AL-SALAM REIT ANNUAL REPORT 2020

44 AL-SALĀM REIT ASSET PERFORMANCE @Mart Kempas continues to prove its resilience as a community- centric hypermarket. Given its strategic location, the high convenience factor of shopping at the hypermarket and a large variety of household items available, @Mart Kempas continued to be a preferred location with local shoppers. However, many of the existing tenants did face financial issues. Consistent with the approach adopted for KOMTAR JBCC, rebates were provided on a case-by-case basis. This has enabled occupancy rates to remain stable at 96% in FY2020. The lease expiry profile has also reduced from a high of 73% during the financial to just 19% in FY2021. MAJOR ASSET ENHANCEMENT INITIATIVE Initial plans for a RM22 million expansion to add 30,000 sqft of lettable space was deferred given the unfavourable operating environment. The proposal will be relooked in the coming financial year. MANAGEMENT DISCUSSION AND ANALYSIS OPERATIONAL REVIEW (ASSET PERFORMANCE) Retail Segment - @Mart Kempas The expansion will see @Mart Kempas expand from a single storey hypermart into one and half-storey retail asset with an increase of 130 car parking bays. This will meet requirements for sufficient medium and long-term capacity. CHALLENGES AND PROSPECTS The macro retail sector remains challenging, but @Mart Kempas can leverage on its strategic competitive positioning within the local community. The retail asset’s strong branding and consumer familiarity, the presence of reputable tenants and many other compelling factors, cumulatively provide the supermarket with a distinct competitive advantage. The focus going forward, is to leverage on the inherent strengths of the asset towards pursuing business growth. The Manager will work closely with tenants, especially the anchor and mini-anchor tenants to develop strategies to attract footfall to @MartKempas. This may include providing extra conveniences, such as free parking during specific operating hours, extending operating hours with the approval of regulatory authorities and other strategies. Focus will also be placed on seeking feedback from all tenants towards developing a more conducive physical environment for retailers as well as consumers. Other strategies include: • C ontinual assessment and if need be, repositioning the lessee trade mix to ensure the community mart is constantly fresh in its commercial space offering • D iversify and generate more robust non-core income flow including advertising space rental as well as creating new tenanted and promotional areas • N otching up footfall volume through year round promotional activities, revenue-maximising events as well as continuing to offer quality products at affordable prices.