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RAM Ratings assigns maiden AA3/Stable corporate credit rating to Al-‘Aqar Healthcare REIT and preliminary ratings to its Sukuk Programmes
Published on 21 Oct 2026.
RAM Ratings has assigned Al-`Aqar Healthcare Real Estate Investment Trust (Al-`Aqar REIT) a Corporate Credit Rating (CCR) of AA3/Stable/P1. Concurrently, RAM has assigned preliminary ratings to the proposed Sukuk Programmes to be established by its funding conduit, Al-`Aqar Capital Sdn Bhd (the Issuer), as detailed in the table below.
The ratings of the Senior Sukuk Wakalah and ICP are anchored on Al-`Aqar REIT's credit profile, reflecting its obligations under the Sukuk Programmes, particularly as the purchase undertaking obligor and deferred sale price obligor. The rating on the Subordinated Perpetual Sukuk is notched down from the REIT's CCR to reflect the instrument’s subordinated ranking and the Issuer’s discretion to cancel periodic distributions.
The CCR incorporates an uplift from Al-`Aqar REIT's stand-alone credit strength, reflecting RAM's view of a ‘moderate’ likelihood of support from KPJ Healthcare Berhad (KPJ), based on RAM’s Group Structure Rating Links criteria. The support assessment considers the REIT’s role as KPJ's healthcare property ownership and capital recycling platform, which facilitates KPJ’s asset-light operating model. Johor Corporation (JCorp) continues to exercise strategic oversight through its indirect ownership, board representation and influence over key decisions. This linkage remains intact notwithstanding any corporate exercises.
Al-`Aqar REIT's stand-alone credit profile is supported by its established healthcare property portfolio and resilient earnings profile. Established in 2006 as Malaysia's first listed Shariah-compliant healthcare REIT, it owns 22 healthcare-related properties, with an investment property value of RM1.89 bil as at end-September 2026. The portfolio is geographically diversified across Malaysia, particularly Selangor, Johor and Kuala Lumpur. However, it remains concentrated by asset type and tenant, comprising predominantly hospital assets leased entirely to KPJ. Long-term leases with KPJ support full occupancy, earnings visibility and stable cash flow generation, while limiting the REIT's exposure to property operating costs and inflationary pressures. These features contribute to its above-industry profitability. In 1H fiscal 2026, its net property income margin stood at 94.4%.
Rating constraints stem primarily from tenant concentration on KPJ, which exposes its earnings and cash flow to KPJ’s credit quality and lease renewal decisions. Lease expiries are also concentrated in certain years, creating periodic renewal and rental reset risks. These risks are partly mitigated by KPJ's strong credit profile, reflected by its leading market position in the private healthcare sector, sound liquidity and healthy lease-servicing capacity, as indicated by OPBDIT to lease obligation coverage of more than six times in 1H fiscal 2026. Tenant retention risk is further moderated by the operational importance of the assets to KPJ, with more than half of its hospitals operating from assets held by the REIT.
The REIT's financial profile is constrained by its high leverage of 48.2% as at end-June 2026, which is close to the regulatory limit of 50%. The limited debt headroom weakens its financial flexibility and constrains its capacity to undertake debt-funded acquisitions or absorb potential valuation declines.
Initial issuance proceeds under the Sukuk Programmes will primarily refinance existing term financing amounting to RM640 mil. The refinancing is expected to improve the REIT's funding profile by increasing the proportion of fixed-rate debt, extending its debt maturity profile and enhancing its financing flexibility through access to the domestic capital market. These benefits are partly offset by the REIT’s leverage which is expected to remain elevated over the near term.
Analytical contacts
L Nurisya Abdullah
(603) 2708 8238
nurisya@ram.com.my
Lim Chern Yit
(603) 2708 8302
chernyit@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
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