Hektar Real Estate Investment Trust (Hektar REIT) is taking another significant step in diversifying its portfolio beyond retail properties through the proposed acquisition of KYS KL East International School in Setapak, Kuala Lumpur, for RM125 million.
The transaction highlights the REIT’s growing focus on education-related assets, which offer long-term rental income and stable occupancy compared to traditional retail properties.
The acquisition involves the leasehold interest of part of a six-acre parcel within the KL East township, together with the existing school facilities and a new secondary school block that will be constructed in the future.
The deal will be executed through a sale-and-leaseback arrangement with KYS College Sdn Bhd (KCSB), allowing the school operator to continue managing and operating the institution while Hektar REIT becomes the property owner.
Under the arrangement, the school will be sub-leased back to KCSB for a tenure of up to 99 years, creating a long-term recurring income stream for the REIT.
The RM125 million purchase consideration will be satisfied through:
The new units will be issued at a discount of up to 5% to the five-day volume-weighted average market price, subject to a minimum issue price of 43.85 sen per unit.
This structure allows Hektar REIT to preserve part of its cash resources while aligning interests with the seller through equity participation.
Established in 2023, KYS KL East International School offers education from preschool through Year 11 under the Cambridge International Curriculum.
The campus currently consists of:
Upon full completion, the campus is expected to accommodate approximately 1,300 students.
KCSB is required to complete the secondary school block within 24 months after the sale and purchase agreement becomes unconditional.
One of the most notable aspects of the transaction is its income-generating structure.
The lease agreement provides:
This structure significantly reduces operational risks for Hektar REIT while ensuring predictable rental growth over time.
The acquisition is expected to generate:
Following completion, the acquisition is expected to:
Currently, Hektar REIT owns six shopping malls, one hotel and one education asset, namely Kolej Yayasan Saad in Melaka.
The acquisition further strengthens the REIT’s exposure to the education sector, which is generally viewed as a resilient asset class with stable long-term demand.
The proposed acquisition is classified as a related-party transaction due to links involving prominent businessman Halim Saad.
Halim Saad is the founder of KYS KL East International School, while his daughter, Nor Sabrina Halim, serves as a director of Hektar Black Sdn Bhd, a major unitholder holding a 16.12% stake in Hektar REIT.
As a result, the transaction requires approval from unitholders and relevant regulatory authorities before proceeding.
The proposed acquisition reflects Hektar REIT’s strategy of diversifying into defensive, income-producing assets that offer long-term earnings visibility. The combination of a 99-year lease structure, built-in rental escalations, triple-net leasing terms and exposure to the growing international education sector positions the REIT to generate more stable recurring income over the coming decades.
If approved, the acquisition is expected to be completed in the first quarter of 2027 and could become a key contributor to Hektar REIT’s future growth while reducing its reliance on retail property income.
Yao Mu Realty, based in Kuala Lumpur, Malaysia, specializes in industrial real estate for factories and land, delivering professional and efficient solutions.
Posted by Yao Mu Realty Sdn Bhd on 23 May 26
Malaysia