KUALA LUMPUR: Hektar Asset Management Sdn Bhd, the manager of Hektar Real Estate Investment Trust (Hektar Reit), announced yesterday the completion of the acquisition of Kolej Yayasan Saad Melaka (KYSM), a fully residential and co-educational private school, for RM148.5 million.
The acquisition marks a pivotal moment in Hektar Reit's strategic expansion and diversification efforts, being the first educational asset in its portfolio, Hektar Asset Management said.
KYSM has consistently ranked among the top 10 schools nationally for its Sijil Pelajaran Malaysia (SPM) results.
It s renowned for excellence in both academic and co-curricular achievements since its establishment in 1995.
The institution offers a comprehensive range of activities including rugby, orchestra, netball, swimming, triathlon, and debate.
The acquisition of KYSM brings numerous benefits to Hektar Reit, as the asset is secured under a 30-year quadruple net lease agreement.
It provides incremental revenue annually and an average yield of 8.0 per cent over the lease tenure.
"This strategic acquisition increases Hektar Reit's assets under nanagement (AUM) by 12.0 per cent to RM1.38 billion.
"With demand consistently far surpassing the annual intake for the placement in KYSM, the Reit sees further growth potential in the asset that can be unlocked," the manager said.
This marks the beginning of Hektar Reit's diversification with the acquisition of its first non-retail asset.
"Hektar Reit is in an active acquisition stage, looking to inject more income-generating assets and targeting to double our portfolio size to RM3.0 billion by 2027.
"Several assets are already in the pipeline for our consideration with the strategy to mix non-retail assets up to 20 per cent in our portfolio," Hektar Asset Management said.
According to the manager, Hektar Reit is on track with its growth strategy and that they are already in active discussion with several parties for the next acquisition.
In selecting new assets, the Reit focuses on yield accretive assets that can provide sustainable and defensible recurring income, with particular interest in education and industrial assets.
"Given their resilient nature to market movements, these sectors present opportunities for Hektar Reit to invest in."
For instance, the private sector education market size is expected to grow at compounded annual growth rate of 6.5-7.0 per cent with further capital gain moving forward based on market research.
Another main focus for the Reit right now is to execute the asset enhancement initiatives to improve it's current assets, especially Subang Parade.
The total repositioning of Subang Parade will be done in phases starting from the fourth quarter of 2024, covering the façade, internal spaces and tenancy remixing to enhance the mall's overall ambiance and offerings.