Section 4 - RISK MANAGEMENT (CONT’D) MANAGEMENT DISCUSSION AND ANALYSIS RISK RISK DESCRIPTION MITIGATION PLAN The remaining tenures of the current contractual leases are shorter than before, with 6 contractual leases (or 25% of total contractual leases) expiring in 2024 and only 1 contractual lease (or 4% of total contractual leases) expiring in 2025. Given that Al-`Aqar’s healthcare assets are highly-specialised, finding a replacement lessee or healthcare operator may take significant amount of time. This could negatively impact the Group’s immediate earnings until a new lessee is secured. The current lease agreements require the tenants to provide a minimum of one year notice prior to renewing the tenancy contracts. Furthermore, our mitigation plan for business and market risk can also serve as an early warning for any potential underperformed or underutilised properties. Should the lessee decide not to renew the lease, the Group needs to identify new joint venture partners, continuously source for a replacement lessee or healthcare operator, re-purpose the building or divest the property to a third party. The factors to decide will mainly depend on the risk assessments of each asset before a certain course of action is undertaken to mitigate this risk. Non-Renewal of Leases 35 BUSINESS OVERVIEW 1 3 4 5 6 AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2023
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