KPJ Healthcare Bhd, the healthcare subsidiary of Johor Corp (JCorp) which has Malaysia’s first Islamic Real Estate Investment Trust (REIT) called Al-’Aqar KPJ REIT has listed it on 10^th August 2006.
KPJ Healthcare manages 19 specialist hospitals locally and abroad, and a private nursing college. Its overseas operations include three specialist hospitals in Indonesia and one in Bangladesh.

To-date, it has injected 6 hospitals into the REIT whilst it has has nine other hospitals in Malaysia, three in Indonesia and one in Bangladesh that it is looking to inject into the trust.It is presently reviewing whether the balance of the 13 hospitals are eligible to be injected into the REIT to increase its size and yields.

Let’s look the recent listing of Malayisa’s first Islamic REIT, Al-‘Agar KPJ Reit (Business Times (11& 12/8/06):

Updates on Malaysia’s first Islamic REIT:

• Financial Performances:

(annualized for year 2006: Source:OSK)

• Al-’Aqar KPJ REIT currently comprises six KPJ Healthcare hospitals worth RM461.25 million. They are Ampang Puteri Specialist Hospital, Johor Specialist Hospital, Damansara Specialist Hospital, Ipoh Specialist Hospital, Puteri Specialist Hospital and Selangor Medical Centre;

• The lease for the properties is for a duration of 15 years with an option to renew for another 15 years, and revision of rental rate every three years starting with RM35.1 million this year:

•  Damansara REIT Managers Sdn Bhd is the manager of the REIT. AmMerchant Bank Bhd is the lead adviser, managing underwriter and sole placement agent while Amanah Raya Bhd is the trustee;

• KPJ will hold 160 million units of the REIT while the balance 165 million units were offered to institutional investors at RM1 per unit and 15 million units to retail investors at RM0.95 sen each.

• The REIT was oversubscribed by 4.13 times for retail and 1.42 times for institutional investors. In addition to the Muslim and Bumiputera investors, the Islamic REIT managed to draw 5,115 non-Muslim and non-Bumiputera investors;

• From the 76 million total applications, about 73 per cent or 56 million came from non-bumi investors from as far as South Africa and the Middle East.

• The Al-’Aqar KPJ REIT opened at RM0.99, a premium of 4.2 per cent, or 4 sen, over its retail offer price of RM0.95. There were 30,810 units done at the opening bell.It closed 3.5 sen up at RM0.985;

• The REIT raised RM167.25 million, most of which will be used to partly fund the acquisition of the six asset;

For those standalone operators of hospitals who is in need of cash or synergies, take note that:

• There were invitation from KPJ Healthcare Bhd/Al’Agar KPJ REIT to  operators who are running standalone  hospital in Malaysia and who may want to collaborate with KPJ Healthcare to enhance the REIT for better yields, and for other operational advantage and

• KPJ Healthcare Bhd’s managing director, Datin Siti Sa’diah Sheikh Bakir  added that the hospital operators could either form partnerships with KPJ Healthcare, or sell their buildings to the company to be injected into the REIT.

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