Parkway Life REIT, through its special purpose entity incorporated in Japan, has entered into a purchase and sale agreement with real estate investment firm Hulic Co for the sale of an industrial property in Japan known as P-Life Matsudo for a consideration of 2.9 billion yen ($37.1 million).

Completion of the agreement has taken place on Jan 29.

The sale consideration has been paid in cash by after the relevant adjustments have been made under the terms of the agreement.

The property divested was originally purchased by Parkway Life REIT for 2.59 billion yen in May 2008 with a net operating income (NPI) yield of 5.3%.

The property’s net book value as at Dec 31, 2020, was approximately $31.0 million.

Get the latest Singapore corporate news stories for FREE

Its valuation as at Dec 31, 2020, stands at 2.41 billion.

The total sale consideration is 20.3% above the latest valuation and 19.8% above the net book value.

SEE: CGS-CIMB ups Parkway Life REIT's DPU estimates due to new acquisitions made

The REIT is expected to recognise a gain on disposal of investment property (before tax) of some $5.1 million.

The proceeds received from the divestment will provide greater financial flexibility to seize other attractive investment opportunities offering better value.

“The divestment which sees us divesting our non-core asset resonates well with our recycling strategy to rebalance and strengthen the growth potential of our Japan Portfolio. Currently, ParkwayLife REIT’s Japan portfolio of 50 properties consists mainly nursing homes diversified across various prefectures, contributing 96.7% of our Japan portfolio’s revenue,” says Yong Yean Chau, CEO of the manager.

“Matsudo which was acquired in 2008 was ParkwayLife REIT’s maiden investment into Japan and our only industrial property (built to specific requirements of a healthcare company presently known as Abbott Diagnostics Medical Co. Ltd),” he adds.

Units in Parkway Life REIT closed 3 cents higher or 0.7% up at $4.15 on Jan 29.