
Earnings Revision and Valuation
Due to better-than-expected 1H25 results and French tax exemptions, the 2025 DPU forecast was raised by 1.7%. PREIT’s defensive characteristics—healthcare orientation, long WALE (14.9 years), and prudent financial management—make it an attractive choice for risk-averse investors.
- Target Price: S\$5.34 (DDM-based, cost of equity 6.0%, terminal growth 2.8%)
Key Share Price Catalysts
- Higher contributions from extended leases for Singapore hospitals
- Asset enhancement at Gleneagles Hospital
- Yield-accretive acquisitions in Singapore
Operating Metrics: Consistent Performance and Growth
| Quarter |
DPU (S cents) |
Occupancy |
Aggregate Leverage |
Average Cost of Debt |
WALE (years) |
Weighted Avg Debt Maturity (years) |
| 2Q24 |
3.75 |
99.7% |
35.3% |
1.35% |
16.1 |
3.3 |
| 3Q24 |
3.76 |
99.7% |
37.5% |
1.36% |
15.8 |
3.0 |
| 4Q24 |
3.62 |
99.7% |
34.8% |
1.48% |
15.3 |
3.5 |
| 1Q25 |
3.84 |
99.7% |
36.1% |
1.50% |
15.2 |
3.3 |
| 2Q25 |
3.81 |
99.7% |
35.4% |
1.50% |
14.9 |
3.0 |
Asset Mix by Net Property Income (NPI)
- Singapore: 65.9%
- Japan: 26.2%
- France: 7.8%
- Malaysia: 0.1%
Debt Maturity and Ample Headroom
PREIT demonstrates strong debt management, with no major refinancing needs until September 2026 and significant headroom:
- Aggregate leverage: 36.4%
- Debt headroom assuming 45% gearing: S\$928m
Profit & Loss, Balance Sheet, and Cash Flow Summary
| Year |
Net Turnover (S\$m) |
EBITDA (S\$m) |
Operating Profit (S\$m) |
Net Profit (Rep./Act.) (S\$m) |
Net Profit (Adj.) (S\$m) |
Cash/ST Investment (S\$m) |
Total Assets (S\$m) |
Shareholders’ Equity (S\$m) |
LT Debt (S\$m) |
Distribution to Unitholders (S\$m) |
| 2024 |
145.3 |
118.5 |
118.5 |
95.0 |
100.7 |
29.5 |
2,551.1 |
1,570.0 |
866.2 |
121.1 |
| 2025F |
157.0 |
130.0 |
130.0 |
197.0 |
109.2 |
39.1 |
2,746.1 |
1,702.2 |
925.0 |
98.3 |
| 2026F |
157.7 |
131.9 |
131.9 |
196.2 |
111.5 |
39.8 |
2,841.6 |
1,782.5 |
940.0 |
115.9 |
| 2027F |
160.8 |
134.5 |
134.5 |
113.9 |
113.9 |
39.3 |
2,851.2 |
1,778.1 |
953.0 |
118.3 |
Conclusion: Parkway Life REIT Remains a Defensive, Yield-Accretive Play
PREIT’s continued growth, strategic expansion into Europe, and disciplined financial management underpin its appeal for risk-averse investors. With robust operating metrics, uninterrupted DPU growth since IPO, and a well-balanced geographic and asset mix, PREIT is well-positioned for further value creation and sustainable returns. The outlook is bright, with upside potential driven by asset enhancements, portfolio diversification, and resilient healthcare demand.
