Hektar REIT seeks unitholder nod for RM125m KYS KL East school leasehold acquisition

Hektar REIT is asking unitholders to approve the RM125 million acquisition of a leasehold interest in part of a freehold site in Setapak, Kuala Lumpur, housing KYS KL East International School. The deal includes existing school buildings and a new seven-storey block to be built, with the purchase pr

PETALING JAYA (Aug 24): Hektar Real Estate Investment Trust (Hektar REIT) is seeking unitholders’ approval to acquire KYS College Sdn Bhd’s (KCSB) leasehold interest in part of a freehold site in Setapak, Kuala Lumpur, together with existing school buildings and a new building to be constructed, for RM125 million.

In a Bursa Malaysia filing on Monday (Aug 24), the trust said the proposed transaction involves KYS KL East International School. The underlying 9.483-acre land is owned by Sime Darby Property (KL East) Sdn Bhd, while KCSB holds a registered master lease over about six acres, running from March 1, 2016 to Feb 28, 2046.

The RM125 million consideration comprises RM106.55 million in cash and RM18.45 million in new Hektar REIT units, according to a circular to unitholders dated Aug 24. The new units will be issued at a price representing a discount of not more than 5% to the five-day volume-weighted average market price of Hektar REIT units up to and including the date the sale and purchase agreement (SPA) becomes unconditional, subject to a minimum issue price of 43.85 sen per unit. At the floor price, up to 42.08 million new units may be issued.

The purchase consideration was arrived at on a willing-buyer willing-seller basis and matches the RM125 million market value assessed by Raine & Horne International Zaki + Partners Sdn Bhd as at April 15, 2026. The valuer adopted the income approach as its primary valuation method; its cost approach produced a value of RM100 million.

Upon completion, the master lease and a proposed supplemental master lease agreement will be novated to MTrustee Bhd, acting as trustee for Hektar REIT. The trustee will then sub-lease the property to KCSB or its nominee to continue operating the school. The proposed sub-lease will run for an initial 30 years, with automatic extensions for two further 30-year terms and a final nine-year term, subject to there being no material outstanding breach. First-year rent will be based on RM3.30 psf per month on the relevant building gross floor area (GFA), with the base rent increasing by 10% every three years during the initial term.

The existing school facilities comprise a four-storey pre-school building and a five-storey primary school building with a combined GFA of 44,969 sq ft. KCSB has undertaken to construct a seven-storey secondary school building with a GFA of 196,086 sq ft at its own cost, taking the total GFA to 241,055 sq ft upon completion. The RM70 million final balance of the purchase consideration is payable only after the new building’s handover conditions are met, including architect certification, issuance of the certificate of completion and compliance, and a valuation confirming the combined market value is at least RM125 million.

As part of the transaction, KCSB is required to obtain Sime Darby Property (KL East)’s consent to extend the master lease to a total tenure of up to 99 years. Negotiations were ongoing as at Aug 14, with the lessor’s consent expected by end-November 2026. The unitholders’ meeting is scheduled for Nov 16, 2026, and the proposed acquisition and lease is expected to be completed by end-February 2027, barring unforeseen circumstances.