THE trustee of Parkway Life Reit (PLife Reit) has entered an agreement to acquire 3 nursing homes in Hokkaido for a sum of 2.56 billion yen (S$26.1 million), in a move to further expand the healthcare Reit's Japan portfolio.
The 3 properties - Blue Terrace Kagura, Blue Rise Nopporo and Blue Terrace Taisetsu - are being sold by Blue Melon Capital Kabushiki Kaisha and its wholly-owned subsidiary, K2 Healthcare Sapporo Godo Kaisha.
These facilities are operated by Blue Care Kabushiki Kaisha, a wholly-owned subsidiary of Living Platform, one of PLife Reit's existing nursing home operators in Japan.
The acquisition will be made at 12.2 per cent below valuation and is expected to generate an average net property yield of 6.5 per cent, PLife Reit announced in a Tuesday (Sept 13) bourse filing.
The deal is expected to be completed by Q3 this year and will bring the Reit's Japan portfolio to 55 properties, totalling S$725.33 million in value. It will be fully funded by Japanese yen debts, which the Reit described as a "natural hedge".
PLife Reit will take over the existing lease agreements of the properties, which have 19 years left on their leases. This will improve PLife Reit's weighted average lease expiry, by gross revenue, from 17.01 years to 17.05 years.
Yong Yean Chau, chief executive of PLife Reit's manager, said: "Against the backdrop of a Covid-19 impacted economy, Japan's aged care market remains stable and resilient. The acquisition not only strengthens our presence in Japan, but also enhances our collaboration with our existing partner, Living Platform group."
Post-acquisition, PLife Reit's leverage ratio will rise from 32.5 per cent as at end-June to 33.4 per cent. The Reit ended Tuesday at S$4.75, down 0.2 per cent or S$0.01.