KPJ to inject two hospital assets into Al-Aqar Healthcare REIT

• The disposal is expected to unlock the value of the assets while allowing KPJ to retain operational control through a leaseback structure.

KUALA LUMPUR (March 27): KPJ Healthcare Bhd (KL:KPJ) has proposed to inject two hospital properties into Al-'Aqar Healthcare Real Estate Investment Trust (Al-Aqar REIT) (KL:ALAQAR) for a combined consideration of RM241 million via a sale-and-leaseback arrangement.

The assets comprise a new 15-storey hospital building at KPJ Ampang Puteri Specialist Hospital and a new 10-storey hospital building at KPJ Penang Specialist Hospital, worth RM131 million and RM110 million respectively, said KPJ in a bourse filing on Thursday.

The disposal is expected to unlock the value of the assets while allowing KPJ to retain operational control through a leaseback structure, the group added.

Under the agreement, KPJ will lease the properties back from Al-Aqar REIT for an initial term of 11 years, with an option to extend for another 15 years. The lease payments will be structured to provide stable rental income to the REIT.

Of the proceeds from the disposals, KPJ has allocated RM100 million for debt repayment, RM139 million for working capital, and the remaining RM2 million for the estimated expenses related to the exercise.

Meanwhile, KPJ has also proposed to renew existing lease agreements for six hospital properties and two academic institutions within Al-Aqar REIT’s portfolio.

This includes KPJ Penang, Taiping Medical Centre, TMC Health Centre, KPJ Seremban Specialist Hospital's new building, old building and vacant land, KPJ Healthcare University, and KPJ International College. 

The transactions are expected to be completed in the second half of 2025, said KPJ.

Prior to this, KPJ had injected 19 of its 29 hospitals into Al-Aqar REIT. The group holds a 3.37% direct stake in Al-Aqar REIT.

Johor Corp is the common shareholder in KPJ and Al-Aqar REIT. It has a 35.86% direct stake in KPJ and a 2.88% direct stake in Al-Aqar REIT.

Shares of KPJ gained seven sen or 2.67% to RM2.69 on Thursday, giving the group a market capitalisation of RM12.18 billion. Al-Aqar REIT closed one sen or 0.8% lowwer at RM1.24, valuing the trust at RM1.04 billion.

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