SPH expands aged care business with 5.26b yen Japan acquisition

Singapore

SINGAPORE Press Holdings (SPH) will acquire five aged care assets in Japan for 5.26 billion yen (S$65.8 million) as part of its strategy to expand to markets with fast-ageing populations.

This marks the media and property group's first overseas investment for its aged care business.

Two of its special purpose vehicles have entered into sale and purchase agreements for the acquisition, said SPH, which publishes The Business Times, in a bourse filing on Monday.

Three of the properties are in Hokkaido, one is in Nara in the Osaka Metropolitan Region, and the fifth is in Tokyo.

With a total capacity of 365 beds, the properties offer seniors independent living services including community-based activities, transport, laundry, meals and care services.

They are "fairly new" buildings, SPH said. With the exception of one of the Hokkaido facilities which was completed in 2009, the other four were completed between 2017 and 2018.

SPH said it will disclose further details of the acquisition upon completion of the deal.

Ng Yat Chung, chief executive officer (CEO) of SPH, said: "We continue to seek opportunities to expand our aged care business overseas."

"This acquisition is in line with our strategy of growing our recurring income base through the acquisition of cash yielding assets in defensive sectors."

The acquisition is part of SPH's partnership with Japanese real estate asset manager Bridge C Capital in October 2019 to set up a fund focused on investing in aged care and healthcare assets such as senior housing, nursing homes and medical office buildings in Japan. SPH had said then that it will invest seed equity of up to S$50 million in the fund.

Asset management fees generated as part of the fund will be added to the recurring income stream from the assets, SPH said on Monday.

The five properties in Japan will continue to be managed by their current operators on long-term master lease agreements, with a portfolio weighted-average lease expiry of 23.4 years (weighted by bed count).

Anthony Tan, deputy CEO of SPH, said the move builds on the group's acquisition of Singapore nursing home operator Orange Valley in 2017.

The aged care industry is set for continued growth in countries with fast-ageing populations like Singapore and Japan, Mr Tan said.

The purchase price of 5.26 billion yen will be paid fully in cash and funded through internal and external resources.

The deal is expected to be completed by March 2020.

SPH shares shed S$0.04, or 2 per cent, to close at S$1.97 on Monday, after the announcement.