Parkway Life Reit divests industrial property in Japan for 2.9b yen

PARKWAY Life Reit on Friday said that it is divesting its non-core industrial property in Japan known as P-Life Matsudo for a total consideration of 2.9 billion yen (about S$37.1 million) to a real estate company in Japan.

It is expected to recognise an estimated gain of about S$5.1 million, as Parkway Life Reit originally purchased the property at S$33.2 million in 2008.

The divestment is also at 20.3 per cent or 490 million yen above the latest valuation of 2.41 billion yen of the property as at Dec 31, 2020, and 19.8 per cent above the book value.

The real estate investment trust (Reit) manager said that this move unlocks value from a non-core property of less strategic value, and alines with its asset recycling strategy to rebalance and strengthen the overall quality and growth potential of Parkway Life Reit's Japan portfolio.

The divestment will further bolster Parkway Life Reit's balance sheet and provide greater financial flexibility for Parkway Life Reit to seize other attractive investment opportunities offering better value, said the manager.

Currently, Parkway Life Reit owns 50 properties in Japan consisting mainly of nursing homes in various prefectures and contributing 96.7 per cent of its Japan portfolio's revenue.

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The divested property was Parkway Life Reit's maiden investment into Japan and its only industrial property.

The divestment is not expected to have any material impact on the consolidated net tangible assets or distributions per unit for the financial period ended Dec 31, 2020.

Yong Yean Chau, CEO of the manager, said that it has divested the property at an "attractive sale yield" of 4.3 per cent.

"With the sale proceeds from this divestment, we will have greater financial strength and flexibility to acquire other quality assets to strengthen our position in the existing key market of Japan, continuing on our track record of creating greater value for our unitholders through strategic asset recycling initiatives," he said.

Units of Parkway Life Reit closed at S$4.15, up three Singapore cents or 0.73 per cent prior to the announcement.