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KUALA LUMPUR (May 23): Hektar Real Estate Investment Trust (KL:HEKTAR) plans to acquire and lease back an international school campus near Setapak in Kuala Lumpur for RM125 million, marking its latest push into the education asset segment to diversify beyond retail properties.
The acquisition involves the leasehold interest in part of a six-acre parcel at the KL East development, together with existing school buildings and a new block to be constructed, Hektar REIT said in a Bursa Malaysia filing on Friday.
The acquisition will be undertaken via a sale-and-leaseback arrangement with KYS College Sdn Bhd (KCSB), which will continue operating the school, KYS KL East International School, under a sub-lease agreement for up to 99 years.
Under the deal, Hektar REIT will pay RM106.55 million in cash and RM18.45 million via the issuance of new units in the REIT. The new units will be issued at up to a 5% discount to the five-day volume-weighted average market price, subject to a floor price of 43.85 sen per unit.
KYS KL East International School, established in 2023, offers preschool to Year 11 education under the Cambridge International Curriculum and is expected to accommodate up to 1,300 students upon completion of the full campus.
The school currently comprises a preschool and primary school building with a combined gross floor area of 44,969 sq ft, while a planned seven-storey secondary school block will add another 196,086 sq ft.
KCSB is required to complete the new building within 24 months from the unconditional date of the sale and purchase agreement.
Hektar REIT said the first-year rental will be based on RM3.30 per sq ft monthly, with a 10% rental escalation every three years throughout the lease tenure. The lease will be on a triple-net basis, where the tenant bears operational, maintenance and property-related costs.
The REIT expects the acquisition to generate an initial net rental yield of 6.7%, based on an annual net rental income of RM8.2 million upon completion of the new building, with the average yield projected at 8.87% over the initial 30-year lease term.
Hektar REIT said the acquisition would enlarge its net lettable area by 9.4% and raise its total asset value by 8.6% from RM1.46 billion as at end-2025.
The REIT currently owns a portfolio comprising six shopping malls, a hotel and an education asset, Kolej Yayasan Saad in Melaka.
The proposed transaction is deemed a related-party transaction as Tan Sri Halim Saad is the founder of KYS KL East International School, while his daughter Nor Sabrina Halim is a director of Hektar Black Sdn Bhd, a major unitholder of Hektar REIT with a 16.12% stake.
The acquisition is subject to unitholders’ approval, Bursa Malaysia’s approval for the issuance of the consideration units, and consent from Sime Darby Property (KL East) Sdn Bhd, the landowner and lessor under the master lease agreement.
Upon completion of the sale and purchase agreement, the master lease — including a supplemental agreement extending the lease tenure to up to 99 years — will be novated to Hektar REIT’s trustee, which will then sub-lease the property back to KCSB to continue operating the school.
The acquisition is expected to be completed in the first quarter of 2027.
Hektar REIT’s units closed unchanged at 44 sen on Friday, giving the REIT a market capitalisation of RM313 million. The counter has traded largely unchanged over the past year.
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