• The divestment, it said, is driven by the shift from residential aged care to home care since 2019, which has resulted in its facility market value declining by one-third to A$27.3 million as at December 2023.

KUALA LUMPUR (Dec 13): Johor Corp-linked Al-‘Aqar Healthcare REIT is disposing of its land and buildings of Jeta Gardens Aged Care Facility in Australia for AU$24.2 million (RM74.9 million) cash to Principal Healthcare Finance Pty Ltd.

The divestment, it said, is driven by the shift from residential aged care to home care since 2019, which has resulted in its facility market value declining by one-third to A$27.3 million as at December 2023.

It anticipates “acquisition of several local mature healthcare assets in the near term” as part of its capital recycling following the disposal, with a long-term view to raise its portfolio value to RM3 billion by 2028, from RM1.7 billion.

The Jeta Gardens facility’s net asset value, it said, represents only 3.76% of total asset value as at end-2022.

Al’Aqar forayed into Australia in 2011, and saw a total investment cost of RM132 million, of which it said 99% was covered by cumulative rental income it incurred.

“Al-`Aqar aims to eliminate risk exposure to these changes, particularly in response to the outcomes of the Royal Commission into Aged Care Quality and Safety Report in 2019, which resulted in a shift from residential aged care to home care,” it said.

Proceeds from the land sale contract, expected to be completed by 2H2024, will be utilized for capital recycling or redemption of financing facilities (A$18.83 million), apportionment of proceeds to the Jeta Gardens facility (A$3.91 million), as well as related expenses (A$1.66 million), the REIT said.

The sale is expected to result in a proforma loss of RM3.4 million, based on Al-‘Aqar’s latest full-year audited financial statement.

The Jeta Gardens facility is leased by a unit of KPJ Healthcare Bhd, which is also linked to Johor Corp.

In relation to the transaction, KPJ through its subsidiaries are disposing of its residential aged care business in Jeta Gardens to DPG Services Pty Ltd for A$700,000.

Al-‘Aqar units settled one sen or 0.8% lower at RM1.24, giving the REIT a market capitalization of RM1.04 billion.

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