Overview

Al-Hadharah Boustead REIT (the "Fund") is the first Islamic plantation-based real estate investment trust (REIT) launched in Malaysia.

Listed on 8 February 2007 on the Main Board of Bursa Malaysia Securities Berhad, Al-Hadharah Boustead REIT's principal investment strategy is to own and invest primarily in plantation assets comprising plantation estates and mills. The primary objectives of the Fund are to provide Unitholders with stable distribution of income/yield and to achieve long term growth in the NAV per Unit of the Fund.

As at 30 September 2011, the Fund comprises of twelve oil palm estates and three palm oil mills in Peninsular Malaysia covering 19,948 hectares.

	Plantation Assets as at 30 September 2011	Land Area (hectares)		Purchase Consideration (RM'000)		Carrying Value (RM'000)
	Bekoh Estate, Johor	1,226		33,510		49,566
	Malaya Estate, Perak	922		20,770		38,238
	Kulai Young Estate, Johor	803		40,850		53,349
	Bukit Mertajam Estate, Kedah	2,173		96,970		112,800
	Batu Pekaka Estate, Kedah	969		38,630		45,472
	Chamek Estate, Johor	817		22,020		42,344
	Telok Sengat Estate and Telok Sengat Palm Oil Mill, Johor	3,699		147,400		229,887
	Lepan Kabu Estate and Lepan Kabu Palm Oil Mill, Kelantan	2,044		71,750		87,949
	Malakoff Estate, Pulau Pinang	1,397		100,500		106,617
	Bebar Estate, Pahang	2,341		88,300		98,616
	Taiping Rubber Plantation Estate and Trong Palm Oil Mill, Perak	1,356		88,733		89,416
	Sutera Estate Sabah	2,201		100,500		101,873
	Total	19,948		849,933		1,056,127

Income Streams

Under the Al-Hadharah Boustead REIT, plantation assets will be leased back to the vendors for a three-year renewable tenancy with a cumulative period of up to thirty years. At the end of every three years, the fixed rental will be reviewed and a new rental will be agreed between the parties. The new rental will be determined based on historical crude palm oil (CPO) prices, prevailing and expected future CPO prices, cost of production, extraction rates and yield per hectare. Hence, income sources for Al-Hadharah Boustead REIT include:

Fixed Rental

With the renewal of the Ijarah agreement effective from 1 January 2010, the fixed rental income for the second tenancy term is increased from Tenants will pay a cumulative fixed rental of approximately RM53.2 million to RM57.8 million per annum for the first tenancy term of three years. This will be payable on a bi-monthly basis.

Performance-Based Profit Sharing

In addition to a fixed rental, the Al-Hadharah Boustead REIT may enjoy an annual profit sharing of net incremental income based on a formula pegged to CPO and fresh fruit bunch (FFB) prices. This net incremental income is determined based on the actual CPO price realised for the year, above the reference price of RM2,000 per MT for the first next three years. It will be shared on a 50:50 basis between the Tenants and the Fund. This profit sharing payment is the first of its kind in the REIT market and may translate into more handsome distribution yields for unitholders.

Capital Gains

Given the development potential of some of the plantation assets, especially those located in prime locations; there is a potential upside for capital gains. The gains realised may be distributed as bonus distributions.

Distribution of Income

The Manager has in the past distributed more than 90% of the Fund's taxable profit for the relevant year on semi-annual basis. However, the Board of Directors of the Manager may at its discretion change the percentage and frequency of the distribution to be made to the unitholders.

The source for the distribution of income comes from the fixed rental and performance-based profit sharing (if any). On top of this, unitholders may also enjoy a bonus distribution resulting from realised capital gains on disposal of the Fund's asset.

Future Growth

With the Boustead Group's well established and proven track record in the plantation sector since the 1900s, the Al- Hadharah Boustead REIT offers an investment opportunity spearheaded by an organisation that has strong operating cashflows complemented with a professional management team.

The Al-Hadharah Boustead REIT is unique as it features embedded growth potential. The Group also has a total plantation portfolio in excess of RM1 billion in value which provides new opportunities for further growth.

The Al-Hadharah Boustead REIT is an attractive investment alternative. It offers unitholders a projected distribution yield of over 7%. This compares favourably to the average dividend yield of 3.0% for selected plantation stocks.

It is the intention of the Manager, subject to approval by the relevant authorities, to fund future acquisitions and plantation enhancements via Islamic financing and/or issuance of new units. However, the Manager shall ensure that the maximum level of financing for the Fund shall not exceed 50% gearing of the Fund’s total asset value as prescribed in the Trust Deed and the REIT Guidelines.

Structure of Al-Hadharah Boustead REIT