Parkway Life REIT property, Mount Elizabeth Hospital, in Singapore. (Photo: REITsWeek)

Singapore-listed Parkway Life REIT has acquired four nursing homes, and one specialised home for elderly dementia patients in Japan, for JPY4,759 million (USD42 million, or SGD59.5 million).

The properties, which are partly funded with proceeds from a divestment in 4Q 2016 as part of the REIT’s effort to recycle assets, were acquired from Marubeni Corporation, UBI Kabushiki Kaisha and UBI Capital Kabushiki Kaisha.

Three of the facilities are located in the Chiba prefecture, while the other two are located in Kudamatsu City.

The properties have been acquired at approximately 9.1% discount to valuation, and are expected to generate a net property yield of 6.9%, said the REIT.

“Leveraging on our strategic partnership, and the strong aging demographics, we continue to monitor the aged care market of the nation closely as we seek out and seize opportunities in a timely and disciplined manner,” said Yong Yean Chau, CEO of the REIT’s manager.

The facilities will be rented out on long-term master lease arrangements that will improve Parkway Life REIT’s weighted average lease expiry (WALE) by gross revenue to 9.81 years from 8.44 years.

“To ensure delivering sustainable returns to [Parkway Life] REIT’s unitholders, backup operator arrangements are being put in place in the event that the existing operators are unable to operate the properties”, said the REIT.

The acquisition is targeted to be completed by 1Q 2017, and will bring the health care REIT’s portfolio to approximately SGD652 million.

Parkway Life REIT finished the trading day unchanged from its previous close on the Singapore Exchange at SGD2.41.

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.