Parkway Life Reit acquires 2 Japan nursing homes for $29.4m

The transaction initiates a new collaboration with Daiwa House.

Parkway Life Reit has acquired more Japanese properties — two nursing homes in the Greater Tokyo region for $29.4m, or 11.1% below independent valuation. 

The properties, completed in 2021, are located in Edogawa Ward and Chiba City residential areas and have close connectivity to Tokyo Centre. The acquisition is expected to be completed by Q3 2022.

This brings PREIT’s Japan portfolio to 57 properties.

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The properties were bought from Japanese real estate developer Daiwa House. According to CGS-CIMB, the new collaboration opens up potential pipeline assets.

CGS-CIMB estimates the purchase could boost PREIT’s Japan portfolio to $755m, making up 34% of its total assets under management (AUM). Under the terms of the agreement, PREIT will take over the properties’ existing lease agreements with Zen Wellness Co Ltd (Zen Wellness) which have a balance lease term of 29 years. 

“This will likely extend its portfolio weighted average lease expiry (WALE) from 17.05 years to 17.21 years, thus improving its income resiliency. PREIT’s first working relationship with Zen Wellness would enable the REIT to establish a long-term strategic alliance for further tenant diversification in Japan. According to management, Zen Wellness was established in Nov 2013 and currently operates 11 nursing homes in the Kanto/Greater Tokyo region,” CGS-CIMB said.