ANNUAL REPORT 2020
Wisma Comcorp,
Shah Alam
Contraves,
Cyberjaya
Block A & B,
South City Plaza,
Seri Kembangan
Offices
Vista Tower,
Kuala Lumpur
Toshiba TEC,
Shah Alam
Dana 13,
Petaling Jaya
Education
SEGi University, Kota Damansara
HELP University, Jalan Semantan
SEGi College, Subang Jaya
Industrial
RHF Stone Factory, Nusajaya
Corporate Directory
About AmanahRaya REIT
AmanahRaya REIT Structure
Manager’s Structure
Organisation Chart
Salient Features of AmanahRaya REIT
Financial Highlights
Asset Under Management
Property Portfolio
Overview of 13 Properties Under
AmanahRaya REIT
Message From The Chairman
Profile of the Board of Directors
Profile of Investment Committee Members
Corporate Calendar 2020
The Management Team
Management Discussion and Analysis
Sustainability Statement
Statement on Corporate Governance
Audit Committee Report
Statement on Risk Management and
Internal Control
Property Market Overview
Statutory Financial Statements
Unitholders Statistics
Analysis of Unitholdings
Additional Disclosure
Notice of Ninth
Annual General Meeting
2
4
5
6
6
7
8
10
11
12
26
30
35
36
37
39
48
56
63
65
67
92
136
137
138
139
TABLE OF
CONTENTS
Hospitality
Holiday Villa, Langkawi
Ex-Holiday Villa, Alor Setar
Retail
Selayang Mall, Selayang
annual report 2020
CORPORATE
DIRECTORY
INVESTMENT COMMITTEE
Zulazman bin Zulkifli
(Chairman)
(Re-designated as Chairman w.e.f. 25 May
2020)
Adenan bin Md Yusof
Michio Izawa
Dato’ Anthony @ Firdauz bin Bujang
(Resigned w.e.f. 25 May 2020)
Dr Iskandar bin Ismail
(Appointed w.e.f. 1 April 2020)
TENDER COMMITTEE
Zulazman bin Zulkifli
(Chairman)
(Appointed w.e.f. 25 May 2020)
Michio Izawa
Ahmad Suhaimi bin Endut
(Resigned w.e.f. 28 February 2020)
Dato’ Anthony @ Firdauz bin Bujang
(Resigned w.e.f. 25 May 2020)
Dr Iskandar bin Ismail
(Appointed w.e.f. 1 April 2020)
Dato’ Anthony @ Firdauz bin Bujang
(Resigned w.e.f. 25 May 2020)
Non-Independent Non-Executive
Directors
Adenan bin Md Yusof
Michio Izawa
Keisuke Ogawa
(Appointed w.e.f. 15 January 2020)
Shahlan bin Md Shukor @ Kadari
(Appointed w.e.f. 1 June 2020)
Akihiro Nakao
(Resigned w.e.f. 15 January 2020)
Ahmad Suhaimi bin Endut
(Resigned w.e.f. 28 February 2020)
AUDIT COMMITTEE
Dato’ Haji Che Pee bin Samsudin
(Chairman)
Zulazman bin Zulkifli
Keisuke Ogawa
(Appointed w.e.f. 15 January 2020)
Akihiro Nakao
(Resigned w.e.f. 15 January 2020)
MANAGER
AmanahRaya-Kenedix REIT Manager
Sdn Bhd
Registration No. 200901013113 (856167-A)
(Incorporated in Malaysia)
MANAGER’S REGISTERED OFFICE
Level 11, Wisma AmanahRaya
No. 2, Jalan Ampang
50508 Kuala Lumpur
Tel : 03 2075 7388
Fax : 03 2078 8187
PRINCIPAL PLACE OF BUSINESS
Level 2, Wisma AmanahRaya
No. 2, Jalan Ampang
50508 Kuala Lumpur
Tel : 03 2078 0898
Fax : 03 2026 6446
BOARD OF DIRECTORS OF THE
MANAGER
Independent Non-Executive Directors
Mahadzir bin Azizan
(Chairman)
Dato’ Haji Che Pee bin Samsudin
Zulazman bin Zulkifli
MANAGEMENT TEAM
Abdul Aziz bin Abdul Rasheed
Chief Executive Officer
(Appointed w.e.f. 30 April 2020)
Yusoff Iskandar bin Mohd Zaki
Head of Investment
(Appointed w.e.f. 19 March 2020)
Sahrul Nizam bin Mohd Salleh
Head of Finance
(Appointed w.e.f. 2 February 2021)
Roslin bin Zainuddin
Head of Property Management
Kusuma Dewi binti Abd Aziz
Head of Investment/Acting Chief Executive
Officer
(Resigned w.e.f. 13 January 2020)
Isyam Ishak
Head of Finance
(Resigned w.e.f. 11 January 2021)
Firdaus Musa
Head of Legal & Compliance
(Resigned w.e.f. 3 January 2021)
COMPANY SECRETARIES OF THE
MANAGER
Jerry Jesudian s/o Joseph Alexander
(MAICSA 7019735)
Leong Shiak Wan
(MAICSA 7012855)
Rizana binti Ahmad Rithauddeen
(LS 0009663)
2
CORPORATE
DIRECTORY
TRUSTEE
Pacific Trustees Berhad
199401031319 (317001-A)
Unit A-9-8, 9
th
Floor
Megan Avenue 1
No. 189, Jalan Tun Razak
Off Persiaran Hampshire
50400 Kuala Lumpur
Tel. No. : 03-21668830
Fax No. : 03-21663830
REGISTRAR AND TRANSFER OFFICE
Boardroom Share Registrars Sdn. Bhd.
(Formerly known as Symphony Share
Registrars Sdn. Bhd.)
199601006647 (378993-D)
11
th
Floor
Menara Symphony
No. 5, Jalan Prof. Khoo Kay Kim
Seksyen 13
46200 Petaling Jaya
Selangor Darul Ehsan
Tel. No. : 03-78904700
Fax No. : 03-78904670
PROPERTY MANAGERS
Knight Frank Property Management
Sdn. Bhd.
201601040834 (1211775-H)
Suite 13B, Level 13, Vista Tower
The Intermark, 348 Jalan Tun Razak
50400 Kuala Lumpur
Tel. No. : 03-21613566
Fax No. : 03-21621408
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
200201011415 (579078-V)
Suite 34.01, Level 34
Menara Citibank
165 Jalan Ampang
50450 Kuala Lumpur
Tel. No. : 03-21617228
Fax No. : 03-21611633
Henry Butcher Malaysia (Mont Kiara)
Sdn. Bhd.
201501023493 (1148822-P)
Unit D4-3-3 & 3A, Solaris Dutamas
No. 1, Jalan Dutamas 1
50480 Kuala Lumpur
Tel. No. : 03-62053330
Fax No. : N/A
Hartamas Asset Management Sdn. Bhd.
201001021285 (905055-U)
Unit 13-08, Level 13
Block A, Menara Prima, Jalan PJU 1/37
Dataran Prima
47301 Petaling Jaya
Selangor Darul Ehsan
Tel. No. : 03-78395555
Fax No. : 03-78395566
AUDITOR
KPMG PLT
(LLP0010081-LCA & AF 0758)
Chartered Accountants
Level 10, KPMG Tower
8 First Avenue Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Tel. No. : 03-77213388
Fax No. : 03-77213399
FINANCIERS
Public Bank Berhad
196501000672 (6463-H)
Menara Public Bank
146, Jalan Ampang
50450 Kuala Lumpur
Tel. No. : 03-21766341
Fax No. : 03-21639917
BURSA MALAYSIA STOCK CODE
ARREIT 5127
(Listed on the Main Board on 26
February 2007)
(CONT’D)
AMANAHRAYA REIT
3
annual report 2020
ABOUT
AMANAHRAYA REIT
ABOUT AMANAHRAYA REIT
AmanahRaya Real Estate Investment Trust ("ARREIT") was established pursuant to the Trust Deed dated 10 October
2006 (as varied by the Supplemental Trust Deed dated 4 January 2007, the Novation Agreement dated 27 August
2009 and the Second Supplemental Trust Deed dated 27 August 2009) (collectively be referred to as “the Trust
Deed”) between AmanahRaya-Kenedix REIT Manager Sdn. Bhd. (“the Manager”) and CIMB Islamic Trustee Berhad
(“the Trustee”). The Trust Deed is regulated by the Securities Commission’s Guidelines on Listed Real Estate
Investment Trusts, the Listing Requirements of Bursa Malaysia Securities Berhad, the Rules of the Depository and
taxation laws and rulings. On 13 May 2019, the Manager, CIMB Islamic Trustee Berhad (“Retiring Trustee”) and
Pacific Trustees Berhad (“New Trustee”) entered into a Supplementary Deed to effect the change of trustee of
AmanahRaya REIT from the Retiring Trustee to the New Trustee. The change of trustee was effected on 21 May 2019
upon the registration and lodgement of the Supplementary Deed with the Securities Commission on 21 May 2019
and 24 May 2019 respectively. Collectively, the Trust Deed and the Supplementary Deed dated 13 May 2019 are
known as the Restated Deed, which has been registered and lodged with the Securities Commission on 10 January
2020 and 16 January 2020 respectively. ARREIT is classified as a real estate investment fund and was listed on the
Bursa Malaysia Securities Berhad on 26 February 2007.
ABOUT AMANAHRAYA-KENEDIX REIT MANAGER SDN. BHD.
AmanahRaya-Kenedix REIT Manager Sdn. Bhd. ("Manager"), (License No: CMSL/A0309/2013) is a jointly owned
entity by Amanah Raya Berhad and KDA Capital Malaysia Sdn. Bhd. ("KDA Capital"). The Manager was formed on
8 May 2009 and took over the management of ARREIT from AmanahRaya Investment Management Sdn. Bhd. on 27
August 2009. Kenedix Asia Pte. Ltd. via KDA Capital became the first Japanese firm to invest in a Malaysian REIT
with the acquisition of 15% of the units of ARREIT. KDA Capital also bought 49% of the shares of the Manager with
Amanah Raya Berhad maintaining the controlling stake of 51% of the shares of the Manager.
The Manager is principally responsible for the management of ARREIT investment strategies to meet its investment
objectives. Its primary investment objective is to provide and administer ARREIT on behalf of the unitholders in
accordance with the Restated Deed dated 10 January 2020 and Guideline issued by the Securities Commission
and Bursa Malaysia Securities Berhad. The Manager's main role is to ensure stable and sustainable return to ARREIT
unitholders.
4
Acts on behalf
of unitholder
Trustee Fee
Management
Services
Management
Fee
Ownership
of Properties
(vested in Trustee)
Net
Property
Income
Property
Management
Fees
KDA CAPITAL MALAYSIA
SDN BHD
OTHER UNITHOLDERS
ARREIT
REAL ESTATE
ASSETS
AMANAH RAYA BERHAD FOR
KUMPULAN WANG BERSAMA
PROPERTY
MANAGERS
HRAYABERH
AH
H
R
AY
A
BE
RH
A
TA
L
MA
LA
Y
E
R
UN
HO
LD
47%
15% 38%
Nawawi Tie Leung Property Consultant Sdn. Bhd.
Henry Butcher Malaysia (Mont Kiara) Sdn. Bhd.
Hartamas Asset Management Sdn. Bhd.
Knight Frank Property Management Sdn. Bhd.
AMANAHRAYA REIT
STRUCTURE
AMANAHRAYA REIT
5
annual report 2020
MANAGER’S
STRUCTURE
ORGANISATION
CHART
AMANAHRAYA-KENEDIX
REIT MANAGER
SDN. BHD.
AMANAH RAYA
BERHAD
51%
KDA CAPITAL
MALAYSIA
SDN. BHD.
49%
INVESTMENT
COMMITTEE
INVESTMENT PROPERTY
MANAGEMENT
FINANCE LEGAL &
COMPLIANCE
ADMINISTRATION
AUDIT
COMMITTEE
TENDER
COMMITTEE
CHIEF
EXECUTIVE OFFICER
BOARD OF
DIRECTORS
6
Fund Category Real Estate Investment Trust
Fund Type Income and Growth
Duration of Fund/ The earlier of:
Termination Date the occurrence of any termination events set out under the provisions of the Trust Deed
80 years after 20 October 2006 or until such further period as the law may permit
Approved 573,219,858
Fund Size
Investment Objective To provide unitholders with stable and growth potential returns over a long term period
Performance Management expense ratio
Benchmark Total returns
Average annual return
Distribution yield
Net asset value (NAV)
Distribution Policy Semi-annual income distribution
Distribution of at least 90% (or such percentage as determined
by the Manager at its absolute discretion)
Revaluation Policy The investment properties shall be revalued annually by the registered independent valuers
Financial Year End 31 December
Listing Main Market of Bursa Malaysia Securities Berhad
Stock Name ARREIT
Stock Code 5127
Date of Listing 26 February 2007
Initial Public RM0.895 - retail
Offering Price RM0.94 - institutional
SALIENT FEATURES OF
AMANAHRAYA REIT
AMANAHRAYA REIT
7
annual report 2020
FINANCIAL
HIGHLIGHTS
SNAPSHOT OF AMANAHRAYA REIT AS AT 31 DECEMBER 2020
RM1.435 Bil
TOTAL ASSET VALUE
01
13
TOTAL NO. OF PROPERTIES
02
573,219,858
TOTAL UNIT ISSUED
03
1.3029
NET ASSET VALUE (NAV)
PER UNIT
04
44.85%
GEARING RATIO
05
5.0840
DPU 2020
(SEN PER UNIT)
06
RM0.66
PRICE AS AT
31 DECEMBER 2020
(PER UNIT)
07
RM378,325,106
MARKET CAPITALIZATION
08
10,372,800
TRADING VOLUME (UNIT)
(OCT-DEC 2020)
09
21,244,300
TRADING VOLUME (UNIT)
(JAN-DEC 2020)
10
RM0.51
LOWEST PRICE 2020
11
RM0.77
HIGHEST PRICE 2020
12
8
FINANCIAL
HIGHLIGHTS
SNAPSHOT OF AMANAHRAYA REIT AS AT 31 DECEMBER 2020 (CONT’D)
DISTRIBUTION PER UNIT (SEN)
Volume Price
0.4000
0.4500
0.5000
0.5500
0.6000
0.6500
0.7000
0.7500
0.8000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2/1/2020
2/2/2020
2/3/2020
2/4/2020
2/5/2020
2/6/2020
2/7/2020
2/8/2020
2/9/2020
2/10/2020
2/11/2020
2/12/2020
-
1.000
2.000
3.000
4.000
5.000
6.000
7.000
2015 2016 2017 2018 2019 2020
DPU/Sen
ARREIT VOLUME VS PRICE
AMANAHRAYA REIT
9
annual report 2020
ASSET UNDER
MANAGEMENT
Unexpired Investment
Lease / in Real Value over
Cost of Appreciation Tenancy Estate Total Asset
Real Type of Acquisition in Value Period Value* Value (%)
Estate(s) Location Building (RM‘000) (RM‘000) Occupancy (approximate) (RM‘000)(a) (a/b)
Hospitality
Ex-Holiday Villa Alor Setar, Hotel 31,000 -4,500 Vacant Vacant 26,500 1.85%
Alor Setar Kedah
Holiday Villa Langkawi, Resort 55,000 30,000 100% 5.50 yrs 85,000 5.92%
Langkawi Kedah Hotel
Higher Education Building
SEGi College, Subang Jaya, Higher 52,500 21,000 100% 0.40 yrs 73,500 5.12%
Subang Jaya Selangor Education
Building
SEGi University, Petaling Jaya, Higher 145,000 40,000 100% 8.00 yrs 185,000 12.89%
Kota Selangor Education
Damansara Building
HELP University, Damansara Higher 53,000 21,000 100% 18.70 yrs 74,000 5.16%
Jalan Semantan Heights, Education
Kuala Lumpur Building
Office Building
Block A & B, Seri Office 18,300 -9,800 50% 2.00 yrs 8,500 0.59%
South City Kembangan, Building
Plaza Selangor
Wisma Glenmarie, Office 30,000 7,000 100% 8.90 yrs 37,000 2.58%
Comcorp Shah Alam Building
Dana 13, Dana 1 Ara Office 99,120 21,880 54% Multiple 121,000 8.43%
Commercial Damansara Building Period
Centre Petaling Jaya,
Selangor
Vista Tower The Intermark, Office 455,000 67,000 63% Multiple 522,000 36.38%
Kuala Lumpur Building Period
Contraves Cyberjaya, Office 40,000 3,600 100% 0.30 yrs 43,600 3.04%
Selangor Building
Toshiba Glenmarie, Office 32,000 400 100% 1.40 yrs 32,400 2.26%
TEC Shah Alam Building
Industrial
RHF Stone Nusajaya, Industrial 24,000 2,000 100% 7.60 yrs 26,000 1.81%
Factory Johor Factory
Retail
Selayang Mall Selayang, Retail 128,165 8,835 95% Multiple 137,000 9.55%
Selangor Mall Period
Real Estate-Related Assets 1,371,500 95.58%
Cash and security deposits 54,056 3.77%
Others (Trade and Other Receivables) 9,270 0.65%
Total Asset Value (RM’000)(b) 1,434,826 100.00%
10
Gross Rental Income (RM’000)
15,000,000.00
12,000,000.00
9,000,000.00
6,000,000.00
3,000,000.00
0
2020 2019 2018
SEGi Kota
Damansara
Selayang
Mall
Block D13 Help University
Sdn Bhd
Holiday Villa
Langkawi
13,158,750.00
14,355,000.00
14,355,000.00
10,406,688.07
8,971,550.04
8,971,550.04
6,677,044.54
7,879,816.36
8,388,120.00
5,415,422.54
5,666,510.16
5,763,361.95
2,500,807.50
4,001,292.00
4,166,292.24
10%
Retail
56%
Office
2%
Industrial
8%
Hotel
24%
Education
4%
Industrial
15%
Retail
13%
Hotel
24%
Education
44%
Office
26%
Education
12%
Retail
2%
Industrial
3%
Hotel
57%
Office
Gross Income
based on
Sector
Lettable
Area based
on Sector
Asset Value
Based on
Sector
PROPERTY
PORTFOLIO
AMANAHRAYA REIT: TOP TENANTS
AMANAHRAYA REIT
11
annual report 2020
12
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
Address
Vista Tower, The Intermark,
348, Jalan Tun Razak,
50400 Kuala Lumpur.
02
05
Location
The property is located within The Intermark development at Jalan Tun Razak. The Intermark is located approximately 1.3 kilometres
north east of Kuala Lumpur City Centre.
01
Title Details
Lot No. 20000, Seksyen 43 held
under Title No. Geran 75638,
Bandar Kuala Lumpur,
State of Wilayah Persekutuan
Kuala Lumpur.
03
Property type
Office tower.
04
Description
A sixty three (63) office tower with three (3)
basement levels B1 to B3 identified as Vista Tower
together with 914 car park bays which forms part
of the integrated commercial development known
as The Intermark, Kuala Lumpur.
Age of property
Approximately 26 years
Tenure
Freehold
Total Land Area
228,948 sq.ft.
Gross Built-up Area
776,196 sq.ft.
Net lettable area
550,324 sq.ft.
Existing use
Office Building
Parking spaces
914 car park bays on the basement level identified
as B1 to B3
Date of acquisition
16 January 2018
Cost of acquisition
RM455,000,000.00
Valuation as at December 2020
RM522,000,000.00
Valuer
Savills (Malaysia) Sdn. Bhd.
Carrying Amount
RM522,000,000.00
Occupancy rates
63%
Property Manager
Knight Frank Property Management Sdn. Bhd.
AMANAHRAYA REIT
13
Vista Tower,
Kuala Lumpur
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
annual report 2020
SEGi University,
Kota Damansara
(CONT’D)
05
Location
SEGi University is located within a
new development known as Taman
Sains Selangor 1, an emerging
high-technology industry estate in
Kota Damansara. Kota Damansara
is an integrated self-contained
township developed by Selangor
State Development Corporation
(PKNS) located approximately 19
kilometres to the west of Kuala
Lumpur city centre.
01
Description
An institutional complex comprising of 1
block of 7-storey administrative building and
one block of 5-storey academic building
Age of property
Approximately 14 years
Tenure
Leasehold for 99 years
Unexpired lease
87 years
Lease period
5+5 years commencing from January 2018
Land Area
425,390 sq.ft.
Gross Floor Area
577,000 sq.ft.
Net lettable area
337,710 sq.ft.
Existing use
A university under the brandname of SEGi
Parking spaces
451 car parking bays
Date of acquisition
28 December 2007
Cost of acquisition
RM145,000,000.00
Valuation as at December 2020
RM185,000,000.00
Valuer
Savills (Malaysia) Sdn. Bhd.
Carrying Amount
RM185,000,000.00
Master Lessee
SEG International Bhd
Occupancy rates
100%
Property Manager
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Address
SEGi University (Malaysia Main
Campus), No. 9, Jalan Teknologi,
Taman Sains Selangor,
Kota Damansara PJU 5,
47810 Petaling Jaya, Selangor.
Title Details
H.S. (D) 255765, P.T. 12171,
Pekan Baru Sungai Buloh,
District of Petaling,
State of Selangor.
03
Property type
Education.
04
02
14
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
Selayang Mall,
Selayang
(CONT’D)
Location
The property is located within Taman
Selayang Utama, a medium-sized
housing scheme.
Generally, the neighbourhood
comprises of a mixture of residential
and commercial developments.
Prominent landmarks in the
neighbourhood include Selayang
General Hospital, Forest Reserve
Institute of Malaysia (FRIM), Selayang
Municipal Council (MPS) and
Gombak District Land Office.
01
Description
4-storey retail space with 6-storey car park
Age of property
Approximately 24 years
Tenure
Leasehold for 99 years
Unexpired lease
59 years
Land Area
175,742 sq.ft.
Gross Floor Area
868,305 sq.ft.
Net lettable area
367,947 sq.ft.
Existing use
Neighbourhood shopping complex under
the brand name of Selayang Mall
Parking spaces
845 parking bays
Date of acquisition
7 May 2010
Cost of acquisition
RM128,165,000.00
Valuation as at December 2020
RM137,000,000.00
Valuer
Knight Frank Malaysia Sdn. Bhd.
Carrying Amount
RM137,000,000.00
Occupancy rates
95%
Property Manager
Knight Frank Property Management
Sdn. Bhd.
05
Address
Lot 384451, Jalan SU 9, Taman
Selayang Utama, 68100 Batu
Caves, Selangor Darul Ehsan.
02
Title Details
Lot 38451 held under Title No.
PM 11660, Town of Selayang,
District of Gombak, State of
Selangor.
03
Property type
Shopping Mall.
04
AMANAHRAYA REIT
15
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
annual report 2020
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
Dana 13, Dana 1
Commercial Centre,
Petaling Jaya
Location
The property is located within Dana
1 Commercial Centre, a newly
completed commercial development
which comprises of 152 units of two
to five storey shop offices and a 13
storey stratified office building with
basement car park level as well as
a serviced apartment block, about
35 kilometres south-west of Kuala
Lumpur city centre.
Description
A 13-storey stratified office building which
forms part of Dana 1 Commercial Centre
Age of property
Approximately 13 years
Tenure
Leasehold for 99 years
Unexpired lease period
77 years
Gross Floor Area
338,244 sq.ft.
Net lettable area
256,972 sq.ft.
Existing use
Office Block with MSC status
Parking spaces
The property has been allocated with 300
bays within Dana 1 Commercial Centre
Date of acquisition
7 May 2010
Cost of acquisition
RM99,120,000.00
Valuation as at December 2020
RM121,000,000.00
Valuer
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Carrying Amount
RM121,000,000.00
Occupancy rates
54%
Property Manager
Hartamas Asset Management Sdn. Bhd.
Address
Dana 13, Dana 1 Commercial
Centre, Jalan PJU 1A/46,
Off Jalan Lapangan Terbang
Subang, 47301 Petaling Jaya,
Selangor Darul Ehsan.
Title Details
Developed on the Parent Lot
59214, Mukim of Damansara,
District of Petaling, State of
Selangor, held under Master Title
No. PN 8024.
Property type
Office building.
16
05
01
03 04
02
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
HELP University,
Jalan Semantan
Location
HELP University is located in the
commercial corner of Damansara
Heights approximately 8 kilometres
to the west of Kuala Lumpur city
centre.
Description
A 5-storey purpose-built office building with
6 lower ground levels inclusive of a 4-level
car park
Age of property
Approximately 22 years
Tenure
Leasehold for 99 years
Unexpired lease
1) HSD 83465 - 51 years
2) PN 46441 - 51 years
Lease period
25 years commencing from September 2014
Total Land Area
35,387 sq.ft.
Gross Floor Area
170,000 sq.ft.
Net lettable area
125,227 sq.ft.
Existing use
A higher learning institution and training centre
under the brandname of Help University
Parking spaces
261 parking bays
Date of acquisition
26 February 2007
Cost of acquisition
RM53,000,000.00
Valuation as at December 2020
RM74,000,000.00
Valuer
Savills (Malaysia) Sdn. Bhd.
Carrying Amount
RM74,000,000.00
Master Lessee
Help University Sdn. Bhd.
Occupancy rates
100%
Property Manager
Henry Butcher Malaysia (Mont Kiara)
Sdn. Bhd.
Address
HELP University, No. 15, Jalan Sri
Semantan 1, Damansara Heights,
50490 Kuala Lumpur.
Title Details
H.S. (D) 83465, P.T. 6 and P.N.
46441, Lot 36622, both in Mukim
and District of Kuala Lumpur,
Wilayah Persekutuan Kuala
Lumpur.
Property type
Education.
AMANAHRAYA REIT
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OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
Holiday Villa,
Langkawi
Description
A purpose-built 4-star resort hotel with 238-
rooms and swimming pool and spa facilities
Age of property
Approximately 29 years
Tenure
Freehold
Lease period
5+5 years commencing from July 2016
Total Land Area
427,672 sq.ft.
Gross Floor Area
183,190 sq.ft.
Net lettable area
Not Applicable
Existing use
A hotel under the brand name of Hotel
Holiday Villa
Parking spaces
55 parking bays
Date of acquisition
26 February 2007
Cost of acquisition
RM55,000,000.00
Valuation as at December 2020
RM85,000,000.00
Valuer
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Carrying Amount
RM85,000,000.00
Master Lessee
Langkawi Holiday Villa Sdn. Bhd.
Occupancy rates
100%
Property Manager
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Address
Lot 1698, Pantai Tengah, Mukim
Kedawang, 07000 Langkawi,
Kedah Darul Aman.
Title Details
H.S. (M) 2100, Lot 2504, Mukim of
Kedawang, H.S. (M) 667, P.T. 107,
Town of Padang Mat Sirat, H.S. (M)
668, P.T. 108, Town of Padang Mat
Sirat, all in District of Langkawi,
Kedah Darul Aman.
Property type
Resort Hotel.
Location
The property is located along one
of the most popular beach known
as Pantai Tengah. Along the same
stretch are other notable hotel resorts
including Langkawi Beach Resort,
Sunset Beach Resort, Moonlight Bay
Resort, Tanjung Mali Beach Resort
and Pelangi Beach Resort. Langkawi
International Airport is located 6 km
to the north of the property.
Langkawi is one of the premier
tourist destinations in Malaysia mainly
due to its duty free zone status,
beautiful beaches and historical sites.
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SEGi College,
Subang Jaya
Description
A 12-storey purpose-built commercial building
with 3 basement car park levels
Age of property
Approximately 14 years
Tenure
Freehold
Lease period
15 years commencing from May 2006
Land Area
61,042 sq.ft.
Gross Floor Area
280,575 sq.ft.
Net lettable area
131,387 sq.ft.
Existing use
A higher learning institution and training
centre under the brand name of SEGi
College
Parking spaces
206 parking bays and 400 motorcycle
parking bays
Date of acquisition
26
February 2007
Cost of acquisition
RM52,500,000.00
Valuation as at December 2020
RM73,500,000.00
Valuer
IPC Island Property Consultants Sdn. Bhd.
Carrying Amount
RM73,500,000.00
Master Lessee
SEG International Berhad
Occupancy rates
100%
Property Manager
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Address
SEGi College, Persiaran
Kewajipan USJ 1, 47600 Subang
Jaya, Selangor Darul Ehsan.
Title Details
Geran 313189, Lot No. 13,
Pekan Subang Jaya,
District of Petaling,
State of Selangor.
Property type
Education.
Location
It is located within the Commercial
Business Districts of Subang Jaya in
USJ 1. Subang Jaya is an integrated
mixed development, comprising
residential, commercial and industrial
developments located about 23.6
kilometres to south-west of Kuala
Lumpur city centre.
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
AMANAHRAYA REIT
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annual report 2020
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
Wisma Comcorp,
Shah Alam
Description
A free standing five (5) storey workshop
cum office building with a single level
basement car park
Age of property
Approximately 15 years
Tenure
Freehold
Lease period
15 years commencing from April 2014
Total Land Area
55,090 sq.ft.
Gross Built-up Area
116,743 sq.ft.
Net lettable area
74,550 sq.ft.
Existing use
Workshop cum office
Parking spaces
110 parking bays provided in the basement
and within the compound of the site
Date of acquisition
23
April 2014
Cost of acquisition
RM30,000,000.00
Valuation as at December 2020
RM37,000,000.00
Valuer
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Carrying Amount
RM37,000,000.00
Master Lessee
Comintel Sdn. Bhd.
Occupancy rates
100%
Property Manager
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Address
No. 37, Jalan Pelukis
U1/46,Section U1,
Temasya Industrial Park,
Glenmarie, 40150 Shah Alam,
Selangor Darul Ehsan.
Title Details
Lot 52802 held under Title No.
GRN 86648, Town of Glenmarie,
District of Petaling, State of
Selangor.
Property type
Office building.
Location
The property is located within
Temasya Industrial Park in Glenmarie,
Shah Alam. Glenmarie is located
about 1.5 kilometres to the north-
west of Subang Jaya town centre
and about 10 kilometres to the east
of Shah Alam city centre.
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Contraves Building,
Cyberjaya
Description
A four storey purpose-built office building
with one (1) basement level
Age of property
Approximately 19 years
Tenure
Freehold
Tenancy period
3+3 years commencing from April 2018
Total Land Area
89,460 sq.ft.
Gross Built-up Area
93,804 sq.ft.
Net lettable area
75,014 sq ft.
Existing use
Office Building
Parking spaces
113 numbers covered car park on the
basement level and 64 numbers uncovered
car parks on the ground floor
Date of acquisition
16 June 2016
Cost of acquisition
RM40,000,000.00
Valuation as at December 2020
RM43,600,000.00
Valuer
First Pacific Valuers Property Consultants
Sdn. Bhd.
Carrying Amount
RM43,600,000.00
Master Lessee
Contraves Sdn. Bhd.
Occupancy rates
100%
Property Manager
Henry Butcher Malaysia (Mont Kiara)
Sdn. Bhd.
Address
Block 3502, Enterprise Building 2
(EB2), Jalan Teknokrat 5, Cyber
5, 63000 Cyberjaya, Selangor.
Title Details
Lot No. PT 12072 held under Title
No. HSD 7061, Mukim of Dengkil,
District of Sepang, State of
Selangor.
Property type
Office building.
Location
The property is located within
Cyber 5 in Cyberjaya, Selangor.
Cyberjaya is located about 35
kilometres to the south-west of
Kuala Lumpur city centre and
about 5 kilometres to the north east
of Putrajaya.
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
AMANAHRAYA REIT
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annual report 2020
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
Toshiba TEC,
Shah Alam
Description
A four story office building cum warehouse
Age of property
Approximately 17 years
Tenure
Freehold
Lease period
6 years commencing from May 2016
Total Land Area
67,371 sq.ft.
Gross Built-up Area
74,104 sq.ft.
Net lettable area
62,474 sq ft.
Existing use
Office
Parking spaces
Available within the compound of the
property.
Date of acquisition
25
March 2016
Cost of acquisition
RM32,000,000.00
Valuation as at December 2020
RM32,400,000.00
Valuer
Knight Frank Malaysia Sdn. Bhd.
Carrying Amount
RM32,400,000.00
Master Lessee
Toshiba Tec Malaysia Sdn. Bhd.
Occupancy rates
100%
Property Manager
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Address
No. 4, Jalan Saudagar U1/16,
Hicom Glenmarie, 40150 Shah
Alam, Selangor Darul Ehsan.
Title Details
Lot 61725 held under Title No.
GRN 215122, Town of Glenmarie,
District of Petaling, State of
Selangor.
Property type
Office building.
Location
The property is located within
HICOM Glenmarie Industrial Park in
Shah Alam, Selangor. HICOM
Glenmarie Industrial Park is located
about 4.0 kilometres to the north-
west of Subang Jaya town centre
and about 14 kilometres to the sout-
west of Petaling Jaya city centre.
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RHF Stone Factory,
Nusajaya
Description
A single storey factory annexed with three
storey office building
Age of property
Approximately 8 years
Tenure
Freehold
Lease period
9+3 years commencing from March 2019
Total Land Area
130,685 sq.ft.
Gross Built-up Area
107,666 sq.ft.
Net lettable area
95,035 sq ft.
Existing use
Factory
Parking spaces
Available within the compound of the
property
Date of acquisition
20
April 2016
Cost of acquisition
RM24,000,000.00
Valuation as at December 2020
RM26,000,000.00
Valuer
IPC Island Property Consultants Sdn. Bhd.
Carrying Amount
RM26,000,000.00
Master Lessee
RHF Stone Sdn. Bhd.
Occupancy rates
100%
Property Manager
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Address
No. 11, Jalan Bioteknologi 3,
Kawasan Perindustrian SILC,
79200 Nusajaya, Johor.
Title Details
Lot PTD 6861 held under Title No.
HSD 479596, Mukim of Jelutong,
District of Johor Bahru, State of
Johor.
Property type
Industrial Factory.
Location
The property is located within
Southern Industries and Logistic
Clusters (SILC) in Nusajaya, Johor.
Nusajaya is located about 30
kilometres to the south-west of Johor
Bahru city centre and about 4.5
kilometres to the north of Gelang
Patah town centre.
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
AMANAHRAYA REIT
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annual report 2020
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
Ex-Holiday Villa,
Alor Setar
Description
A 21-storey hotel with 156-rooms with sub-
basement level within a development also
known as City Plaza
Age of property
Approximately 23 years
Tenure of Master Title
Leasehold for 99 years
Unexpired lease
Approximately 87 years (Master Title)
Tenancy period
-
Gross Floor Area
150,000 sq.ft.
Existing use
Vacant since July 2018
Date of acquisition
26
February 2007
Cost of acquisition
RM31,000,000.00
Valuation as at December 2020
RM26,500,000.00
Valuer
IPC Island Property Consultants Sdn. Bhd.
Carrying Amount
RM26,500,000.00
Master Lessee
Vacant since June 2018
Occupancy rates
0%
Property Manager
Hartamas Asset Management Sdn. Bhd.
Address
Lot 162 & 163, Jalan Tunku
Ibrahim, 05000 Alor Setar, Kedah
Darul Aman.
Title Details
Held under Master Title H.S. (D)
21920, P.T. 6282, H.S. (D) 21921,
P.T. 6283, H.S. (D) 21922, P.T.
6284, all in Town of Alor Setar,
District of Kota Setar, State of
Kedah Darul Aman.
Property type
Hotel.
Location
The property is located within the Central
Business District of Alor Setar where
several government and commercial
buildings are located, including Majlis
Bandaraya Alor Setar, Bangunan KWSP,
Bangunan Simpanan Nasional, Menara
Sentosa and Universiti Tun Abdul
Razak.
Alor Setar is the capital city of Kedah
and one of the region’s oldest cities. It
is a distribution center for manufacturing
and agricultural products such as rice.
Alor Setar is also the royal town of the
Kedah State.
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Block A & B,
South City Plaza,
Seri Kembangan
Description
Two (2) blocks (Block A and Block B) of 5
½-storey purpose-built commercial buildings
Age of property
Approximately 9 years
Tenure of Master Title
Leasehold for 99 years
Unexpired lease
73 years
Tenancy period
2 years commencing from January 2018
(Block B)
Gross Floor Area
Not applicable
Net lettable area
66,606 sq.ft.
Existing use
Block A is currently vacant and Block B is
currently used as an office
Parking spaces
The property shares the usage of 1,766
parking bays with the developer and owner
of the individual units within the South City
development
Date of acquisition
26 February 2007
Cost of acquisition
RM18,300,000.00
Valuation as at December 2020
RM9,200,000.00
Valuer
IPC Island Property Consultants Sdn. Bhd.
Carrying Amount
RM8,500,000.00
Master Lessee
Block A – Vacant
Block B – Paramount Vintage Sdn. Bhd.
Occupancy rates
50%
Property Manager
Nawawi Tie Leung Property Consultants
Sdn. Bhd.
Address
Block A & B, South City Plaza,
Persiaran Serdang Perdana,
Taman Sedang Perdana, Section
1, 43300 Seri Kembangan,
Selangor.
Title Details
P.T. No. 520 held under Title No.
H.S. (D) 226742, Pekan of
Serdang, District of Petaling,
State of Selangor.
Property type
Office building.
Location
The property is located within a
commercial development known
as South City Plaza which comprises
of retail complex, office block and
hotel cum service apartments. Seri
Kembangan is located about 14.7
kilometres to the south of Kuala
Lumpur city centre.
OVERVIEW OF 13 PROPERTIES
UNDER AMANAHRAYA REIT
(CONT’D)
AMANAHRAYA REIT
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MESSAGE FROM THE
CHAIRMAN
annual report 2020
Dear Unitholders,
On behalf of the Board of Directors of AmanahRaya-Kenedix REIT
Manager Sdn Bhd (AKRM), the Manager of AmanahRaya Real
Estate Investment Trust (ARREIT), it is our pleasure and privilege
to present the Annual Report and Audited Financial Statement for
the financial year ended 31 December 2020.
This year has been an extremely challenging year the world over and our country due to the
COVID-19 pandemic, to say the least. It has caused a slew of health, economic and social
challenges. The real estate market was not spared of the negative impact either. After the
announcement of various lockdowns around the world in beginning in January 2020, the
initial fear of global economic meltdown set in. It was no different here in Malaysia. The
announcement of the Movement Control Order (MCO) in March 2020 led to the local capital
markets witnessing one of its worst decline in history. Malaysian REITS (MREITs) were not
spared either. The sharp drop within days driven by fear and uncertainty recovered over the
following weeks to a more realistic level.
Once the initial fear subsided and the MCO was eased, there was a glimmer of hope. Various
sectors re-opened, economic activities were re-starting and consumer sentiment was slowly
recovering. This period saw an upward trend for most economic sectors and recovery was
thought to be on its way. However, the spike in COVID-19 cases in September 2020, various
iterations of MCO was re-introduced. This time, sentiments and recovery efforts became even
dimmer than the first MCO. From the real estate industry perspective, the hardest hit sectors
were undoubtedly retail and hospitality assets. Prolonged shutdown, travel restrictions, strict
social distancing and mass layoff particularly impacted these asset classes severely.
As we write this, Malaysia is still operating under strict social distancing measures and
cautious economic activity resumption. There remains many uncertainties moving forward
that will impact earnings and growth moving forward as the COVID-19 situation is still
evolving.
Nevertheless, we are pleased to report that ARREIT delivered a satisfactory financial
performance in 2020 amidst the challenging market and operational conditions. Despite
these challenges, the Board remains focused in strengthening our portfolio, improving our
margins and operations.
ECONOMIC AND PROPERTYOVERVIEW
According to Bank Negara Malaysia, the overall economy contracted at a rate of 5.6% during
the year under review caused by the COVID-19 pandemic.
The office sector in the KL City and Selangor also weakened but to a lesser extent. The
cumulative supply within the office sector is approximately 109.5 million sq. ft. as of Q4 2020.
The overall occupancy rate of office space in KL City declined to record low of 69.1% and in
Selangor it dropped to 77.9% in Q4 2020. The current oversupply factor aside, the COVID-
19 pandemic has severely impacted the demand side. More prospective tenants are
reviewing or postponing their workspace decisions to balance between growth and reducing
operational and cost. Decision-making at corporate headquarters has also been slowed
down by the spike in COVID-19 cases in Q4 2020. While most employees were allowed to
work remotely (i.e. Work From Home), there were no termination or contraction of spaces
due to the pandemic.
26
MAHADZIR BIN AZIZAN
Chairman
MESSAGE FROM THE
CHAIRMAN
The education sector saw an almost immediate effect due to the pandemic because of
prolonged closure of schools, colleges and universities. Admission of new and existing
students was deferred but resumed in May and June 2020, however the spike in COVID-19
cases resulted in enforced closure again. Foreign student intake has virtually ceased due to
travel restrictions. Classes for existing students moved online. The pandemic has certainly
caused major changes to the education establishments and structure. Future investments in
the sector will focus on online learning, technology adoption as well as collaboration between
like-minded educational establishments to leverage on each other.
The industrial sector remained the only sector that was resilient and showing upward trends
in growth. Specifically, in Johor, there were a slew of positive market activity with several
sales of properties and land closed including one in Southern Industrial and Logistic Cluster
(SiLC) specifically. This sector will continue to shine in the coming years supported by
generous tax incentives to attract Foreign Direct Investments to Malaysia. Johor’s close
proximity to Singapore with established infrastructure and amenities positions it as ideal for
logistic and manufacturing industries.
The retail real estate market was severely impacted. Large sections of both sectors were
forced to halt operations on a scale unseen before. Essential services only were allowed to
operate. This resulted in a majority of hotels and shopping malls to close for prolonged
periods during the MCO. The MIER Consumer Sentiments Index (CSI) remained below the
100-point threshold for all of 2020. This signals deflated consumer spending due to concerns
of recessions, rising unemployment and lower disposable income amidst the continuous
effect of the pandemic. The retail growth for the year has been revised downwards from -
9.3% to -15.8%. The pandemic has altered the retail scene with several local and international
brands ceasing operations permanently.
PERFORMANCE OVERVIEW
In the face of all these challenges, ARREIT remained resilient in 2020 owing to a diversified
property portfolio and having a large percentage of the leases on long-term triple net lease
structures. This has minimised risks and operational costs for ARREIT. The year also saw
Selayang Mall’s lease with Seal Management Sdn Bhd coming to an end in June 2020. This
property has now become one of the properties directly managed by ARREIT.
For the year ended 31 December 2020, the net property income eased to RM72.65 million
from RM80.67 million in 2019. The 10% decline is attributable to lower rental income from
Vista Tower, change of triple-net lease to multi-tenant property for Dana 13 and higher
property expenses.
ARREIT provided targeted tenants with the rental relief package including rental rebates,
deferred rental payment, staggered payment plans and allowance for utilities. These were
provided for mostly education, hospitality and office tenants to a tune of approximately
RM5.56 million.
The Board made the decision to provide the rental relief package taking into account the
interest and wellbeing of our stakeholders namely our tenants and unitholders. We realised
it is our responsibility to do so in the larger Malaysian context to help tenants manage
operations and cashflow difficulties.
The total distribution to unitholders is RM29.14 million for 2020 compared to RM35.54 million
in 2019, 18% lower year-on-year. Thus, the final distribution per unit for the full year is 5.1
sen in 2020 compared to 6.2 sen in the year before.
The fair value of ARREIT’s investment portfolio saw a slight drop to RM1,363 million in 2020
from RM1,399 million in 2019. The downward adjustment of 3% was made in the face of a
conservative outlook going into 2021.
AMANAHRAYA REIT
27
(CONT’D)
28
annual report 2020
Despite the lower net property income and distribution for 2020, ARREIT’s financial position
remains healthy and robust with a gearing level of 44.85% as at 30 December 2020, below
the mandated threshold of 50%. Total borrowings stood at RM643.56 million with almost 95%
in long-term borrowings. The effect of switching from term loan to long-term borrowings and
reduction of Overnight Policy Rates in 2020 resulted in significant saving for ARREIT, to the
tune of RM6.8 million throughout the year.
LOOKING AHEAD TO 2021
The World Bank expects Malaysia’s economy to grow 6.7% driven by the improvement in
global economy projected to grow 4.2% in 2021 and the much anticipated vaccination
program. A timely approval and rollout program by the Government is key to achieving the
growth projection. Private consumption is expected to reach 7.4% in the coming year. All
this will boost investor confidence and business sentiments contingent upon controlling any
spike in COVID-19 cases, protecting the most vulnerable sections of the population, reducing
high unemployment and avoiding another MCO-like shutdown.
There is no doubt that the year ahead for Malaysia will continue to be challenging. Majority
of the effects that we have seen and experienced in 2020 will continue into 2021, albeit to a
lesser extent.
ARREIT enters the new year cautiously with tempered expectations. While there are some
signs of recovery amidst growth projections, the Manager is aware of the volatility and
hardship of businesses in returning to pre-COVID levels, especially for micro, small and
midsize enterprises that underpin the econoour. We remain focused on enhancing portfolio
fundamentals, growth and optimising asset management.
We are looking forward to continue delivering sustainable financial performance, as we have
been year after year, with the support of the Board which remains committed to ensuring
sustainable performance, prudent capital management, good governance, effective
engagement with stakeholders, adherence to compliance requirements, and sound
operational strengths.
MOVING FORWARD WITH THE TIMES
We would be remiss if we do not take heed of the lessons we learnt this year. This new normal
necessitates us to remain agile, proactive and flexible. This is not only because of the
increasingly fast changing consumer trends and tenant needs but also the rapid evolving
risk and its mitigation.
To this end, we will be seeking closer cooperation with our tenants to build a more sustainable
relationship, enhancing operational efficiency, embarking on asset enhancement initiatives
and increase the use of technology as part of our digitalisation programs amongst others.
The Manager intends to pay special attention on the health and safety of our tenants and
enhance hygienic standards in all our properties.
MESSAGE FROM THE
CHAIRMAN
(CONT’D)
AMANAHRAYA REIT
29
Even though the Manager’s emphasis will always be on improving financial and operational
performance of ARREIT, we will actively endeavour to acquire new properties that are able
to provide accretive yields over a long term with solid fundamentals. We believe that the
opportunity to acquire such properties is more promising moving forward in this environment,
as borrowing costs are favourable, owners are exiting certain property sectors and capital
values are undergoing market corrections. We will continue to assess our current portfolio
for divestment where appropriate and optimise returns for unitholders.
The Manager will continue to push forward in meeting our objective to increase the fund size
to RM3 billion within the next three to five years.
CHANGES IN THE BOARDROOM AND MANAGEMENT
Encik Zulazman bin Zulkifli was appointed and re-designated as the Chairman of both the
Tender Committee and the Investment Committee, effective 25 May 2020. We would like to
congratulate him for both appointments.
We are please to welcome Dr Iskandar bin Ismail and Encik Shahlan bin Md Shukor @ Kadari,
who were appointed as an Independent Non-Executive Director and Non-Independent Non-
Executive Director on 1 April 2020 and 1 June 2020, respectively.
We would like to extend our heartfelt appreciation to the former Board Members, Dato’
Anthony @ Firdauz bin Bujang and Encik Ahmad Suhaimi bin Endut, for their invaluable
contributions and achievements during their tenure with ARREIT.
It is with great pleasure that we announced the appointment of Encik Abdul Aziz bin Abdul
Rasheed as the Chief Executive Officer of the Manager. He was selected after an extensive
search and rigorous selection process. The Board is confident that with his vast experience
spanning across several industries and roles, he is well suited to originate fresh ideas and
execute the strategic initiatives required to take ARREIT forward into the future. On behalf of
the Board, welcome to the family!
ACKNOWLEDGEMENTS
We wish to take this opportunity to express our sincere gratitude to the members of the Board,
Committee Members and the Management, for their continued dedication and commitment
in delivering another satisfactory and committed effort for our unitholders despite the
challenges of COVID19 pandemic. Rest assured that ARREIT's focus remains unchanged,
with top priority given to delivering value to our stakeholders.
In closing, we would like to thank all our unitholders, tenants, employees and business
partners for your unwavering support and confidence in 2020. We hope to build a stronger,
more resilient and sustainable ARREIT heading into 2021.
Please stay safe and healthy. Our wish is to see this unfortunate phase in our lives behind us
together and come out stronger.
Mahadzir bin Azizan
Chairman
MESSAGE FROM THE
CHAIRMAN
(CONT’D)
PROFILE OF THE
BOARD OF DIRECTORS
annual report 2020
MAHADZIR BIN AZIZAN
Independent
Non-Executive Director
Board Committee Membership:
Nil
Working Experience and Occupation:
Mahadzir has more than forty (40) years of experience in corporate
legal matters and has held key positions both in the private and public
sector. After graduation, he joined the Judicial and Legal Service of
the Malaysian Government as a Deputy Public Prosecutor and Federal
Counsel and subsequently ventured into the private sector and served
Malaysian International Shipping Corporation (MISC) and Island &
Peninsular Berhad, the property arm of Permodalan Nasional Berhad
(PNB) for twenty-four (24) years. Whilst in the private sector, he also
served as Ahli Majlis MARA, director of Amanah Raya Berhad and
Tabung Haji group of companies as well as various other directorships
in government-linked companies.
He also sits on the Board of ECM Libra Financial Group Berhad and
RCE Capital Berhad.
Academic/ Professional Qualifications:
Barrister-at-Law from the Honourable Society of Lincoln's Inn,
London, United Kingdom
Called to the English Bar in 1978
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
No conflict of interest with AmanahRaya-Kenedix REIT Manager Sdn Bhd
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Nationality / Age / Gender:
Malaysian / 72 / Male
Date of Appointment:
5 April 2016 (Independent, Non-Executive Director)
11 February 2019 (re-designated as Chairman, Board of Director)
Present Directorship:
Listed Company
ECM Libra Financial Group
Berhad
RCE Capital Berhad
Other Public Companies
Nil
ADENAN BIN MD YUSOF
Non-Independent
Non-Executive Director
Board Committee Membership:
Member, Investment Committee, AmanahRaya-Kenedix REIT
Manager Sdn Bhd
Working Experience and Occupation:
Upon obtaining his Bachelor, Adenan worked for two (2) of the largest
architectural practices in the United States. During his tenure at Harry
Weese and Associates as well as Lohan Associates, he gained
valuable experience in the development of various building types from
residential to 5 star hotels and office buildings. Thereafter, in 1993, he
joined KLCC Berhad and worked on the prestigious Petronas Twin
Towers project.
Adenan later joined Amanah Capital Partners Berhad in 1995 and was
responsible in overseeing all property investments under Amanah
Capital Group. Subsequently, in 2003, Adenan moved to KUB Malaysia
Berhad as General Manager and was later seconded to KUB Realty
Sdn. Bhd, the property arm of KUB.
In 2008, Adenan joined Terengganu Incorporated as the Group General
Manager to head its property investment division and was tasked in
drafting a strategic plan for its property investment. Prior to his return
to Amanah Raya Berhad, he was the Senior Vice President of Special
Projects at UDA Holdings Berhad.
Adenan was appointed as the Group Managing Director of Amanah
Raya Berhad since September 2016.
Academic/ Professional Qualifications:
Bachelor of Architecture from Illinois Institute of Technology Chicago,
Illinois, USA
Holds a Capital Market Services Representative’s License since
July 2013
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
Group Managing Director at Amanah Raya Berhad
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Nationality / Age / Gender:
Malaysian / 57 / Male
Date of Appointment:
30 September 2016 (Non-Independent, Non-Executive Director)
31 March 2017 (Member, Investment Committee)
Present Directorship:
Listed Company
Nil
Other Public Companies
Amanah Raya Berhad
AmanahRaya Trustees
Berhad
30
PROFILE OF THE
BOARD OF DIRECTORS
(CONT’D)
DATO’ HAJI CHE PEE BIN
SAMSUDIN
Independent
Non-Executive Director
Nationality / Age / Gender:
Malaysian / 64 / Male
MICHIO IZAWA
Non-Independent
Non-Executive Director
Nationality / Age / Gender:
Japanese / 50 / Male
Board Committee Membership:
Chairman, Audit Committee, AmanahRaya-Kenedix REIT Manager
Sdn Bhd
Working Experience and Occupation:
Dato’ Haji Che Pee began his career as an Accountant in the
government sector since 1982. His extensive experience includes
serving at various government departments including Ministry of
Finance, Langkawi Development Authority (LADA), Malaysian Institute
of Islamic Understanding (IKIM), Economic Planning Unit in Prime
Minister’s Department and Perbendaharaan State of Kedah as the
State Treasurer for nine (9) years.
Previoulsy, Dato’ Haji Che Pee was appointed as Board Member of
Kumpulan Wang Persaraan (Diperbadankan) (KWAP) from 1 March 2016
until October 2017. Presently, he is an Independent Non-Executive
Director of Bank Muamalat Malaysia Berhad since 29 March 2018.
Dato’ Haji Che Pee was also the Accountant General of Malaysia
from January 2015 to October 2017.
Academic/ Professional Qualifications:
Bachelor in Accounting (Hons.)
Member of Chartered Accountant (CA) of the Malaysian Institute
of Accountants (MIA)
Member of Association of Chartered Certified Accountants (ACCA),
Chartered Institute of Management Accountants (CIMA), and
Chartered Institute of Public Finance & Accountancy (CIPFA)
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
No conflict of interest with AmanahRaya-Kenedix REIT Manager Sdn Bhd
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Date of Appointment:
23 August 2011 (Non-Independent, Non-Executive Director)
22 December 2017 (Redesignated as an Independent, Non-
Executive Director)
11 February 2019 (Redesignated as Chairman, Audit Committee)
Present Directorship:
Listed Company
Nil
Other Public Companies
Amanah Raya Berhad
Board Committee Membership:
Member, Investment Committee, AmanahRaya-Kenedix REIT
Manager Sdn Bhd
Member, Tender Committee, AmanahRaya-Kenedix REIT Manager
Sdn Bhd
Working Experience and Occupation:
Michio Izawa currently serving as Chief Executive Officer and President
of Kenedix Asia Pte. Ltd. effective January 2020. Previously, Mr Michio
served as Chief Investment Officer and Director of Kenedix Asia Pte.
Ltd. from May 2015 until December 2019. Michio Izawa also served as
Chief Representative of Kenedix, Inc. Singapore Representative Office
from January 2015. He was previously Senior Manager of Corporate
Planning Department at Kenedix, Inc. from November 2014.
Before joining Kenedix, Inc., he served as Representative in Japan at
CarVal Investors Pte. Ltd., (CarVal) between August 2012 and March
2014. He was also Managing Director of Global Credit Strategies Group
and Real Estate Group at CarVal from January 2009 where he was
responsible for the investment in distressed asset portfolios and real
estate in Japan. Between September 2006 and December 2008, he was
Director of Global Credit Strategies Group at CarVal Tokyo Branch and
served as Investment Manager of Reorganization Group at Cargill
Investment Japan Co., Ltd. Between January 1996 and December
2000, he served as Capital Market Trader of Financial Service Division
at Cargill Japan Ltd. Before joining Cargill, he served in the International
Department at Cosmo Oil. Co, Ltd. from April 1994.
Academic/ Professional Qualifications:
B.A. in Economics from the Keio University, Tokyo, Japan
Chartered Member of the Securities Analysts Association of
Japan ("CMA")
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
Director at Kenedix Asia Pte. Ltd. and KDA Capital Malaysia Sdn Bhd
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Date of Appointment:
13 March 2017 (Non-Independent Non Executive, Director)
13 March 2017 (Member, Investment Committee)
23 January 2018 (Member, Tender Committee)
Present Directorship:
Listed Company
Nil
Other Public Companies
Nil
AMANAHRAYA REIT
31
annual report 2020
PROFILE OF THE
BOARD OF DIRECTORS
(CONT’D)
Board Committee Membership:
Member, Audit Committee, AmanahRaya-Kenedix REIT Manager
Sdn Bhd
Working Experience and Occupation:
Keisuke Ogawa started his carrier in April 2001 as Real Estate
Developer in Cosmos Initia Co. Ltd. (formerly known as Recruit Cosmos
Co. Ltd.). Since March 2004 until December 2007, he joined Fund
Creation Co. Ltd as Senior Manager and involved in work fields
related with Business Development, Asset Management and Investment.
Keisuke Ogawa continued his career with LaSalle Investment
Management as Associate Director from January 2008 to October 2011.
In November 2011, Keisuke Ogawa joined Kenedix Inc as a Senior
Manager for a period of two (2) years. In October 2013, Keisuke Ogawa
was appointed as Head of Strategic Investment Division3 in Kenedix
Inc. Since December 2019, Keisuke Ogawa has been serving as
Executive Director of Kenedix Asia Pte. Ltd.
Academic/ Professional Qualifications:
Bachelor of Architecture and Civil Engineering, Kobe University,
Japan
Certified Master of ARES (The Association for Real Estate
Securitization)
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
Executive Director at Kenedix Asia Pte. Ltd. and KDA Capital Malaysia Sdn Bhd
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Date of Appointment:
15 January 2020 (Non-Independent, Non-Executive Director)
15 January 2020 (Member, Audit Committee)
Present Directorship:
Listed Company
Nil
Other Public Companies
Nil
Board Committee Membership:
Chairman, Investment Committee, AmanahRaya-Kenedix REIT Manager
Sdn Bhd
Chairman, Tender Committee, AmanahRaya-Kenedix REIT Manager
Sdn Bhd
Member, Audit Committee, AmanahRaya-Kenedix REIT Manager Sdn Bhd
Working Experience and Occupation:
Zulazman is Director, Origination, MIDF Amanah Investment Bank Bhd
and formerly Group Executive Director of Apex Equity Holdings Bhd
concurrently Non-Executive Chairman of JF Apex Securities Bhd. He is
an Investment Banker, Stockbroker, Member of the Royal Institution of
Chartered Surveyors, Member of the Institute of Corporate Directors and
Individual Member of FIABCI Malaysia Chapter. He has over 25 years of
stockbroking and property experience. His foray into property was
through a joint venture with UEM Land Holdings Sdn Bhd (now UEM
Sunrise Bhd) and AMP Capital Investors of Australia.
Throughout his career in Malaysia, Zulazman was also a Dealing Member
and a Licensed Dealers Representative of the Kuala Lumpur Stock
Exchange and Bursa Malaysia, a Licensed Investment Advisor with the
Securities Commission, a Registered Responsible Person with the Securities
Commission for a Venture Capital Management Corporation while in Australia
he was an ASIC licensed Investment Advisor. He has held various positions
in financial services at Academia Capital, DH Flinders, Kuala Lumpur City
Securities (now Alliance Investment Bank), CIMB Securities (now CIMB
Investment Bank), ShareTech Securities, Jardine Fleming, Arab-Malaysian
Securities (now AmInvestment Bank) in Malaysia, Cazenove & Co and
as an Intern in Property Equities at UBS Philips & Drew in the UK.
Academic/ Professional Qualifications:
BSc (Hons) Property Valuation & Finance from City, University of
London
DipLang, Spanish Language from Madrid Complutense University
Member, Royal Institution of Chartered Surveyors
Individual Member, FIABCI Malaysia Chapter
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
No conflict of interest with AmanahRaya-Kenedix REIT Manager Sdn Bhd
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Date of Appointment:
11 February 2019 (Independent, Non-Executive Director)
11 February 2019 (Member, Audit Committee)
11 February 2019 (Member, Investment Committee)
25 May 2020 (Chairman, Tender Committee)
25 May 2020 (re-designated as Chairman, Investment Committee)
Present Directorship:
Listed Company
Nil
Other Public Companies
Nil
32
KEISUKE OGAWA
Non-Independent
Non-Executive Director
Nationality / Age / Gender:
Japanese / 44 / Male
ZULAZMAN BIN ZULKIFLI
Independent
Non-Executive Director
Nationality / Age / Gender:
Malaysian / 53 / Male
Board Committee Membership:
Member, Investment Committee, AmanahRaya-Kenedix REIT
Manager Sdn Bhd
Working Experience and Occupation:
Dr Iskandar holds a Bachelor of Science (Honours) in Land
Management, a Masters of Science in Urban Land Valuation (Archie
Sherman award winner) and a Ph.D in Real Estate Management, all
three from the University of Reading, United Kingdom.
He began his career in 1982 with the Valuation and Property Services
Department, Ministry of Finance, Malaysia, valuing properties for
listing purposes for the Capital Issues Committee (CIC). He left the
public sector in 2002, and joined the corporate sector, becoming a
Director at Johor Corp and Khazanah Nasional Berhad, among
others. He has also served on the Board of various listed and unlisted
companies such as UDA (2005-2008), South Johor Investment
Corporation (2006-2008) and Harta Consult (2004).
He is currently the Principal of Iskandar Associates, a real estate
consultancy, which he set up in 2004.
Academic/ Professional Qualifications:
Malay College Kuala Kangsar (1972-1976)
A-Levels, Norwich City College, Norfolk, United Kingdom (1977-1978)
B.Sc (Hons.), M.Sc and Ph.D in Real Estate, University of
Reading, United Kingdom (1996)
Registered Valuer and Fellow of the Royal Institution of Surveyors
Malaysia
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
No conflict of interest with AmanahRaya-Kenedix REIT Manager Sdn Bhd
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Date of Appointment:
1 April 2020 (Independent, Non-Executive Director)
1 April 2020 (Member, Investment Committee)
Present Directorship:
Listed Company
Nil
Other Public Companies
Nil
Board Committee Membership:
Nil
Working Experience and Occupation:
Shahlan holds a Degree in Accounting from University Teknologi MARA
(UiTM) and is a member of the Chartered Accountant (CA) of the
Malaysian Institute of Accountants (MIA).
He started his career in 1995 as an Audit Assistant in Azman, Wong,
Salleh & Co (Public Accountants) in Kuala Lumpur. In year 2001, he
joined Perbadanan Nasional Bhd as an Investment Monitoring Executive
and he continued his career with Keretapi Tanah Melayu Bhd (KTMB)
in 2004 as an Auditor in the Internal Audit Department.
He began his career as an Accountant in the Government sector since
2005. His extensive experience includes serving at various Government
departments including Accountant General’s Department of Malaysia
Putrajaya (HQ), Accountant General’s Department of Malaysia State of
Selangor, Selangor State Health Department and Marine Department
Malaysia.
He is currently the Senior Principal Assistant Director, Government
Investment Company Division (GIC), Ministry of Finance.
Academic/ Professional Qualifications:
Bachelor Degree in Accounting, Universiti Teknologi MARA
Member of the Chartered Accountant, Malaysian Institute of
Accountants (MIA).
Declarations:
No family relationship with any Director/ Major Shareholder of AmanahRaya-
Kenedix REIT Manager Sdn Bhd
No conflict of interest with AmanahRaya-Kenedix REIT Manager Sdn Bhd
Never been convicted of any offence within the past five years and have not
been imposed any penalty by the relevant regulatory bodies during the financial
year 2020
Date of Appointment:
1 June 2020 (Non-Independent, Non-Executive Director)
Present Directorship:
Listed Company
Syarikat Jaminan Kredit
Perumahan Berhad
Syarikat Jaminan Pembiayaan
Perniagaan Berhad
Pengurusan Danaharta Nasional
Berhad
Other Public Companies
Nil
PROFILE OF THE
BOARD OF DIRECTORS
(CONT’D)
AMANAHRAYA REIT
33
DR ISKANDAR BIN ISMAIL
Independent,
Non-Executive Director
Nationality / Age / Gender:
Malaysian / 61 / Male
SHAHLAN BIN
MD SHUKOR @ KADARI
Non-Independent,
Non-Executive Director
Nationality / Age / Gender:
Malaysian / 49 / Male
Family Relationship with any Director and/or Substantial Unitholder
None of the Directors of the Manager has any family relationship with any other Directors or Substantial Unitholders.
Conflict of Interest
Save for the following, none of the Directors of AmanahRaya REIT has conflict of interest during the financial year under review.
Adenan bin Md Yusof is the Group Managing Director of Amanah Raya Berhad.
Shahlan bin Md Shukor @ Kadari is the Nominee of the Ministry of Finance of Malaysia, which is a major shareholder of Amanah Raya Berhad.
Michio Izawa and Keisuke Ogawa are the representative of Kenedix Asia Pte. Ltd.
Convictions for Offences
None of the Directors have been convicted for offences within the past ten (10) years.
Attendance at Board of Directors Meetings
The Board comprises of eight (8) directors, of which four (4) are Independent Non- Executive and four (4) are Non-Independent Non-
Executive.
During the financial year, the Board met six (6) times, two (2) of which were special board meetings. The number of meetings attended by
each Director is as follows:-
Number of Board
meetings held during Number of meetings
Directors Directors’ tenure in office attended by Directors
Mahadzir bin Azizan 6 6
Dato’ Haji Che Pee bin Samsudin 6 6
Adenan bin Md Yusof 6 6
Zulazman bin Zulkifli 6 6
Michio Izawa 6 6
Keisuke Ogawa 6 6
(Appointed w.e.f 15 January 2020)
Dr Iskandar bin Ismail 5 5
(Appointed w.e.f 1 April 2020)
Shahlan bin Md Shukor @ Kadari 3 3
(Appointed w.e.f 1 June 2020)
Dato’ Anthony @ Firdauz bin Bujang 3 3
(Resigned w.e.f. 25 May 2020)
Ahmad Suhaimi bin Endut Not Applicable Not Applicable
(Resigned w.e.f. 28 February 2020)
Akihiro Nakao
Not Applicable Not Applicable
(Resigned w.e.f. 15 January 2020)
annual report 2020
PROFILE OF THE
BOARD OF DIRECTORS
(CONT’D)
34
PROFILE OF
INVESTMENT COMMITTEE MEMBERS
Conflict of Interest
Save for the following, no conflict of interest has arisen between the Investment Committee Members and AmanahRaya REIT during the
financial year under review.
Adenan bin Md Yusof is the Group Managing Director of Amanah Raya Berhad.
Michio Izawa is the representative of Kenedix Asia Pte. Ltd.
Convictions for Offences
None of the Investment Committee Members have been convicted for offences within the past ten (10) years.
Attendance at Investment Committee Meetings
The Investment Committee currently comprises of two (2) Independent members.
During the financial year, no Investment Committee Meeting was held as no investment was made by ARREIT.
Zulazman bin Zulkifli (Chairman)
(Please refer to page 32 for profile)
Adenan bin Md Yusof
(Please refer to page 30 for profile)
Michio Izawa
(Please refer to page 31 for profile)
Dr Iskandar bin Ismail
(Please refer to page 33 for profile)
INVESTMENT COMMITTEE
AMANAHRAYA REIT
35
CORPORATE
CALENDAR 2020
annual report 2020
8
th
Annual General Meeting
The Eighth Annual General Meeting (“AGM”) of AmanahRaya Real Estate Investment Trust (“ARREIT”) was held as a fully virtual meeting
through live streaming and online remote voting on 25th June 2020 from the broadcast venue at 1
st
Floor, Wisma AmanahRaya, No.2 Jalan
Ampang, 50508 Kuala Lumpur. During the AGM, the Management presented the achievements of ARREIT for the year 2019 to all the
unitholders.
The AGM was held fully virtual considering the COVID-19 pandemic and as part of the care and safety measures control for the well-being
of the unitholders of ARREIT as well as the employees of AmanahRaya-Kenedix REIT Manager Sdn Bhd (“the Manager”) and the members
of the Board of Directors of ARREIT. The AGM was in line with the Guidance Note on the Conduct of General Meetings for Listed Issuers
issued by the Securities Commission Malaysia on 18 April 2020.
36
THE
MANAGEMENT TEAM
AMANAHRAYA REIT
37
ABDUL AZIZ BIN ABDUL RASHEED
Chief Executive Officer
Date of Appointment
30 April 2020
Academic/Professional Qualification/Membership(s)
Bachelor of Engineering (Honours) in Electrical & Electronic Engineering, University of Hertfordshire
Master of Business Administration, Imperial College London
Certified Planning Engineer, American Academy of Project Management, USA - 2016
Project Management Professional (PMP), Project Management Institute (PMI), USA - 2017
Working Experience
Abdul Aziz, a Malaysian aged 44, received an MBA from the Imperial Business School, London and a Bachelor (Hons) in Electrical &
Electronic Engineering from University of Hertfordshire, UK. He is a certified Project Management Professional (“PMP”) with Project
Management Institute (“PMI”) USA and Certified Planning Engineer (“CPE”) with American Academy of Project Management (“AAPM”) USA.
He has more than 22 years’ experience across various industries including Private Equity Real Estate, Real Estate Investment Trust, Satellite
Systems, Air Traffic Control Systems, Oil & Gas, Broadcast and Communications in various countries across Asia.
Prior to joining AmanahRaya-Kenedix REIT Manager, he was a Project & Programme Manager with AREA Group Sdn Bhd, where he was
involved in developing Kuala Lumpur’s first inner-city mega e-commerce fulfillment centre and warehouse. Prior to this, he was Head of
Engineering of Axis REIT responsible for redevelopment and refurbishment of Asset Under Management (“AUM”) of RM2 billion consisting
of primarily industrial facility and logistics warehouses. One of the refurbished property was awarded ‘Asia-Pacific Property Awards –
Commercial Renovation/Redevelopment for Malaysia’.
He was appointed as Chief Executive Officer on 30 April 2020 and has no directorship in other public companies or listed issuers.
YUSOFF ISKANDAR BIN MOHD ZAKI
Head of Investment
Date of Appointment
19 March 2020
Academic/Professional Qualification/Membership(s)
Bachelor of Commerce (Accounting), Curtin University of Technology
CPA Australia
Working Experience
Yusoff, a Malaysian aged 35, joined AKRM as the Head of Investment on 19 March 2020. Prior to joining AKRM, he was attached with a
boutique shariah-compliant Private Equity firm. He brings along more than ten years of experience encompassing audit, accounting and
finance, investment analysis and portfolio management.
Other than as disclosed, he does not hold directorship in other public companies in Malaysia. He does not have any family relationship with
any Directors and/or under major Unitholders of AmanahRaya REIT nor does he have any conflict of interests with AmanahRaya REIT. He
has not been convicted for any offences, other than traffic offences (if any), within the past 5 years.
THE
MANAGEMENT TEAM
annual report 2020
38
(CONT’D)
ROSLIN ZAINUDDIN
Head of Property Management Department
Date of Appointment
15 July 2019
Academic/Professional Qualification/Membership(s)
Bachelor of Engineering - Electrical (Power), Universiti Teknologi Mara
Registered Property Manager with Board of Valuers, Appraisers and Estate Agents Malaysia (BOVEA)
Registered Property Manager with Malaysian Institute of Property and Facilities Manager (MIPFM)
Registered Building Manager with Building Management Association of Malaysia (BMAM)
Working Experience
Roslin, a Malaysian aged 48, joined AKRM as the Head of Property and Facilities Management in July 2019.
He is responsible for the management of all properties in ARREIT which includes the building and maintenance management as well as
asset enhancement initiatives. He works closely with the Head of Investment on valuation matters regarding existing and new properties.
Roslin has extensive experience in the property & facilities management where he has spent more than 20 years in the industry. Prior to
joining AKRM, he was under the employment of Glomac Berhad where his last position was Assistant General Manager Property & Facilities
Management.
Other than as disclosed, he does not hold directorships in other public companies in Malaysia. He does not have any family relationship with
any Directors and/or major Unitholders of AmanahRaya REIT nor does he have any conflict of interests with AmanahRaya REIT. He has not
been convicted for any offences, other than traffic offences (if any), within the past 5 years.
SAHRUL NIZAM BIN MOHD SALLEH
Head of Finance
Date of Appointment
2 February 2021
Academic/Professional Qualification/Membership(s)
Bachelor of Accounting (Hons) UiTM
Member of Malaysia Institute of Accountant (MIA)
Working Experience
Sahrul Nizam, a Malaysian aged 44, joined AKRM as the Manager, Finance Department in February 2021. He is responsible for financial
reporting, capital management, general accounting and treasury of AKRM and ARREIT. He has working experience for almost 15 years in
several local and MNC companies in Malaysia.
Other than as disclosed, he does not hold directorship in other public companies in Malaysia. He does not have any family relationship with
any Directors and/or major Unitholders of AmanahRaya REIT nor does he have any conflict of interests with AmanahRaya REIT. He has not
been convicted for any offences, other than traffic offences (if any), within the past 5 years.
MANAGEMENT DISCUSSION AND
ANALYSIS
The Board of Directors of AmanahRaya-Kenedix REIT Manager Sdn. Bhd., the Manager of AmanahRaya Real Estate Investment
Trust (“ARREIT”) is pleased to present the Annual Report of ARREIT and the Audited Financial Statements of ARREIT for the financial
period ended 31 December 2020.
ABOUT ARREIT AND AMANAHRAYA-KENEDIX REIT MANAGER SDN. BHD.
ARREIT was established pursuant to the Trust Deed dated 10 October 2006 (as varied by the Supplemental Trust Deed dated 4 January
2007, the Novation Agreement dated 27 August 2009 and the Second Supplemental Trust Deed dated 27 August 2009) (collectively be
referred to as the “Trust Deed”) between AmanahRaya-Kenedix REIT Manager Sdn. Bhd. (“the Manager”) and CIMB Islamic Trustee Berhad
(‘the Trustee”). The Trust Deed is regulated by the Securities Commission’s Guidelines on Listed Real Estate Investment Trusts, the Listing
Requirements of Bursa Malaysia Securities Berhad, the Rules of the Depository and taxation laws and rulings. On 13 May 2019, the Manager,
CIMB Islamic Trustee Berhad (“Retiring Trustee”) and Pacific Trustees Berhad (“New Trustee”) entered into a Supplementary Deed to effect
the change of trustee of AmanahRaya REIT from the Retiring Trustee to the New Trustee. The change of trustee was effected on 21 May
2019 upon the registration and lodgement of the Supplementary Deed with Securities Commission on 21 May 2019 and 24 May 2019
respectively. Collectively, the Trust Deed and the Supplementary Deed dated 13 May 2019 are known as the Restated Deed, which has
been registered and lodged with the Securities Commission on 10 January 2020 and 16 January 2020 respectively. ARREIT is classified as
a real estate investment fund and was listed on the Bursa Malaysia Securities Berhad on 26 February 2007.
AKRM as the Manager of ARREIT acts in accordance with the Restated Trust Deed and guidelines imposed by the Securities Commission and
Bursa Malaysia Securities Berhad. AKRM is also the holder of Capital Markets Services Licence, with its Director and Principal Officer holding
the Capital Markets Services Representative’s Licence under the Capital Markets and Services Act 2007. As the Manager, AKRM’s primary
responsibility is to deliver stable, steady and sustainable returns to the unitholders of ARREIT.
INVESTMENT STRATEGIES AND POLICIES
The Manager’s investment strategy seeks to acquire properties that are able to provide strong, continuous and sustainable returns with
stable growth potential in terms of rental yield and capital values. The acquisition and assessment of properties follows a stringent policy
involving site visits, financial analysis, preliminary technical and legal due-diligence, risk assessment and market studies before being
proposed to the Investment Committee and Board of Directors for their endorsement. The criterias for investment include the following:
Location
The location is evaluated based on its proximity within established Central Business District, industrial zones, populated areas as well as
accessibility to and from major roads, highways and public transportation systems such as LRT, buses, etc.
Price and Rental Yield
Rental yields in relation to the value is a key criterion. As such, the Manager closely looks at net rental yields of above 6% depending on the
quality or condition of the property being considered, location and type of properties. New acquisitions must be able to deliver accretive
yields and capital growth that translate to strong and sustainable returns to the Unitholders.
Quality Properties
The Manager strives towards acquiring high quality properties that are in a good tenantable condition. A technical due diligence exercise,
which includes examining the condition of mechanical and electrical equipment and structural components are conducted by the Manager’s
appointed consultants prior to completing any acquisition. All properties acquired must also comply with the requirements and guidelines
set by relevant authorities.
Diversified Portfolio
ARREIT’s strength lies on the diversity of its portfolio. Diversification allows the Manager to cushion the impact of any adverse condition in
a particular sector or locality. ARREIT will continue to adopt this strategy while focusing on four main commercial sectors namely industrial,
retail, office and education.
AMANAHRAYA REIT
39
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)
40
2020 2019 2018 2017 2016
(Losses)/EPU Yield (%) (Based on Closing
Market Price) (1.96) 8.36 17.28 14.23 7.68
Distribution Per Unit (DPU) (sen) 5.084 6.200 6.100 5.503 5.899
Distribution Yield (%) 7.70 8.38 7.44 6.05 6.41
MER (%) 1.17 1.35 1.20 1.10 1.07
Annual Total Return (%)** 7.89 7.73 7.23 5.81 6.46
Annual Total Return (3 years) (%) 7.62 6.92 6.50 6.50 6.97
Annual Total Return (5 years) (%) 7.02 6.89 6.79 7.57 8.70
* ARREIT distributed at least 90% of the realised and distributable income and thus, its total income for the year is exempted from tax
pursuant to Section 61A (1) of the Income Tax Act 1967.
** Total return is calculated based on the actual gross income distribution and the net change in the weighted average market price for
the financial year, over the weighted average market price of ARREIT for the respective year.
Note:
The unit price of ARREIT is largely determined by market factors. Therefore, past performance is not necessarily indicative of future
performance and that unit prices and investment returns may fluctuate.
Income Distribution
During the period under review, ARREIT made the following income distributions:
First semi-annual Second semi-annual Total
2.1972 2.8868 5.0840
For 2020, ARREIT distributed a total income of RM29.14 million or 5.08 sen, which was lower than 2019’s income distribution of 6.20 sen.
The second and final income distribution of RM16.55 million has been declared at 2.89 sen per unit payable on 12 April 2021. Analysis of
income distribution:
2020 2019 2018 2017 2016
Income distribution per unit (sen)
First interim income distribution - 1.5000 1.5000 1.3545 1.4266
Second interim income distribution - 1.5000 1.5000 1.9394 1.3365
Third interim income distribution - 1.5000 1.5000 1.3545 1.3992
Proposed Fourth and final income distribution - 1.7000 1.6000 1.4516 1.3404
First semi-annual income distribution 2.1972 - - - -
Proposed final income distribution 2.8868 - - - -
5.0840 6.2000 6.1000 5.5027 5.899
Net Asset Value
Net Asset Value (NAV) as at 31 December 2020 stood at RM1.303 per unit.
The net asset value of ARREIT since 2016 is tabulated as follows:
2020 2019 2018 2017 2016
Total net asset value (“NAV”) RM:
Before provision for income distributions 1.303 1.355 1.352 1.271 1.197
After provision for income distributions 1.274 1.323 1.324 1.257 1.183
Units in Issue
As at 31 December 2020, the total number of units issued was 573,219,858.
MANAGEMENT DISCUSSION AND
ANALYSIS
(CONT’D)
AMANAHRAYA REIT
41
Gearing Level
As at 31 December 2020, ARREIT’s total debt was RM643.56 million with a gearing ratio of 44.85%.
2020 2019 2018 2017 2016
Gearing ratio (%) 44.85 43.81 44.72 49.99 30.29
Other Performance Benchmarks
2020 2019 2018 2017 2016
Total returns (%)
1
7.89 7.73 7.23 5.81 6.46
Asset Portfolio Turnover (times)
2
- 0.02 0.35 - 0.03
Management Expense Ratio (“MER”) %
3
1.17 1.35 1.20 1.10 1.07
1. Total return is calculated based on the actual gross income distribution and the net change in the weighted average market price for
the financial year, over the weighted average market price of ARREIT for the respective year.
2. Asset Portfolio Turnover is based on the average of total acquisitions and total disposals of investment in ARREIT for the financial year
ended 31 December 2020 to the average net asset value for the financial year calculated on a daily basis.
3. The calculation of MER is based on the total expenses incurred by ARREIT, including Manager’s fee, Trustee’s fee, audit fees, tax
agent’s fee and administrative expenses, to the average net asset value of ARREIT for the financial year calculated on a daily basis.
OPERATIONAL REVIEW
PROPERTY MANAGEMENT
The Property Management Department is responsible for the management of all properties in ARREIT’s portfolio with the main aim to preserve
the values of all properties and ensuring that they are always in good tenantable condition. This is done through comprehensive maintenance
programs. Periodic inspections are carried out on a quarterly basis by the appointed Property Managers. In 2020, total property expenses
incurred was RM19.36 million including statutory payments and insurances.
Asset Enhancement Initiatives (“AEI”)
In 2020, the Manager awarded a contract sum of RM1.47 million for various projects. There are no major projects awarded during the year
2020 due to the Movement Control Order enacted in view of the Covid-19 outbreak. Several smaller AEI works were completed such as
cooling tower repair works, chiller rectification works, and Air Circuit Breaker replacement works at Selayang Mall. In addition, as a preventive
measure to reduce the spread of Covid-19 virus and to comply with the Ministry of Health new rules and regulations in view of the pandemic,
the Manager had installed face recognition thermal scanner at Vista Tower.
Occupancy
Occupancy rate for ARREIT’s portfolio of properties are tabulated as follows:
Property Net Lettable Area (sqft) Type Occupancy Rate
Industrial
RHF Stone Factory 95,035 Single tenant 100%
Hospitality
Holiday Villa Langkawi 183,190 Single tenant 100%
Education
SEGi University 337,710 Single tenant 100%
SEGi College 131,387 Single tenant 100%
HELP University 125,227 Single tenant 100%
42
annual report 2020
MANAGEMENT DISCUSSION AND
ANALYSIS
(CONT’D)
Property Net Lettable Area (sqft) Type Occupancy Rate
Office
Vista Tower 550,324 Multi tenant 63%
Dana 13 256,972 Multi tenant 54%
Contraves 75,014 Single tenant 100%
Blocks A & B, South City Plaza 66,606 Single tenant 50%
Wisma Comcorp 74,550 Single tenant 100%
Toshiba TEC 62,474 Single tenant 100%
Shopping Mall
Selayang Mall 367,947 Multi tenant 95%
Weighted Average Lease Expiry (“WALE”)
ARREIT’s portfolio comprised of short to long term leases. As at year end, the overall portfolio’s WALE was about 3.24 years, a decrease
from 2019’s WALE of 4.43 years. This was mainly due to the change from single tenant to multi tenancy at Selayang Mall.
CAPITAL MANAGEMENT
The Manager adopted a prudent capital management strategy and strives towards reducing its gearing level. In addition to the above, the
Manager has also complied with the provisions of the Trust Deed and all applicable rules and guidelines prescribed by the Securities
Commission in financing ARREIT. As at 31 December 2020, ARREIT achieved a debt level of 44.85% of the total asset level as compared
to 43.81% in the previous year. The Manager endeavours towards reducing its debt level to at least 42% by end 2021 through asset recycling.
The following are the debt instruments undertaken by ARREIT:
Type Financier Amount Rate Expiry
Medium Term Note 1 Public Bank Berhad RM450 million COF + 0.5% December 2025
Medium Term Note 2 Public Bank Berhad RM161 million COF + 0.5% March 2025
Term Loan Public Bank Perhad RM33.92 million COF + 0.5% December 2021
RISK MANAGEMENT
The Manager is aware of the many risk factors that could impact the operation and financial performance of ARREIT. Below are the several
initiatives taken by the Manager to mitigate risk:
Acquisition and Investment Risk
The Manager undertakes thorough due diligence process including site visit and review of tenants financial standing on the property and
tenant(s) in order to avoid impairment of capital values and low rental yields.
Operational Risk
All properties under the fund are reviewed and updated periodically in accordance to the adopted operating procedures, guidelines, and
regulations imposed by the authorities.
Tenancy Risk
The Manager engages real estate consultants and agents on regular basis to ensure full tenancy. AT the same time, the Manager monitors
tenants capabilities in paying rental periodically.
Financial Process Risk
The Manager adopted the group policy of Amanah Raya Berhad in managing the financials of ARREIT. Proper controls on asset management,
procurement and cash management have been put in place.
AMANAHRAYA REIT
43
MANAGEMENT DISCUSSION AND
ANALYSIS
(CONT’D)
Alternate Site/Disaster Recovery Centre (“DRC”)
AKRM adopted Amanah Raya Berhad group policy on Business Continuity Management which is in compliance with the Securities
Commission’s requirement for DRC.
Compliance Risk
Regular monitoring by the Group Chief Risk Officer and the appointed Compliance Officer of AKRM is in place in ensuring compliance of
relevant laws and guidelines by the authorities.
Interest Rate Risk
In ensuring good financial performance of ARREIT, the Manager closely monitors the floating rate and has established a cap on the interest
rate movement.
Market Risk
Regular review and reporting to Investment Committee and Board are in place.
Human Capital Risk
The Group Human Capital has adopted a policy in line with the market to recruit and retain employees.
Authority Limits
ARREIT is governed by specific authority limits that include but not limited to approvals on investments and divestments, banking facilities,
capital and operating expenditure as well as engagement of services from external parties.
Threshold limits was established to ensure transparency and good governance. Provision has also been made for alternate authorised
personnel to approve and release payments for transactions with prior approval as per the authority limits.
Internal Audit and Audit Committee
While Internal Audit services come under the Manager’s holding company, Amanah Raya Berhad, the Board, Audit Committee and
Management meet regularly to monitor, assess and address significant risks faced by ARREIT.
MOVING FORWARD
Acquisition
The Manager will continue to focus on expanding its portfolio through acquisitions of quality properties to ensure growth in terms of dividend
and capital values.As prices of properties for sale has turned quite competitive recently, the Manager will acquire yield accretive properties
as and when the opportunities arise.
Leasing
The Manager will continue to focus its efforts in filling up the available spaces to improve the average occupancy rate of ARREIT properties.
At present, the average occupancy rate is at 82%, and the Manager aims to increase it to 85% by the end of 2021.
Financial Performance
As the overall property market has not shown any improvement in 2020, the future poses a challenge for ARREIT. In view of this, the Manager
strive to maintain the DPU in the region of 6.0 sen per unit. In order to cushion the impact of lower DPU due to lower occupancy and rental
pressure, the Manager will ensure that the operating cost is kept at minimum. Moving forward, the Manager will also continue to dispose
non-performing assets that are not in line with long term strategy of ARREIT portfolio.
44
annual report 2020
MANAGEMENT DISCUSSION AND
ANALYSIS
(CONT’D)
Capital Management
The Manager will continue with its effort to lower borrowing cost and gearing level.
SOFT COMMISSION
During the financial year under review, the Manager did not receive any soft commission from its broker or any parties by virtue of transactions
conducted by ARREIT.
MATERIAL LITIGATION
There is no material litigation pending since the issuance of the last annual report to the date of this report.
CHANGES IN THE STATE OF AFFAIRS
There was no change in the state of affairs of ARREIT during the financial year under review.
MATERIAL CONTRACT
There was no material contract entered by ARREIT that involved the Directors of the Manager of major unitholders of ARREIT during the
financial year under review.
DIRECTORS OF THE MANAGER
The Directors of the Manager in office since the date of the last report and the date of this report are:
Mahadzir bin Azizan (Chairman)
Adenan bin Md Yusof
Ahmad Suhaimi bin Endut (resigned with effect from 28 February 2020)
Akihiro Nakao (resigned with effect from 15 January 2020)
Michio Izawa
Keisuke Ogawa (appointed with effect from 15 January 2020)
Dato’ Haji Che Pee bin Samsudin
Dato’ Anthony @ Firdauz bin Bujang (resigned with effect from 25 May 2020)
Dr. Iskandar bin Ismail (appointed with effect from 1 April 2020)
Shahlan bin Md Shukor @ Kadari (appointed with effect from 1 June 2020)
Zulazman bin Zulkifli
DIRECTORS' BENEFITS
Since the end of the previous financial year, no Director of the Manager has received or become entitled to receive a benefit (other than
benefits which are accrued from the fees paid to the Manager or from transactions made with companies related to the Manager as shown
in the notes to the financial statements of ARREIT) by reason of a contract made by the Manager or ARREIT or a related corporation with the
Director of the Manager or with a firm in which the Director of the Manager is a member, or with a company in which the Director of the
Manager has substantial financial interest, other than related party transactions as shown in Note 22 to the financial statements of the ARREIT.
Neither at the end of the financial year, nor at any time during the financial year, did there subsist any arrangement to which the Manager or
ARREIT was a party, whereby the Directors of the Manager might acquire benefits by means of acquisition of shares or debentures of the
Manager or any other body corporate or the acquisition of units of ARREIT.
AMANAHRAYA REIT
45
MANAGEMENT DISCUSSION AND
ANALYSIS
(CONT’D)
DIRECTORS' INTEREST
None of the Directors of the Manager in office at the end of the financial year had any interest in ARREIT during the financial year ended 31
December 2020.
SANCTION AND/OR PENALTIES
There was no public sanction and/or penalty imposed on ARREIT and the Directors of the Manager by the relevant regulatory bodies during
the financial year ended 31 December 2020.
FAMILY RELATIONSHIP WITH ANY DIRECTOR
None of the Directors of the Manager has any family relationship with any other Directors or major Unitholders of AmanahRaya REIT.
CONFLICT OF INTEREST
No conflict of interest has arisen during the financial year under review.
AUDIT AND NON-AUDIT FEE
The amount of audit and non-audit fees paid or payable to the external auditors for the financial year ended 31 December 2020 are as
follows:-
FY2020
Audit Fee RM135,000
Non-Audit Fees RM10,000
RESERVES AND PROVISIONS
There were no material transfers to and from reserves or provisions during the financial year ended 31 December 2020 other than those
disclosed in the Statement of Changes in Net Asset Value.
INFORMATION ON THE FINANCIAL STATEMENTS
In arriving at the financial statements of ARREIT, the Manager took reasonable steps to ascertain that:
a. any charge on the assets of AmanahRaya REIT which arisen since the end of the financial year which secures the liability of any other
person, except as disclosed in Note 4 to the financial statement;
b. any contingent liability of AmanahRaya REIT which has arisen since the end of financial year.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve (12) months after the
end of the financial year of which, in the opinion of the Manager, will affect the ability of AmanahRaya REIT to meet its obligations as and
when they fall due.
46
annual report 2020
MANAGEMENT DISCUSSION AND
ANALYSIS
(CONT’D)
OTHER STATUTORY INFORMATION
The Manager states that:
As at the date of this report, the Manager is not aware of any circumstances not otherwise dealt with in this report or the financial statements
of AmanahRaya REIT which would render any amount stated in the financial statements misleading.
The Manager opines:
a. that the results of the operations of ARREIT during the financial year under review were not substantially affected by any item, transaction
or event of material and unusual in nature; and
b. that there were no item, transaction or event of material and unusual in nature that are likely to affect substantially the results of the
operations of AmanahRaya REIT arisen during the interval between the end of the financial year under review and the date of this
report.
Before the statement of comprehensive income and statement of financial position of ARREIT were made, the Manager took reasonable
steps:-
a. to ascertain that proper actions had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts
and satisfied themselves that there were no bad debts and that no further allowance is required for doubtful debts; and
b. to ensure that any current asset which is unlikely to realise their value as shown in the accounting records in the ordinary course of
business had been written down to an amount which they are expected to be realised at.
At the date of this report, the Manager is not aware of:
a. any circumstances not otherwise dealt with in this report or financial statements of ARREIT which would render the amount written-off
for bad debts or the amount of the provision for doubtful debts made in the financial statements of ARREIT inadequate to any material
extent;
b. any circumstances which have arisen, which would render adherence to the existing method of valuation of assets or liabilities of
ARREIT misleading or inappropriate; and
c. any circumstances not otherwise dealt with in this report or the financial statements of ARREIT which would render any amount stated
in the financial statements misleading.
At the date of this report, there does not exist:
a. any charge on the assets of ARREIT which has arisen since the end of the financial year which secures the liabilities of any other
person; or
b. any contingent liability of ARREIT which has arisen since the end of the financial year.
AUDITORS
The auditor, Messrs KPMG, has indicated their willingness to accept re-appointment.
This concludes the Management Discussion and Analysis Report with a resolution from the Board of Directors.
Mahadzir Azizan
Chairman
Kuala Lumpur
25 February 2021
AMANAHRAYA REIT
47
MANAGEMENT DISCUSSION AND
ANALYSIS
(CONT’D)
annual report 2020
INTRODUCTION
The Board of Directors (the “Board”) of AmanahRaya-Kenedix REIT Manager Sdn. Bhd. (“AKRM”) views the management of economic,
environmental, and social (“EES”) risks and opportunities as integral towards the business sustainability of AmanahRaya REIT (“ARREIT”).
This Sustainability Statement for the financial year ended 31 December 2020 (“FY2020”) presents the EES matters which are material to
ARREIT. AKRM places emphasis on managing and monitoring these material sustainability matters (“MSMs”) as they are either significant
EES impacts of AKRM and ARREIT or substantively influence the assessments and decisions of AKRM and ARREIT’s stakeholders.
This Sustainability Statement is prepared in accordance with the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia
Securities Berhad (“Bursa”) and has considered Bursa’s Sustainability Reporting Guide – 2nd Edition and its accompanying Toolkits.
SCOPE
The scope of this Sustainability Statement includes all 13 properties in ARREIT’s portfolio as of 31 December 2020 as follows:
1. Vista Tower, The Intermark, Kuala Lumpur;
2. Toshiba TEC, Shah Alam;
3. Dana 13, Petaling Jaya;
4. Wisma Comcorp, Shah Alam;
5. Contraves, Cyberjaya;
6. Block A & B, South City Plaza, Seri Kembangan;
7. Selayang Mall, Selayang;
8. SEGi University, Kota Damansara;
9. HELP University, Jalan Semantan;
10. SEGi College, Subang Jaya;
11. Holiday Villa, Langkawi;
12. Ex-Holiday Villa, Alor Setar; and
13. RHF Stone Factory, Nusajaya.
OUR SUSTAINABILITY MANAGEMENT PROCESS AND GOVERNANCE
AKRM adopts a structured approach to ensure relevant EES matters are considered in managing ARREIT’s business and properties. At
least on an annual basis, AKRM conducts a materiality assessment review to assess and prioritise EES risks and opportunities which are
material to AKRM and ARREIT. The approach is in line with the concept of materiality stipulated in the Listing Requirements, i.e., a material
sustainability matter is one that:
reflects ARREIT and AKRM’s significant economic, environmental, and social impacts; and/or
substantively influence the assessments and decisions of ARREIT and AKRM’s key stakeholders.
Furthermore, AKRM incorporates sustainability strategies and responsibilities in its governance structure. The Board is ultimately responsible
for ensuring the business strategic plan including strategies on EES considerations underpinning sustainability, providing leadership by
approving key sustainability strategy and initiatives, and overseeing the performance of the management of the MSMs prioritised.
On the other hand, it is the Senior Management’s responsibility to ensure sustainability strategy and initiatives are effectively implemented,
to carry out materiality assessment review to identify MSMs, to ensure the MSMs are managed, and also to ensure key stakeholders are
appropriately identified, engaged, and managed. Each Senior Management personnel, as depicted in the Organisation Chart Section in
this Annual Report, is responsible for the sustainability performance of the department or function under their respective purview.
Sustainability considerations are also discussed and managed in the day-to-day management of ARREIT’s affairs as the Management is
aware of the importance and benefits brought by well-managed EES risks and opportunities to ARREIT’s sustainable performance which
includes more efficient use of resources and greater human capital quality, amongst others. Managing social impacts in day-to-day business
management is especially crucial during the outbreak of COVID-19 pandemic which have put businesses around the world in a difficult
situation between ensuring the safety of people and delivering business performance.
48
SUSTAINABILITY
STATEMENT
AMANAHRAYA REIT
(CONT’D)
OUR STAKEHOLDERS
As a responsible business, AKRM recognises its role in preserving and creating value for its key stakeholders, including in economic,
environmental, and social terms as well as financial terms. Via various engagement methods and channels, AKRM seeks to understand the
stakeholders, their concerns, and facilitates ongoing engagement to foster constructive exchange with the different stakeholder groups of
ARREIT and AKRM. Stakeholders’ concerns and commonly discussed focus areas are taken into consideration in the annual materiality
assessment review of ARREIT.
The following table summarises the engagement approaches which AKRM has established with key stakeholders of ARREIT and AKRM
and the key focus areas commonly discussed with the respective stakeholder groups. Note that the engagement methods may also be
carried out through online platforms, e.g., video/ voice call and online meetings.
STAKEHOLDERS ENGAGEMENT METHOD FOCUS AREAS
Investors/Unitholders Annual General Meetings Growth and income
Extraordinary General Meeting Financial sustainability
Quarterly results and • Active engagement
Bursa announcements
Government, Agencies Meetings Compliance with laws and regulations
& Regulators Electronic Reporting System
Tenants Meetings Property maintenance
Property enhancement
Property safety and health
Water management
Property Managers Monthly and/or quarterly reporting Energy usage
Security
Property maintenance
Water management
Employees Townhall/dialogue Staff benefits
Performance appraisals Professional development – trainings attended/ training hours
Talent retention
Workplace safety and health
Equal opportunity and non-discrimination
Suppliers/Vendors/ Meetings Business practices
Service Providers Creditability/qualification
Local Community Philanthropic activities Social contribution
49
SUSTAINABILITY
STATEMENT
ARREIT’s FY2020 materiality assessment review has seen the inclusion of three MSMs, namely Water Management, Employee Benefits, and
Equal Opportunity and Non-Discrimination. ARREIT’s MSMs are summarised as follows:
Material Sustainability Matters Description
Growth and Financial ARREIT’s main investment objective is to continuously provide sustainable returns to investors and
Stability unitholders and nurture quality growth of its portfolio. Maintaining financial stability and sustainable
growth is key to obtaining continuous support from investors and unitholders.
Compliance with Law and It is crucial for ARREIT and AKRM to comply with relevant laws and regulations. It is the
Regulations responsibility of ARREIT and AKRM to ensure the rule of law of its business environment is upheld to
protect the society and stakeholders which the laws and regulations are enacted to protect.
Ethical Business Practices AKRM believes in business sustainability fostered by ethical business environment and practices.
and Integrity Upholding business ethics and integrity instils confidence and trust in the relationship between AKRM,
ARREIT, and their stakeholders.
Health, Safety, and Security AKRM takes seriously the health, safety, and security of people involved in ARREIT’s business,
including employees, tenants and users of ARREIT’s properties, and as such, aims to create a
secure and safe environment for users of ARREIT’s properties as well as a healthy and safe workplace
for its employees.
Water Management Freshwater supply is a basic necessity for all, including businesses, tenants, and users of ARREIT
properties. AKRM aims to provide adequate access to water supply to the tenants of ARREIT
properties and minimise water shortage impacts in the event of water supply disruption at the
municipal level, especially for properties in Selangor area.
Talent Retention, Innovation and intellectual capital are increasingly pivotal to value creation and AKRM places strong
Professional Development, emphasis on human capital development. Without the presence of suitable talents, skills and
and Succession Planning leadership in management, ARREIT would not be able to optimise its value even in the most ideal
presence of all other business factors.
annual report 2020
SUSTAINABILITY
STATEMENT
(CONT’D)
50
MATERIAL SUSTAINABILITY MATTERS (“MSMs”)
A
B
C
D
E
F
A
B
C
EF
D
I GH
Significance to Stakeholders of
AKRM and ARREIT
Significance to AKRM and ARREIT
HighLow
HighLow
Material Sustainability Matters Description
Equal Opportunity and AKRM views all people as equal and shall have equal opportunity and no one shall be discriminated
Non-Discrimination on the basis of race, colour, religion, national origin, gender, age, marital status, disability or veteran
status. AKRM aims to uphold meritocracy in its workforce.
Property Maintenance and ARREIT’s properties are key tangible assets core to the revenue generating capacity of the business.
Enhancement Hence, it is vital for ARREIT to ensure its properties are fit for the purposes they are meant to serve
and satisfy the demands and requirements of tenants. A well-maintained property, with due
consideration given to environmental and social aspects, is not only favourable to renewal of leases
but also creates better market demand.
Employment Benefits AKRM respects the employer-employee relationship it has with its workforce. AKRM aims to provide
appropriate benefits that incentivise performance while supporting healthy work-life balance of its
employees.
GROWTH AND FINANCIAL STABILITY
ARREIT’s investment strategy places emphasis on properties which are able provide strong, continuous, and sustainable returns. To this
end, ARREIT has established stringent processes to assess existing and current investments to ensure investment decisions and ARREIT’s
portfolio remains aligned with ARREIT’s strategy. Careful considerations and business decisions are also made in view of optimising property
value and rental yield, taking into account strategic and operational risks and managing them accordingly.
Growth and financial performance of ARREIT for the FY2020 are reported and discussed in detail in the
Management Discussion and
Analysis section of this Annual Report.
COMPLIANCE WITH LAWS AND REGULATIONS
AKRM views compliance issues seriously and has dedicated a specific role - i.e., Compliance Officer - to ensure AKRM and ARREIT comply
with relevant legal and regulatory requirements, with added focus on the laws, regulations or guidelines relevant to a REIT which is governed
by the Securities Commission Malaysia and Bursa. The Compliance Officer receives regular updates on developments of key legal and
regulatory requirements and ensures AKRM and/or ARREIT is prepared to respond to these developments.
Amongst others, the Compliance Officer’s role is to ensure AKRM as the manager of ARREIT maintains its Capital Markets Services Licence
and complies with Bursa’s Main Market Listing Requirements and the Guidelines on Listed Real Estate Investment Trusts issued by the
Securities Commission Malaysia, and other regulations which may impeded continuous operations if not complied with.
Relevant training is also provided to AKRM personnel to ensure they are kept abreast of existing and recently introduced laws and regulations
and compliance matters. The subjects of training provided to AKRM personnel during FY2020 are disclosed in the
Talent Retention,
Professional Development, and Succession Planning
section of this Sustainability Statement. Senior Management personnel are also
responsible for ensuring their respective functions and team members comply with the relevant laws and regulations in their day-to-day
work.
For the financial year under review, AKRM did not receive any fines levied or reprimands by regulator or authorities in relation to compliance
issues.
ETHICAL BUSINESS PRACTICES AND INTEGRITY
AKRM is committed to fostering a business culture of integrity and ethical business practices. The overarching business culture of ARREIT
is provided and communicated clearly in the Code of Business Ethics which AKRM has adopted from its parent company group, the Amanah
Raya Berhad group of companies (“AmanahRaya Group”). Amongst others, the Code of Business Ethics provides for key business matters
including the following:
conflict of interest situations - conflict of interest situations with AKRM’s business counterparts, especially where purchasing, supplying
or tender is concerned, shall be reported to the Chief Integrity Officer;
AMANAHRAYA REIT
SUSTAINABILITY
STATEMENT
(CONT’D)
51
G
H
I
A
B
C
gift and entertainment policy - the size of gift and entertainment shall not appear to be able to impede independent judgement by the
employee, and reasonable gift and entertainment allowed by the Code of Business Ethics shall be reported to and approved by the
relevant authorities within the AmanahRaya Group;
gratification - prohibition of soliciting and receiving corrupt gratification and duty to report to the Chief Integrity Officer; and
purchasing practices - purchasing practices of AKRM are guided by procedures and guidelines that include controls such as anti-
money laundering checks on buyers and tenants, assessment by a tender committee, comparison of quotations, etc.
All employees of AKRM are required to sign and acknowledge their understanding and commitment to the Code of Business Ethics. Apart
from employees of AKRM, suppliers and business partners of AKRM are also required to observe the business ethics principles and policies
provided in the AmanahRaya Group’s Vendor Code of Ethics.
In addition, all vendors of ARREIT are bound by AmanahRaya Group’s Vendor Code of Ethics which governs tender practices, including
non-collusion in the submission of tender. This includes provision for the vendor to independently assess the tender price without colluding
with other bidders, not to communicate with other parties on the tender price, as well as not to induce or influence other parties to submit or
not to submit a tender.
The Board of AKRM does not tolerate any corrupt practices in ARREIT’s business and such culture of integrity is instilled in the working
environment through leadership, culture, and tone from the top. Integrity briefings and training are also provided to employees from time to
time. In response to Section 17A of the Malaysian Anti-Corruption Commission Act 2009 which came into effect on 1 June 2020, AKRM has
reviewed its internal policies and procedures addressing anti-corruption and will continue to ensure adequate and effective controls are in
place to manage corruption risks.
Whistleblowing Mechanism
Apart from policies and procedures on ethical business practices and integrity, AKRM has adopted AmanahRaya Group’s policy on
whistleblowing and its mechanism, to facilitate the raising of integrity concerns or unethical business practices, amongst others, to the
AmanahRaya Group. The policy on whistleblowing provides protection to whistleblowers so as to encourage whistleblowing activities without
fear of reprisal. The parties to whom whistleblowing shall be made is to the Chief Integrity Officer.
HEALTH, SAFETY, AND SECURITY
Health, Safety and Security of ARREIT’s Properties
External Property Managers appointed by AKRM are responsible for managing the respective ARREIT properties, including safety and
security matters. AKRM engages closely with Property Managers to understand and address any issues arising. On a monthly basis, Property
Managers submit management reports to AKRM including reports on any incidents or accidents during the reporting period together with
root causes and action plans to prevent future recurrence.
That said, AKRM oversees compliance with safety standards by Property Managers. One of the key compliance matters is the annual renewal
of Fire Certificate by the Fire Rescue Department which requires Property Managers to ensure effective fire-fighting system is in place and
at least one fire drill is conducted annually. All fire safety requirements and Fire Certificates for ARREIT’s properties are in order.
Vacant properties, i.e., Ex-Holiday Villa, Alor Setar and Block A, South City Plaza, are fenced-off to prevent unauthorised access and use
and to safeguard public safety. Security guards are deployed on-site, and closed-circuit televisions are also installed in these properties.
Health, Safety and Security at the Workplace
At the workplace, AKRM strives to create a safe and healthy working environment for employees. AKRM has set a zero serious injury target
in relation to its employees, whose workplace is mainly based in AKRM’s office and occasional site visits. On top of personal protection
equipment such as hard hats, safety briefings are also provided to employees visiting premises which are under construction or maintenance
to ensure they are well equipped to manage safety risks and know what to do in case of accidents or emergency.
For the financial year under review, there were no reported cases of workplace-related fatality or serious injury to AKRM’s employees.
AKRM employees also receive regular information and knowledge updates on personal and workplace safety and health from AKRM’s
parent company, Amanah Raya Berhad.
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Responding to COVID-19
For FY2020, significant emphasis was placed on health and safety due to the COVID-19 pandemic which affected the economy and livelihood
of Malaysians, as well as the entire world. Guided by the federal and state governments, ARREIT’s properties continued to operate while
tenants were subjected to different levels of operational restrictions due to the various degrees of movement control order (“MCO”) imposed
by the government.
During MCO periods, AKRM maintains close engagement with the Property Managers of the relevant properties and ensures appropriate
operating procedures are put in place. These include ensuring the availability of hand sanitisers, ensuring all persons entering the properties
are registered to enable contact tracing, ensuring the practice of mask-wearing, crowd control, regular sanitisation of public areas,
temperature checks, etc. Property managers are required to regularly update AKRM on the management efforts and the performance of
COVID-19 prevention measures. AKRM is also in regular communication with its tenants and vendors to ensure any known cases are
reported, tracked and necessary remedial actions are taken at the properties. Furthermore, where permissible, AKRM personnel also
conducts visits to the properties to monitor the implementation of the said control measures.
AKRM employees were also provided with briefing and training focusing on personal hygiene relating to preventing COVID-19 and coping
with working from home to ensure employees maintain physical and mental health in dealing with the pandemic. AKRM also provides
coverage for employees who wish or need to perform swab tests for COVID-19.
PROPERTY MAINTENANCE AND ENHANCEMENT
Maintenance of Properties
Property managers are responsible for the day-to-day maintenance of the respective properties. That said, AKRM monitors the maintenance
of ARREIT’s properties via the Property Managers’ monthly management reports. Furthermore, AKRM’s Property Management Department
personnel conducts site inspections and assessment at least on a quarterly basis, considering amongst others, the physical and aesthetic
condition of the properties, building safety, ingress and egress, structural soundness, cleanliness, lighting, etc.
The day-to-day maintenance of ARREIT’s properties are generally managed by the Property Managers. AKRM monitors the maintenance of
ARREIT’s properties via monthly reports submitted by Property Managers and via quarterly inspections performed by AKRM’s Property
Management Department. During inspection, assessments are made on the physical and aesthetic conditions of properties. The assessment
considers, amongst others, building safety, ingress and egress, structural soundness, cleanliness, lighting, etc. Maintenance of ARREIT’s
properties constitute a major portion of AKRM’s assessment of Property Managers which contributes to decisions to appoint or reappoint
Property Managers. Other factors considered in the assessment of Property Managers include complaints received (if any), incident reports
(if any), pricing terms and conditions, etc.
During FY2020, AKRM has renewed the property management services for one property and appointed a new Property Manager to another
property in place of an expiring contract. Further information on ARREIT’s properties and their respective Property Managers is provided in
the
Overview of Properties under AmanahRaya REIT section in this Annual Report.
Property Enhancement and Refurbishment
ARREIT has in place scheduled Asset Enhancement Initiatives (“AEI”) which set out a plan for property enhancement activities for each of
its properties to maintain and enhance property condition as well as to sustain competitiveness.
Major property enhancement and refurbishment works committed during the financial year include works on escalator modernisation at
Selayang Mall and domestic water pipe replacement at Vista Tower. Smaller enhancement projects have also been undertaken on other
ARREIT’s properties.
Further information on ARREIT’s AEI is detailed in the Management Discussion and Analysis section of this Annual Report.
Resource Conservation
Usage of electricity is commonly one of the major expenses in the operations of a building. While ARREIT does not directly incur the electrical
expenses, it nevertheless receives electrical use reports from the Property Managers. For properties maintained under full-management
arrangements, ARREIT receives monthly electrical usage reports from the Property Managers. On the other hand, for properties leased
under a triple net arrangement, electricity use is monitored by the lessee and quarterly electrical usage reports are submitted to ARREIT.
AKRM is currently undertaking an energy conservation study with one of ARREIT’s Property Managers to explore energy conservation
opportunities at an ARREIT property.
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AMANAHRAYA REIT
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SUSTAINABILITY
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(CONT’D)
WATER MANAGEMENT
FY2020 has seen a number of water disruption incidents in some ARREIT properties arising from pollution-related disruptions to municipal
water source which affected a few major areas of the Selangor state. In a couple of events, prolonged periods of disruption have depleted
water tank reserves in affected properties and the respective Property Managers had to source water externally.
In order to mitigate such risk, Property Managers frequently monitor water tank levels to ensure they are at maximum capacity at all times
and have contingency plans such as ready access to water suppliers in the event of another water disruption. AKRM also undertakes
initiatives to enhance water efficiency at ARREIT properties. Amongst others, these initiatives include reducing consumption of water used
for property maintenance and awareness programs for tenants. These initiatives aim to preserve water and avoid wasting water especially
in times of water shortages.
A project for the upgrading of domestic water piping system for Vista Tower was completed in August 2020. The works include the
replacement of older piping system for better water pressure and more efficient water use and are expected to help save 100,000L in water
consumption every year.
EQUAL OPPORTUNITY AND NON-DISCRIMINATION
AKRM adopts meritocracy and believes in rewarding employees based on performance and contribution. AKRM believes all persons shall
have access to equal opportunity regardless of their race, colour, religion, national origin, gender, age, marital status, disability or veteran
status.
The principle of equal opportunity and non-discrimination is practiced throughout AKRM’s human capital management processes, from
employment to career progress. When assessing candidates and employees, AKRM based its assessment on merits, credentials, experience,
and achievements. Likewise, every employee is provided with opportunities to develop themselves professionally in the pursuit of their career
advancement without preference or discrimination based on race, colour, religion, national origin, gender, age, marital status, disability or
veteran status.
Furthermore, such principles are clearly stipulated in the Code of Business Ethics and employees are strongly encouraged to make a report
in accordance with the established procedures in the event they feel they have been discriminated against or harassed.
For the financial year under review, there were no reported cases of discrimination or harassment.
TALENT RETENTION, PROFESSIONAL DEVELOPMENT, AND SUCCESSION PLANNING
Human and intellectual capitals are valuable intangibles to AKRM and ARREIT. Successful management of ARREIT relies on, amongst
others, suitable mix of talents, skills, and leadership in Management. AKRM places emphasis on human capital management to support
skills and talent enhancement as one of the key enablers towards business continuity.
From time to time, AKRM reviews and analyses the skills and mix required for the effective management and operation of AKRM and ARREIT.
The assessment serves as a basis in assessing the existing talents, skills, and experience present in AKRM’s workforce and in determining
if additional training or recruitment is required.
AKRM employees, being part of the AmanahRaya Group, are subjected to AmanahRaya Group’s annual performance appraisal program.
The performance appraisal session provides a platform for a two-way discussion between an employee and his/her superior. AKRM
encourages open communication with the aim to acknowledge contribution and strength as well as to identify shortfall and continuous
development opportunities for both the employee and the superior. Apart from work performance, AKRM also encourages employees to
discuss their career aspirations so as to enable AKRM to provide relevant support for career progress, including identifying training needs
and opportunities to take up additional roles and responsibilities.
Having the benefit of being a part of AmanahRaya Group, performing employees of AKRM may be provided with opportunities for internal
transfer or promotion to other functions within the AmanahRaya Group to enrich their working experience and career satisfaction. Internal
transfer programs also provide opportunities for AKRM to identify potential talents and leaders through the wider pool of talents and skills at
AmanahRaya Group.
AmanahRaya Group Human Capital Division, together with Senior Management of AKRM, discusses on succession planning considerations
from time to time to ensure continuity and business operations in AKRM to address any foreseeable business expansion needs and in case
of any leadership change.
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G
F
SUSTAINABILITY
STATEMENT
(CONT’D)
Ongoing personal and professional development programs and training are provided to AKRM’s employees. During the financial year under
review, the training sessions attended by AKRM’s employees, ranging from technical skills to personal development skills, includes the
following subject matters, amongst others:
information technology;
personal motivation and development;
relationship management;
strategic planning;
industry forums;
updates on retail industry;
corporate liability and Section 17A of the Malaysian Anti-Corruption Commission Act 2009;
anti-money laundering and counter terrorism-financing;
managing conflict of interest;
integrity and management;
sustainability; and
public relations.
EMPLOYMENT BENEFITS
AKRM strives to create a workplace that supports career satisfaction, promotes positive thinking, personal and professional development,
work-life balance and general wellbeing. In order to understand how AKRM is able to support employees, online employee surveys are
conducted annually at the AmanahRaya Group level.
As such, where practical, AKRM provides employee benefits beyond the minimum required by applicable laws and regulations to enable
employees achieve a balanced work-life lifestyle. Amongst others, benefits provided to AKRM employees include leaves which include
study leaves and Haj leaves, medical benefits including hospitalisation/surgical insurance, Group Term LIFE Insurance, outpatient, and
maternity benefits, education assistance, and training and development opportunities.
In AKRM, employees receive competitive remuneration and compensation package which are commensurate with their roles, responsibilities,
and workload. In order to ensure employees remain motivated and incentivised, performing employees are further rewarded with bonuses
and other incentives for achieving their performance targets.
From time to time, AKRM, together with AmanahRaya Group Human Capital Department, reviews the benefits for AKRM employees to ensure
the compensation and benefits remain competitive and relevant to the market AKRM operates in.
CONCLUSION
In challenging business environment like what the world has faced in FY2020, AKRM continues to acknowledge the importance of balancing
business performance in all aspects including financial, economic, environmental, and social considerations to remain resilient and sustain
business. AKRM will continue to monitor and review both financial and non-financial aspects to manage existing and emerging risks and
harness opportunities.
55
AMANAHRAYA REIT
I
SUSTAINABILITY
STATEMENT
(CONT’D)
Effective corporate governance has always been a priority to the Board of Directors of AmanahRaya-Kenedix REIT Manager Sdn. Bhd.
(“AKRM” or “the Manager”) as the Manager of AmanahRaya Real Estate Investment Trust (“ARREIT”). We are committed towards ensuring
that high standard of corporate governance is practised throughout the Manager for the best interest of our unitholders.
In ensuring the implementation and operation of proper corporate governance, AKRM is guided by the principles and recommendations
stipulated in Securities Commission’s Guidelines on Real Estate Investment Trusts (“REIT Guidelines”), Malaysian Code on Corporate
Governance 2017 (“MCCG 2017”), Capital Markets & Services Act 2007 (“CMSA 2007”) and Main Market Listing Requirements of Bursa
Malaysia Securities Berhad (“Bursa Malaysia”) (“MMLR”).
THE MANAGER OF ARREIT
ARREIT is managed by AKRM. All Directors and employees of the Manager are remunerated by the Manager and not by ARREIT. The
Manager’s primary role is to ensure good and sustainable return to the unitholders by managing the properties under ARREIT’s portfolio in
accordance with ARREIT’s Deed and the REIT Guidelines.
Other main functions of the Manager are as follows:
developing business plans as well as strategic and investment policies for ARREIT;
providing recommendations on the acquisition, divestment and/or enhancement of ARREIT’s assets to the Trustee;
monitoring compliance with all applicable legislations, rules and guidelines as well as ARREIT's Deed;
ensuring appropriate record keeping;
formulating proper risk management policies;
supervising and overseeing the appointed Property Managers on the management of ARREIT’s properties; and
formulating plans for equity and debt financing for ARREIT’s capital requirements as well as managing its finances.
DIRECTORS OF THE MANAGER
The Board of Directors
The Board is entrusted with the responsibility of overall management and corporate governance of the Manager including establishing goals
for management and monitoring the achievement of these goals. The Board has collective responsibility for charting the strategic direction,
development, and control of the Manager and has adopted the primary responsibilities, roles and duties set out in the REIT Guidelines,
which facilitate the discharge of the Directors’ stewardship responsibilities. The responsibilities of the Board, amongst others, are as follows:
setting up the objectives and goals of the Manager and ARREIT;
formulating and reviewing the adequacy of corporate policies and strategies, including but not limited to policies on investments,
internal controls, investor relations and accounting;
overseeing and evaluating the conduct of the Manager’s activities;
identifying principal risks and ensuring the implementation of appropriate systems to manage these risks;
reviewing and approving key matters such as financial results, investments and divestments, acquisitions and disposals and major
capital expenditure in accordance with established policies and procedures; and
ensuring proper succession planning is in place, including appointing, training and reviewing the remuneration and compensation for
key personnel of the Manager, where appropriate.
Board Balance and Composition
The Board currently comprises of four (4) Independent Non-Executive Directors and four (4) Non-Independent Non-Executive Directors.
The Board takes cognisance that MCCG recommends that at least two (2) or one-third (1/3) of the Board is independent and the Chairman
of the Board is an Independent Director. The Board also has achieved the target of having a majority of Independent Directors in compliance
with the MCCG 2017 and exceeding the minimum one-third (1/3) requirement as set out in the MMLR.
annual report 2020
56
STATEMENT ON
CORPORATE GOVERNANCE
In terms of diversity in skills, experience and competencies, the Board comprises members with various professional backgrounds from the
fields of law, accounting, architecture, management, economics, business and public administration, all of whom bring in depth and diverse
experiences, expertise and perspectives to the Manager’s operations to ultimately enhance unitholders’ value for the long-term.
The Chairman of the Board is responsible for the conduct of the Board and ensures that the Board’s discussions are conducted in such a
way that all views are taken into account and discussed at length before a decision is made. The roles of Chairman and Chief Executive
Officer are separate with clear segregation of roles and responsibilities to ensure balance of power and authority. Whilst the Chairman
navigates the Board and ensures that members of the Board work hand in hand with the management and encourages constructive
relationship between the directors and management, the Chief Executive Officer holds the responsibility of executing the agreed business
policies and directions set by the Board as well as making operational decisions in managing ARREIT.
Board Meetings
Board meetings are scheduled regularly at least once every quarter. Special Board meetings are also held to discuss urgent issues, as and
when necessary. Throughout 2020, six (6) Board meetings were held, two (2) of which were Special Board meetings. Pursuant to the MMLR,
all Directors have complied with the requirement to attend at least 50% of Board meetings held in a financial year. The number of meetings
attended by each Director during the financial year ended 31 December 2020 (“FYE2020”) are as follows:-
Directors Designation Attendance
Mahadzir bin Azizan Independent Non-Executive Director 6/6
Dato’ Anthony @ Firdauz bin Bujang
(a)
Independent Non-Executive Director 3/3
Dato’ Haji Che Pee bin Samsudin Independent Non-Executive Director 6/6
Adenan bin Md Yusof Non-Independent Non-Executive Director 6/6
Ahmad Suhaimi bin Endut
(b)
Non-Independent Non-Executive Director -
Michio Izawa Non-Independent Non-Executive Director 6/6
Zulazman bin Zulkifli Independent Non-Executive Director 6/6
Keisuke Ogawa
(c)
Non-Independent Non-Executive Director 6/6
Dr Iskandar bin Ismail
(d)
Independent Non-Executive Director 5/5
Shahlan bin Md Shukor @ Kadari
(e)
Independent Non-Executive Director 3/3
Akihiro Nakao
(f)
Non-Independent Non-Executive Director -
Notes:-
(a) Resigned with effect from 25 May 2020
(b) Resigned with effect from 28 February 2020
(c) Appointed with effect from 15 January 2020
(d) Appointed with effect from 1 April 2020
(e) Appointed with effect from 1 June 2020
(f) Resigned with effect from 15 January 2020
Access to and Supply of Information and Advice
Board members are supplied with information in a timely manner. Notices and meeting agenda together with the board papers are usually
circulated one (1) week prior to the scheduled Board meeting. The papers provide among others, financial and corporate information,
significant operational, financial and corporate issues, performance of ARREIT and management’s recommendations and proposals.
The Board has completed and unrestricted access to the advice and service of the Audit Committee, Company Secretary, Group Legal
Division, Group Compliance, Integrity and Risk Division and Group Internal Audit Division to enable them to discharge their duties effectively.
In discharging their duties, the Board also has accessed to external independent professional advisers, from time to time and whenever
deemed necessary, at the expense of the Manager.
Appointment to the Board
All new nominations are assessed and approved by the entire Board which in line with its policy of ensuring nominees are persons of sufficient
calibre and experience.
The selection of candidates is assessed considering various factors including the objectives of ARREIT and the Manager and the relevant
experience and expertise of the candidates as well as their potential contributions.
AMANAHRAYA REIT
(CONT’D)
57
STATEMENT ON
CORPORATE GOVERNANCE
Reviews on the performance of the Board members are done formally. The renewal or replacement of Board members do not necessarily
reflect their level of contributions but will most of the time be determined by the need to align and structure the Board in accordance with
the goals and directions of ARREIT and its business.
Directors are regularly updated on developments and changes in the operating environment including revisions to accounting standards as
well as laws and regulations affecting ARREIT and/or the Manager.
Directors’ Remuneration
The objective of the remuneration policy is to attract, retain, and motivate the Directors to successfully carry out the Manager’s and ARREIT’s
missions and objectives. The level of Directors’ remuneration is comparable in order to attract and retain Directors of such calibre to provide
the necessary skills and experience as required and to commensurate with the responsibilities for the effective management and operations
of the Manager and ARREIT’s operations. All Non-Executive Directors are paid directors’ remuneration taking into account any additional
responsibilities undertaken such as a Director acting as Chairman of a Board Committee and membership of Board Committees.
Directors’ Training
The Directors attended various talks and lecture series organised by regulators and professional bodies to enhance their knowledge and
expertise as well as to keep abreast with the relevant changes of the industry, corporate governance, laws and regulations and business
environment.
During the FYE2020 the Directors have attended the trainings as indicated below:-
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annual report 2020
DIRECTOR
Dato’ Haji Che Pee bin
Samsudin
Ahmad Suhaimi bin Endut
Adenan bin Md Yusof
Zulazman bin Zulkifli
ORGANISER
Securities Industry Development Corporation
Securities Industry Development Corporation
Securities Industry Development Corporation
Securities Industry Development Corporation
Securities Industry Development Corporation
ICLIF Leadership and Governance Centre
Royal Institution of Chartered Surveyors
Malaysian Industrial Development Finance
Malaysian Industrial Development Finance
Malaysian Industrial Development Finance
Institute of Corporate Directors Malaysia
Institute of Corporate Directors Malaysia
Bloomberg
University of Michigan
New York Institute of Finance
TITLE OF PROGRAM
Amanah Raya Berhad Board of Director's Training 2020
Capital Market Directors Programme
Amanah Raya Berhad Board of Director's Training 2020
Business Disruptions – Priorities for Boards
Amanah Raya Berhad Board of Director's Training 2020
Raising Defences: Section 17A, Malaysian Anti-Corruption
Commission Act 2009
Professional Ethics for RICS Members
Raising the Bar! Measure success through SMART KPIs
Product development and innovation in Islamic Finance
Familiarisation of Microsoft Teams
Brands Matter
How to be an effective NED in a Disruptive World
How to identify, assess, monitor and control credit risks?
Innovation in Investment Technology: Artificial Intelligence
Electronic Trading in Financial Markets
(CONT’D)
STATEMENT ON
CORPORATE GOVERNANCE
59
AMANAHRAYA REIT
DIRECTOR
Zulazman bin Zulkifli
(Continued)
Dr Iskandar bin Ismail
Shahlan bin Md Shukor @
Kadari
Keisuke Ogawa
ORGANISER
Asian Business School
Permodalan Nasional Berhad
Malaysian REIT Managers Association
Permodalan Nasional Berhad
Harvard University
Securities Industry Development Corporation
Securities Industry Development Corporation
Securities Industry Development Corporation
Securities Industry Development Corporation
Iclif Executive Education Center - Asia School
of Business
Securities Industry Development Corporation
Iclif Executive Education Center - Asia School
of Business
Securities Industry Development Corporation
Online Compliance Training/Compliance Asia
Monetary Authority of Singapore
Kenedix Asia
TITLE OF PROGRAM
Digital Transformation Executive Programme
Knowledge Sharing Initiatives Forum
The Malaysian REIT, Navigating the new norm
How safe are the safe haven assets in Malaysia
Exercising Leadership: Foundational Principle
Corporate Liability – Section 17A Malaysian Anti-
Corruption Commission Act 2009
Strengthening Organisation’s Integrity Against Money
Laundering and Terrorism Financing
Investing in Crypto Assets
Amanah Raya Berhad Board of Director's Training 2020
Mandatory Accreditation Program
Amanah Raya Berhad Board of Director's Training 2020
Mandatory Accreditation Program
Amanah Raya Berhad Board of Director's Training 2020
AML&CTF (Singapore) Training
Fund Management Industry Engagement 2020
BCP Annual Training
(CONT’D)
STATEMENT ON
CORPORATE GOVERNANCE
The Board Committees
The Board has set up the following committees to assist the Directors in discharging their duties. The committees are:
The Audit Committee;
The Investment Committee; and
The Tender Committee.
AUDIT COMMITTEE
The Audit Committee (“AC”) was formed on 9 June 2009 to assist the Board in the execution of its responsibilities. It comprises of two (2)
Independent Non-Executive Members and one (1) Non-Independent Non-Executive Member. The full details of the composition and summary
of activities of the AC during FYE2020 are set out in the Audit Committee Report of this Annual Report.
INVESTMENT COMMITTEE
The Investment Committee (“IC”) was established on 4 August 2006. It operates under the delegated authority from the Board and is
represented by members from various fields including banking and property. The IC comprises of two (2) Independent Non-Executive
Members and two (2) Non-Independent Non-Executive Members.
The duties and responsibilities of the IC are outlined in its terms of reference, which includes:
Reviewing, deliberating and deciding on any investments to be made by ARREIT as recommended by the management;
Reviewing, assessing and deciding on the escalation of proposals relating to asset acquisition, disposal and fund raising exercises to
be undertaken by ARREIT to the Board and Trustee for final approval;
Reviewing and deliberating the following reports;
Property Market and Outlook Report
ARREIT’s Performance Report
Ensuring that ARREIT is managed in accordance with:-
its investment objectives;
its Deed;
its Prospectus;
the REIT Guidelines and other securities laws; and
the internal investment restrictions and policies.
Recommending to the Board the appropriate strategies to achieve the objectives of ARREIT in accordance with its investment policies;
Ensuring that the selected strategies are properly and efficiently implemented by the management;
Actively monitoring, measuring and evaluating the performance of the Manager; and
Carrying out other duties as may be determined from time to time by the Board.
The members of the IC are as follows:
Zulazman bin Zulkifli (Chairman)
(a)
Adenan bin Md Yusof
Michio Izawa
Dr Iskandar bin Ismail
(b)
Dato Anthony @ Firdauz bin Bujang
(c)
Notes:-
(a) Re-designated as Chairman with effect from 25 May 2020
(b) Appointed with effect from 1 April 2020
(c) Resigned with effect from 25 May 2020
TENDER COMMITTEE
The Tender Committee (“TC”) was established on 24 August 2016. It operates under the delegated authority from the Board. The TC
comprises of one (1) Independent Non-Executive Member and one (1) Non-Independent Non-Executive Member.
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annual report 2020
STATEMENT ON
CORPORATE GOVERNANCE
(CONT’D)
The members of the TC are as follows:
Zulazman bin Zulkifli (Chairman)
(a)
Ahmad Suhaimi bin Endut
(b)
Michio Izawa
Dato Anthony @ Firdauz bin Bujang
(c)
Notes:-
(a) Appointed as Chairman with effect from 25 May 2020
(b) Resigned with effect from 28 February 2020
(c) Resigned with effect from 25 May 2020
The duties and responsibilities of the TC are outlined in its terms of reference, which includes:
To reinforce and inculcate good corporate governance, accountability, integrity and transparency in the tendering process and contract
management;
To ensure prudent spending of ARREIT fund for refurbishment works, renovation and other related works to the existing and future
properties of ARREIT and are done in the best interest of ARREIT unit holders; and
To assist the Management in making recommendation to the Board that the services to be provided by the contractor / consultant /
service provider etc. through the tendering process are of high standard, value for money and in accordance to the requirements /
specifications of the contract / project to be awarded.
COMPANY SECRETARY
The Company Secretary played an important role in advising the Board on issues relating to compliance with relevant laws, rules, procedures
and regulations that may affect the Board, the Manager and ARREIT. The Company Secretary is responsible for ensuring that the Board,
Board Committees and Unitholders meeting procedures, corporate policies and procedures, and applicable rules and regulations are
adhered to. The Company Secretary is also responsible for advising the Board of their obligations and duties to disclose their interests in
securities including any conflict of interests in a transaction involving the Manager and ARREIT.
ACCOUNTABILITY AND AUDIT FINANCIAL REPORTING
Financial Reporting
The Board is responsible in ensuring that proper maintenance of accounting records for ARREIT and appropriate accounting policies had
been consistently applied. The Board is assisted by the AC in overseeing ARREIT’s financial reporting processes and the quality thereof.
Relationship with External Auditors
The external auditors, Messrs KPMG PLT is independent and the appointment was nominated by the Manager and approved by the Trustee.
The remuneration of the Auditor was approved by the Trustee.
The Audit Committee also reviewed the results of the annual audit and the audit report with the auditors. Private sessions between the
auditors and the Audit Committee, in the absence of the Management team were held during the year under review.
Internal Control
The Board has an overall responsibility of maintaining a system of internal control that covers financial and operational controls and risk
management. The system provides reasonable but not absolute assurance against material misstatement of management and financial
information or against financial losses and fraud.
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AMANAHRAYA REIT
STATEMENT ON
CORPORATE GOVERNANCE
(CONT’D)
Compliance Officer
The Manager has a dedicated compliance officer working towards ensuring compliance with all legislation, rules and guidelines issued by
Securities Commission and Bursa Malaysia as well as the Deed.
MANAGEMENT OF BUSINESS RISK
Effective risk management is an integral part of the Manager’s strategic plan. The Manager operates within overall guidelines and specific
parameters set by the Board. The risk management framework adopted by the Manager allows it to continuously identify, evaluate, mitigate
and monitor risks affecting ARREIT and the Manager.
The risk management process is integrated in the day-to-day operations of the Manager, allowing a more practical and hands on approach
in identifying mitigating strategies.
RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST
The Manager has established procedures that will ensure related party transactions and conflicts of interests are undertaken in full compliance
with the REIT Guidelines, the Deed and MMLR.
Among the policies adopted by the Manager to deal with potential conflicts of interest issues include:
transactions on arm’s length basis and on normal commercial terms which are not more favourable than those extended to third parties
or public and are not to the detriment of the minority Unitholders;
ARREIT's cash or other liquid assets should be placed in a current or deposit account of institutions licensed or approved to accept
deposits;
the Manager may not act as principal in the sale and purchase of real estate, securities and any other assets to and from ARREIT; and
all real estate investment and divestment transactions must be consented by the Trustee, consistent with the investment objective and
strategy of ARREIT and transacted at a price which is in accordance to the relevant guidelines.
WHISTLEBLOWING POLICY
The Board has put in place procedures to provide employees of the Manager with defined and accessible channels to report on suspected
fraud, corruption, dishonest practices or other similar matters relating to ARREIT or the Manager, and for the independent investigation of
any reports by employees and appropriate follow-up action. The aim of the whistle blowing policy is to encourage the reporting of such
matters in good faith, with the confidence that employees making such reports will be treated fairly, and to the extent possible, be protected
from reprisal.
COMMUNICATION WITH UNITHOLDERS
The Board acknowledges the importance of regular communication with unitholders and investors via annual reports, circulars, and quarterly
financial reports. The Manager has made various announcements that are released to Bursa Malaysia Securities Berhad via Bursa LINK
during the year, through which unitholders and investors are able to obtain an overview of ARREIT’s performance and operations.
ARREIT has also established a systematically maintained corporate website, amanahrayareit.com.my, allowing the Unitholders and public
to keep abreast with the development of ARREIT at all times.
62
annual report 2020
STATEMENT ON
CORPORATE GOVERNANCE
(CONT’D)
The Audit Committee (“AC”) was formed on 9 June 2009 to assist the Board in the execution of its responsibilities. It operates under the
delegated authority from the Board and in line with the MMLR. The Audit Committee of ARREIT comprises of two (2) Independent Non-
Executive Members and one (1) Non-Independent Non-Executive Member.
The members of the Audit Committee are as follows:
Dato Haji Che Pee bin Samsudin (Chairman)
Zulazman bin Zulkifli
Keisuke Ogawa
(a)
Akihiro Nakao
(b)
Notes:-
(a) Appointed with effect from 15 January 2020
(b) Resigned with effect from 15 January 2020
The composition of the AC fulfils the requirements of Paragraphs 15.09(1)(a) and 15.09(1)(b) of the Main Market Listing Requirements of
Bursa Malaysia Securities Berhad (“MMLR”).
Audit Committee Meetings
The Audit Committee held four (4) meetings during FYE2020. The meeting dates were predetermined in advance in order to ensure availability
of each member. Meeting papers were circulated to all the AC members prior to the meetings by way of electronic means and hard copy.
The details of attendance of each member are as follows:
Directors Designation Attendance
Dato’ Haji Che Pee bin Samsudin Independent Non-Executive Director 4/4
Zulazman bin Zulkifli Independent Non-Executive Director 4/4
Keisuke Ogawa
(a)
Non-Independent Non-Executive Director 4/4
Akihiro Nakao
(b)
Non-Independent Non-Executive Director Not Applicable
Notes:-
(a) Appointed with effect from 15 January 2020
(b) Resigned with effect from 15 January 2020
Summary of Activities carried out by the Audit Committee during the Financial Year of 2020
The primary role of the AC is to monitor, oversee, review and evaluate the effectiveness and adequacy of the Manager’s financial management
and reporting system, as well as the risk management and internal control environment of ARREIT. The AC also has the delegated
responsibilities to assist the Board in overseeing the external and internal audit functions, conflict of interest situations and related party
transactions (“RPT”). Summary of work undertaken by AC during the year under review is as listed below:-
Reviewing all internal and external reports on the operations of ARREIT and the Manager as well as the portfolio under management
and ensuring compliance with all relevant laws and regulations;
Initiating investigation in respect of activities within its terms of reference and to seek for information it requires from the management
and/or any employee;
Obtaining external legal or other independent professional advice, opinion and/or reports and to secure the attendance of external
parties with relevant experience and expertise as and when necessary;
Reviewing, together with external auditors, the audit plan, scope of the audit and areas of audit for ARREIT and the Manager;
Discussing and highlighting any problems arising from the audit exercise and/or any other matters raised by external auditors;
Reviewing external auditors’ letters and reports and response from the management;
63
AMANAHRAYA REIT
AUDIT
COMMITTEE REPORT
Reviewing the audit report prepared by external auditors;
Making appropriate recommendations to the Board on matters concerning resignations, dismissals and replacements of external
auditors;
Reviewing and reporting the adequacy of the scope, functions and resources of the internal audit function and authorizing it to carry
out the audit works;
Reviewing all financial results and financial statements and all portfolios under management;
Reviewing and highlighting any related-party transactions; and
Ensuring that the policy, strategy and operations of ARREIT and the Manager are in compliance with all relevant laws and regulations.
INTERNAL AUDIT FUNCTION
The internal audit function of the Manager was carried out by an in-house Group Internal Audit Division (“GIAD”) and is led by the Head of
Internal Auditor which reports directly to the Audit Committee. GIAD is an independent, objective assurance and consulting services unit
that designed to add value and improve the Manager’s operations. It actively facilitates the Manager to accomplish its objectives by bringing
a systematic and disciplined approach to evaluate and improve the effectiveness of governance processes.
GIAD has the principal responsibility for undertaking a regular and systematic review of the systems and internal controls so as to provide
reasonable assurance that such systems continue to operate satisfactorily and effectively. Summary of activities undertaken by GIAD during
FYE2020 are listed below:
To ensure that ARREIT was managed in accordance with the Deed, Prospectus, the Securities Commission's Guidelines on Real Estate
Investment Trusts and other applicable guidelines imposed by the SC and other relevant authorities;
To ensure that the properties are adequately insured by the lessees/tenant;
To ensure that all reasonable and permitted courses of action taken to pursue overdue rental payments and how is the action taken
evidenced;
To ensure that properties are maintained based on the Property Management Agreement;
No undue influence or favouritism on selection/appointment of Property Manager;
The selection of financially stable, competent and reliable Property Manager;
To ensure that AKRM closely monitor the work performed by the appointed Property Managers which are constantly sourced solution
to enhance the value of the properties either via internal and/or external refurbishment and upgrading exercises;
To ensure that the performance of Property Managers was fully assessed;
To ensure that all record keeping procedures and audit trail of all records and the confidentiality of information were adhered to; and
Identify and disclose any non-compliance issue detected during audit exercise and recommend for corrective actions.
AUDIT
COMMITTEE REPORT
64
annual report 2020
(CONT’D)
Being a Real Estate Investment Trust, ARREIT is not subjected to Paragraph 15.26(b) of the MMLR of Bursa Malaysia Securities Berhad.
Nevertheless, the Board of Directors of the Manager has voluntarily opted to include this Statement on Internal Control to demonstrate its
commitment in maintaining a sound and effective system of internal control.
THE BOARD’S RESPONSIBILITY
The Board is responsible in ensuring the adequacy and integrity of the overall internal control systems and policies. Strong emphasis has
been given by the Board in maintaining a sound system of internal control and effective risk management practices.
Notwithstanding the above, the Board also acknowledges that a sound system of internal control can mitigate but not eliminate the risk of
failure in achieving the identified business objectives. It is therefore pertinent to note that the adopted system of internal control should be
able to provide reasonable protection against material losses but not absolute shield against the same.
RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
The Manager has established, among others, the following systems of internal control to protect the interest of the Unitholders:
An operational manual has been established to outline the structure and framework in managing the overall operations of the Manager.
The operational manual includes inter-alia policies and procedures on acquisition and disposal of properties, property management
processes, financial and operational reporting as well as continuing listing and compliance obligations. The operational manual is
subject to periodical review and will be updated as and when necessary;
Authority limits have been specified for the operations of ARREIT including but not limited to approvals on investments and divestments,
banking facilities, capital and operating expenditure as well as engagement of services from external parties. Approvals from the
Trustee and the Board are required for matters of certain threshold limits whereas those which do not exceed the threshold limits are
delegated to other Board committees or the Chief Executive Officer to facilitate operational efficiency. A set of other authorised personnel
have also been identified to approve and release payments for transactions with prior approval in accordance with the authority limits;
The Manager has adopted a group wide Integrity Plan and Code of Business Ethics towards recognizing and resolving ethical issues
that may be encountered in conducting its daily operations. The Code of Business Ethics addresses among others, issues on conflict
of interest, whistle blowing policy, ethics and responsibility to stakeholders;
An Enterprise Risk Management Policy which sets out the approaches and expectations in relation to risk management has also been
adopted by the Manager. Via the policy, the Board recognizes that risk management is an integral part of good management and
corporate governance practice;
Internal Audit services are outsourced to the Manager’s holding company, Amanah Raya Berhad. The cost incurred by the Manager
for the outsourced Internal Audit Function in respect of the financial year ended 2020 amounted to RM15,533. Finding obtained from
internal audit activities are reported directly to the AC and are independent from the management team of the Manager;
Scheduled regular meetings of the Board, AC and IC with representation from the management provide the key to systematic monitoring
of ARREIT’s activities. The Chief Executive Officer is entrusted to manage the daily operations of the Manager and ARREIT and holds
the responsibility of leading the respective heads of departments towards achieving the identified objectives;
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
65
AMANAHRAYA REIT
In order to maintain quality and efficiency, the Manager’s personnel across all functions are given the opportunity to attend relevant
trainings. A systematic staff performance appraisal mechanism has also been adopted to ensure adequate and sufficient rewards are
awarded to well deserving personnel;
The AC conducts reviews on issues relating to the effectiveness of the internal control system raised by internal and external auditors,
regulatory authorities and the management. Where a weakness on internal control mechanism is identified, the AC shall ensure that
appropriate remedial action is taken by the management;
The IC reviews and scrutinizes all investment, divestment and fund-raising proposals recommended by the management. The reviewing
process includes identification of risks involved in such activities towards ensuring that ARREIT is managed in accordance with its
objectives. The IC also holds the responsibility of actively monitoring the performance of the Manager and ARREIT;
All recommendations endorsed by the AC and IC shall be presented for review and approval by the Board.
AMENDED AND RESTATED TRUST DEED
The Manager has entered into an Amended and Restated Trust Deed dated 5 December 2019 with the Trustee in compliance with the
amendments made to the SC’s REIT Guidelines. The Amended and Restated Trust Deed clearly describes the powers and responsibilities
of the Manager, the Trustee, and will enable the Manager and Trustee to perform their duties and responsibilities effectively to act in the
best interest of the unitholders of ARREIT.
ANTI-BRIBERY AND ANTI-CORRUPTION MANAGEMENT SYSTEMS
The Manager has implemented the Anti-Bribery and Anti-Corruption Management System in compliance with Section 17A of the Malaysian
Anti-Corruption Commission Act 2009 effective from 1 June 2020. The policies and procedures are in place and communicated to relevant
parties to mitigate the possibility of the occurrence of bribery and corruption acts.
REVIEW OF THIS STATEMENT
Based on the above, the Board is of the view that the risk management and internal control system adopted by the Manager is adequate
and sufficient to ensure good corporate governance for ARREIT. Assurance had been received from the Chief Executive Officer and Head
of Finance that the risk management and internal control system of the Manager in relation to managing the operations of ARREIT, is operating
adequately and effectively, in all material aspects, based on the risk management and internal control system set in place by the Manager.
This Statement has been tabled and approved by the Board on 25 February 2021.
STATEMENT ON RISK MANAGEMENT
AND INTERNAL CONTROL
66
annual report 2020
(CONT’D)
67
AMANAHRAYA REIT
PROPERTY MARKET
OVERVIEW
MARKET INDICATIONS
The destructive impact of the nationwide Movement Control Order (MCO) implemented since 18 March 2020 to contain the spread of the
novel coronavirus is reflected in the country’s poor economic performance for 2Q2020. Malaysia’s gross domestic product (GDP) contracted
17.1% on the quarter (1Q2020: +0.7%) as measures such as travel restrictions, enforced business closures and restricted social activities
left many businesses and economic sectors struggling to stay afloat.
Following the gradual reopening of the economy and better external demand conditions, Malaysia’s GDP moderated 2.7% in 3Q2020, but
the fresh wave of COVID-19 cases since September 2020 led to sharper contraction of 3.4% in 4Q2020. The country’s economy contracted
5.6% for all of 2020, its worst performance since the Asian financial crisis (1998) and below the Government’s earlier projection of -3.5% to
-5.5%.
For 2021, the economy is expected to rebound between 6.5% and 7.5%, supported mainly by the recovery of economic and trade activities
globally and domestically. As the rollout of COVID-19 vaccines gets underway, more business activities and services sector are allowed to
reopen during the current phase of MCO 2.0 subject to conditions and standard operating procedures (SOPs) set by the relevant authorities.
The country’s unemployment rate was recorded at 4.7% in 3Q2020, an improvement from 5.1% in 2Q2020. For 2020, the unemployment
rate is expected to peak at between 3.5% and 5.5%, the highest since 1995 due to the unprecedented crisis caused by the COVID-19
outbreak.
Malaysia registered a deflation (-1.2%) in 2020, the first time in five decades, primarily due to lower global oil and commodity prices coupled
with tiered electricity tariff rebate since April 2020 and suppressed domestic demand amongst other factors. Bank Negara Malaysia (BNM)
has projected that headline inflation will average higher to 2.5% in 2021, mainly on improved global oil prices
The Business Conditions Index (BCI) was recorded at 115.4 points in 4Q2020. With the 29.1 points gain (3Q2020: 86.3 points), the BCI
breached the 100-point threshold for the first time since 4Q2018; indicating a boost in manufacturers’ confidence level. On the year, the
index expanded 27.1 points due to higher levels of domestic demand and export, supported by various stimulus packages announced by
the Government.
The Central Bank cut the overnight policy rate (OPR) by 25 basis points to 1.75% on 7 July 2020, its fourth revision in the year to provide a
more accommodative monetary environment to support the country’s economy.
Malaysia’s Industrial Production Index (IPI) expanded 1.7% year-on-year (y-o-y) in December 2020, mainly due to the 4.1% growth in the
manufacturing sector. The mining and electricity indices, however, were lower by 5.4% and 0.2% respectively.
Approved Investments, 2018 to Jan-Sept 2020
(p)
Malaysia 2018 2019 Jan–Sept 2020
(p)
Number of Approved Projects 5,018 5,287 2,935
Domestic Investment 124,221.5 128,475.3 67,226.7
(RM Million)
Foreign Investment 80,133.5 82,908.2 42,611.6
(RM Million)
Total Capital Investment 204,355.0 211,383.5 109,838.3
(RM Million)
Source: Malaysian Investment Development Authority (MIDA)
Note: (p) = Preliminary data
During the first nine months of 2020, Malaysia recorded a total of 2,935 approved projects worth RM109.8 billion in the manufacturing,
serviced and primary sectors. Compared to the corresponding period last year, there was an annual decline of 27.3% in total capital
investment (2019: RM151.1 billion).
Of the total investment approved, domestic investment accounted for 61.2% (RM67.2 billion), while the remaining 38.8% share (RM42.6
billion) were foreign direct investment (FDI). The top five (5) sources for the approved FDI originated from China (RM17.0 billion), followed
by Singapore (RM8.0 billion), USA (RM2.8 billion), Switzerland (RM2.8 billion) and Netherlands (RM2.4 billion).
PROPERTY MARKET
OVERVIEW
annual report 2020
RETAIL MARKET
1.0 MALAYSIA: RETAIL PERFORMANCE
Since 2012, the country’s retail sales growth has been trending down, reaching a miniscule growth rate of 1.4% in 2015. The upward
adjustments in fuel prices and electricity tariffs, coupled with the implementation of the goods and services tax (GST) in April 2015,
have collectively led to higher living cost.
Retail sales growth continued to remain lacklustre in the subsequent years, before peaking at 3.9% in 2018; a sluggish performance
despite the three-month tax holiday following the Government’s decision to zerorise the GST in June 2018.
Malaysia: Retail Sales Growth, 2012 to 2020
(f)
The onset of the COVID-19 pandemic and the subsequent enforcement of MCO since 18 March 2020 has severely impacted the
economy, as majority of business activities slowed or came to a complete halt. The conditional and recovery phases of MCO (CMCO
and RMCO), enforced in May 2020 and June 2020 respectively, saw the gradual resumption of most economic sectors and business
activities subject to conditions and SOPs.
Although footfall in shopping centres saw recovery, retail sales were reportedly weak as shoppers adopt prudent spending behaviour
amid the current economic downturn. Consequently, the retail sales growth was recorded at -9.7% in 3Q2020. For the entire year of
2020, retail sales growth is projected at -15.8% as the resurgence of COVID-19 cases since late September led to the reinstatement
of MCO and CMCO for selected states and localities in the country. Since 22 January 2021, the whole country except Sarawak has
been placed under lockdown again (MCO 2.0) to contain the spread of infections.
The MIER Consumer Sentiments Index (CSI) was recorded at 85.2 points in 4Q2020, 6.3 points lower on the quarter (3Q2020: 91.5
points); the ninth consecutive quarter since 4Q2018 where the index has remained below the 100-point threshold. This reflects subdued
consumer spending on concerns of economic recession, rising unemployment and lower disposable income amid unprecedented
crisis.
Retail Sales Growth (%)
10%
5.0%
0.0%
-5.0%
-10.0%
-15.0%
-20.0%
2012
5.5%
2013
4.5%
2014 2015
1.4%
2016
1.7%
2017
2.0%
2018
3.9%
2019
3.7%
2020(f)
-15.8%
3.4%
68
Sources: Malaysia Retailers Association (MRA) / Knight Frank Research
Note: (f) = Forecast
(CONT’D)
PROPERTY MARKET
OVERVIEW
AMANAHRAYA REIT
(CONT’D)
By the first half of 2021, four shopping centres/supporting retail components are scheduled for completion in Selangor. Collectively, these
completions will increase the existing cumulative retail supply by circa 1.61 million sq ft.
Selangor: Retail Centres/Retail Components Scheduled for Completion/Opening, 1H2021
Shopping Centre Location Estimated NLA (sq ft)
Retail Component of Pacific Star Section 13, Petaling Jaya 240,000
Retail Component of Datum Jelatek Taman Keramat, Ampang 319,000
Setia City Phase 2 Setia Alam, Shah Alam 400,000
KSL Esplanade Mall Bandar Bestari, Klang 650,000
Total 1,609,000
Source: Knight Frank Research
Existing Supply (Million sq ft)
34.0
33.0
32.0
31.0
30.0
29.0
28.0
2016
30.16
2017
30.32
2019
31.95
2020
33.42
2018
30.57
Selangor
2.0 SELANGOR
2.1 Supply: Existing and Future
As of 2020, the cumulative supply of retail space in Selangor stood at circa 33.42 million sq ft following the completion of Tropicana
Gardens Mall in Kota Damansara, KIPMALL Desa Coalfields in Sungai Buloh and Quayside @ Twentyfive 7 in Kota Kemuning with
combined NLA of approximately 1,470,000 sq ft. This reflects an annual growth rate of circa 4.6% in supply.
Between 2016 and 2020, approximately 3.3 million sq ft of retail space entered the market, depicting a compound annual growth rate
(CAGR) of 2.6% within the four-year period.
Selangor: Cumulative Supply of Retail Space, 2016 to 2020
69
Source: Knight Frank Research
Note: Putrajaya supply is included in Selangor
2.2 Occupancy
The average occupancy rate of shopping centres in the state peaked at 87.9% in 2015 and has since continued to downtrend. Until
2019, the average occupancy remained firm above the 80.0% threshold, despite a high supply pipeline of retail space coming into the
market. However, with the economic fallout from COVID-19, countless businesses have permanently shut their doors, and this has led
to the state recording a lower overall occupancy rate of 78.8% in 3Q2020.
Selangor: Overall Occupancy Rate of Retail Space, 2014 to 3Q2020
70
annual report 2020
2.3 Rental Rates
The rental levels of selected shopping centres in Selangor are summarised in the table below.
Selangor: Rental Levels of Retail Space in Selected Shopping Centres, 1H2020
Shopping Centre Location Floor Level Rental Range
(RM per sq ft / month)
1 Utama Shopping Centre Bandar Utama Lower Ground 12.00 – 50.00
Ground 14.00 – 34.00
1 13.00 – 37.00
2 7.00 – 31.00
Sunway Pyramid Shopping Mall Bandar Sunway Lower Ground 2 19.00 – 45.30
Lower Ground 1 16.00 – 43.00
Ground 22.60 – 41.00
1 17.50 – 33.20
Subang Parade Subang Jaya Lower Ground 7.80 – 20.62
Ground 12.00 – 22.67
1 4.00
PROPERTY MARKET
OVERVIEW
(CONT’D)
Occupancy Rate (%)
50.0%
100.0%
95.0%
90.0%
85.0%
80.0%
75.0%
70.0%
65.0%
60.0%
55.0%
84.7%
84.9% 85.4%
84.3%
2014 2015 2016 2017 2018 2019 3Q2020
87.9%
82.1%
78.8%
Sources: NAPIC / Knight Frank Research
Shopping Centre Location Floor Level Rental Range
(RM per sq ft / month)
Central I-City Shah Alam Lower Ground 6.00 – 17.00
Ground 10.00 – 23.00
1 8.00 – 30.00
2 6.00 – 16.00
3 8.00 – 13.01
IOI Mall Bandar Puchong Ground 9.00 – 33.27
1 6.00 – 16.50
2 9.25 – 15.00
Melawati Mall Taman Melati Lower Ground 5.60 – 18.80
Ground 8.60 – 32.60
1 4.98 – 8.60
2 6.10 – 18.60
3 9.25 – 22.60
4 5.30 – 18.10
5 5.40 – 18.10
6 5.60 – 10.60
Source: NAPIC / Knight Frank Research
Prominent shopping centres in Selangor, namely 1 Utama Shopping Centre and Sunway Pyramid Shopping Mall command high rental
rates ranging from RM7.00 per sq ft to RM50.00 per sq ft per month depending on the location/orientation/positioning of the retail lot
within the mall, floor level, unit sizing and other factors.
Newer built shopping centres with more modern facilities and amenities such as Central I-City and Melawati Mall, have competitive
rental rates from RM4.98 per sq ft to RM32.60 per sq ft per month.
Meanwhile, rental levels of neighbourhood shopping centres which cater to the needs of local communities, such as Subang Parade
and IOI Puchong, remained firmed and range from RM4.00 per sq ft to RM33.27 per sq ft per month.
2.4 Capital Values
Since the sale of SStwo Mall for a consideration of RM180 million in 2018, there has not been any notable transactions of shopping
centres in Selangor. Investment transactions remain lacklustre amid low investor confidence and sentiment undermined by the health
crisis.
Selangor: Notable Transactions of Shopping Centres in Selangor, 2015 to 2020
Date of Building Estimated
Transaction Name Location NLA Consideration Price Purchaser
(sq ft) (RM) (RM / sq ft)
2018 SStwo Mall
(1)
Petaling Jaya 460,000 180,000,000 391 DK Group of
Companies
2017 AEON Mahkota Cheras 308,000 88,000,000 286 Foremost Wealth
Cheras Management
Sdn Bhd
2017 Empire Shopping SS16/1, 350,000 570,000,000 1,629 Pelaburan
Gallery
(2)
Subang Jaya Hartanah Bhd
(PHB)
2015 DA MEN USJ USJ 1, 420,920 486,844,000 1,157 Pavilion REIT
Shopping Mall
(3)
Subang Jaya
71
AMANAHRAYA REIT
PROPERTY MARKET
OVERVIEW
(CONT’D)
Date of Building Estimated
Transaction Name Location NLA Consideration Price Purchaser
(sq ft) (RM) (RM / sq ft)
2015 Tropicana City Mall
(4)
SS20, 448,248 540,000,000 N/A CapitaMalls
Petaling Jaya Malaysia Trust
2015 Subang Avenue SS16, 213,354 139,500,000 654 Sime UEP
Subang Jaya Properties Bhd
and Subang Mall
Property
Source: Knight Frank Research
Notes:
(1) The Puchong-based DK Group of Companies has completed the deal at the end of July 2018. The deal is done between AsiaMalls
Sdn Bhd and DK Group of Companies. The mall which was shut down five years ago is set to reopen as a healthcare centre with
Life Care Diagnostics Medical Centre as its new tenant. In October 2020, it was reported that LifeCare Property (SS2) Sdn Bhd,
a subsidiary of private medical care operator LifeCare Diagnostic Medical Centre, and DK-MY Properties Sdn Bhd have signed
the term of purchase (source: nst.com.my).
(2) Empire Shopping Gallery: The Mammoth Empire Holding Sdn Bhd has been granted a call option to buy back the shopping mall
on the fifth anniversary of the sale. It also has the right of first refusal to buy the mall should PHB decide to dispose of it within the
five years.
(3) DA MEN USJ Shopping Mall is part of an integrated commercial development comprising the shopping mall, 41 units of
contemporary shops and offices, as well as 480 units of apartments housed in two tower blocks with six levels of podium car
parks. The total consideration was revised to RM486,844,000 from the initial total consideration of RM488,000,000 due to the
reduction of car parking bays.
(4) The total purchase consideration of RM540 million include the purchase of both Tropicana City Mall with Tropicana City Office
Tower. The apportionment of value is not available.
3.0 RETAIL MARKET OUTLOOK
The economic fallout from the COVID-19 outbreak continues to have unprecedented effect on the retail landscape. Despite gradual
recovery of footfall in shopping centres during the CMCO and RMCO phases, retail sales remain weak due to cautious consumer
spending amid the economic downturn. The recent resurgence of Covid-19 cases and subsequent reinforcement of MCO 2.0 in all
states except Sarawak has thwarted the gradual recovery of the industry.
In Budget 2021, the Government has reduced the employee’s EPF contribution from 11% to 9% effective 1 January 2021 in addition to
the 1% reduction in the income tax rate for the RM50,001 to RM70,000 bracket effective from 2021 (current tax rate is 14%). The
reduction in both EPF contribution and income tax rate is set to increase the disposable income of individuals, helping to ease their
financial burden during this trying time.
To cushion the severe impact of the novel coronavirus, the Government has launched a few economic stimulus packages including;
PRIHATIN, PENJANA, Prihatin Supplementary Initiative Package (Kita Prihatin). The latest RM15 billion Malaysian Economic and Rakyat
Protection Assistance Package (Permai), which was unveiled on 18 January 2021, aims to safeguard the welfare of the people and
support the business community as all states in Malaysia except Sarawak entered into MCO 2.0.
Prior to the implementation of the COVID-19 Bill in October 2020, landlords of selected shopping centres have provided relief to their
tenants by offering various rental waiver initiatives. Pending the commercial rollout of COVID-19 vaccine by 1H2021, there is potential
for subsequent waves of infection that will dampen business confidence and impact rental collection, tenancy renewals, rental revisions
and take-up rates. Hence, there is a need for continued measures in terms of rental, marketing and promotional support to rebuild
businesses and lift consumer sentiment.
Shopping centres are expected to embrace a new normal, with tighter security measures and heightened hygiene and sanitation
practices. With the focus on less contact with surfaces and among people, there is a foreseeable trend of more shopping centres and
retailers embracing technological innovations to improve shopper traffic while reassuring consumer safety.
72
annual report 2020
PROPERTY MARKET
OVERVIEW
(CONT’D)
The new norm brought upon by the pandemic is set to have lasting impact. Changing consumer behaviour have pushed retailers to
adopt e-commerce and strategically connect to their consumers through multiple channels. The booming e-commerce business, which
appears to be a silver lining consequential to the pandemic, has also accelerated the growth of last-mile delivery and food delivery
services.
The short-term outlook for the sector remains cloudy but there are windows of opportunities in the mid to longer term with the right
data, key insights and value.
HOTEL MARKET
4.0 MALAYSIA: TOURISM MARKET PERFORMANCE
Tourist arrivals and receipts have generally been on an uptrend since 2010 to 2019, with the exception of a decline in 2015. This is
likely attributed to the implementation of GST in the second quarter of 2015 and the aviation tragedies related to the national carrier,
Malaysian Airlines. During the review period from 2010 to 2019, tourist arrivals and receipts grew at CAGR of 0.7% and 4.8%
respectively.
Amid the closure of international borders in response to the COVID-19 outbreak, Malaysia registered 4.30 million arrivals with a
corresponding total receipts of RM12.6 billion for the first nine months of 2020. This reflects a sharp annual decline of 78.6% and 80.9%
when compared to the corresponding period in 2019 (1Q-3Q2019: 20.1 million arrivals, RM66.1 billion receipts).
Tourists from Singapore recorded the highest arrivals at 1.54 million, a -80.4% decline from the corresponding period in 2019. This is
followed by Indonesia, China, Thailand, and India with 710,118 (-74.6%), 403,055 (-83.3%), 372,075 (-74.2%) and 155,448 (-71.2%)
arrivals respectively.
The Chart below shows the trend of tourist arrivals and receipts for Malaysia, from 2010 to 3Q2020.
Malaysia: Tourist Arrivals and Receipts, 2010 to 3Q2020
73
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OVERVIEW
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Tourist Arrivals (Millions)
Tourist Receipts (RM Billions)
No. of Arrivals Receipts Amount
30
25
20
15
10
5
0
100
90
80
70
60
50
40
30
20
10
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(9M)
24.6
24.7
25.0
25.7
27.4
25.7
26.8
25.9
25.8
26.1
4.3
Source: Tourism Malaysia / Knight Frank Research
Note: 3Q2020 (January to September 2020 period)
With the cancellation of Visit Malaysia Year 2020 (VMY 2020), Tourism Malaysia have shifted the focus to promoting domestic tourism
in an attempt to revive the sector, targeting 92.8 million domestic tourists and corresponding receipts of RM76.9 billion.
In 2019, domestic tourism recorded improved performance with 239.1 million visitors, depicted an annual increase of 8.1% (2018:
221.3 million visitors) while domestic receipts grew by the double digit (11.5%) to register at RM103.2 billion (2018: RM92.6 billion
receipts). The state of Kedah welcomed 14.8 million domestic visitors with corresponding spending of RM5.2 billion.
5.0 MALAYSIA & KEDAH
5.1 Supply: Hotel & Room – All Star Rating
Malaysia: Hotel & Room Supply – All Star Ratings, 2010 to 2019
As of 2019, there were a total of 4,826 hotels (all-star categories) contributing 315,969 rooms in Malaysia, this reflects an annual increment
of 1.6% and 2.5% respectively. Generally, Malaysia’s hotel and room supply have been on an upward trend since 2010, depicting a CAGR
growth of 8.2% and 7.2% in the hotel and room supply respectively for the period under review (2010 to 2019).
Similar to the national trend, the Kedah hotel market has also seen positive growth in its hotel and room supply. As of 2019, there were a
total of 340 hotels offering 18,954 keys in the state, this depicts a CAGR of 9.2% and 6.0% in hotel and room supply respectively.
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OVERVIEW
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No. of Hotel Supply
No. of Room Supply
Room Supply Hotel Supply
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
6,000
5,000
4,000
3,000
2,000
1,000
-
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
315,969
4,826
Sources: Tourism Malaysia / Knight Frank Research
Kedah: Hotel and Room Supply - All Star Ratings, 2010 to 2019
In the pipeline, are some 60 hotels with a total of 21,413 rooms nationwide, of which 26 establishments contributing circa 7,677 rooms
are underway in 2021. Kuala Lumpur tops the list with 23 upcoming hotels offering 6,730 rooms while Langkawi in Kedah state is set
to have four new establishments with a total of 1,241 rooms.
5.2 Occupancy
During the period from 2010 to 2018, the average occupancy rate of all-star ratings hotels in Malaysia trended upwards gradually to
record at 60.8% in 2018 before declining by circa -3.3% to 58.8% in 2019. The lower occupancy in 2019 may be attributed to the
addition of new hotels and competition arising from the rise of unregistered accommodation or unregulated short-term accommodations
(STA) such as Airbnb.
Similarly, Kedah’s hotel average occupancy saw steady growth since 2010 before declining in 2018 (-7.0%) and 2019 (-0.7%). The
sharp dip in 2018 is likely attributed to a combination of factors that include the reintroduction of SST in the third quarter of the year,
the introduction of tourism tax at a flat rate of RM10 per room per night charged on foreign tourists and higher hotel supply (and rooms).
Unsurprisingly, the occupancy rates for year 2020 are significantly lower due to severe impact arising from the COVID-19 pandemic
on the hospitality, tourism and aviation related industries as a result of borders closure and restrictions in interstate movements. The
average occupancy rates for Malaysia and Kedah, for the first nine months of 2020, are reportedly at 31.6% and 27.6% respectively.
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No. of Hotel Supply
No. of Room Supply
Room Supply Hotel Supply
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
300
250
200
150
100
50
-
350
400 20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
18,954
340
Sources: Tourism Malaysia / Knight Frank Research
The chart below shows the average occupancy rate (AOR) of all-star rating hotels in Malaysia and Kedah for the period from 2010 to
3Q2020.
Malaysia & Kedah: – Average Occupancy Rates of All-Star Hotels, 2010 to 3Q2020
5.3 Room Rates
The chart below shows the average daily room rate of hotels in selected states in Malaysia for 2018 and 2019.
Malaysia & Selected States: Average Daily Room Rates, 2018 and 2019
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OVERVIEW
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Malaysia Kedah
Average Occupancy Rate (%)
60.0
50.0
40.0
30.0
20.0
10.0
70.0
0.0
31.6
27.6
2016
2019 2020
(9M)
20172010 2011 2012 2013 2014 2015 2018
Sources: Tourism Malaysia / Knight Frank Research
Note: 3Q2020 (January to September 2020 period)
Average Daily Room Rate (RM)
2018 2019
Kuala
Lumpur
1000
800
600
400
200
0
1200