AL-SALAM REIT ANNUAL REPORT 2019

37 ANNUAL REPORT 2019 Retail @Mart Kempas OPERATIONAL REVIEW AL-SALĀM REIT • The majority of the tenancies were renewed in FY2017 and will expire from FY2020 onwards. The Service Provider has managed to retain the existing tenants albeit with increase competition from other malls. MAJOR ASSET ENHANCEMENT INITIATIVE @Mart Kempas’s current occupancy rate of 99% had achieved near saturation even as the property continues to attract high tenancy demand volume. To further realise on the asset’s potential going forward, @Mart Kempas is looking to increase it’s commercial area by undertaking a planned expansion at total expected cost of approximately RM22 million. The said expansion will increase the total net leasable area of t@Mart Kempas by adding 30,000 square feet consisting of 2 floors of retail and parking space. STRATEGIES • To develop and entice new target market/demographics via social media campaigns • To implement mall-wide shopping programmes aimed at maximizing shopper spending through rewards and redemptions approach • Develop and sustain new income stream from renting advertising space, creating new tenanted areas and promotion areas • To continue to maintain strategic partnerships with tenants including being actively engaged with tenants in executing promotional activities in ensuring ongoing, conducive trade atmosphere within the mall area CHALLENGES AND PROSPECTS The lingering soft economy will undoubtedly cause a continual impact on consumer spending strength coming into the new year as shoppers become more cautious in loosening their purse strings. Conversely, bargain shopping and demand for quality and competitively priced staple goods and household products will play out as the most dominant theme for buying preference across shopper demographics throughout the economic slowdown period. @Mart Kempas is perfectly positioned to capitalized on the said factors as evidenced by high tenancy rate and robust footfall volume as the new year looms ahead. As such, the property manager will continue to strengthen the retail mart’s revenue and bottom line through: • Continual assessment and if need be, reposition the lessee trade mix to ensure the community mart is constantly fresh in it’s commercial space offering • To diversify and generate more robust non-core income flow including advertising space rental as well as creating new tenanted and promotional areas • Notching up footfall volume through year round promotional activities, revenue-maximizing events as well as continuing to offer quality products at affordable prices. iii. Tenancy Expiry Profile (Occupied NLA) 2020 74% 2022 6% 2021 20% TENANCY EXPIRY PROFILE