At S$2.6 billion market cap, Parkway Life REIT is one of Asia’s largest healthcare-focused real estate investment trusts.
It has been listed on the Singapore Exchange since August 2007.
Now, Parkway Life REIT owns three highly profitable Singapore hospitals: Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital.
More than that, it also owns nursing homes and medical facilities across four countries.
Its shares have returned over 258% over the past 18 years. Its current yield sits at ~4%, with a 1.68x P/B ratio. This is one of the highest valuations among Singapore REITs.
Can this Singapore healthcare REIT continue to grow? And is it still worth buying today? Let’s dive in.
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Parkway Life REIT’s portfolio breakdown
Other than its three Singapore hospitals, Parkway Life REIT also owns 75 nursing homes and medical facilities across four countries.
These properties are primarily concentrated in Singapore (~60% of gross revenue), Japan (~32% of gross revenues), with the remaining located in France (~8% of gross revenues).
Now, 35% of these properties are nursing homes, with the rest being hospitals or medical centres across the four countries.
Parkway Life REIT’s dividends secured by long-term leases
What’s interesting with Parkway Life REIT is its Singapore portfolio operates under a highly attractive master lease agreement.
This means its full rental income is guaranteed at least until December 2042, with IHH Group acting as the master tenant.
This secures Parkway Life REIT with a strong, cash flow visibility into the future.
As part of the agreement, this means the master tenant pays for property taxes, insurance, operating expenses.
Furthermore, there’s a variable rent component that gives Parkway Life REIT a built-in rent escalation, either with higher inflation or higher hospital revenues.
This way, Parkway Life REIT’s rental income is well protected against inflation.
When we look at Parkway Life REIT’s Japan and France portfolios, their lease terms are still over ten years. This means this Singapore REIT’s income is basically locked in at the minimum until 2035.
Parkway Life REIT’s latest 1H2025 financial results
Let’s look at the financial numbers. During its 1H2025 results, Parkway Life REIT’s:
- Gross revenue grew by ~8.1% y/y to S$78.3 million
- Its net property income (NPI) grew by 8% y/y to S$73.8 million
- Finance costs rose by 24% y/y to S$6.7 million
- Distributions per unit (DPU) increased by 1.5% to S$7.65 cents per unit
Not too bad. Parkway Life REIT’s NPI grew mainly due to contributions from acquisitions in Japan and France in the previous year.
However, this was offset due to the Yen depreciation. Meanwhile, its finance costs were shot up due to its acquisitions and higher interest rates from its Japanese debt.
Parkway Life REIT’s dividends: 135% growth since IPO
Having said that, Parkway Life REIT continued to grow its DPU y/y. In fact, it continued to have an “un-interrupted” dividend growth since its IPO. That’s impressive.
Assuming we bought its shares at S$1.28 per unit, the dividend yield on our initial purchase cost would hit ~ 11% yield.
Distributions steadily increasing and secured occupancies are probably why Parkway Life REIT continues to trade at a premium to its current book value – there’s consistent growth.
Parkway Life REIT’s healthy balance sheet
Parkway Life REIT currently has total debt of ~S$928 million, implying a 35.4% aggregate leverage ratio. This is still well below the regulatory limit of 50%.
This gives the REIT plenty of headroom to add ~S$762 million of debt for expansion. In other words, it gives Parkway Life REIT plenty of firepower to grow its assets.
What’s more, Parkway Life REIT can cover its interest costs more than nine times, which means its interest coverage ratio stands at a high 9.1x.
Its total borrowing cost is ~1.5%, which is extremely low given the current peak interest rate cycle, with other Singapore REITs paying north of 4-5% interest costs.
Parkway Life REIT’s debt matures every three years. With all the headroom in debt, I believe the refinancing risk is not a huge concern.
Longer-term healthcare tailwind
We know there’s an aging population especially in developed countries like Japan and Singapore.
For instance, Singapore’s 65+ year old population has risen from 13.1% in 2015 to about 20.7% in 2025, and is projected to reach 23.9% by 2030.
Meanwhile, Japan’s 65+ year old population already stands near 29.4% in 2025 and is expected to hit ~34.8% by 2040.
In fact, according to Singapore government’s website, the graph below shows the citizens aged 80 and above in Singapore over the last ten years:
The trend is clear. As society ages, there‘s a need for more healthcare and nursing care. This means higher hospital demand, more nursing home beds and increasing healthcare spending.
Logically speaking, hospital operators, nursing homes and elderly care should benefit from growing healthcare needs.
My final thoughts
At 1.68x P/B ratio, Parkway Life REIT trades at a 68% premium. Yet, there is a reason why the market is “overpaying” for this healthcare REIT:
- Distributions have consistently grown
- Occupancy is guaranteed over the next ten years and longer
- Debt is the lowest amongst Singapore REITs
- The hospital property type is uniquely positioned to benefit from the aging population
The thing is, such high valuations typically reflect the strong earnings power of an asset.
What’s more, Parkway Life REIT shares have performed well over the years, and continue to stand out as one of the safest income plays in Singapore.
