Parkway Life REIT has entered into a sale and purchase agreement with Fortress Japan Investment Holdings over the divestment of four nursing homes in Japan.

Total consideration for the sale, which has been paid in cash, is JPY3.72 billion (USD31.5 million).

The properties are namely the Bon Sejour Ibaraki, Legato Higashi Sumiyoshi, Legato Katano, and the Royal Residence Gotenyama.

According to Parkway Life REIT, these assets were originally acquired for for JPY2.77 billion.

“Arising from the investment exuberance in the nursing home market in Japan in recent years, there has been much compression in terms of cap rates for the nursing home properties”, said the Singapore-listed health care REIT, in a statement on the divestment.

Parkway Life REIT is expected to recognise an estimated divestment gain of approximately SGD5.2 million over the properties’ net book value.

“Proceeds received from the divestment will provide greater financial flexibility to seize other attractive investment opportunities offering better value”, said the REIT.

“As with our maiden asset recycling initiative which was successfully completed in 1Q 2015, the proceeds from this second divestment will enable us to acquire other attractive assets to rebalance and enhance the overall resiliency of our Japan portfolio, and deliver better value for our unitholders amidst the volatile environment”, added Yong Yean Chau, CEO of the REIT’s manager.

Units of Parkway Life REIT finished the trading day about 0.4% lower from its previous close on the Singapore Exchange to end at SGD2.36.