Parkway Life Reit to buy Japanese nursing home for 3.2b yen

Parkway Life Real Estate Investment Trust (Parkway Life Reit) C2PU is buying a nursing home in Japan's Greater Tokyo Region for 3.2 billion yen (S$38.4 million), the manager announced on Friday (Dec 10).

The 150-bed property in Kisarazu city in Chiba was built in 2017 and will be leased for 20 years to a subsidiary of nursing home operator Habitation Group, at an annual gross rental of about 197.2 million yen.

The acquisition will be funded by yen-denominated debt, raising the gearing of Parkway Life Reit from 34.9 per cent to 36 per cent, the manager disclosed.

The deal is projected to be accretive for the Reit's distribution per unit (DPU), with an estimated net property yield of 5.9 per cent, and will increase the weighted average lease expiry by gross revenue for Parkway Life Reit's portfolio from 17.42 years to 17.47 years.

The price tag, which was reached on a "willing-buyer, willing-seller" basis, marks a 7 per cent discount against an independent valuation of the property of 3.44 billion yen.

The Reit manager added that the transaction is not expected to have any material impact on the Reit's consolidated net tangible assets or DPUs for the period to Dec 31, 2021.

The purchase has been made through a silent partnership agreement, similar to Parkway Life Reit's previous acquisitions in Japan, and is expected to be completed by year's end. The Reit's Japanese portfolio would then comprise 52 properties, valued at about S$804 million.

Said Yong Yean Chau, chief executive of the manager, said: "The acquisition delivers immediate yield growth and enhances the resiliency of our portfolio with a long stable lease."

He added that the Reit plans to build on its long-term working relationship with Habitation Group and to optimise its growth strategy in Japan, which he dubbed "our valued core market".

Parkway Life Reit units closed on Friday at S$5.07, up by S$0.03 or 0.60 per cent, before the announcement.