PETALING JAYA: Al-Aqar Healthcare Real Estate Investment Trust (REIT) has proposed to renew the leasing of its six hospitals with KPJ Healthcare Bhd for another 15 years.
The six hospitals are KPJ Ampang Puteri Specialist Hospital, KPJ Damansara Specialist Hospital, KPJ Ipoh Specialist Hospital, KPJ Johor Specialist Hospital, KPJ Puteri Specialist Hospital and KPJ Selangor Specialist Hospital.
Cumulatively, the assets were worth RM712mil as of January this year, in terms of market value.
In a filing with Bursa Malaysia, it was announced that Damansara REIT Managers Sdn Bhd and AmanahRaya Trustees Bhd, the manager and trustee of Al-Aqar, respectively, plans to enter into six separate lease agreements with KPJ’s subsidiaries.
Barring any unforeseen circumstances, the proposed lease renewal is expected to be completed in the second quarter of 2021.
On June 30,2006, Al-Aqar had entered into lease agreements with six subsidiaries of KPJ to lease the properties owned by the REIT.
The initial 15-year contractual lease period under the principal lease agreements will expire on June 29,2021.
Hence, the proposed lease renewal is expected to be effective June 30 and will end on June 29,2036. It also comes with an option to renew for another 15 years.
Al-Aqar said the total gross rental for the first year of the renewed contractual term amounted to RM40.94mil, based on 5.75% of the open market value of the properties.
For the second and third year, the rent would see a 2% incremental increase from the rent of the preceding year.
The first rental term comprises the first three years of the lease.
The rent for every succeeding rental term will be calculated based on the rent review formula agreed by Al-Aqar and KPJ.
Any adjustment to the rent in the first year of each succeeding rental term shall not exceed 2% incremental increase over the rent for the preceding year.
Meanwhile, for the second and third year of every succeeding rental terms, the rental will be increased by 2% over the rent for the preceding year.