Section 2 - OPERATIONS REVIEW (CONT’D) MANAGEMENT DISCUSSION AND ANALYSIS HISTORICAL DPU SINCE IPO (CONT’D) Diversify Core Growth In New Economics The Manager continues to actively pursue the comprehensive 5-Year Plan (2024-2028) for the Group with the following objectives: 5-Year Plan (2024-2028) The primary focus of the 5-Year Plan (2024-2028) lies in acquiring high quality assets, diversifying across the value chain and expanding geographically: Adapting Business Model. To enhance competitiveness and strengthen relationships with tenants, the Manager is exploring a new business model for Al-`Aqar’s tenants. This may involve flexible and customised rental arrangements tailored to the needs of the tenants, including the creation of retail space at the hospitals. Retail space now plays a pivotal role in hospitals, both in terms of aesthetics and ambiance, potentially leading to an increase in property valuation and generating additional income for Al-`Aqar’s tenants. Continuous Improvement at Manager Level. To expedite the fund transformation initiatives, the Manager has successfully executed digital and organisational transformation initiatives. Furthermore, the Manager continuously implements new measures, which include enhancing leadership development programmes, staying abreast of healthcare trends and international knowledge learning as well as increasing the frequency of engagements with all stakeholders to better understand the existing gaps. 1. To double the current investment properties value of RM1.64 billion (as at 31 December 2023) to approximately RM3.0 billion by the end of 2028 through a proactive capital recycling strategy, encompassing both acquisitions and disposals. 2. To align with future healthcare trends and establish a strong portfolio of assets capable of enduring the test of time. 3. To ensure a sustained, increasing trend in DPU over the long term. GROWTH INITIATIVES ASSET TYPE RATIONALES Diversification of tenants, geographical expansion • Exploring independent hospitals in Malaysia • Exploring healthcare group with large network of hospitals overseas Complementary to hospital portfolio • Hub and spoke model • Targeting multidisciplinary Ambulatory Care Centres (“ACC”) Expansion into upstream healthcare segment • Sale-leaseback for medical devices and pharmaceutical players with existing built-up assets • Identifying partner(s) for Build-to-Suit (BTS) Diversification of assets • Meeting the demand for quality nursing home locally • Exploring Japan (oldest nation, FDI friendly) Enlarge tenant base with different healthcare operators 1 Grow complementary assets with KPJ 2 Diversify across value chain 3 Capitalise on aged care markets 4 Ambulatory Care Centers (ACCs) Factories Nursing home Hospitals, Specialist Centers 32 BUSINESS OVERVIEW 1 3 4 5 6 AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2023
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