18 SECTION 03 AL-`AQAR HEALTHCARE REIT BUSINESS REVIEW As assets continue ageing, the REIT takes a proactive approach in establishing a long-term budget to avoid adhoc repair and maintenance, which may introduce higher cost burdens. By maintaining discipline in preventive maintenance, optimising resources, and strategic implementation of renewals and maintenance, the REIT ensures tenant operations can continue with minimal disruptions while preserving long-term asset value. In terms of portfolio management, the REIT continues to strengthen its core hospital segment and reduce exposure to non-core segments, including the Australian portfolio. As the healthcare industry progresses, healthcare asset classes are also adapting to cater to evolving demand, in tandem with the rise of an ageing population. While Al-`Aqar sees expansion in areas such as senior living facilities, specialised care centres and specialised medical centres focusing on medical tourism, the REIT is employing a disciplined approach to its acquisitions, ensuring that the assets are a strategic fit to the overarching portfolio. The REIT actively engages with its sponsor, KPJ, to establish a pipeline of acquisition assets in line with KPJ’s expansion plan. This engagement allows for active coordination with KPJ to exit non-core segments in accordance with market conditions and when opportunities arise. Besides KPJ’s pipeline, the Board and management of Al-`Aqar are placing greater focus on portfolio growth through thirdparty acquisitions to reduce single-sponsor concentration risk in the long term. While Al-`Aqar remains open to thirdparty acquisitions and portfolio diversification, the REIT is maintaining a disciplined approach in its acquisitions in alignment with its gearing limit and with the REIT’s overall strategic direction. On the operational front, Al-`Aqar focused on laying the groundwork with the aim of achieving operational efficiencies from value extraction and tightening capital expenditure (“CAPEX”) spending without compromising on tenant satisfaction. PORTFOLIO EXPANSION IN 2025 CONTRIBUTION FROM NEW ACQUISITION ENHANCING HEALTHCARE CAPACITY 2 ACQUISITIONS COMPLETED IN OCTOBER 2025 PORTFOLIO VALUE RM1.9 2025: billion RM1.7 2024: billion 13.6% NPI RM3.4 million REVENUE RM3.5 million 3,175 2025: 2,602 2024: 22.0% TOTAL LICENSED BED
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