Overview

Al-Hadharah Boustead REIT is the first Islamic plantation-based real estate investment trust (REIT) launched in Malaysia. It is also the largest Islamic REIT in Malaysia with a market capitalisation of approximately RM670 million as at 30 June 2008.

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 June 2008, the Fund comprises of eight oil palm estates and two palm oil mills in Peninsular Malaysia covering 12,679 hectares.

	Plantation Assets as at 30 June 2008	Land Area (hectares)		Carrying Value
				(RM'000)		%
	Bekoh Estate, Johor	1,226		33,616		7.0
	Malaya Estate, Perak	922		22,457		4.6
	Kulai Young Estate, Johor	816		40,944		8.5
	Bukit Mertajam Estate, Kedah	2,173		97,653		20.2
	Ladang Batu Pekaka, Kedah	969		38,939		8.1
	Chamek Estate, Johor	817		22,362		4.6
	Telok Sengat Estate and Telok Sengat Palm Oil Mill, Johor	3,712		154,703		32.0
	Lepan Kabu Estate and Lepan Kabu Palm Oil Mill, Kelantan	2,044		72,249		15.0
	Total	12,679		482,923		100

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

Tenants will pay a cumulative fixed rental of RM41.3 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 RM1,500 per MT for the first 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 dividend yields for investors.

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 dividends.

Dividends

Projected Dividends

At least 98% of the distributable earnings of the REIT will be paid to unitholders for the first three financial years. It is projected that the REIT will be well positioned to declare a dividend distribution of 7.38 sen for the next three years.

Variable Dividends

In addition to income from fixed rentals, the REIT will also see earnings derived from profit sharing between the REIT and its tenants based on a formula. This may also contribute to additional dividend distribution to the unitholders.

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. There is a planned second phase injection of plantation assets. 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 investors a projected dividend yield of over 7%. This compares favourably to the average dividend yield of 3.0% for selected plantation stocks. In light of the current debt free status of the fund, the Al-Hadharah Boustead REIT affords greater flexibility in achieving enhanced growth for its unitholders.

Structure of Al-Hadharah Boustead REIT