MANAGEMENT DISCUSSION AND ANALYSIS 0 100.0 200.0 300.0 (RM’ mil) 80.0 Commodity Murabahah-I Commodity Murabahah-II 30.0 Commodity Murabahah-III (Tranche 1) 280.0 Commodity Murabahah-III (Tranche 2) 300.0 Floating Rate 100% Fixed Rate 0% CAPITAL REVIEW GEARING RATIO Al-`Aqar’s gearing ratio are calculated based on the proportion of total Islamic financings to the total asset value in accordance with the SC Guidelines. The gearing ratio at the end of the reporting period are as follows: 2020 2021 Total Islamic financings (RM’ mil) 683.6 683.9 Total assets value (RM’ mil) 1,648.0 1,664.7 Total Islamic financings to total asset value ratio (%) 41.48 41.08 Al-`Aqar’s gearing ratio stood at 41.08%, below than SC’s Guidelines on Listed REITs’ limits of up to the permitted 50% of Total Asset Value. It provides a comfortable financing headroom for potential acquisitions. Given that Al-`Aqar’s financing is entirely based on floating basis, the financing rate will fluctuate in response to market financing rates. There is a risk on potential increase of financing rate in the future versus the fixed rental arrangement with the tenants. The following policies will be enforced by management to manage risks: 1. Establishment of a treasury team to track profit rate fluctuations. 2. To consider hedging via an Islamic Profit Rate Swap (“IPRS”). 3. Refinancing the facility to a fixed rate after two or three years, depending on the movement and stability of the profit rate. Fixed Rate vs Floating Rate Ratio Debt Maturity Profile AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2021 052
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