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Business Times
18-05-2025
- Business
- Business Times
Healthcare S-Reits see encouraging institutional interest so far this year
HEALTHCARE S-Reits have been the top-performing Reit sub-sector this year, offering an average total return of 6.2 per cent against a 1.1 per cent decline in the iEdge S-Reit Index. The sub-sector also outperformed other Reit sub-sectors over the one-year and three-year periods, clocking average returns of 16.8 and 6.2 per cent, respectively. The two healthcare S-Reits listed in Singapore have reported net institutional inflows amounting to S$17.6 million in the year to date. In contrast, the S-Reit sector as a whole suffered net institutional outflows totalling S$527 million over the same period. Here is a look at the two healthcare S-Reits' business updates for the first quarter of 2025. ParkwayLife Reit ParkwayLife Reit (PLife Reit) is one of the largest listed healthcare Reits in Asia. Its portfolio value stands at about S$2.46 billion, made up of healthcare properties across Singapore, Japan and France. In the first quarter of 2025, PLife Reit posted increases in both gross revenue and net property income (NPI). Gross revenue rose by 7.3 per cent year on year to S$39 million in Q1 2025; NPI went up 7.5 per cent over the same period, to S$36.8 million. The strong performance was driven by contributions from a nursing home acquired in Japan last August, and 11 other homes acquired in France in December 2024. The gains were, however, partially offset by the depreciation of the Japanese yen. Step-up lease agreements in Singapore properties also contributed to the higher distributable income in Q1 2025. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Reit's distributable income was S$25 million, up 9.1 per cent year on year. Distribution per unit (DPU) for the period is 1.3 per cent higher at S$0.0384 for the period, and will be distributed in H1 2025. As part of its portfolio optimisation strategy, the Reit also announced that it was divesting its Malaysia portfolio, which accounts for 0.2 per cent of its gross revenue, at S$6.09 million. With this move, the Reit marks its exit from the country. CGSI Research's Lock Mun Yee notes that PLife Reit's income profile is underpinned by a robust rental structure, with built-in rent escalation features and its Singapore portfolio contributing to 65.2 and 66.2 per cent of its total Q1 2025 revenue and NPI, respectively. She also highlights that the Reit has a strong balance sheet, with a gearing ratio of 36.1 per cent, and that 90 per cent of its interest-rate exposure is hedged into fixed rates. Bloomberg pegs PLife Reit's 12-month consensus estimated target price at S$4.70. First Reit For the first quarter of 2025 period, First Reit posted a 2.8 per cent year-on-year decline in both rental and other income, and net property and other income to S$25.4 million and S$24.6 million, respectively. The decline was attributed to the depreciation of the Japanese yen and Indonesian rupiah against the Singdollar. As a result, distributable amount declined by 2.2 per cent year on year, and DPU dipped to S$0.0058 for the period. In local currency terms, Q1 2025 rental and other income for the Reit's Indonesia portfolio rose by 5.5 per cent year on year, while that of Japan remained unchanged. As at Mar 31, 2025, First Reit's gearing rose slightly to 40.7 per cent, and has 56.7 per cent of the debt portfolio either on fixed rates or hedged. Lower interest rates led to a drop in cost of debt from 5 per cent in Q1 2024 to 4.7 per cent in Q1 2025, and the Reit has no refinancing requirements until May 2026. Turning to its strategic review, First Reit says a marketing agent has been appointed to run a competitive and robust price-discovery process which entailed reaching out to more than 60 parties to solicit interest for the Indonesia portfolio. First Reit has also approached multiple parties to explore options relating to the business as part of assessing opportunities. Phillip Securities Research's Darren Chan notes that First Reit is trading at an attractive FY 2025e DPU yield of 9.2 per cent, and that organic growth will come from more Indonesian hospitals achieving performance-based rent. Bloomberg says First Reit has a 12-month consensus estimated target price of S$0.30. The writer is a research analyst at SGX. For more research and information on Singapore's Reit sector, visit for the S-Reits & Property Trusts Chartbook.
Business Times
18-05-2025
- Business
- Business Times
Healthcare S-Reits outperforming broader S-Reit market and sub-segments so far this year
HEALTHCARE S-Reits have been the top-performing Reit sub-sector this year, offering an average total return of 6.2 per cent against a 1.1 per cent decline in the iEdge S-Reit Index. The sub-sector also outperformed other Reit sub-sectors over the one-year and three-year periods, clocking average returns of 16.8 and 6.2 per cent, respectively. The two healthcare S-Reits listed in Singapore have reported net institutional inflows amounting to S$17.6 million in the year to date. In contrast, the S-Reit sector as a whole suffered net institutional outflows totalling S$527 million over the same period. Here is a look at the two healthcare S-Reits' business updates for the first quarter of 2025. ParkwayLife Reit ParkwayLife Reit (PLife Reit) is one of the largest listed healthcare Reits in Asia. Its portfolio value stands at about S$2.46 billion, made up of healthcare properties across Singapore, Japan and France. In the first quarter of 2025, PLife Reit posted increases in both gross revenue and net property income (NPI). Gross revenue rose by 7.3 per cent year on year to S$39 million in Q1 2025; NPI went up 7.5 per cent over the same period, to S$36.8 million. The strong performance was driven by contributions from a nursing home acquired in Japan last August, and 11 other homes acquired in France in December 2024. The gains were, however, partially offset by the depreciation of the Japanese yen. Step-up lease agreements in Singapore properties also contributed to the higher distributable income in Q1 2025. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Reit's distributable income was S$25 million, up 9.1 per cent year on year. Distribution per unit (DPU) for the period is 1.3 per cent higher at S$0.0384 for the period, and will be distributed in H1 2025. As part of its portfolio optimisation strategy, the Reit also announced that it was divesting its Malaysia portfolio, which accounts for 0.2 per cent of its gross revenue, at S$6.09 million. With this move, the Reit marks its exit from the country. CGSI Research's Lock Mun Yee notes that PLife Reit's income profile is underpinned by a robust rental structure, with built-in rent escalation features and its Singapore portfolio contributing to 65.2 and 66.2 per cent of its total Q1 2025 revenue and NPI, respectively. She also highlights that the Reit has a strong balance sheet, with a gearing ratio of 36.1 per cent, and that 90 per cent of its interest-rate exposure is hedged into fixed rates. Bloomberg pegs PLife Reit's 12-month consensus estimated target price at S$4.70. First Reit For the first quarter of 2025 period, First Reit posted a 2.8 per cent year-on-year decline in both rental and other income, and net property and other income to S$25.4 million and S$24.6 million, respectively. The decline was attributed to the depreciation of the Japanese yen and Indonesian rupiah against the Singdollar. As a result, distributable amount declined by 2.2 per cent year on year, and DPU dipped to S$0.0058 for the period. In local currency terms, Q1 2025 rental and other income for the Reit's Indonesia portfolio rose by 5.5 per cent year on year, while that of Japan remained unchanged. As at Mar 31, 2025, First Reit's gearing rose slightly to 40.7 per cent, and has 56.7 per cent of the debt portfolio either on fixed rates or hedged. Lower interest rates led to a drop in cost of debt from 5 per cent in Q1 2024 to 4.7 per cent in Q1 2025, and the Reit has no refinancing requirements until May 2026. Turning to its strategic review, First Reit says a marketing agent has been appointed to run a competitive and robust price-discovery process which entailed reaching out to more than 60 parties to solicit interest for the Indonesia portfolio. First Reit has also approached multiple parties to explore options relating to the business as part of assessing opportunities. Phillip Securities Research's Darren Chan notes that First Reit is trading at an attractive FY 2025e DPU yield of 9.2 per cent, and that organic growth will come from more Indonesian hospitals achieving performance-based rent. Bloomberg says First Reit has a 12-month consensus estimated target price of S$0.30. The writer is a research analyst at SGX. For more research and information on Singapore's Reit sector, visit for the S-Reits & Property Trusts Chartbook.
Business Times
29-04-2025
- Business
- Business Times
CGSI upgrades OUE Reit to ‘add' on improved outlook
[SINGAPORE] CGS International (CGSI) has upgraded its recommendation for OUE Reit to 'add' from 'hold', and raised its price target marginally to S$0.33 from S$0.32. In a report on Monday (Apr 28), CGSI analysts Lock Mun Yee and Li Jialin said the Singapore-listed real estate investment trust (S-Reit) could see higher interest savings ahead, which would bode well for its distribution per unit (DPU). They noted that the Reit saw a lower cost of debt at 4.2 per cent in the first quarter of FY2025, which would translate into interest expense savings of close to S$3 million. For the Q1 ended March, the manager of OUE Reit reported an 11.3 per cent drop in financing costs to S$22.6 million. 'Management expects further interest expense savings from a lower base rate when its share of the OUE Allianz Bayfront borrowing of S$311 million is re-financed in the second half of FY2025,' the analysts added. Therefore, the research house is raising its DPU estimates for the Reit by 3.8 to 4.5 per cent for FY2025 to FY2027. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up This would mean an 'attractive' estimated DPU yield of 7.3 per cent for FY2025, the analysts said. In addition, they point out, the Reit is trading at an 'undemanding valuation', with a price-to-book ratio of 0.47 times. Commercial uplift In its Q1 business update on Apr 24, the Reit manager reported an 11.9 per cent decrease in revenue to S$66 million, and a 12.1 per cent drop in net property income (NPI) to S$53.2 million. The manager attributed the decline to the divestment of Lippo Plaza in Shanghai, as well as lower contributions from the hospitality segment due to weaker concerts and Mice pipeline compared to the previous year. OUE Reit's commercial segment, however, saw positive growth. On a like-for-like basis adjusted to exclude the recently divested Lippo Plaza Shanghai, revenue and NPI for the segment both rose by 2.2 per cent to S$42.7 million and S$32.2 million, respectively. Committed occupancy at the Reit's office portfolio improved to 96.3 per cent. In particular, Mandarin Gallery's committed occupancy inched up to 99.5 per cent – the highest since December 2019. 'Management also took note of growing spending on food and beverage in comparison to shrinking luxury spending by Chinese tourists,' the CGSI analysts said. OUE Reit's office portfolio saw positive rental reversion of 9.9 per cent in Q1, led by OUE Downtown and One Raffles Place; its retail segment at Mandarin Gallery posted positive rental reversion of 4.9 per cent. The analysts noted that the Reit manager renewed 5 per cent out of the 18.6 per cent of expiring leases by gross rental income in FY2025. 'Management expects reversion of single-digit positive reversion to hold up as expiring leases continue being marked to market,' they added. Hospitality headwinds? However, CGSI still sees uncertainty for OUE Reit's hospitality segment. For Q1 FY2025, the Reit's hospitality revenue fell 13.3 per cent to S$23.3 million, while NPI slid 12.5 per cent to S$20.8 million. CGSI's analysts said the decline was mainly led by underperformance at Hilton Orchard, as the number of travellers from the US, Indonesia and China dropped. They noted that revenue per available room (RevPAR) at Hilton Orchard was 19.1 per cent lower at S$249 in March, compared to the year before. The decline was partially offset by a growing contribution from Crowne Plaza, which saw an 8.9 per cent growth in RevPAR to S$247. 'We lowered our RevPAR assumptions for Hilton Singapore Orchard to factor in the impact of macroeconomic headwinds on travel demand, thus lowering our FY2025-2027 revenue forecasts by 3 to 4 per cent,' said CGSI's Lock and Li. Units of OUE Reit were down S$0.005, or 1.8 per cent, at S$0.275 on Tuesday.
