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 54 MANAGEMENT DISCUSSION AND ANALYSIS CAPITAL REVIEW SUKUK IJARAH On 24 August 2020, the Group issued RM520.0 million in nominal value of IMTNs (Issue 2) with a transaction cost amounting RM3.9 million. The issuance was used to refinance the maturity of Issue 1 and CMTF-i amounting to RM162.8 million and RM350.0 million respectively. The Group is obligated to redeem outstanding Issue 2 of at least 10% of the nominal value of the Issue 2 on the first anniversary of issue date (i.e. 24 August 2021) which amounted to RM52.0 million. On 24 September 2021, the Group redeemed outstanding Issue 2 of RM69.0 million. TERM FINANCING-I On 24 September 2021, Al-Salām REIT obtained the Business Financing (BF-i) of up to RM70.0 million to redeem outstanding Issue 2 of RM69.0 million. The principal amount is expected to be paid in September 2026. MOVING FORWARD Given that all the Islamic financings are on floating financing basis, the Manager is considering several options to mitigate financing risk in the near future. Nevertheless, on the upside, the Fund has been enjoying the full year reductions in the OPR by Bank Negara Malaysia from 3.00% in November 2019 to 1.75% in July 2020. This has been reflected in the reduction in the Fund’s financing costs from RM28.9 million in FY2020 to RM26.0 million in FY2021. The gearing of Al-Salām REIT as of 31 December 2021 is 50.7%. Although the SC had previously set the maximum gearing limit at 50%, on 12 August 2020 the SC announced that it will temporarily increase the gearing limit of Malaysian REITs from 50% to 60%, effective immediately until 31 December 2022. Al-Salām REIT is looking to pare down current debt levels to a more manageable degree with the aim of achieving optimum gearing in the coming year. The Fund plans to attain this target via undertaking issuance of new units as well as assessing other cost-effective financing solutions to obtain the most optimal capital structure moving forward. Al-Salām REIT will continue to execute proper stewardship of capital and risk in its pursuit to deliver long term and sustainable value to the unitholders as well as all stakeholders involved.
RkJQdWJsaXNoZXIy NDgzMzc=