Sold Parkway Life Reit

 

Today, I sold my Parkway Life Reit shares from SRS account. This was a difficult decision for me, as I only started being a long-term investor in the REIT late last year. 

However, there are a few reasons why I believe that this was the right time to sell.

1. Valuation

Plife Reit is currently trading at more than 60% premium to its net asset value (NAV) of $2.34. This means that the REIT is valued higher than its underlying assets. I believe that the REIT is severely overvalued now and that there is a risk of a correction in the near future.

2. Interest Rate Compressed and Forex risks

Plife Reit is a defensive healthcare REIT having exposure to interest rate risk just like any other REITs. Outlook seems positive in light of expected interest rates cut in Sep 24 as well as aging population in Japan where it owns a large number of nursing healthcare properties. 

At a share price of $3.93 and projected annual dividend of $0.15, its dividend yield is compressed to merely 3.8%. If interest rates stay high for long, coupled with prolonged depreciation of yen, the cost of borrowing for the REIT will remain high and net property income will be suppressed. This could put pressure on the REIT's future distribution yield.

3. Opportunity Cost

I believe that there are better investment opportunities available in the market today. I can reinvest the proceeds from the sale of Plife Reit into other assets that I believe offer a better risk-return profile.

Plife Reit has just distributed the latest bi-annual dividend of $0.0754 and the next dividend will be in Feb 2025 which will be a few more months away.

I plan to consolidate and deploy my spare cash in SRS account into local bank shares such as DBS or OCBC, which I hope to see correction soon due to worries about their net income margin from interest rate cuts and mounting global recession fears.

Overall, I believe that selling Plife Reit at 3.93 was the right decision for me. While I am disappointed at my impatience to not sell it above $4 for more profits, I believe that it is important to take decent profits when they are available.

Thanks for reading.

With love & peace,

Qiongster