Broker: DBS Group Research
Date of Report: 22 May 2026
Excerpt from DBS Group Research report.
Report Summary
- Stock: Parkway Life REIT (PREIT SP)
- Action: Maintain BUY
- Target Price: SGD 4.75
- Key Investment Thesis: Parkway Life REIT is positioned as one of Asia’s largest healthcare REITs with stable, visible earnings and long-term income visibility through 2042. The portfolio includes prime Singapore hospitals, Japanese nursing homes, and French assets, all in markets with strong aged-care fundamentals.
- Growth Drivers:
- Major uplift in distributions expected from 2026, following lease renewal and roll-off of rent rebates. DPU (distribution per unit) is forecast to grow nearly 20% y/y in FY26.
- Further growth potential from asset enhancement initiatives (AEI) and acquisitions, with ample debt headroom (gearing at 33%).
- Upside if Mount Elizabeth Orchard Hospital delivers better-than-expected revenue post-refurbishment, and potential shift to a revenue-sharing rental structure could accelerate DPU growth by 5-10% in FY27.
- Embedded inflation-linked rental growth (CPI + 1%) and defensive income profile.
- Valuation: PREIT trades at ~1.5x forward P/B and a 4.4% forward yield. FY26F yield is attractive at 4.5%, above its 5-year historical mean.
- Risks: Currency risks (JPY/EUR exposure, hedged to 1Q29/1Q30) and rising interest rates on JPY debt. However, PREIT’s average cost of debt remains among the lowest in the sector.
- Outlook: PREIT remains a preferred pick in the sector with high earnings visibility, robust growth prospects, and potential for higher yields if rental structures evolve as anticipated.
above is an excerpt from a report by DBS Group Research. Clients of DBS Group Research can be the first to access the full report from the DBS website : https://www.dbs.com/
