A L - S A L Ā M R E I T A N N U A L R E P O R T 2 0 2 1 12 LETTER TO STAKEHOLDERS REPOSITIONING IN THE FACE OF CHANGE Al-Salām REIT has taken a longer-term approach to these challenges. As the pandemic continues to dictate the shape of the economic landscape, the Fund has undertaken the strategy of providing rental support/rebates to maintain long-term tenant relationships commensurate with the tenants’ financial performance. This is the first step in ensuring the sustainability of the Fund’s portfolio of properties while helping secure our relationship with our tenants. As the operating environment improves and business picks up for our tenants, this support will be lowered gradually. We also continued to undertake Asset Enhancement Initiatives (AEIs) on a case-by-case basis to ensure all our assets are operating at the optimum level. This included working closely with the management of our commercial assets to develop a more attractive and facilitative environment for consumers. FINANCIAL HIGHLIGHTS The Fund’s overall financial performance in FY2021 is commendable, given the challenging operating landscape. Through prudent cost measures and resource management, earnings improved, despite a reduction in revenue. Net property income remained positive at RM55.0 million. Total distribution per unit (DPU) was 2.30 sen, totalling RM13.3 million, representing 91% of the income available for distribution. As at 31 December 2021, our cash position stands at RM30.6 million (2020:RM28.8 million). Debts and liabilities have continued to be well managed, and sufficient working capital has been retained to meet operational requirements as well as debt obligations. Lower revenues of RM71.5 million were recorded (FY2020: RM86.1 million) mainly due to the lower performance of the retail segment, particularly KOMTAR JBCC, as the continuing closure of the Malaysia-Singapore border has a bearing upon the performance. BUSINESS HIGHLIGHTS Al-Salām REIT’s financial performance was driven by the Fund’s sizeable triple nett lease assets portfolio, consisting of Mydin Hypermart Gong Badak and F&B-related properties, which continued to provide a sustained core income. The continued containment measures, as well as border closure, had significantly affected the footfall in malls under Al-Salām REIT's portfolio - KOMTAR JBCC and @Mart Kempas, to a certain extent. In order to keep the long-term tenant relationship, we chose to take the strategy of providing rental support in accordance with their business performance to ensure long-term tenancy sustainability. For KOMTAR JBCC, we had expected to field new tenants on the renovated ground floor, but this was delayed due to the current challenging environment. Weekends and weekdays footfall remains low due to the extended MCO implementation. Rental revenues were negatively impacted as many tenants recorded subdued business performance. However, the reopening of the Singapore-Johor Causeway is expected to improve the mall’s performance. Meanwhile, Menara KOMTAR, with Johor Corporation being the anchor tenant, had continued to provide good earnings for the property. @Mart Kempas continued to prove it's resilience as a community-centric hypermarket throughout the MCO. Given the strategic location and high convenience factor to property's captive consumer market, @Mart Kempas continued to be a preferred location with both shoppers and retailers alike as evidenced by the improved occupancy rate (FY2021: 97% as compared to FY2020: 96%) The Fund’s sole education property asset, the Malaysian College of Hospitality and Management, has also contributed stable earnings from the master lease agreement with KPJ Group’s education arm. TOTAL DISTRIBUTION PER UNIT (DPU) 2.30 NET PROPERTY INCOME RM55.0 m i l l i i o n s e n
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