See also: PLife REIT posts 1.4% increase in 1Q DPU to 3.32 cents despite Covid-19 outbreak
The brokerage has also reduced its DPU forecast for FY2020 by 1.1% to factor in the $1.7 million set aside to aid tenants affected by the Covid-19 pandemic.
In a Tuesday report, analyst Lock Mun Yee believes that PLife REIT possesses a stable yield backed by its defensive income structure due to its reinforced balance sheet with a longer debt maturity profile and lower-cost debt.
According to Lock, PLife REIT has a gearing at 38.5% at end 1Q2020, and a debt headroom of $240 million, “assuming a gearing limit of 45% to tap potential inorganic growth opportunities”.
“While we like PLife REIT for its stable yield backed by its defensive income structure, our recommendation remains a ‘hold’ given the 5.6% total returns potential based on the current share price. Upside risks include accretive acquisitions, while downside risks include deflationary periods whereby Singapore rent revisions would revert to 1%,” she says.
As at 12.34pm, units of Parkway Life REIT are trading 4 cents lower, or down 1.2% at $3.36.
