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Saturday, December 18, 2010

KPJ to inject assets into REIT

KPJ Healthcare Bhd is set to raise RM138.7 million by injecting three of its hospital buildings into a real estate investment trust (REIT) scheme called Al-'Aqar KPJ REIT.

KPJ managing director Datin Paduka Siti Sa'diah Sheikh Bakir said under the scheme, the healthcare group will in return get a combination of RM1.1 million in cash and the balance in new Al-'Aqar KPJ REIT units.

The exercise involves the sale of two hospital buildings here - the Bandar Baru Klang Specialist Hospital in Selangor and the Kluang Utama Specialist Hospital in Johor.

The third hospital is the Rumah Sakit Bumi Serpong Damai building in Jakarta, Indonesia.

To retain the use of the buildings, the group in turn will rent the buildings via a 15-year lease with an option to extend the tenure for another 15 years.
The asset injection will allow the group to unlock value and realise its investment in the properties, Siti Sa'adiah said.

Proceeds from the asset sales will be used to pare down the group's borrowings and trim the gearing to 0.4 times from 0.5 times and an interest cost-savings of about RM2.2 million a year.

"This will enable us to gain access into funds in our plans to build new hospitals next year such as in Pasir Gudang, Kuantan, Klang, Muar and in Sabah," she told reporters in Kuala Lumpur yesterday after Al-'Aqar KPJ REIT's annual shareholder meeting.

Al-'Aqar KPJ REIT is the first and largest Islamic healthcare REIT in Malaysia and managed by Damansara REIT managers Sdn Bhd, which is a member of the Johor Corp Group (JCorp).

The sale and leaseback of the three hospitals is the fourth tranche of the REIT's injection since its launch in 2006.

The first tranche involved the injection of six hospital buildings valued at RM481.2 million, the second involved the sale of five buildings for RM170.0 million and the third comprised seven hospital buildings and one nursing college for RM292.5 million.

With the injection, Al-'Aqar KPJ REIT's total enlarged units stands at 636.8 million units with a total of 22 hospital buildings under its scheme, one nursing college, the Selesa Hotel, Metropolis Tower and another two properties in Jakarta.

Upon completion of the proposed acquisitions, the enlarged total asset value will be more than RM1.2 billion.

Al-'Aqar KPJ REIT will seek listing and quotation for its consideration units of 56.6 million units on the Main Board of Bursa Securities.

By Business Times

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