Interview – Healthcare REIT’s

Reading Time: 4 minutes
Yusaini Bin Hj Sidek
Yusaini Bin Hj Sidek, Executive Director of Damansara REIT Managers

Funds manager Damansara REIT has received a lot of attention for its Al-‘Aqar Healthcare REIT, which is an Islamic real estate investment trust. The principal activity of the fund is to invest into Shariah compliant properties in the healthcare sector with the primary objective of providing unit holders with stable distribution and sustainable long term growth as well as capital appreciation. Inside investor asked Yusaini Bin Hj Sidek, Executive Director of Damansara REIT Managers, about the fund’s development and performance.

Q: Can you tell us about the background of the Al-‘Aqar Healthcare REIT?

A: We were established in 2006 with initial assets of RM481 million and were listed on the KLSE in August 2006. In 2007, we added our second acquisition worth RM180 million, comprising of five properties. The third acquisition took place in 2009, adding nine properties at the value of RM286 million. The latest acquisitions were properties in Indonesia and Australia, completed in 2011. In January 2012, we added another hospital building in Malaysia. Altogether, the asset value of the fund is now about RM1.37 billion. In terms of dividends, we managed to distribute in average about 7.70 sen per unit.

Q: By now, how many assets do you have in total?

A: We have 22 assets in Malaysia, comprising hospitals, nursing colleges and one healthcare related asset. The others are two in Jakarta and one in Brisbane, Australia. We also received other offers from the UK, Australia, Thailand and Sri Lanka for new acquisitions; however, this needs further evaluation and is subject to approval from our unit holders. We are specialised on healthcare and healthcare related property investments, and we focus on Shariah based property financing instruments. We welcome any proposal as well as parties that are interested in Al-‘Aqar and are willing to share our experience and knowledge in managing healthcare related real estate investment trusts. Any party interested to move properties into Al-‘Aqar will be offered a sale-and-lease-back scheme. Thus, not only the company will obtain liquidity from their properties, but also has the opportunity to expand further.

Q: What was the reason of the fund’s name change?

A: The fund was called Al-‘Aqar KPJ REIT in the beginning when it was set up by the sponsor, KPJ Healthcare Berhad, but later the name was changed into Al-‘Aqar Healthcare REIT. The rationale behind this was to reflect the healthcare related assets that Al-‘Aqar is focusing on. Changing the name also created a greater awareness for Al-‘Aqar as we opened to third-party assets as an alternative after fully integrating the KPJ assets. Due to short supply of property, we took the next step by expanding abroad. The aggressive expansion strategy created a growth story for Al-‘Aqar. We integrated KPJ to participate in the new assets and, vice-versa, if KPJ buys a new property, we integrate this. It is a competitive and very synergetic partnership.

Q: What is the current share price of the fund?

A: Currently we trade at RM1.37. The highest value we touched so far was RM1.45.

Q: What is the main advantage of an Islamic REIT?

A: As the growth potential of Islamic REITs is big, our product is well received by Islamic investors as well as conventional investors. These factors will allow us to expand further locally and abroad. As REIT that focuses on healthcare related assets, we provide sustainable growth to our investors with a permissible activity according to Shariah regulations. The Islamic finance system that we use is accepted by many countries such as Indonesia and Australia.

Q: What is your expansion strategy?

A: We are focusing on two strategies. We either acquire more assets with good return or we enhance the existing property portfolio.

Q: What are the main considerations for investors to look into REITs?

A: A wise investor does not put all his eggs into one basket. If an investor wants to diversify and is looking for stable income and constant growth, then he should look into investing into REITs. It’s low to medium risk at medium return. Of course, higher returns can be obtained by investing into private equity, but at higher risk. With a REIT, you have a flow of your investment. A private equity fund manager will just invest into higher return on investment, and this might not be Shariah compliant. Using a Shariah compliant REIT, we are very clear-cut in everything we invest in and also with regards to the underlying financing scheme. Al-‘Aqar and REITs itself are actually an alternative for investors.

Q: Can retail investors also take part in the REIT?

A: Of course. The minimum investment is 100 units as determined by the stock exchange. Everybody can invest. For example, we have about 15 per cent foreign retail investors.

Q: What are the tax implications?

A: REITs enjoy tax exemptions if they pay a dividend of more that 90 per cent on the distributable income.Our track record shows that we pay dividend on more than 99 per cent of our income. However, the unitholders are subject to withholding tax which varies according to the category.

Q: What was the return last year?

A: It was 7.69 sen per unit. It was a stable return for both our local and foreign investors.

Q: How popular is a REIT for small and retail investors in comparison to fixed income or stocks?

A: Normally, return from a REIT is better that that from fixed deposit and has less fluctuation as compared to conventional stocks. For institutions looking for stable returns, REIT provides one option.

Q:  How many REITs do you manage in Malaysia?

A: Currently, in Malaysia, there are 14 REITs, among them REITs that invest into commercial property and logistics. We are basically managing Al-‘Aqar Healthcare REIT focusing on healthcare related properties.

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Reading Time: 4 minutes

Yusaini Bin Hj Sidek, Executive Director of Damansara REIT Managers

Funds manager Damansara REIT has received a lot of attention for its Al-‘Aqar Healthcare REIT, which is an Islamic real estate investment trust. The principal activity of the fund is to invest into Shariah compliant properties in the healthcare sector with the primary objective of providing unit holders with stable distribution and sustainable long term growth as well as capital appreciation. Inside investor asked Yusaini Bin Hj Sidek, Executive Director of Damansara REIT Managers, about the fund’s development and performance.

Reading Time: 4 minutes

Yusaini Bin Hj Sidek
Yusaini Bin Hj Sidek, Executive Director of Damansara REIT Managers

Funds manager Damansara REIT has received a lot of attention for its Al-‘Aqar Healthcare REIT, which is an Islamic real estate investment trust. The principal activity of the fund is to invest into Shariah compliant properties in the healthcare sector with the primary objective of providing unit holders with stable distribution and sustainable long term growth as well as capital appreciation. Inside investor asked Yusaini Bin Hj Sidek, Executive Director of Damansara REIT Managers, about the fund’s development and performance.

Q: Can you tell us about the background of the Al-‘Aqar Healthcare REIT?

A: We were established in 2006 with initial assets of RM481 million and were listed on the KLSE in August 2006. In 2007, we added our second acquisition worth RM180 million, comprising of five properties. The third acquisition took place in 2009, adding nine properties at the value of RM286 million. The latest acquisitions were properties in Indonesia and Australia, completed in 2011. In January 2012, we added another hospital building in Malaysia. Altogether, the asset value of the fund is now about RM1.37 billion. In terms of dividends, we managed to distribute in average about 7.70 sen per unit.

Q: By now, how many assets do you have in total?

A: We have 22 assets in Malaysia, comprising hospitals, nursing colleges and one healthcare related asset. The others are two in Jakarta and one in Brisbane, Australia. We also received other offers from the UK, Australia, Thailand and Sri Lanka for new acquisitions; however, this needs further evaluation and is subject to approval from our unit holders. We are specialised on healthcare and healthcare related property investments, and we focus on Shariah based property financing instruments. We welcome any proposal as well as parties that are interested in Al-‘Aqar and are willing to share our experience and knowledge in managing healthcare related real estate investment trusts. Any party interested to move properties into Al-‘Aqar will be offered a sale-and-lease-back scheme. Thus, not only the company will obtain liquidity from their properties, but also has the opportunity to expand further.

Q: What was the reason of the fund’s name change?

A: The fund was called Al-‘Aqar KPJ REIT in the beginning when it was set up by the sponsor, KPJ Healthcare Berhad, but later the name was changed into Al-‘Aqar Healthcare REIT. The rationale behind this was to reflect the healthcare related assets that Al-‘Aqar is focusing on. Changing the name also created a greater awareness for Al-‘Aqar as we opened to third-party assets as an alternative after fully integrating the KPJ assets. Due to short supply of property, we took the next step by expanding abroad. The aggressive expansion strategy created a growth story for Al-‘Aqar. We integrated KPJ to participate in the new assets and, vice-versa, if KPJ buys a new property, we integrate this. It is a competitive and very synergetic partnership.

Q: What is the current share price of the fund?

A: Currently we trade at RM1.37. The highest value we touched so far was RM1.45.

Q: What is the main advantage of an Islamic REIT?

A: As the growth potential of Islamic REITs is big, our product is well received by Islamic investors as well as conventional investors. These factors will allow us to expand further locally and abroad. As REIT that focuses on healthcare related assets, we provide sustainable growth to our investors with a permissible activity according to Shariah regulations. The Islamic finance system that we use is accepted by many countries such as Indonesia and Australia.

Q: What is your expansion strategy?

A: We are focusing on two strategies. We either acquire more assets with good return or we enhance the existing property portfolio.

Q: What are the main considerations for investors to look into REITs?

A: A wise investor does not put all his eggs into one basket. If an investor wants to diversify and is looking for stable income and constant growth, then he should look into investing into REITs. It’s low to medium risk at medium return. Of course, higher returns can be obtained by investing into private equity, but at higher risk. With a REIT, you have a flow of your investment. A private equity fund manager will just invest into higher return on investment, and this might not be Shariah compliant. Using a Shariah compliant REIT, we are very clear-cut in everything we invest in and also with regards to the underlying financing scheme. Al-‘Aqar and REITs itself are actually an alternative for investors.

Q: Can retail investors also take part in the REIT?

A: Of course. The minimum investment is 100 units as determined by the stock exchange. Everybody can invest. For example, we have about 15 per cent foreign retail investors.

Q: What are the tax implications?

A: REITs enjoy tax exemptions if they pay a dividend of more that 90 per cent on the distributable income.Our track record shows that we pay dividend on more than 99 per cent of our income. However, the unitholders are subject to withholding tax which varies according to the category.

Q: What was the return last year?

A: It was 7.69 sen per unit. It was a stable return for both our local and foreign investors.

Q: How popular is a REIT for small and retail investors in comparison to fixed income or stocks?

A: Normally, return from a REIT is better that that from fixed deposit and has less fluctuation as compared to conventional stocks. For institutions looking for stable returns, REIT provides one option.

Q:  How many REITs do you manage in Malaysia?

A: Currently, in Malaysia, there are 14 REITs, among them REITs that invest into commercial property and logistics. We are basically managing Al-‘Aqar Healthcare REIT focusing on healthcare related properties.

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