Parkway Life REIT Mount Elizabeth HospitalParkway Life REIT property in Singapore, Mount Elizabeth Hospital

Singapore–listed healthcare REIT, Parkway Life REIT, announced on 24 March that it has acquired a Japanese nursing home facility for JPY1,100 million (SGD13.6 million).

The property, Silver Heights Hitsujigaoka Ichiban-kan & Nibankan, has been acquired from vendor Kabushiki Kaisha Silver Heights Sapporo.

The acquisition has been described as one that would be distribution per unit (DPU) yield-accretive and generate a net property yield of 6.7%. The acquisition is targeted to be completed by the first quarter of 2016.

The facility is secured with a 20-year master lease arrangement that has been arranged with the vendor, bolstering Parkway Life REIT’s aggregate weighted average lease expiry (WALE) (by gross revenue) from 9.12 years to 9.23 years. A backup operator has also been arranged. As at 31 December 2015, the operating occupancy of the Property is at 94%.

“The ageing demographic trend, coupled with favourable governmental policies, translates to greater investment opportunity for Parkway Life REIT. With approximately 520,000 elderly on the waiting lists for placements in nursing homes nationwide, nursing home capacity is likely to remain inadequate, keeping demand for quality aged care properties in Japan strong”, said the REIT in its statement.

The acquisition cost will be funded via long-term JPY denominated debts. Upon acquisition, Parkway Life REIT’s gearing will increase from 36.6% to 37.1%.

Units of Parkway Life REIT ended the trading day about 1% lower from its previous close on the Singapore Exchange to end at SGD2.35.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.