AL-SALAM REIT ANNUAL REPORT 2020

48 AL-SALĀM REIT OVERVIEW OF PROPERTY The Food & Beverage Restaurant segment comprises 43 restaurant properties located across Malaysia. The properties support the food and beverage operations of QSR, specifically in relation to the operations of fast food brands namely KFC and Pizza Hut. Al-Salām REIT leases all properties to the QSR Group of Companies. Description No of Properties Market Value (RM) Restaurant located at shophouses/offices 23 RM75.0 million Single-storey restaurants building with drive-through outlets 16 RM189.0 million Restaurants at mall 4 RM20.5 million Total 43 RM284.4 million LEASE TERM Pursuant to the master lease agreements, the properties are leased based on a Triple Net Lease for a term of 3 years, renewable every 3 years (Rental Period) up to a maximum of 15 years (Lease Term). Upon expiry, the Lease Term can be extended for a further period of 15 years (Extended Lease Term). No of Properties (Second Acquisition) First Rental Period 16 19 March 2019 – 18 March 2022 5 17 September 2020 – 16 September 2023 No of Properties (First Acquisition) Second Rental Period 11 6 May 2018 – 5 May 2021 10 29 September 2018 – 28 September 2021 Note : 1 property at Megamall Pinang Shopping Complex is currently untenanted since 29 September 2020 and the Manager has appointed a property agent to market the property to a prospect tenant. MAJOR ASSET ENHANCEMENT INITIATIVE No major asset enhancement initiative was undertaken in FY2020. The Fund will continue to enhance the relationships with the tenants and proactively attend to tenants’ needs and requirements. OUTLOOK AND PROSPECTS The F&B sector is expected to remain resilient in FY2021. In FY2020, despite the effects of the COVID-19 pandemic, the sector continued to post positive growth. Hence, the same trend is foreseen for FY2021. The 16 drive-through outlets are expected to record growth in the current pandemic period due to its ability to offer 4 distinct marketing channels, namely drive-through, dine-in, take-away and delivery. The QSR brands such as KFC and Pizza Hut are Malaysian favourites and thus customer traction will remain strong. MANAGEMENT DISCUSSION AND ANALYSIS OPERATIONAL REVIEW (ASSET PERFORMANCE) Food & Beverage Segment - KFC & Pizza Hut Restaurant