Al-’Aqar Healthcare REIT is proposing to acquire three hospitals from KPJ Healthcare Bhd for RM192 million, to be paid in cash and new shares.
Both entities have a common major shareholder in Johor Corporation, which the Johore government owns, and are thus deemed related party transactions.
Johor Corp is a major unitholder of Al-’Aqar Healthcare REIT with an indirect interest of 36.56 per cent. It is also a major shareholder of KPJ Healthcare with a 35.58 per cent direct interest and a 9.63 per cent indirect interest. Among Johor Corp’s core businesses are wellness and healthcare.
In a recent Bursa Malaysia filing, Al-’Aqar Healthcare REIT said it was buying TMC Healthcare Centre Building in Taiping, Perak, for RM14.3 million cash and KPJ Seremban Specialist Hospital Building for RM84.7 million cash.
The REIT is also buying Pasir Gudang Specialist Hospital in Johor for RM93 million, to be satisfied by a cash payment of RM67.99 million and the 20.5 million new units in the REIT at RM1.22 per unit.
Concurrently, with the purchases, Al-’Aqar Healthcare REIT said its trustee (Amanahraya Trustees Bhd) and its manager (Damansara REIT Managers Sdn Bhd) have entered into lease agreements with the three KPJ Healthcare subsidiaries involved.
Following the acquisitions and leases of the three hospitals, the REIT’s portfolio size will increase to RM1.73 billion from RM1.54 billion.
“The proposed acquisitions and proposed leases are expected to improve the future earnings of Al-’Aqar Healthcare REIT, taking into consideration the additional rental income to be received from the properties, which is expected to translate into DPU (distribution per unit) yield accretion,” it said.
Al-’Aqar Healthcare REIT plans to raise RM138 million via a private placement of up to 118.97 million new units or 16.16 per cent of its total units, mainly to repay bank financing. The private placement investors will be identified later.
Al-’Aqar Healthcare REIT’s total bank financing stood at RM690 million as of Aug 18. The acquisitions and leases are expected to be completed by the fourth quarter of 2022, while the private placement is expected to be completed by the first half of 2023.
Apart from Johor Corp, the Employees Provident Fund (EPF) is a major unitholder of Al-’Aqar Healthcare REIT, with a direct interest of 11.31 per cent and a shareholder of KPJ with a direct stake of 12.7 per cent.
Lembaga Tabung Haji is also a major unitholder of Al-’Aqar Healthcare REIT, with a direct interest of 14.34 per cent and a shareholder of KPJ with a direct stake of 2.95 per cent.