Hektar Asset Management Sdn Bhd, the Manager of Hektar Real Estate Investment Trust (“Hektar REIT”), today announced a proposed acquisition and lease of KYS KL East International School (“KYSKLEIS”) for a total consideration of RM125.0 million, further increasing its exposure into the private K-12 education asset segment.
KYSKLEIS is an international and private school which offers pre-school, primary and secondary school education for students from preschool to Year 11. It follows the Cambridge International Curriculum, providing a structured pathway from Early Years through IGCSE (Year 10–11). The school’s programme is recognised globally and prepares students for international pre-university pathways.
The proposed transaction involves the acquisition of the vendor’s leasehold interest in the land and buildings of KYSKLEIS, located within the KL East township in Setapak, Kuala Lumpur, forming part of the KL East Masterplan by Sime Darby Property, which is an integrated township development covering over 159 acres located at the foothills of Bukit Tabur and Klang Gates Quartz Ridge.
Designed as a self-contained “live-learn-shop” ecosystem, the KL East masterplan brings together residential areas, retail spaces, parks, and educational institutions, with KYS KL East International School serving as an important educational anchor within the township.
Pursuant to the proposed acquisition, a leaseback arrangement will be effected whereby the vendor being the existing school operator will continue to manage the school under a long-term sub-lease agreement. The purchase consideration will be satisfied through a combination of cash and partly via issuance of new Hektar REIT units, allowing the REIT to optimise its capital structure.
Under the terms of the sub-lease arrangement, it is structured on a triple net basis, with the tenant responsible for all property-related outgoings including quit rent, assessment, maintenance, utilities and insurance. It also incorporates a rental escalation of 10% every three years, providing built-in income growth over the lease period. The proposed acquisition is expected to generate average net yield of approximately 8.87% across 30 years.
The asset currently comprises of two phases covering existing pre-school and primary school building, with a planned Phase 3 development of a secondary school block, which will be undertaken by the vendor at its own cost and is expected to be completed within 24 months from the unconditional date of the agreement. Upon full completion, the campus is expected to accommodate up to 1,300 students, with a total gross floor area of approximately 241,055 sq ft.
Zainal Iskandar, Executive Director and Chief Executive Officer of Hektar Asset Management, said,
“This proposed acquisition represents a strategic step in strengthening Hektar REIT’s income visibility and portfolio resilience. The long-term lease structure, coupled with contractual rental escalation, provides a stable and predictable income stream while enhancing our exposure to the education sector.
We believe this acquisition will complement our existing portfolio and support our objective of delivering sustainable returns to unitholders over the long term.”
The proposal is subject to, among others, approval from unitholders of Hektar REIT, regulatory authorities, and the listing of the new units to be issued as part of the consideration. The transaction is also classified as a related party transaction, and an independent adviser has been appointed to advise non-interested unitholders. Barring unforeseen circumstances, the proposed acquisition and lease arrangement is expected to be completed in 1H 2027.
Looking ahead, Hektar REIT will continue to pursue assets that provide stable income streams and long-term growth potential, while maintaining a disciplined and balanced approach to capital management.
The proposed acquisition will also enhance Hektar REIT’s overall portfolio diversification, further increasing its footprint in the private education segment.
