AL-SALAM REIT ANNUAL REPORT 2018

AL-SALĀM REIT ANNUAL REPORT 2018 11 KOMTAR JBCC nonetheless, will undergo coniguration exercise due to the exit of an anchor tenant. Although this will cause the occupancy to drop substantially, we, however, foresee this as an opportunity to undertake asset enhancement initiatives (AEI) by creating spaces for mini anchors and specialty tenants to align with the current retail landscape. We believe that the AEI will bring in a greater variety of quality trades and brands that would improve rental return, create a more diversiied trade proile and enhance the overall ambience of the shopping mall. For the other retail assets under Al-Salām REIT portfolio, each one of them has its own competitive advantage. Mydin Hypermart Gong Badak which was acquired in September 2018 is one of the biggest shopping mall in Kuala Terengganu that doesn’t have direct competitors in the catchment area whilst @Mart Kempas is expected to remain resilient by virtue of being a community mart that targets the lower and middle income market and ofer shoppers a wide range of necessary household products. The oice property sector continues to struggle with an oversupply of new buildings amidst subdued leasing activities. The growing mismatch between supply and demand continues to exert pressure on overall rental and occupancy levels. In the Iskandar Malaysia region alone, there are over 9.5 million square feet cumulative supply of purpose-built oice. Nonetheless, the long-term tenancies by Johor Corporation which forms majority of the current 91% occupancy provides income security and lower occupancy risks for Menara KOMTAR. Food and beverage (F&B) assets operated by QSR Brands (M) Holdings Bhd (QSR) provides income stability on the back of triple net lease arrangement and of the fact that F&B scene in Malaysia has been quite resilient despite the slowing domestic economy and uncertainty in the global economic environment. On top of the expected completion of another 22 QSR properties worth RM115 million, Al-Salām REIT would also stand to beneit from QSR’s plans to re-list on Bursa Malaysia with an asset-light strategy as the latter has sizeable number of outlets across four countries in the region. We are pleased to announce that Al-Salām REIT has distributed a total distribution per unit (DPU) of 5.35 sen per unit in FY2018. This translates into an annual distribution yield of 6.6% based on the closing unit price of RM0.81 as at 31 December 2018. The total payout of RM31.0 million represents approximately 97.4% of Al-Salām REIT’s distributable income for the year. On this note, I would like to express my sincere gratitude to the Board Members for their invaluable counsel and advice as well as to the Shariah Committee for their wisdom. Our achievements are due in large part to their leadership, hard work and commitment. It would not have been possible without them at the helm. Appreciation also extends to the management team of the Manager for the undivided commitment and dedication towards Al-Salām REIT. My sincere gratitude also goes to our valued stakeholders- unitholders, trustee, inanciers, business partners and relevant authorities for their unwavering support and trust throughout the year. Mydin Hypermart Gong Badak worth RM 155 million Average Occupancy Rate of 90 % Undertaking of AEI by creating spaces for mini anchors & specialty tenants Newly Acquired Asset Occupancy remains resilient Configuration Exercise