Other REITs only caught up later this year, when fund managers turned defensive in the uncertain market. For the same period, other REITs at best only made half of what Al-‘Aqar did.

That does not mean that the healthcare REIT was immune to selling pressure, though — historically, it loses less value whenever investors switch to higher-beta stocks.

When the yield spread between REITs and Malaysian Government Securities narrowed in the second quarter of 2013 after the US Federal Reserve hinted that it was going to phase out its asset purchasing programme, Al-‘Aqar fell 4.41% over two months, compared with the double-digit percentages seen among the sector’s big caps.

At RM1.60 on Aug 16, Al-‘Aqar is up 14% year to date. However, the price-to-book ratio of 1.33 times is close to IGB REIT’s 1.52 times — the highest among Malaysian REITs. The current consensus target price for Al-‘Aqar is RM1.80, which indicates an upside potential of 12.5% and a 4.8% yield, according to Bloomberg data.

Is Al-‘Aqar being overlooked by funds? The investment trust only has 3.31% of investors classified as “insurance companies” and “investment advisers”, Bloomberg data shows, compared to the big caps, that have such investors in the double digits. It is also less liquid than many other REITs, with a free float of just 16.9%.

Compared with other REITs, Al-‘Aqar seems to be more aggressive in its investment strategy. For one, it is one of only two locally listed REITs (the other being YTL Hospitality REIT) with international real estate in its portfolio. In FY2015, the group’s sole property in Australia, Jeta Gardens Aged Care & Retirement Village, constituted 10.96% of its net rental income of RM104.57 million.

This also means that it has foreign exchange risk exposure. In the same year, Al-‘Aqar sold its two properties in Indonesia and recorded RM3.51 million in realised forex loss in its books. Its debt-to-asset ratio of 41.04% as at 1QFY2016 was also the fourth highest among listed REITs.

Al-‘Aqar’s distribution per unit (DPU) has also been flat over the past five financial years. In the course of two years ended FY2013, its DPU rose by 2.08% to 7.85 sen. It fell by 2.55% to 7.65 sen the following year, with DPU in FY2015 increasing a mere 0.65% despite a 2.17% increase in total distributed income to RM54.42 million due to new units placed that year. In 1QFY2016, Al-‘Aqar’s net rental income fell 4.31% to RM24.87 million due to the lack of rental income from its former two Indonesian properties, with DPU falling to 2.53 sen from 3.79 sen a year earlier.

Al-‘Aqar can take comfort in the healthcare industry being described as “recession-proof” and KPJ Healthcare’s support helping the trust achieve full occupancy of its properties under investment. It has sought a waiver twice from Securities Commission Malaysia to buy vacant land for the new wing of its hospital and nursing college.

With KPJ Healthcare’s group of companies undertaking the developments, an earnings accretive acquisition for the REIT would be ideal. In its FY2015 annual report, chairman Datuk Kamaruzzaman Abu Kassim said KPJ Healthcare had plans to inject new hospitals or undertake expansion exercises.