KUALA LUMPUR (Dec 4): Al-Aqar Healthcare Real Estate Investment Trust (Al-Aqar REIT) (KL:ALAQAR) is expected to record a disposal loss from its planned divestment of non-performing property in Bukit Mertajam, Penang, for RM12 million — below both its market value and original investment cost.

The healthcare-focused REIT said it has signed a sale and purchase agreement (SPA) with Icon Square Sdn Bhd (ISSB) to dispose of a six-storey purpose-built building with a basement level — currently operated as KPJ Healthcare College, Penang — together with all fixtures and fittings, according to its filing with Bursa Malaysia on Thursday.

“Given the current volatile and uncertain economic environment, the proposed disposal will enhance the balance sheet strength of Al-Aqar REIT and provide greater financial flexibility to explore new investment opportunities with higher yield and/or growth potential,” the REIT said.

An independent valuer appraised the market value of the property at RM13 million in a valuation report dated Nov 20, 2025, using the income approach by investment method as the primary assessment, and the comparison method as a cross-check, the REIT noted. 

Meanwhile, its original investment cost, including upkeep, stands at approximately RM14.17 million, with the acquisition of the property spread between 2009 and 2024.

The purchaser, ISSB, is principally involved in the buying, selling, renting and operating of self-owned or leased non-residential real estate, as well as managing indoor and outdoor sporting events with its own facilities.

The property is currently leased to KPJ Healthcare University Sdn Bhd under an agreement dated Aug 1, 2025 until July 31, 2026, with an option to renew for one additional year. The property, located in Section 5, Bandar Bukit Mertajam, sits on approximately 11,727.87 sq m of land.

As part of the disposal process, Al-Aqar REIT will novate the existing lease to ISSB through a deed of novation to be executed between the trustee, the manager, the purchaser and the current lessee.

Al-Aqar REIT said the divestment forms part of its capital recycling strategy to streamline its portfolio by disposing of non-core or underperforming assets.

The Bukit Mertajam property contributed RM0.97 million in net property income (NPI) for the financial year ended Dec 31, 2024 (FY2024), marginally higher than RM0.96 million in FY2023, which the REIT said reflects minimal impact on overall earnings and income distribution.

The RM12 million in gross cash proceeds will be redeployed into yield-accretive investments or asset enhancement initiatives under its 2024-2028 strategic plan, according to the REIT.

Should no new investments be secured within the next 12 months, the manager will instead use the proceeds to pare down bank borrowings and reduce gearing.

Shares in Al-Aqar REIT closed one sen or 0.78% higher at RM1.29 on Thursday, giving the trust a market capitalisation of RM1.08 billion.