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PLife Reit acquires nursing home in Japan for 1.65b yen
PARKWAY Life Reit (PLife Reit) is deepening its presence in Japan with the acquisition of a nursing home in the Greater Tokyo region from aged care operator KK Habitation for 1.65 billion yen (S$21.2 million).
In a filing to the Singapore Exchange, PLife Reit's manager said that the purchase is being made at about 4.6 per cent below valuation as independent valuer Enrix Co appraised the value of the property (as at Oct 31) at 1.73 billion yen. It will generate a net property yield of 6.4 per cent and the Reit's manager believes that the acquisition will be DPU-accretive to the Reit's unitholders.
The 100-bed nursing home is located in the residential area of Kamagaya City within the Chiba Prefecture. With the latest acquisition, PLife Reit will secure a fresh 20-year master lease agreement and lengthen the weighted average lease expiry (WALE) for PLife Reit's Japan portfolio from 11.19 years to 11.44 years.
The acquisition will be funded by a long-term yen loan facility, so as to protect the Reit from potential currency fluctuations and achieve a stable net asset value. Post acquisition, PLife Reit's gearing level will go up to 39.3 per cent, from 38.6 per cent as at Sept 30.
Yong Yean Chau, chief executive of the Reit's manager, said: "This acquisition not only strengthens our presence in Japan but also boosts the resilience of our portfolio by delivering immediate growth. We continue to build strong long-term relationships with local players with synergic business strategies to ensure that we continue to identify strong quality assets, which will lead to sustainable returns for unitholders."
The property is operated by a wholly-owned subsidiary of Habitation Group, which is PLife Reit's biggest nursing home operator in Japan. Habitation Group operates 28 healthcare and aged cared facilities in Japan. With this latest acquisition - which is slated for completion in Q4 - PLife Reit's portfolio increases to 54 properties worth some S$2.01 billion.
Units in PLife Reit closed at S$3.82 on Thursday, up two cents or 0.53 per cent.