Parkway Life REIT enters deal to acquire three Japan properties

Novelty Japan pens at DaisoNovelty Japan pens at Daiso

Parkway Life REIT has entered a deal to acquire three nursing rehabilitation facilities in Japan from K. K. Habitation, Fuyo Shoji Kabushiki Kaisha and Medical Corporation Shojinka for 3.7 billion yen, or around S$46.3 million, the healthcare-focused REIT said in a filing to SGX Tuesday.

“The strong ageing demographics of Japan continue to position PLife REIT favorably as we acquire aged care properties to fortify the resiliency and quality of our portfolio,” Yong Yean Chau, executive director and CEO of the REIT’s manager, said in a statement.

“Working in collaboration with one of our key partners in Japan, K. K. Habitation, we have further deepened our presence in Japan, which represents one of PLife REIT’s growth engines,” Yong added.

Around 40 percent of Japan’s population is expected to be above the age of 65 by 2050, Parkway Life REIT said.

The acquisition pricing is 7 percent below valuation and is expected to generate net property yield of 6.8 percent, providing immediate yeild uplift, the REIT said.

The properties are Hodaka no Niwa, located in Takayama City, Gifu Prefecture; Orange no Sato, located in Arita-gun, Wakayama Prefecture; and Haru no Sato, located in Shunan City, Yamaguchi Prefecture, the filing said.

They have a “healthy operational occupancy” of around 94 percent as of end-October, the REIT said.

“The properties are strategically located in the residential neighborhood within the key cities of the respective prefectures, Gifu, Wakayama and Yamaguchi Prefectures,” the REIT said.

“In addition, Parkway Life REIT’s tenant risk exposure will be further diversified with the addition of three new operators, two of which are associated companies of K. K. Habitation, which is Parkway Life REIT’s second largest nursing home operator in Japan,” it added.

The deal will be funded with a long-term yen bank facility, Parkway Life REIT said, adding this will provide a natural hedge for foreign exchange risks by using yen funding for yen-denominated assets.

The acquisition is expected to be completed this month, the REIT said, adding it would bring its portfolio to 53 properties valued at S$1.92 billion.