S E C T I O N 3 S T R A T E G I C P E R F O R M A N C E 51 MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW OF PROPERTY Al-Salām REIT has 6 industrial/warehouse properties with a cumulative market value of RM141.6 million. The 6 properties located across Malaysia form part of the crucial food and beverage operations supply chain of KFC and Pizza Hut, the fast food brands under QSR. LEASE TERM The said properties are leased to QSR 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 1 19 March 2019 – 18 March 2022 No of Properties (First Acquisition) Third Rental Period 2 6 May 2021 – 5 May 2024 3 29 September 2021 – 28 September 2024 MAJOR ASSET ENHANCEMENT INITIATIVE The properties are on a triple net lease arrangement and therefore, no major asset enhancement initiative was undertaken in FY2021. The Fund will continue to enhance the relationships with the tenants and proactively attend to tenants’ needs and requirements. CHALLENGES AND PROSPECTS The industrial segment is expected to remain robust on the back of continued strong demand. Hence, Al-Salām REIT will look to grow its portfolio of industrial properties by acquiring warehouse of similar type, yield accretive properties. Specifically targeted industrial assets would be assets related to integrated warehousing and last-mile delivery for retail tenants. QSR has identified its upstream segment as a key enabler of the group’s future revenue expansion. Therefore, Al-Salām REIT’s incoming growth of QSR assets will be in line with the group’s forward focus on strengthening/optimising its upstream capabilities whilst aiming to be a regional exporter of halal products. The Manager will continue to engage with QSR to identify and undertake development/sale and leaseback of potential assets within this segment. Al-Salām REIT plans to undertake diversification of asset class with more focus on the industrial spectrum and to take advantage of Johor Corporation as the major industrial land owner in Johor. We will explore opportunities to undertake sale and leaseback arrangements of assets located within Johor Corporation’s 4 major industrial parks, namely the Tanjung Langsat Industrial Park, Muar Furniture Park Pengerang Industrial Park and the upcoming Sedenak Tech Valley. Industrial Premises F&B NON-RESTAURANT SEGMENT- INDUSTRIAL PREMISES
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