Parkway Life REIT : Acquisitions And Disposals :: Non-Mandatory Disclosure :: Acquisition Of Five Properties Located In Japan

Parkway Trust Management Limited, as manager of Parkway Life Real Estate Investment Trust ("Parkway Life REIT", and as manager of Parkway Life REIT, the "Manager"), is pleased to announce that HSBC Institutional Trust Services (Singapore) Limited, as trustee of Parkway Life REIT (the "Trustee"), has through its wholly-owned subsidiary, Parkway Life Japan4 Pte. Ltd. (the "SPV"), entered into two Tokumei Kumiai agreements (or silent partnership agreements, collectively, the "TK Agreements") with the TK Operators (as defined below) in relation to the acquisition of five nursing home and care facility properties located in Japan (the "Properties", as described below) by the TK Operators (the "Acquisition") at a total purchase price of approximately ¥4,500,000,000 (approximately S$59.2 million1) (the "Purchase Price"). Completion is expected to take place no later than October 2013 ("Closing Date").
Godo Kaisha Samurai 7 and Godo Kaisha Samurai 8 (collectively, the "TK Operators", and each, a "TK Operator"), each a Godo Kaisha incorporated under Japanese laws, have today entered into separate conditional purchase and sale agreements ("Purchase and Sale Agreements") with K.K. Sawayaka Club (the "Vendor" or "Sawayaka Club"), a Japanese kabushiki kaisha, for the purchase of the Sawayaka Seaside Toba property (the "Seaside Toba Property"), the Sawayaka Niihama-kan property (the "Niihama Property"), the Sawayaka Mekari Niban-kan property (the "Mekari Niban Property"), the Sawayaka Kiyota-kan property (the "Kiyota Property") and the Sawayaka Minato-kan property (the "Minato Property" and together with the Seaside Toba Property, Niihama Property, Mekari Niban Property and Kiyota Property, the "Properties", and each, a "Property").

1 Based on the exchange rate of S$1.00 : ¥76.00 (the "Exchange Rate"). Unless otherwise stated, all conversions of ¥

amounts into S$ in this announcement will be based on the Exchange Rate.

1

Under the respective TK Agreements, a company established under Japanese laws, and known as a "Godo Kaisha", will own the relevant Properties. A Godo Kaisha is a company similar to a limited liability company in Singapore whose members are only liable to the extent of their contribution to the Godo Kaisha2.
Prior to the Closing Date, the SPV, which is wholly-owned by Parkway Life REIT, shall inject funds into the respective TK Operators (the "Parkway Life REIT TK Investment") and, as provided for in the respective Purchase and Sale Agreements, each TK Operator will acquire the relevant Properties from the Vendor. The Parkway Life REIT TK Investment in the TK Operators will be equivalent to 100.0% of the sum of the Purchase Price of the Properties and the costs for the Acquisition.
The completion of the Acquisition will be subject to the satisfaction of a number of conditions including, inter alia, compliance with certain applicable laws and regulations and the obtaining of certain applicable governmental and regulatory approvals.

Each of the Properties will have a fresh 20 year building lease agreement with the existing operator, Sawayaka Club (the "Building Lease Agreements"), pursuant to which the TK Operators will grant a building lease to Sawayaka Club in respect of the Properties at an
annual gross rental of approximately ¥360,000,000 (approximately S$4.7 million).

2 See also paragraph 5.3 below.

2

Sawayaka Club as the existing operator of the Properties will also enter into backup operator agreements with the TK Operators and the backup operator, Living Platform, Ltd., (the "Backup Operator" and the backup operator agreements, the "Backup Operator Agreements"), to ensure that, inter alia, in the event Sawayaka Club is unable to continue operating the Properties, the Backup Operator will assume the operation of the Properties smoothly, with minimal interference to the residents of the Properties.
Further, K.K. Uchiyama Holdings ("Uchiyama"), the parent company of Sawayaka Club and K.K. Bonheure ("Bonheure"), a wholly-owned subsidiary of Uchiyama (collectively, the "Guarantors"), in connection with the entry into the Building Lease Agreements by Sawayaka Club, irrevocably, unconditionally and absolutely, jointly and severally guarantee (rentai hosho) the prompt payment or fulfilment of any and all obligations (including, without limitation, all obligations to make rental payments) of Sawayaka Club to each of the TK Operators under the Building Lease Agreements (the "Rental Income Guarantees").

Each TK Operator has entered into an asset management agreement with Black Hills Investment Ltd. ("Black Hills", or the "Asset Manager") in respect of the relevant Properties (the "Asset Management Agreement"). The Asset Manager is responsible for the servicing, administration and management of the Properties. The Asset Manager shall be appointed for an initial term up to February 2014, and its appointment shall thereafter be automatically renewed for successive 2-year periods unless the TK Operators or the Asset Manager gives a notice of non-renewal in accordance with the terms of the relevant Asset Management Agreement.

The Vendor and the Guarantors have collectively provided an undertaking letter to the respective TK Operators in respect of the Properties, in which they agree to jointly and severally undertake to, inter alia:-
(i) rectify the certain conditions set forth in the Undertaking Letter (the "Conditions")
at their own costs and expenses; and

(ii) rectify the Conditions within three months after the Closing Date.

Uchiyama is a Japan-based company listed in Osaka Stock Exchange since April 2012. Uchiyama is engaged in two main businesses - nursing home operations under Sawayaka Club, and entertainment, food and beverage operations under Bonheure.
Black Hills is a private real estate asset management firm that was founded in March 2007 in Japan with its core business being in the real estate markets. The assets under Black Hills' management are approximately ¥32 billion (approximately S$421 million) as at July
2013.

3

Based on the property yield of the Acquisition, the Manager believes that the Acquisition will be DPU-accretive to the unitholders of Parkway Life REIT ("Unitholders"), using pro forma historical financial information for the purpose of analysis.

The Acquisition is in line with the investment criteria stated in the prospectus of Parkway Life REIT dated 7 August 2007. The principal investment strategy of the Manager is to invest in income-producing real estate and/or real estate-related assets in the Asia-Pacific region (including Singapore) that are primarily used for healthcare and/or healthcare related purposes (including but not limited to, hospitals, healthcare facilities and real estate and/or real estate assets used in connection with healthcare research, education, and the manufacture or storage of drugs, medicine and other healthcare goods and devices), whether wholly or partially owned, and whether directly or indirectly held through the ownership of special purpose vehicles whose primary purpose is to own such real estate. As such, the Acquisition, which comprises five nursing home and care facility properties, is consistent with Parkway Life REIT's principal investment strategy.

The Acquisition is expected to benefit Unitholders by improving income diversification and reducing the reliance of Parkway Life REIT's income stream on any single property.

All the Properties are well-equipped and strategically located within residential districts, which make them attractive retirement facilities. In addition, the facilities are well- maintained and in good physical condition, making them attractive residences to senior citizens. The facilities are operated by experienced service and nursing staff who provide a wide range of nursing care services to the residents, contributing to the competitiveness of the Properties.

The Purchase Price for the Properties, exclusive of Japanese consumption tax and other estimated fees and expenses (including the acquisition fee, stamp duties, taxes payable, advisory fees, professional fees and expenses) was arrived at on a willing-buyer and willing-seller basis after taking into account the valuation of the Properties by the independent valuer. Such valuations for the Properties as at 1 August 2013 are
summarised in the table in paragraph 3.2 below.

4

The Purchase Price will be paid in cash to the Vendor on the Closing Date after making the relevant adjustments for security deposits and allocations of taxes, expenses and revenues in relation to the Properties pursuant to the terms of the Purchase and Sale Agreements.

International Appraisals Incorporated ("IAI"), an independent valuer, has been commissioned by the Trustee (in its capacity as trustee of Parkway Life REIT) to prepare an independent valuation of the Properties. In its valuation reports dated 6 September
2013, IAI stated that the total appraisal value of the Properties as at 1 August 2013 is approximately ¥4,511,000,000 (approximately S$59.4 million). The valuation was prepared using the Discounted Cash Flow Method and the Purchase Price is close to par with the valuation. The following sets out the break-down of each of the Property's Purchase Price
and Valuation:

5

The above transaction is not expected to have any material impact on the consolidated net tangible assets or distributions per Unit for the financial year ended 31 December 2012.

Based on information available to the Manager, as at the date of this announcement, none of the directors of the Manager or the controlling Unitholders has any interest, direct or indirect, in the Acquisition.

No person is proposed to be appointed as a director of the Manager in connection with the
Acquisition.

Pursuant to the Purchase and Sale Agreements, the TK Operators will acquire the Properties from the Vendor, and the title deeds to the Properties will be held by the TK Operators, as the legal owners of the respective Properties. It should be noted that the title deeds of the Properties are held by the TK Operators and not by the Trustee directly due to the nature of the arrangements under the TK Agreements. As such, the Trustee is not the legal owner of the Properties and has no direct control over the Properties or how they are managed. Should the TK Operators become insolvent, the Trustee's right to distribution under the TK Agreements would be treated as a bankruptcy claim, and would rank junior to all debt obligations owed by the TK Operators.
Given that only the TK Operators have rights against and obligations to third parties as the legal owner of the Properties, third parties will have no recourse against the SPV, as the silent partner, and the liability of Parkway Life REIT (as a TK investor through the SPV) is thus limited to the amount of the Parkway Life REIT TK Investment.

068898 for a period of three months commencing from the date of this announcement:

Vendor of the relevant Properties;

Asset Manager;

Club;

6

TK Operators;

BY ORDER OF THE BOARD Parkway Trust Management Limited (Company Registration no. 200706697Z)
As manager of Parkway Life Real Estate Investment Trust
Chan Wan Mei
Company Secretary
17 September 2013

7

This Announcement is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for units in Parkway Life Real Estate Investment Trust ("Parkway Life REIT" and the units in Parkway Life REIT, the "Units").
The value of Units and the income from them may fall as well as rise. The Units are not obligations of, deposits in, or guaranteed by, Parkway Trust Management Limited, as manager of Parkway Life REIT (the "Manager") or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested.
Investors have no right to request the Manager to redeem their Units while the Units are listed. It is intended that unitholders of Parkway Life REIT may only deal in their Units through trading on Singapore Exchange Securities Trading Limited (the "SGX-ST"). Listing of the Units on the SGX- ST does not guarantee a liquid market for the Units.
The past performance of Parkway Life REIT or the Manager is not necessarily indicative of the future performance of Parkway Life REIT or the Manager.
This Announcement may contain forward-looking statements that involve assumptions, risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in these forward-looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition, shifts in expected levels of property rental income, changes in operating expenses, property expenses, governmental and public policy changes and the continued availability of financing in the amounts and on the terms necessary to support Parkway Life REIT's future business. Investors are cautioned not to place undue reliance on these forward-looking statements,
which are based on the Manager's current view of future events.

8

distributed by