AL-SALAM REIT ANNUAL REPORT 2019

The TF-i has a significant covenant in which the Fund shall at all times, maintain the following criteria: (a) The financing payment cover ratio (“FPCR”) of not less than 1.25 times; and (b) Total debts and Financing over Total Assets Value of not more than 50%; and (c) Minimum security cover of 1.25 times. The financing is secured by the investment properties amounting to RM121,675,000 (2018: RMNil) as per disclosed in Note 11. (b) Commodity Murabahah Term Financing-I Islamic financing facility is a Commodity Murabahah Term Financing-i (“CMTF-i”) dated 14 April 2015 amounting to RM350.0 million from RHB Islamic Bank Berhad and Maybank Islamic Berhad (collectively “the Banks”) to part finance the acquisition of the investment properties of the Fund in 2015. The nominal value of the CMTF-i comprised Tranche 1 and Tranche 2, amounting to RM136.04 million and RM213.96 million, respectively. The CMTF-i profit is payable over a period of 60 months from the date of first disbursement with full repayment of principal sum on the 60th month. The effective profit rate for the CMTF-i will be based on COF + 1.35% per annum for the first 16 months, COF + 1.40% per annum for the next 8 months and COF + 1.50% per annum for the remaining duration of the CMTF-i. The COF is based on each respective Banks’ COF. The average effective profit rate for the CMTF-i is 5.26% (2018: 5.38%). The total transaction costs of RM4,470,060 incurred in 2015 were debited against the amount of the Islamic financing facility on drawdown date comprising, amongst others, processing and stamping fees, legal advisory fees and other establishment fees. The CMTF-i has a significant covenant in which the Group shall at all times, maintain the following criteria: (a) The consolidated net gearing ratio of not more than 1.0 times; and (b) Financing to Value (“FTV”) ratio shall not exceed 50% of security value; and (c) Minimum shareholder’s fund of not less than RM500.0 million; and (d) Minimum finance service cover ratio (“FSCR”) of 1.50 times. The financing is secured by the investment properties amounting to RM718,852,000 (2018: RM718,898,000) as per disclosed in Note 11. The outstanding RM350,000,000 in nominal value of CMTF-i will be due in May 2020. The Manager is in the midst of undertaking steps to exercise refinancing options via rated Sukuk Ijarah Programme to meet the short-term obligations as explained in Note 22. (c) Sukuk Ijarah On 24 August 2018, ALSREIT Capital Sdn Bhd established a Sukuk Ijarah Programme comprising Islamic Medium Term Notes (“IMTN”) of up to RM1.5 billion in nominal value and issued RM162,785,000 in nominal value of IMTNs (“Issue 1”) with transaction cost amounting RM2,350,155. The Sukuk Ijarah Programme has a significant covenant in which the Group shall at all times, maintain the following Finance Service Cover Ratio (“FSCR”): (a) FSCR at Issuer level of not less than 1.5 times; and (b) FSCR at Al-Salām REIT level of not less than 1.5 times; and (c) such other financial covenant(s) as may be determined by the Rating Agency and to be mutually agreed to by ALSREIT Capital Sdn Bhd. The financing is secured by the investment properties amounting to RM331,108,000 (2018: RM328,001,000) as per disclosed in Note 11. The outstanding RM162,785,000 in nominal value of IMTN of Issue 1 will be due in August 2020. The Manager is in the midst of undertaking steps to exercise refinancing options via rated Sukuk Ijarah Programme to meet the short-term obligations as explained in Note 22. AL-SALĀM REIT • 136 ANNUAL REPORT 2019 For The Financial Year Ended 31 December 2019 (Cont’d) Notes To The Financial Statements