Parkway Life REIT to acquire Japan nursing home for JPY3.2B

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Parkway Life REIT will acquire a nursing home in Japan’s Greater Tokyo region for 3.2 billion yen, or around S$37.9 million, the Singapore REIT said in a filing to SGX Friday.

The acquisition pricing is at around 7 percent below valuation of around 3.44 billion yen, the filing said.

The 150-bed property, located in a residential area of Kisarazu City in Chiba prefecture, is expected to generate a net property yield of 5.9 percent, the filing said, with the deal expected to be distribution per unit (DPU) accretive.

The REIT said it would fund the deal with yen-denominated debt.

The property is operated by Fuyo Shoji Kabushiki Kaisha, a wholly owned subsidiary of Habitation Group, which is the REIT’s largest nursing home operator in Japan, the filing said. Habitation Group currently operates 36 healthcare and aged care facilities, including hospitals, clinics and rehabilitation facilities, in Japan, the filing said.

The REIT said it will secure a fresh 20-year lease agreement with Fuyo Shoji Kabushiki Kaisha for an annual gross rental of around 197.2 million yen, or around S$2.3 million.

“The acquisition delivers immediate yield growth and enhances the resiliency of our portfolio with a long stable lease,” Yong Yean Chau, CEO of the REIT’s manager, said in the statement.

“As we continue to grow our footprint in Japan, which is our valued core market, we recognise the importance of developing sustainable long-term partnership with credible operators with synergic business strategies. We look forward to expanding our strong working relationship with Habitation Group,” Yong said.

The occupancy was around 96 percent as of end-October, reflecting operational stability, the REIT said.

The transaction is the REIT’s third acquisition this year, increasing the size of the Japan portfolio to 52 properties, valued at around S$804 million, Parkway Life REIT said.

The deal is expected to be completed in December, the filing said.

The acquisition will be made via a Tokumei Kumiai deal, similar to the REIT’s other acquisitions in Japan, the filing said.

Other Singapore-listed REIT’s have pointed to Japan’s nursing home market as having strong growth potential. Earlier this week, First REIT acquired 12 Japan nursing homes from OUE Lippo Healthcare, citing the inadequate supply and growing demand in the market.