Al-Salam Real Estate Investment Trust was listed on Bursa Malaysia on 29 September 2015 with 31 properties. Two years after its IPO listing, Al-Salam REIT has maintained its portfolio at 31 properties valued at RM 922.1 million. In this article, I’ll list down 9 quick facts that you need to know about Al-Salam REIT before you invest.
#1: Stock Symbol
Ticker Symbol: KLSE: ALSREIT / KLSE: 5269
Market Capitalization: RM 568.4 Million (18 December 2017)
Share Price: RM 0.98 (18 December 2017)
Syariah Compliant: Yes
#2: The Business
Al-Salam REIT derives income from the following properties:
- KOMTAR JBCC
KOMTAR JBCC is the trophy asset of Al-Salam REIT. It is valued at RM 465.0 million, accounting for 50.4% of the value its portfolio. The property is part of an integrated development consisting of a 4-storey shopping mall and a 25-storey purpose built office known as Menara Komtar. In 2016, it has recorded a 93% occupancy rate with a total of 129 tenants. Its key tenants include Metrojaya, Padini Concept Store, and Brands Outlet. In 2016, KOMTAR JBCC has generated RM 39.92 million and RM 27.47 million in gross revenue and net property income.
- Menara Komtar
As mentioned, Menara Komtar is part of the integrated development of JBCC. It is valued at RM 72.0 million, accounting for 7.8% of the value of its portfolio. It is currently occupied by major tenants which includes Johor Corporation, Damansara Assets Sdn Bhd, and TPM Technopark Sdn Bhd. Collectively, they represent 80% of all tenants occupying Menara Komtar. In 2016, Menara Komtar has contributed RM 9.03 million and RM 5.84 million in gross revenue and net property income.
- @Mart Kempas
@Mart Kempas is a single-storey purpose built hypermarket that serves low-to-medium income shoppers in Kempas. It is valued at RM 65.0 million, accounting for 7.0% of the value of its portfolio. It has recorded a 90.0% occupancy rate. Unified Vision Sdn Bhd is the key tenant as it contributes 10% of total income of the property. The rest of @Mart Kempas’s tenants are contributing not more than 5% of its total income. In 20116, @Mart Kempas has contributed RM 6.78 million and RM 3.77 million in gross revenue and net property income.
- KFCH International College Building
KFCH International College Building is a 4-storey building located in Bandar Dato’ Onn, a residential township situated 12 km from Johor Bahru. It is valued at RM 28.4 million, accounting for 3.1% of the value of its portfolio. The building is leased to KFCH College for a lease term of 3 + 3 + 3 years commencing on 8 October 2010. In 2016, KFCH International College Building has contributed RM 2.34 million and RM 2.08 million in gross revenue and net property income.
- The QSR Properties
Al-Salam REIT has 22 properties which are specifically used for the operations of fast food brands under QSR namely KFC and Pizza Hut. Collectively, they are valued at RM 158.6 million, accounting for 17.2% of the value of its portfolio. In 2016, the QSR Properties have contributed RM 9.80 million and RM 9.79 million in gross revenue and net property income.
- Industrial Premises
Al-Salam REIT has 5 industrial properties that are used to support QSR’s operations of both KFC and Pizza Hut restaurants. Combined, they are valued at RM 133.1 million, accounting for 14.4% of the value of its portfolio. In 2016, these industrial properties have contributed RM 8.26 million and RM 8.24 million in gross revenue and net property income.
#3: The Financials
I’ve compiled the quarterly results of Al-Salam REIT for the past 8 quarters. Evidently, quarterly sales have increased from RM 17.15 million in Q4 2015 to RM 21.48 million in Q4 2016 before dropping to RM 19.79 million in Q3 2016. Realised earnings are in tandem with its quarterly sales. It has grown from RM 6.76 million in Q4 2015 to RM 10.98 million in Q4 2016 before dropping to RM 8.61 million in Q3 2017.
Source: Quarterly Results of Al-Salam REIT
#4: Major Acquisitions
As at 30 September 2017, there is no announcement or proposal of any major acquisition or disposal of investment properties by Al-Salam REIT.
#5: Lease Profile
The following are the proportion of leases of Al-Salam REIT’s properties which will expire starting in the financial year 2019 onwards:
Source: Annual Report 2016 of Al-Salam REIT
Most of @Mart Kempas’s leases will expire in the financial year 2017. This is offset by long-term leases from Menara Komtar, KFCH International College Building, the QSR Properties and the Industrial Premises. Both the QSR Properties and the Industrial Premises are leased based on a Triple Net Lease for a term of 3 years and is renewable every 3 years up to a maximum of 15 years beginning in the financial year 2015.
As I write, Al-Salam REIT is trading at RM 0.98 a unit.
As at 30 September 2017, Al-Salam REIT has reported having RM 1.04 in net asset value a unit. Thus, its current P/NAV works out to be 0.94.
Al-Salam REIT adopts a distribution policy to declare and pays out at least 90% of its distributable income on a half-yearly basis. For the 1st half of 2017, Al-Salam REIT has paid out 2.85 sen in DPU.
If Al-Salam REIT is able to maintain its DPU at 2.85 sen for the next 2 half yearly distributions, it would pay out 5.70 sen in DPU. As such, its gross dividend yield is expected to be 5.82%. For individual investors, it is prudent to deduct 10% withholding tax from 5.70 sen when calculating your net dividend yield, as such, I would expect net dividend yield to be 5.23%.
#7: Debt Profile
As at 30 September 2017, Al-Salam REIT has recorded RM 350.6 million in total Islamic Financing. It works out to be 35.3% of Al-Salam REIT’s total asset value of RM 992.0 million, thus, is in line with its intention to maintain below 50% in debt-to-total assets.
#8: Investor Relations
For further enquiries or to request for additional investment information on Al-Salam REIT’s Investors Relation matters, you may contact:
Sahrin bin Munir
Designation: Senior Executive Business Development & Investor Relations
#9: Major Shareholders
As at 31 December 2016, the substantial shareholders of Al-Salam REIT are:
– Damansara Assets Sdn Bhd: 48.12%
– Tabung Amanah Warisan Negeri Johor: 17.24%
– Waqaf An-Nur Corporation Bhd: 9.98%
– Johor Corporation: 4.06%
– Kulim (Malaysia) Bhd: 3.91%