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First REIT acquires two nursing homes in Japan for $26.3 mil

Felicia Tan
Felicia Tan9/21/2022 11:44 PM GMT+08  • 2 min read
First REIT acquires two nursing homes in Japan for $26.3 mil
The exterior of Medical Rehabilitation Home Bon Séjour Komaki (Komaki), one of the two newly-acquired nursing homes. Photo: First REIT
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The manager of First REIT, on Sept 21, announced that the REIT has acquired two nursing homes in Japan. The homes, which are located near the city centres of Tokyo and Nagoya, were acquired for a purchase consideration of 2.6 billion yen ($26.3 million).

The REIT, through its wholly-owned subsidiary, OUELH Japan Medical Facilities Pte. Ltd., had entered into a tokumei kumiai agreement, or silent partnership agreement for the acquisition of the two nursing homes, Loyal Residence Ayase (Ayase) and Medical Rehabilitation Home Bon Séjour Komaki (Komaki).

The properties have a combined net yield of 5.2%. Ayase, a three-storey nursing home with 80 rooms, has a gross floor area (GFA) of 3,386.52 sqm (36,452.2 sq ft). Komaki, a 10-storey nursing home building with 124 rooms and 165 beds, has a GFA of 8,858.49 sqm.

Following the acquisitions, First REIT’s portfolio will be more diversified geographically, with developed markets contributing to approximately one quarter of its assets under management (AUM).

The REIT’s tenant diversification will also improve, with the addition of two well-established and experienced third-party operators Social Welfare Research Institute Co., Ltd. and Benesse Style Care Co., Ltd.

The acquisitions will be fully funded by debt, and are expected to be accretive to the REIT’s distribution per unit (DPU).

See also: Lendlease Global Commercial REIT recognised for corporate governance

“Japan is one of the key growth markets for First REIT. Our timely penetration and expansion into Kanagawa and Aichi prefectures, after establishing a strong foothold from our maiden acquisition of 12 nursing homes across Japan early this year, will position First REIT for long-term growth with stability,” says Victor Tan, executive director and CEO of the manager.

“These acquisitions are in line with one of our strategic pillars under First REIT 2.0 growth strategy to step up growth in developed markets to more than 50% of our portfolio, which the Trust is progressing steadily towards fulfilling this strategic goal. The enlarged asset base and portfolio diversification will also pave the way for sustainable distributions for unitholders of First REIT,” Tan adds.

Units in First REIT closed flat at 27.5 cents on Sept 21.

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