MALAYSIA: A year after closing its first two deals, Alpha REIT, a Malaysia-based Shariah compliant vehicle focusing on education assets, is undergoing due diligence for the acquisition of two schools and is also considering investing in two university campuses.
“These transactions are fairly chunky in size. We are trying to track the schools in terms of performance over a couple of quarters to get comfortable with the management. Then, we will make the decisions to make an acquisition. So over the next 18-24 months, we should be consistently announcing an acquisition every quarter or two acquisitions every half year,” shares Jeyabalan Parasingam, CEO of Alpha REIT.
Alpha REIT, which currently has a portfolio comprising two assets, namely KDU Schools and the International School ParkCity with purchase prices amounting to RM165 million (US$40.62 million) and RM140 million (US$34.46 million) respectively, is also working with K-12 schools and universities for the construction of buildings according to specific requirements. It has also been approached for the development of teaching hospitals.
“We are quite prepared to do greenfield or catalyze greenfield or brownfield developments to the extent that we can work with a developer or we can forward purchase a transaction to help bring financial closure. A lot of these assets that we look at are all build-to-suit so it has to be a working partnership between Alpha REIT, the school and either a contractor or a developer to build the asset,” explains Parasingam.
While Alpha REIT has a global mandate and intends to invest overseas in the future, it will focus on Malaysia for the next three years to build its portfolio to reach assets under management of RM1.5-2 billion (US$369.25-492.33 million).
“The first port of call would be Australia, the UK and possibly within the Southeast Asia region, it would probably be Singapore, Vietnam and Indonesia, primarily because either the demographics work the right way or the land laws are friendly toward foreign investors making real estate investments,” details Parasingam.