AL-SALAM REIT ANNUAL REPORT 2020

149 ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CONT’D) 17. ISLAMIC FINANCING (CONT’D) (a) TF-i T he TF-i profit is payable over a period of 60 months from the date of first disbursement. The effective profit rate for the TF-i will be based on COF which is based on the Bank’s COF + 1.45% per annum for the duration of the TF-i. T he average effective profit rate for the TF-i is 4.18% (2018: 5.15%) per annum. The principal amount is to be expected to be paid in March 2024. The TF-i has a significant covenant in which the subsidiary shall at all times, maintain the following criteria: (i) The financing payment cover ratio (“FPCR”) of not less than 1.25 times; (ii) Total debts and financing over total assets value of not more than 50%; and (iii) Minimum security cover of 1.25 times. T he financing is secured by the investment properties amounting to RM152,094,000 (2019: RM121,675,000) as per disclosed in Note 10. (b) CMTF-i T he 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 4.63% (2019: 5.26%) per annum. The CMTF-i has a significant covenant in which the subsidiary shall at all times, maintain the following criterias: (i) The consolidated net gearing ratio of not more than 1.0 time; (ii) Financing to Value (“FTV”) ratio shall not exceed 50% of security value; (iii) Minimum shareholder’s fund of not less than RM500.0 million; and (iv) Minimum finance service cover ratio (“FSCR”) of 1.50 times. (c) Sukuk Ijarah O n 24 August 2018, a subsidiary of the Group, ALSREIT Capital Sdn Bhd established a Sukuk Ijarah Programme comprising Islamic Medium Term Notes (“IMTN”) of up to RM1,500,000,000 in nominal value and issued RM162,785,000 in nominal value of IMTNs (“Issue 1”) with a transaction cost amounting RM2,350,155. T he Sukuk Ijarah Programme has a significant covenant in which the subsidiary, Al-Salām REIT and its subsidiary shall at all times, maintain the following financial covenants: (i) Finance Service Cover Ratio (“FSCR”) at Issuer level of not less than 1.5 times; (ii) FSCR at Al-Salām REIT level of not less than 1.5 times; (iii) such other financial covenant(s) as may be determined by the Rating Agency and to be mutually agreed to by ALSREIT Capital Sdn Bhd. A s at 31 December 2019, the outstanding amount of RM162,785,000 in nominal value of Issue 1 which had been due in August 2020. O n 24 August 2020, the Group issued RM520,000,000 in nominal value of IMTNs (“Issue 2”) with a transaction cost amounting RM3,928,296. The financing was used to refinance the maturity of Issue 1 and CMTF-i amounting to RM162,785,000 and RM350,000,000 respectively. T he Group is obligated to redeem oustanding Issue 2 of at least ten per centum (10%) of the nominal value of the Issue 2 on the first anniversary of issue date (i.e. 24 August 2021) which amounting to RM52,000,000.