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

Structure of Al-Hadharah Boustead REIT