BUSINESS OVERVIEW 8 Al-`Aqar Healthcare REIT | Annual Report 2024 LETTER TO STAKEHOLDERS We entered 2024 with measured optimism, mindful of the evolving global and domestic economic landscape. Amid shifting macroeconomic conditions and rising operational costs, Al-`Aqar Healthcare REIT continued to focus on delivering sustainable value to our unitholders. Our strong foundation in healthcare real estate, supported by our long-standing partnership with KPJ Healthcare Berhad has allowed us to navigate industry challenges while maintaining steady growth. Anchored by our Strategic Plan we continue to refine our portfolio, deploying capital effectively and strengthening stakeholder collaboration, both of which are critical to maintaining momentum in an evolving healthcare landscape. This commitment to stability is reflected in our performance for FY2024. DATUK HASHIM BIN WAHIR Chairman, Independent Non-Executive Director I am pleased to present the Annual Report for FY2024 highlighting a total distribution per unit (“DPU”) of 7.27 sen. While this is slightly lower than the 7.90 sen recorded in 2023, which was the highest DPU pay-out in a decade, last year’s exceptional performance set an unusually high benchmark. Despite the marginal decline, our pay-out percentage remained consistent, and the reduction in DPU was primarily due to a modest dip in distributable income from lower earnings. REVIEWING 2024 - SUPPORTIVE OPERATING ENVIRONMENT Malaysia’s economy experienced stronger growth in 2024, expanding by 5.1% compared to 3.6% in 2023, driven by resilient domestic demand, particularly household spending and investments. This positive momentum, coupled with the Central Bank’s decision to maintain the benchmark interest rate at 3.00%, created a stable financial environment. For the healthcare real estate sector, sustained economic growth and steady interest rates support investor confidence, tenant stability and long-term demand for healthcare assets. Our local private healthcare sector remains a key growth driver, supported by demographic shifts, rising demand for specialised treatments and government initiatives. The increased allocation to the Ministry of Health in Budget 2025 highlights efforts to enhance public healthcare, with private hospitals playing a crucial role in alleviating patient congestion. These developments bode well for Al-`Aqar, as the expansion of privately operated medical centres drives demand for quality healthcare facilities, ensuring stable rental income and reinforcing the REIT’s long-term growth prospects. Boosted by the resurgence of medical tourism, Malaysia’s health services sector showed strong growth in 2024. The Malaysia Healthcare Travel Council projected international patient arrivals to reach nearly 1.5 million by the end of 2024 (2023: 1.39 million), further solidifying Malaysia’s position as a leading regional hub for healthcare travel. This growing influx of patients seeking treatment abroad has bolstered private hospital occupancy rates, driving stronger financial performance across the sector. Together with supportive government policies and structural healthcare reforms, these trends continue to create a favourable environment for investments in medical facilities and health-related assets
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