KUALA LUMPUR, October 16 – Hektar Asset Management Sdn. Bhd., the Manager of Hektar Real Estate Investment Trust (“Hektar REIT”), has unveiled an ambitious diversification strategy by acquiring Kolej Yayasan Saad Melaka (KYSM), a prestigious private school in Melaka, Malaysia, for RM150 million. This strategic move marks Hektar REIT’s entry into the education sector and aligns with its vision to explore new investment avenues beyond its retail-focused real estate portfolio. Kolej Yayasan Saad Melaka (KYSM), founded in June 1995 and located in Ayer Keroh, Melaka, is a co-ed institution that serves students from forms 1 to 5 (aged 13 to 17).
The school boasts an impressive track record, consistently ranking among the top 3 schools for best Sijil Pelajaran Malaysia (“SPM”) results. Its alumni have gone on to graduate from prestigious IVY League universities and hold prominent positions across government-linked companies (GLCs), government-linked investment companies (GLICs), multinational corporations (MNCs), and various sectors in the private and government domains. MTrustee Berhad, the Trustee of Hektar REIT, has signed a conditional sale and purchase agreement to acquire the property from KYS College Sdn Bhd (“KYSC”).
The acquisition will be funded through a combination of proceeds from Proposed Placements, internally generated funds, and borrowings. This approach allows Hektar REIT to maintain a healthy gearing ratio while ensuring sufficient cash reserves for operational needs. The acquisition comes with a sustainable mid to long-term income stream facilitated by a 30-year Quadruple-Net lease agreement, featuring guaranteed annual step-ups with an experienced operator. This investment is expected to yield an average annual return of 7.9% over the lease term, with completion anticipated by the end of the first half of 2024.
Hektar REIT currently manages six shopping malls and a hotel across Peninsular Malaysia, and this strategic diversification into the education sector represents a significant expansion of its portfolio. The move is part of Hektar REIT’s broader strategy to invest in assets that are resilient to economic cycles and offer consistent value to its unitholders. En. Johari Shukri bin Jamil, Executive Director & Chief Executive Officer of Hektar Asset Management Sdn. Bhd., expressed enthusiasm about this educational acquisition, stating, “We’re thrilled to announce the acquisition of this esteemed educational asset, Kolej Yayasan Saad Melaka (“KYSM”).
This strategic move underscores our commitment to enhancing the educational landscape and generating sustained value for our Unitholders. As we integrate this asset into our portfolio, we foresee a harmonious synergy that will propel educational excellence and stakeholder value to new heights. As we extend our reach beyond retail real estate, we are embracing the educational sector, which has perennial value and societal impact.” Hektar REIT’s diversification into the education sector is underpinned by strong market potential. The K-12 private education sector in Malaysia is estimated to have combined assets worth RM6 billion.
The private education sector is expected to witness robust growth, with the primary school market projected to grow at a CAGR of approximately 7%, followed by secondary schools at 6.5% and other segments at 6%. By 2026, the market size is expected to reach RM20 billion, presenting promising opportunities for Hektar REIT’s strategic expansion into the education sector.
