SGX Market Updates

Highlights of Singapore’s Three Healthcare REITs


PUBLISHED ON |

27 April 2017

  • RHT generated total returns of 2.7% and 33.1% in the year-to-date and last 12 months, bringing its three-year total return to 80.5%. The trust currently trades at 1.1x price-to-book (P/B) ratio with 7.7% dividend yield.

  • Parkway Life generated total returns of 11.0% and 11.1% in the year-to-date and last 12 months, bringing its three-year total return to 21.7%. The trust currently trades at 1.5x price-to-book (P/B) ratio with 5.1% dividend yield.

  • First REIT generated total returns of 9.0% and 14.7% in the year-to-date and last 12 months, bringing its three-year total return to 43.6%. The trust currently trades at 1.3x price-to-book (P/B) ratio with 6.4% dividend yield.




12m Total Returns

Source: Bloomberg (data as of 25 April 2017)



Name SGX Code Gearing % Interest Cover (x) Weighted Average
Tenure of Debt
(Years)
Data correct
as of
Parkway Life REIT C2PU 37.6 10.0 3.50 31-Mar-2017
First REIT AW9U 31.0 5.7 1.56 31-Mar-2017
RHT Health Trust RF1U 26.6 6.7 1.00 31-Dec-2016

Source: Company data




RHT Health Trust


Stock Performance and Valuations
  • RHT generated total returns of 2.7% and 33.1% in the year-to-date and last 12 months, bringing its three-year total return to 80.5%.
  • From a valuation perspective, the trust currently trades at a 1.1x price-to-book (P/B) ratio with a dividend yield of 7.7%. Over the last four years, the REIT has averaged a P/B ratio of 1.03, with a high of 1.13 as at 31 March 2015 and a low of 0.95 as at 31 March 2014.

Recent Earnings and Management Outlook
  • On 6 February 2017, RHT released results for its third quarter ended 31 December 2016. The trust reported a distribution per unit (DPU) of 1.25 Singapore cents (based on an INR/SGD exchange rate of 47.57), -34.6% from the 1.91 Singapore cents in the year-ago quarter (based on an INR/SGD exchange rate of 46.98). Total revenue in 3Q FY17 was S$22.5 million, versus S$34.8 million in the year-earlier quarter.
  • Debt profile statistics:
    • Gearing of 19.9% as at 31 December 2016; post-acquisition of land, development projects and post-disposal of FHTL stake, gearing is 26.6%. This compares with 19.1% as at 30 September 2016; post-acquisition of land and development projects, before sale of FHTL stake, gearing is 22.5%.
    • Interest cover of 6.7x as at 31 December 2016 post FHTL disposal, vs 9.1x as at 30 September 2016 before FHTL disposal.
    • Weighted average tenure of debt of 1.0 year as at 31 December 2016, vs 1.26 years as at 30 September 2016.
  • RHT said its results were affected by a slowdown in its hospital business following the country’s demonetisation policy, introduced in November 2016. DPU declined QoQ mostly due to the disposal of its 51% economic interest in Fortis Hospital Ltd (FHTL) on 12 October 2016, and less favourable foreign exchange rates at the time the forward contracts were entered into.
  • Management will expand and improve its portfolio of medical facilities – the next project to be completed will be a 200-bed oncology block at BG Road Clinical Establishment, followed by enhancements within existing Clinical Establishments to upgrade medical facilities and programs being offered.

The full financial statement can be read here.

To read the kopi-C profile of RHT CEO Gurpreet Dhillon, click here.


Key Highlights
  • RHT is the first business trust listed on SGX with India-based healthcare assets. It has a portfolio of 12 Clinical Establishments, four greenfield Clinical Establishments and two Operating Hospitals strategically located across India. These assets are valued at about S$1.1 billion as at 31 March 2016, based on an INR/SGD exchange rate of 49.20.
  • RHT will continue to focus on organic growth through greenfield developments and the expansion/upgrading of existing facilities. Competition in India to acquire new healthcare assets remains high, which means organic growth offers opportunities to obtain higher returns from its investments.
  • In March this year, media reported that RHT’s major shareholder, Fortis Healthcare, was considering a buyout of all the units it didn't already own in the trust. The trust said it had approached Fortis, which currently owns 29.6% of RHT, for clarification, and Fortis has said the media report was “speculative”.



Parkway Life REIT


Stock Performance and Valuations
  • Parkway Life generated total returns of 11.6% and 11.5% in the year-to-date and last 12 months, bringing its three-year total return to 22.2%.
  • From a valuation perspective, the trust currently trades at a 1.5x price-to-book (P/B) ratio with a dividend yield of 5.1%. Over the last five years, the REIT has averaged a P/B ratio of 1.39, with a high of 1.44 as at 31 December 2013 and a low of 1.21 as at 31 December 2011.

Recent Earnings and Management Outlook
  • On 25 April 2017, Parkway Life REIT reported results for the three months ended 31 March 2017. It posted a 9.6% YoY jump in DPU for the first quarter to 3.28 Singapore cents, with gross revenue rising 0.2% to S$26.9 million, and net property income holding steady at S$25.1 million.
  • Based on a closing market price of S$2.52 as at 31 March, the trust had an annualised distribution yield of 5.2% for the period, up from an annualised yield of 4.8% in the year-ago quarter.
  • Debt profile statistics:
    • Gearing of 37.6% as at 31 March 2017, vs 36.3% as at 31 December 2016
    • Interest cover of 10.0x as at 31 March 2017, vs 8.7x as at 31 December 2016
    • Weighted average tenure of debt of 3.5 years as at 31 March 2017, vs 3.2 years as at 31 December 2016
  • All long-term loans due in FY2018 have successfully been termed out in 1Q 2017, and there will be no long-term refinancing needs till FY2019.

The full statement can be read here.

To read the kopi-C profile of Parkway Life REIT CFO Loo Hock Leong, click here.


Key Highlights
  • Parkway Life REIT is one of Asia’s largest listed healthcare REITs by asset size. It owns a portfolio of 44 properties valued at approximately S$1.7 billion as at 31 December 2016. It owns the largest portfolio of private hospitals in Singapore, comprising Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital. It also has 40 assets in Japan, including one pharmaceutical product distributing and manufacturing facility in Chiba Prefecture, as well as 39 nursing home and care facilities in other prefectures. It also owns strata-titled units/lots at Gleneagles Intan Medical Centre Kuala Lumpur in Malaysia.
  • In February, the REIT successfully completed its second asset recycling initiative as it redeployed freed-up capital from the divestment of its four Japan properties in December 2016 to acquire five Japan properties. They comprise four nursing homes and one group home for elderly dementia residents. Following the purchase, the value of its Japan portfolio stands at about 38% of total assets under management.



First REIT


Stock Performance and Valuations
  • First REIT generated total returns of 9.0% and 14.3% in the year-to-date and last 12 months, bringing its three-year total return to 43.6%.
  • From a valuation perspective, the trust currently trades at a 1.3x price-to-book (P/B) ratio with a dividend yield of 6.4%. Over the last five years, the REIT has averaged a P/B ratio of 1.20, with a high of 1.28 as at 31 December 2012 and a low of 1.10 as at 31 December 2013.

Recent Earnings and Management Outlook
  • On 17 April, First REIT reported results for the three months ended 31 March 2017. It unveiled a record DPU for the first quarter – up 1.4% year-on-year to 2.14 Singapore cents. Gross revenue rose 2.5% YoY to S$27.2 million, while net property income gained 2.5% to S$26.9 million.
  • Based on an annualised DPU of 8.68 cents and a closing share price of S$1.31 as at 31 March 2017, the latest distribution translates to a yield of 6.6%. This is the trust’s 11th consecutive quarter of DPU growth since 2Q 2014.
  • Debt profile statistics:
    • Gearing of 31.0% as at 31 March 2017, vs 31.1% as at 31 December 2016
    • Interest cover of 5.7x as at 31 March 2017, vs 5.2x as at 31 December 2016
    • Weighted average tenure of debt of 1.56 years as at 31 March 2017, vs 1.81 years as at 31 December 2016
  • Indonesia, Southeast Asia’s largest economy, remains First REIT’s key focal market. The country’s gross domestic product grew 5.02% in 2016, up from 4.88% in 2015, with the International Monetary Fund forecasting 2017 growth of 5.1%.
  • Indonesia’s healthcare sector remains supported by its national health insurance scheme, which now allows more affluent Indonesians to supplement coverage under the scheme with private health insurance.

The full statement can be read here.


Key Highlights
  • First REIT is the first healthcare real estate investment trust to list on SGX in December 2006. It is sponsored by Indonesia's largest listed real estate developer PT Lippo Karawaci Tbk, and operates the Siloam Hospitals Group.
  • Managed by Bowsprit Capital Corporation, First REIT has a portfolio of 18 properties, comprising 14 in Indonesia, three in Singapore and one in South Korea. Valued at S$1.3 billion as at 31 December 2016, the portfolio includes hospitals, nursing homes and rehabilitation centres.
  • Opportunities for further yield-accretive acquisitions in the healthcare sector remain strong for First REIT, with its right-of-first-refusal to the growing pipeline of 43 hospitals from its sponsor.



The table details the three Healthcare REITs, sorted by market capitalisation. Click on the trust name to view its profile in SGX StockFacts.

Name SGX
Code
Market Cap
S$m
Total
Return
YTD
%
Total
Return
12M
%
Total
Return
3Y
%
Dvd
Ind Yld
%
P/B
Parkway Life REIT C2PU 1,567 11.1 11.0 21.7 5.1 1.5
First REIT AW9U 1,036 9.0 14.7 43.6 6.4 1.3
RHT Health Trust RF1U 758 2.7 33.1 80.5 7.7 1.1
Average 7.6 19.6 48.6 6.4 1.3

Source: SGX, Bloomberg & SGX StockFacts (data as of 26 April 2017)




Analyst Ratings

Name SGX Code No of Analysts Covering Buy Ratings Hold Ratings Sell Ratings
Parkway Life REIT C2PU 5 3 2 0
First REIT AW9U 4 2 2 0
RHT Health Trust RF1U 4 0 4 0

Source: Bloomberg (data as of 25 April 2017)




Previous Market Updates on Healthcare Sector







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