Felicia Tan Published on Wed, Jun 30, 2021 

The manager of Parkway Life REIT (PLifeREIT) has announced on June 30 that it has entered into a Tokumei Kumiai agreement (or silent partnership agreement) to acquire two nursing homes in Japan for a consideration of 4.1 billion yen ($49.4 million).

The agreement was signed by the REIT’s wholly-owned subsidiary, Parkway Life Japan4, with Kabushiki Kaisha Strawberry Firm and Kabushiki Kaisha Anthebliss.

The nursing homes, Will-Mark Kashiihama and Crea Adachi, are owned by Kabushiki Kaisha Strawberry Firm and Kabushiki Kaisha Anthebliss respectively.

Will-Mark Kashiihama has a total of 198 beds, while Crea Adachi has 87 beds.

The acquisition is slated to be completed by the 3Q2021 and will bring the REIT’s portfolio to a total of 55 properties valued at $2.0 billion.

Under the agreement, a company established under Japanese laws and known as a Godo Kaisha will own the properties.

A Godo Kaisha is similar to a limited liability company in Singapore.

This is the REIT’s third asset recycling initiative following the recent divestment of a non-core industrial property, P-Life Matsudo.

The divestment was completed in January.

Based on the expected net property yield of 5.7% from the acquisition, the manager believes that the acquisition will be accretive to PLife REIT’s distribution per unit (DPU).

The acquisition is in line with the investment criteria set out in the REIT’s prospectus on Aug 7, 2007.

It is also expected to benefit the REIT’s unitholders by improving income diversification and reducing the reliance of any one of the REIT’s properties.

The properties are freehold and well-located in the cities of Fukuoka and Tokyo Prefectures. Upon the completion of the acquisition, the REIT has established its first presence in Tokyo Prefecture.

As at May 31, the acquired properties have an operational occupancy of 84%.

They are also expected to improve the REIT’s portfolio weighted average lease expiry (WALE) to 5.61 years from 5.22 years. 

“PLife REIT is pleased to successfully implement yet another asset recycling initiative. Most importantly, with the acquisition of the properties, we have further strengthened the quality of our portfolio and presence in Japan, which continues to be a valued core market for PLife REIT since our maiden entry in 2008,” says Yong Yean Chau, CEO of the manager.

“Leveraging on our robust strategic partnership and the resilient aging demographics5 in Japan, we continue to monitor aged care market of the nation vigilantly as we seek and seize opportunities in a timely and disciplined manner to optimise the resiliency of our portfolio and deliver immediate yield growth,” Yong adds.

Units in PLife REIT closed 1 cent higher or 0.2% up at $4.59 on June 30.