Al-Aqar locks in RM15mil annual rent from new KPJ hospital leases
KUALA LUMPUR: Al-Aqar Healthcare Real Estate Investment Trust (Al-Aqar Reit) is set to secure more than RM15 million in annual base rental income through new long-term lease agreements with KPJ Healthcare Bhd.
This follows the trust's proposed acquisition of two new buildings at KPJ hospitals in Ampang and Penang worth a combined RM241 million.
The 15-year leases, covering properties at KPJ Ampang Puteri and KPJ Penang, will commence upon the completion of the RM131 million and RM110 million purchases, respectively.
Both properties will be leased back to their current operators under structured contracts that include fixed rental escalations and market-based rent reviews.
In a bourse filing today, Al-Aqar Reit said the first-year base rent for the Ampang building is RM8.19 million, while the Penang building will contribute RM6.88 million, totalling RM15.07 million annually.
The second and third years will see a two per cent increase each year.
From the fourth year onwards, rental will be subject to periodic reviews based on open market value but capped at a maximum annual increment of two per cent.
"Any adjustment to the rent shall not be more than two per cent incremental increase over the rent for the preceding year," it said, adding that both lease agreements come with renewal options for another 15 years.
Unitholders will vote on the proposals at an extraordinary general meeting scheduled for June 25 in Johor Bahru.
If approved, the deal will boost Al-Aqar Reit's recurring income profile without materially affecting its net asset value (NAV) per unit.
"The proposed acquisitions are not expected to have a material effect on the NAV per unit of Al-Aqar Reit," it added.
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