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

Parkway Life REIT has announced the acquisition of a nursing home in Kamagaya City in the Greater Tokyo region from K.K. Habitation for JPY1.65 billion (SGD21.2 million).

The acquisition will be made at approximately 4.6% below the valuation and is expected to generate a net property yield of 6.4% for the REIT.

The home is operated by Fuyo Shoji Kabushiki Kaisha, a wholly owned subsidiary of Habitation Group - the REIT’s largest nursing home operator in Japan.

The acquisition will see Parkway Life REIT secure a fresh 20-year master lease agreement, lengthening its portfolio weighted average lease expiry (WALE) from 11.19 years to 11.44 years.

The acquisition will be funded by a long-term JPY loan facility, providing a natural hedge for foreign exchange risks.

The REIT’s gearing level post-acquisition will increase from 38.6% to 39.3%.

The acquisition is expected to be completed over the fourth quarter of 2020 and will bring the REIT’s portfolio to 54 properties totalling approximately SGD2.01 billion in value.

Parkway Life REIT was last done on the SGX at SGD3.82, which implies a distribution yield of 3.7% according to data compiled on the Singapore REITs table.

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.