REIT Watch – Healthcare S-REITs outperform broader S-REIT market and sub-segments year to date

Healthcare S-REITs

Source: Bloomberg (data as of 15 May 2025). Dividend yields are as of S-REITs & Property Trusts Chartbook 1Q 2025.
Healthcare S-REITs have been the top-performing REIT sub-sector this year, with an average total return of 6.2 per cent, compared to the iEdge S-REIT Index’s decline of 1.1 per cent. The sub-sector also outperformed other REIT sub-sectors over the 1-year and 3-year periods, averaging 16.8 per cent 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 year-to-date. In contrast, the S-REIT sector as a whole has experienced net institutional outflows totaling S$527 million over the same period.

Here’s a look at the two healthcare S-REITs’ business updates for the first quarter of 2025.

ParkwayLife REIT (PLife REIT) is one of the largest listed healthcare REITs in Asia with a portfolio value of approximately S$2.46 billion comprising healthcare properties across Singapore, Japan and France. For 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$39.0 million in 1Q25, while NPI rose 7.5 per cent over the same period to S$36.8 million.

The strong performance was driven by contribution from one nursing home acquired in Japan in August 2024 and 11 nursing homes acquired in France in December 2024, partially offset by the depreciation of the Japanese Yen. Step-up lease agreements in Singapore properties also contributed to higher distributable income in 1Q25. 

PLife REIT recorded a higher distributable income of S$25.0 million, up 9.1 per cent year-on-year, and declared 1.3 per cent higher in distribution per unit (DPU) at 3.84 cents for the period which will be distributed in 1H25.

As part of its portfolio optimization strategy, the REIT also announced that it was divesting its Malaysia portfolio, which makes up 0.2 per cent of its gross revenue, at S$6.09 million which will mark its exit from Malaysia.

CGSI Research’s Lock Mun Yee notes that PLife REIT’s income profile is underpinned by a robust rental structure with in-built rent escalation features, and its Singapore portfolio contributing to 65.2 per cent and 66.2 per cent of its total 1Q25 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.

According to Bloomberg, PLife REIT has a 12-month consensus estimated target price of S$4.70. 

For the first quarter of 2025 period, First REIT posted a 2.8 per cent year-on-year decline in both rental & other income and net property & other income to S$25.4 million and S$24.6 million respectively. The decline was attributed to the depreciation of Japanese Yen and Indonesian Rupiah against the Singapore Dollar. As a result, distributable amount declined by 2.2 per cent year-on-year and DPU dipped to 0.58 Singapore cents for the period.

In local currency terms, 1Q25 rental & 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 31 March 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 5.0 per cent in 1Q24 to 4.7 per cent in 1Q25, and the REIT has no refinancing requirements until May 2026.

On progress of its strategic review, First REIT updated that a marketing agent has been appointed to run a competitive and robust price discovery process where there was an outreach to over 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 attractive FY25e DPU yield of 9.2 per cent and organic growth will come from more Indonesian hospitals achieving performance-based rent.

According to Bloomberg, First REIT has a 12-month consensus estimated target price of S$0.30. 
For more research and information on Singapore’s REIT sector, visit sgx.com/research-education/sectors for the SREITs & Property Trusts Chartbook.

REIT Watch is a regular column on The Business Times, read the original version.

—

Originally Posted on May 19, 2025 – REIT Watch – Healthcare S-REITs outperform broader S-REIT market and sub-segments year to date