Management Discussion and Analysis Overview of Al-Salām REIT As one of the Shariah-compliant Real Estate Investment Trusts (“REITs”) listed on the Main Market of Bursa Malaysia Securities Berhad, Al-Salām REIT (“the Fund”) continues to demonstrate resilience through our diversified and income-generating property portfolio. Spanning across four sectors – retail outlets, office building, F&B restaurants, industrial & others – we manage properties worth RM1.24 billion as at 31 December 2024. Since our listing, Al-Salām REIT has navigated periods of both expansion and adversity, reflecting the inherent cyclicality of the property and capital markets. Nevertheless, the Fund’s ability to maintain operational stability and uphold its commitment to Shariah-compliant investment principles underscores its underlying resilience that support sustainable value creation and long-term growth. Riding the Waves of Economic Recovery and Johor’s Growth The Malaysian economy grew 5.1% in 2024, despite global uncertainties, driven by domestic demand as the robust labour market contributed favourably to household spending. This particularly benefited the retail and F&B restaurant sectors. Looking ahead to 2025, supportive domestic factors such as investment upcycles, wage growth, and maintained OPR by Bank Negara Malaysia are expected to continue fostering a positive economic environment. Additionally, with our primary exposure in Johor region, the Johor-Singapore Special Economic Zone (“JS-SEZ”), and the upcoming Johor Bahru-Singapore Rapid Transit System (“RTS”) is set to boost cross-border investment and development in Johor, our primary geographical exposure. These initiatives are anticipated to further enhance the region’s economic dynamism, driving demand for commercial and industrial properties. FINANCIAL REVIEW FY2024 RM'000 FY2023 RM'000 Variance (%) Gross Revenue 78,453 76,283 2.8 Net Property Income 51,415 50,908 1.0 Trust Expenses 44,834 42,543 5.4 Profit for the Year (Realised) 4,388 7,571 -42.0 Income Available for Distribution (Realised) 4,388 7,571 -42.0 EPU (sen) – Realised 0.76 1.31 -42.0 DPU (sen) – Realised 0.70 1.20 -42.0 For the financial year ended 31 December 2024 (“FY2024”), Al-Salām REIT recorded total revenue of RM78.5 million, representing a 2.8% increase compared to RM76.3 million in the previous year. This improvement was primarily driven by the sustained recovery and enhanced performance of the retail segment, reflecting the REIT’s strategic focus on optimising asset performance. Net Property Income (“NPI”) posted a modest year-onyear growth of 1.0%, rising to RM51.4 million from RM50.9 million in FY2023. The uplift in NPI was attributable to the RM2.2 million increase in revenue, although partially offset by higher utilities, maintenance, and other operating costs amounting to RM1.7 million. Trust expenses for the year rose, mainly due to an increase in Islamic financing costs, which amounted to RM40.5 million compared to RM36.5 million in FY2023. 1 ABOUT US 21 2 BUSINESS OVERVIEW 3 SUSTAINABILITY STATEMENT 4 CORPORATE GOVERNANCE 5 OTHER INFORMATION 6 FINANCIAL STATEMENTS
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