Covenant’s strength
Covenant’s strength which mainly focuses on tenant profiling is important to mitigate the risk of rental default especially in a single tenancy
arrangement. In addition, the Manager will conduct a due diligence exercise on the financial strength of the prospective tenants and its
operations. The risk of rental default is also mitigated by having security deposits up to 6 months.
FINANCIAL REVIEW
FUND’S PERFORMANCE
In 2020, ARREIT recorded a net property income of RM72.16 million against RM79.67 million in the previous year. The decrease was mainly
contributed by the decrease in rental income from Vista Tower, The Intermark, and higher property expenses incurred.
Total property expenses increased to RM19.36 million from RM16.21 million in 2019 mainly due to increase in repair and maintenance costs.
In terms of realised income, ARREIT recorded RM30.71 million, a decrease of 17.3% as compared to the previous year.
The decrease was mainly due to rental rebates provided to tenants impacted from the Covid-19 pandemic amounting to RM5.59 million
during the year. Following the annual revaluation exercise, ARREIT recognised a loss from fair value adjustments of the investment properties
amounting to RM38.11 million in comparison to a gain from fair value adjustment of the investment properties amounting to RM3.12 million
in 2019.
The significant decrease in fair value adjustment of the investment properties in 2020 is mainly contributed from Selayang Mall amounting
to RM31.0 million and Vista Tower, The Intermark, amounting to RM3.0 million. ARREIT’s trust expenses managed to decrease slightly by
1.9% mainly due to the reductions in Overnight Policy Rate (OPR) rate as announced by Bank Negara Malaysia (BNM) and also the interest
savings from settlement of Affin Bank Term Loan amounting to RM162.23 million during the year.
However, the interest savings was reduced as a result of the impairment loss on financial instruments amounting to RM1.03 million during
the year. Consequently, the overall net realised income in 2020 decreased to RM30.71 million from RM37.14 million in the previous year.
Review of Performance
2020 2019 2018 2017 2016
Total Asset Value (RM) 1,434,826,370 1,471,855,117 1,499,264,735 1,526,616,881 1,040,293,296
Total Net Asset Value (RM) 746,851,505 776,591,192 775,213,754 728,290,587 686,061,728
Units in Circulation (units) 573,219,858 573,219,858 573,219,858 573,219,858 573,219,858
Net Asset Value Per unit (RM) 1.303 1.355 1.352 1.271 1.197
Highest Net Asset Value Per Unit (RM) 1.361 1.364 1.397 1.271 1.197
Lowest Net Asset Value Per Unit (RM) 1.303 1.354 1.352 1.197 1.187
Market Price per unit (RM) as at 31 December 0.66 0.74 0.82 0.91 0.92
Highest Traded Price for
the Twelve Months Period (RM) 0.77 0.87 0.92 0.97 0.97
Lowest Traded Price for
the Twelve Months Period (RM) 0.51 0.73 0.82 0.91 0.86
Results of ARREIT’s Performance
2020 2019 2018 2017 2016
Total Gross Rental Income 91,516,844 95,877,818 96,684,553 60,417,996 57,385,743
Total Property Expenses 19,359,656 16,210,440 (17,673,739) (7,236,581) (4,083,964)
Net Property Income (NPI) 72,645,326 80,665,650 79,570,299 53,799,270 53,301,779
Interest and Other Income 735,044 1,186,193 1,428,555 1,379,529 2,083,066
Total Non-Property Expenses (42,184,741) (42,985,977) (45,473,626) (22,910,639) (20,051,656)
Realised Earnings 30,707,491 37,136,577 37,965,743 31,650,305 35,333,189
Changes in Fair Value of Investment Properties (38,107,358) 3,116,979 49,148,296 42,603,621 5,207,986
(Losses)/Earnings Before Taxation (7,399,867) 35,494,133 81,250,462 74,253,926 40,541,175
Taxation* NIL NIL NIL NIL NIL
(Losses)/Earnings After Taxation (7,399,867) 35,494,133 81,250,462 74,253,926 40,541,175
(Losses)/Earnings Per Unit (EPU) after
Taxation (sen) (Realised + Unrealised) (1.29) 6.19 14.17 12.95 7.07
MANAGEMENT DISCUSSION AND
ANALYSIS
annual report 2020
(CONT’D)
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