BUSINESS OVERVIEW SECTION 2 9 Al-`Aqar Healthcare REIT | Annual Report 2024 LETTER TO STAKEHOLDERS These broader economic and industry drivers have positively impacted Al-`Aqar, supported by its close partnership with KPJ, Malaysia’s leading private healthcare provider. As of December 2024, KPJ reported a robust financial performance, with revenue increasing by 15% to RM3.92 billion (FY2023: RM3.42 billion) - and profit before tax rising 40% to RM530.96 million. (FY2023: RM377.94 million). KPJ’s bed occupancy rate also improved to 69% in 2024 (2023: 67%), reflecting the continued demand for quality medical services. This growth strengthens Al-`Aqar’s rental stability, supported by higher patient volumes and KPJ’s expansion. 2024 –STEADY PERFORMANCE AMID PORTFOLIO ADJUSTMENTS Al-`Aqar delivered a stable performance in 2024, successfully navigating a dynamic operating environment while implementing strategic portfolio adjustments. Despite external pressures such as rising operational costs and rental realignments, the REIT maintained its equilibrium, supported by its defensive asset class and long-term lease structures. To further strengthen its financial position, Al-`Aqar focused on capital efficiency and portfolio optimisation, executing strategic divestments under its capital recycling strategy. These moves streamlined the holdings, enhancing operational agility and long-term sustainability. At the same time, a 100% occupancy rate reaffirmed the strong demand for healthcare real estate, reflecting the value of Al-`Aqar’s long-term lease agreements and established tenant relationships. The Fund’s total investment properties was at 23 (FY2023:24) following the successful disposal of Damai Wellness Center on 6 June 2024. Following fair value adjustments, facility upgrades, and forex-related impacts on the Australian property, the portfolio’s value increased to RM1.65 billion as of 31 December 2024, (FY2023 : RM1.64 billion). M-REITS IN A GRADUAL REBOUND AMID CAUTIOUS OPTIMISM The Malaysian Real Estate Investment Trusts (‘’M-REITs”) sector saw a strong recovery in 2024, with the Bursa Malaysia REIT Index rising by 11.4%, a marked improvement from 1.2% in 2023. This growth was in line with the FTSE Bursa Malaysia (‘’FBM’’) KLCI’s 12.9% increase, supported by the start of the US Federal Funds Rate easing cycle, which enhanced the appeal of M-REITs to investors. Despite the recovery, the sector remained cautious amid ongoing uncertainties, such as fluctuating interest rates and global economic challenges. Meanwhile, the total market value of M-REITs continued to grow, facilitated by new property acquisitions and capital-raising efforts. STRONG TOTAL RETURNS AMID EARNINGS ADJUSTMENTS While our total return strengthened, distribution yield declined slightly from 6.37% in 2023 to 5.35% in 2024. This was partly due to slightly lower earnings, as reduced contributions from the Australia segment affected overall income although cost savings helped offset some of the earnings impact. The strengthening of Al-`Aqar’s share price of RM1.36 (FY2023: RM1.24) had also contributed to the lower distribution yield. Al-`Aqar delivered a commendable total return of 15.03%, significantly outperforming the broader M-REITs market. This achievement reflects our strategic focus and the strength of our healthcare asset portfolio which continues to benefit from longterm leases with established healthcare operators. Our continuing collaboration with principal tenant KPJ is key to our portfolio’s stability and performance, ensuring consistent rental income and portfolio resilience. AL-`AQAR REIT PERFORMANCE 8.01% 2023 2023 5.35% 2024 2024 6.37% 15.03% Total Return Distribution Yield Table 2 – comparison of Al-`Aqar’s performance in 2024 and 2023 TOTAL RETURN (FY2024) 10.45% 15.03% Trading Performance of M-REITs Trading Performance of Al-`Aqar DISTRIBUTION YIELD (31 DECEMBER 2024) Table 1 – comparison of M-REIT and Al-`Aqar’s performance in 2024 5.6% 5.35% Trading Performance of M-REITs Trading Performance of Al - ‘Aqar
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