AL-SALAM REIT ANNUAL REPORT 2017

AL-SALĀM REIT ANNUAL REPORT 2017 155 20. SIGNIFICANT RELATED PARTY TRANSACTIONS For the purposes of these financial statements, parties are considered to be related to the Fund if the Fund has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Fund and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Significant related party transactions other than those separately disclosed elsewhere in the financial statements are as follows: 2017 2016 RM RM Rental income received/receivable from related parties 27,860,572 29,588,047 Other property management fees charged by related parties of the Manager (including in other operating expenses) 4,487,125 4,117,620 The related party transactions described above were entered into in the normal course of business and are based on negotiated and mutually agreed terms. 21. FAIR VALUES OF FINANCIAL INSTRUMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. The carrying amount of the various financial assets and financial liabilities reflected in the statement of financial position approximate their fair values other than as disclosed below: Carrying Amount Fair Value RM RM 2017 Financial liability at amortised cost Islamic financing - non-current 347,698,967 341,932,000 2016 Financial liability at amortised cost Islamic financing - non-current 346,804,955 340,786,000 The fair value of the non-current Islamic financing was estimated using discounted cash flow analysis based on market equivalent profit rate of 5.21% (2016: 5.11%) per annum for similar type of instruments of similar risk and cash flow profiles. The disclosure of the fair value of the non-current Islamic financing is considered a Level 2 fair value hierarchy disclosure. NOTES TO THE FINANCIAL STATEMENTS - CONT’D