Al-Aqar REIT dragged by loss on disposal in 1Q; Al-Salam REIT sees retail, industrial boost

• Net rental income for the quarter also dropped 3.9% to RM25.03 million from RM26.05 million in 1QFY2024.

KUALA LUMPUR (May 26): Al-Aqar Healthcare Real Estate Investment Trust (Al-Aqar REIT) (KL:ALAQAR) reported a 3.7% decline in net income to RM15.80 million for the first quarter ended March 31, 2025 (1QFY2025), compared to RM16.41 million in the same period last year, primarily due to a loss of income from the disposal of the Damai Care & Wellness Centre and higher manager's fees.

Net rental income for the quarter also dropped 3.9% to RM25.03 million from RM26.05 million in 1QFY2024, according to the REIT’s filing on Monday.

Nonetheless, Al-Aqar, in which KPJ Healthcare Bhd (KL:KPJ) owns a 34.5% stake, declared its first interim income distribution of 1.74 sen per unit for 1QFY2025, compared to 1.90 sen per unit in the corresponding quarter last year.

Segment-wise, Al-Aqar’s Malaysian operations experienced a 2.3% drop in net rental income due to the asset disposal and higher fees, while its Australian operations saw a 75.6% decline, partly due to rental adjustments following a business sale agreement.

Al-Aqar expects its earnings to remain stable, backed by long-term lease agreements with KPJ, which continues to demonstrate operational strength.

“To maintain positive distribution growth for unitholders and uphold these lease agreements, the fund is actively involved in various corporate initiatives and exploring third-party acquisitions,” it said.

The group said it planned to use the proceeds from the disposal of the Jeta Gardens Aged Care Facility in Australia for further distribution to unitholders or to fund acquisition in local healthcare properties, or a mixture of both, depending on strategic considerations.

Meanwhile, its peer Al-Salam REIT (KL:ALSREIT), which owns retail, office, restaurants and industrial properties, particularly in Johor, saw its net income for the first quarter ended March 31, 2025 (1QFY2025) rise 19.9% to RM3.28 million from RM2.73 million a year earlier, underpinned by improved performance in its retail and industrial segments.

Quarterly revenue rose 7.4% to RM21.38 million from RM19.90 million in 1QFY2024, mainly due to higher rental and promotional income from retail outlets, which climbed 14.6% year-on-year to RM12.45 million, the company said in a separate filing on Monday.

The board declared its first interim income distribution of 0.51 sen per unit for 1QFY2025, as compared with 0.30 sen in the same quarter last year, to be paid on June 30.

Moving forward, Al-Salam expects continued income stability from its triple net lease assets and QSR Brands (M) Holdings Bhd (QSR)-linked properties, coupled with growth opportunities in Johor Bahru from upcoming infrastructure projects which are expected to boost demand for retail and office spaces.

“The manager is confident that the fund's existing stable of assets are well maintained to ensure the stability of rental income, stable income distributions for Al-Salam REIT and create long-term value for its unitholders,” it said.

Shares of Al-Aqar closed unchanged at RM1.26 on Monday, valuing the group at RM1.06 billion.

Al-Salam's shares settled down half a sen or 1.28% to 38.5 sen on Monday, giving the REIT a market capitalisation of RM223.3 million.

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