PARKWAY Life Real Estate Investment Trust (Parkway Life Reit) is acquiring 11 nursing homes in France for a total consideration of 111.2 million euros (S$159.9 million).
The acquisition marks the Reit’s maiden investment in Europe, which is the third key market with “strong fundamentals, growing ageing population and aged care sectors”, said the manager on Tuesday (Oct 22).
The purchase price of S$159.9 million represents an approximate 3.6 per cent discount from the properties’ independent valuation of about S$165.8 million.
The healthcare-focused Reit is buying the properties from DomusVi, a nursing home operator in France.
The properties will continue to be leased to DomusVi, under a new lease term of 12 years, after the deal goes through.
The transaction is expected to be completed by the fourth quarter of 2024, after which Parkway Life Reit’s portfolio will rise to 75 properties with a total value of about S$2.42 billion.
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The acquisition will be fully funded by a private placement to raise gross proceeds of about S$180 million, at an estimated issue price range of between S$3.80 and S$3.88 per new unit.
The deal is expected to be 1.6 per cent distribution per unit and 4.4 per cent net asset value per unit accretive to unitholders. Parkway Life Reit’s pro forma leverage ratio for the first half of 2024 would fall roughly to 33.3 per cent, from 35.3 per cent as at Jun 30.
The 11 nursing homes are located across France and they comprise a total of 42,630.8 square metres of net lettable floor area and 850 nursing beds.
The Reit manager is positive on the strong demand for nursing homes in France, which is facing an ageing population. It noted that the proportion of people aged 65 and above has increased from 17 per cent in 2009 to 22 per cent in 2023.
Therefore, it believes that the transaction will allow the Reit to “capture the structural tailwinds” of France’s ageing population.
It also expects the deal to provide the Reit a foothold in a “highly regulated sector with high barriers to entry”, as no new nursing home beds are expected to be authorised until 2028.
Yong Yean Chau, chief executive officer of the manager, said: “Through this acquisition, Parkway Life Reit will extend (its) growth into a new market with strong fundamentals – ageing population with mature health and aged care sectors.”
He added: “This will allow Parkway Life Reit to optimise its investment exposure and further diversify the geographical risks within its portfolio, thereby enhancing risk-adjusted returns for its unitholders.”
Units of Parkway Life Reit closed flat at S$3.99 on Monday. It called for a trading halt on Tuesday morning.
