AL-SALAM REIT ANNUAL REPORT 2020

10 AL-SALĀM REIT The Manager also worked closely with the management of malls to create a more facilitative environment to attract consumers. This included providing free parking at selected hours and various other incentives. Despite the operating conditions, the Manager has continued to undertake Asset Enhancement Initiatives (AEIs), but on a case-by-case basis. AEIs are essential towards ensuring that all retail assets are operating at optimum condition. FINANCIAL HIGHLIGHTS The Board is pleased to share that these and many other efforts undertaken in FY2020 have enabled Al-Salām REIT to register a positive financial performance. Despite the Fund’s gross revenue decreasing on the back of reduced rental contributions from its properties, net property income remained positive at RM65.0 million. Total distribution per unit (DPU) was 2.08 sen, totalling RM12.01 million, which represents 96% of the income available for distribution. The fund’s cash position is sufficient to cover capex for AEI and other expenditures and as at 31 December 2020, stands at a healthy RM28.8 million (FY2019: RM31.4 million). Debts and liabilities continue to be well managed and sufficient working capital is retained to meet operational requirements and debt obligations. BUSINESS HIGHLIGHTS Al-Salām REIT’s financial performance was driven by the fund’s sizable triple net lease assets portfolio comprising Mydin Hypermart Gong Badak and other food and beverage (F&B) related properties. LETTER TO STAKEHOLDERS Assets operated by QSR Brands (M) Holdings Bhd (QSR) also contributed to income stability. QSR continues to persevere by virtue of their time-tested operational excellence and sustainable market share amidst the challenging business environment. Importantly, the F&B sector was comparatively robust in FY2020, spearheaded by leading household brands. The strong brand equity continued to enable QSR to see traction with consumers and with that, continued to contribute positively to Al-Salām REIT’s performance. The Malaysian College of Hospitality and Management, being the Fund’s sole education property asset, has also provided stable earnings, derived from master lease arrangement with KPJ Group’s education arm. On the whole, Al-Salām REIT’s overall performance is within management’s expectations save for the retail segment, in particular, KOMTAR JBCC. Due to extended MCO and the Malaysia-Singapore border closure, rental performance for KOMTAR JBCC was below initial expectations for FY2020. The Manager will continue to explore ways to optimise the asset going forward into FY2021. Other strategic plans initially earmarked for FY2020 such as a private placement exercise, asset acquisitions as well as tenant mix enhancement for KOMTAR JBCC were deferred due to the unfavourable operating environment. These remain in the pipeline and will be reassessed for suitability going forward into FY2021.