Parkway Life REIT property, Parkway East Hospital. (Photo: Google Maps)

Parkway Life REIT (PLife REIT) has announced the acquisition of three nursing rehabilitation facilities in Japan from K. K. Habitation for JPY3,700 million (SGD46.3 million).

The properties are namely Hodaka no Niwa, located in Takayama City, Orange no Sato, located in Arita-gun, and Haru no Sato, located in Shunan City.

In addition to the geographical diversification within Japan, PLife REIT’s tenant risk exposure will be further diversified with the addition of three new operators, said its manager on 3 December.

Two of the operators are associated companies of K. K. Habitation, which is PLife REIT’s second largest nursing home operator in Japan.

PLife REIT will secure fresh 20-year master lease agreements for each of the properties

The acquisition is yield-accretive, and will be made at approximately 7% below valuation.

It is expected to generate a net property yield of 6.8%.

The acquisition is expected to be completed by December 2019 and will bring PLife REIT’s portfolio to 53 properties with a total value of SGD1.92 billion.

Its WALE will lengthen from 6.29 years to 6.69 years.

The acquisition will be funded by a long-term JPY bank facility that will increase the REIT’s gearing level post-acquisition from 37.2% to 38.0%.

The REIT will adopt a natural hedge strategy for the acquisition through JPY funding.

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.