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Growing Value
ANNUAL REPORT 2011
GROWING VALUE
Like a skilled farmer carefully picking healthy seeds that he will plant, nurture and cultivate to deliver the best possible harvest, AmanahRaya-REIT Managers Sdn Bhd (ARRM) too continues to expertly select and manage the many properties within its asset portfolio, skilfully growing their value while delivering high returns to unitholders. Whether they are the assets in our hospitality, higher education, office building, industrial or retail clusters, we continue to sow the seeds of success by purposefully enhancing the value of these existing assets. In doing so, we are leveraging on our core values which call for us to be Responsible and Effective, to maintain Integrity and to be Trustworthy. As ARRM sets its sights on growing the value of the AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) portfolio to RM1.5 billion over the next three years, we will inject high-yielding new assets into our asset portfolio and grow their value.
Contents
02 07 08 34 35 36 38 46 50 Corporate Directory About AmanahRaya REIT Property Portfolio Corporate Structure Organisational Chart Board of Directors Profile of The Board of Directors Message from the Chairman AmanahRaya REIT Investment Committee Members 52 55 56 57 58 77 128 131 Statement of Corporate Governance Corporate Calender Profile of The Chief Operating Officer The Management Team Managers Report Statutory Financial Statements Unitholders Statistics Additional Disclosure
Office Building
Block A & B, South City Plaza Wisma AmanahRaya Wisma Amanah Raya Berhad Wisma UEP Dana 13, Dana 1 Commercial Centre
Hospitality
Holiday Villa, Alor Setar Holiday Villa, Langkawi
Higher Education Building

SEGI College, Subang Jaya SEGI University College, Kota Damansara
Industrial
Permanis Factory Kontena Nasional Distribution Centre 11 AIC Factory Silver Bird Factory Gurun Automotive Warehouse
Retail
Selayang Mall
Corporate Directory
MANAGER AmanahRaya- REIT Managers Sdn Bhd (Incorporated in Malaysia)
(856167-A)
COMPANY SECRETARIES OF THE MANAGER Leong Shiak Wan (f) See Siew Cheng (f) Jerry Jesudian a/l Joseph Alexander Norhaslinda binti Samin
MANAGERS REGISTERED OFFICE Level 11, Wisma AmanahRaya No.2, Jalan Ampang 50508 Kuala Lumpur Tel : 03 2055 7388 Fax : 03 2078 8187 INDEPENDENT INVESTMENT COMMITTEE
Mahadzir bin Azizan (Appointed as Chairman on 01/01/2012) Datuk Yahya bin Yaacob (Resigned as Chairman on 01/01/2012) Tuan Syed Elias bin Abd. Rahman Alhabshi Vasantha Kumar Tharmalingam (Appointed on 11/02/2011) Datuk Johar bin Che Mat (Appointed on 01/01/2012) Tengku Dato Seri Hasmuddin bin Tengku Othman (Resigned on 01/01/2012
PRINCIPAL PLACE OF BUSINESS Level 8, Wisma TAS No.21, Jalan Melaka 50100 Kuala Lumpur Tel : 03 2078 0898 Fax : 03 2026 6322 AUDIT COMMITTEE Datin Aminah binti Pit Abd Raman (Chairperson) Datuk Syed Hussian bin Syed Junid Che Pee bin Samsudin (Appointed on 23/08/2011) Alina binti Hashim (Resigned on 23/08/2011)
BOARD OF DIRECTORS OF THE MANAGER Independent Non-Executive Directors Tan Sri Dato Ahmad Fuzi bin Abdul Razak (Chairman) Dato Abdul Mutalib bin Mohamed Razak Datuk Syed Hussian bin Syed Junid
MANAGEMENT TEAM Adenan bin Md Yusof (Chief Operating Officer / Principal Officer) Azmanira binti Ariff (Head, Legal and Compliance) Yusri bin Abdul Manaf (Head, Property Management) Noorbaizura binti Hermeyney (Head, Real Estate Investment) Zaffarin bin Haji Zanal (Group Chief Risk Officer) Kusuma Dewi binti Abdul Aziz (Accountant)
Non-Independent Non-Executive Directors Dato Ahmad Rodzi bin Pawanteh Datin Aminah binti Pit Abd Raman Shahrol Anuwar bin Sarman Datuk Johar bin Che Mat (Appointed on 23/08/2011) Che Pee bin Samsudin (Appointed on 23/08/2011) Sharizad binti Jumaat (Resigned on 23/08/2011) Alina binti Hashim (Resigned on 23/08/2011) Abas bin Abd Jalil (Resigned on 23/08/2011)
Ama nahR a y a R EIT
PROPERTY MANAGERS Malik & Kamaruzaman Property Management Sdn Bhd (721939-X) 3rd Floor, Wisma Yakin Jalan Melayu 50100 Kuala Lumpur I.M. Global Property Consultants No. 47-2, Tingkat 2 Wisma IMG, Jalan 3/76D Desa Pandan, 55100 Kuala Lumpur
(001639648-V)
PRINCIPAL FINANCIER OF THE FUND Affin Bank Berhad (25046-T) 17th Floor, Menara Affin 80, Jalan Raja Chulan 50200 Kuala Lumpur
AUDITOR BDO (AF 0206) 12th Floor, Menara Uni.Asia 1008, Jalan Sultan Ismail 50250 Kuala Lumpur
2)
REGISTRAR AND TRANSFER OFFICE BURSA MALAYSIA STOCK CODE Symphony Share Registrars Sdn Bhd Level 6, Symphony House Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Selangor Tel : 03 7841 8000 Fax : 03 7841 8008
(378993-D)
ARREIT 5127 (Listed on the Main Board on 26 February 2007)
TRUSTEE CIMB Trustee Berhad (167913M) Level 5, Bangunan CIMB Jalan Semantan, Damansara Heights 50490 Kuala Lumpur Tel : 03 2084 8888 Fax : 03 2092 2717
Annual report 2011
Hospitality Retail Industrial Higher Education Oce Building
Diversied
Growth
With the well-diversified hospitality, higher education, office building, industrial and retail sector properties within our AmanahRaya REIT portfolio, we are the most diversified REIT in the market. It is this diversity that makes us more resilient as our risks are spread out over several sectors in the event of the downfall of one sector. Through ensuring long term leasing arrangements, pre-determined rental increments and other measures to safeguard ourselves, we are effectively securing cash flows and mitigating our risk.
Annual report 2011
Property Profile
Holiday Villa, Alor Setar Holiday Villa, Langkawi SEGi College, Subang Jaya SEGi University College, Kota Damansara Block A & B South City Plaza, Seri Kembangan Wisma AmanahRaya, Jalan Ampang Wisma Amanah Raya Berhad, Jalan Semantan Wisma UEP, Subang Jaya Dana13, Dana 1 Commercial Centre, Petaling Jaya Permanis Factory, Bangi Kontena Nasional Distribution Centre 11, Port Klang AIC Factory, Shah Alam Silver Bird Factory, Shah Alam Gurun Automotive Warehouse, Gurun Selayang Mall, Selayang
About AmanahRaya REIT

AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) was established on 10 October 2006 pursuant to the Deed between the Manager, AmanahRaya-REIT Managers Sdn Bhd and CIMB Trustee Berhad (Trustee). It was listed on the Main Board of Bursa Malaysia on 26 February 2007 as a real estate investment fund. As at 31 December 2011, the portfolio of AmanahRaya REIT consists of 15 properties with a total book value of RM1.04 billion. The portfolio is well diversified comprising properties from hospitality, higher education, office building, industrial and retail sectors. The investment objective of AmanahRaya REIT is to provide strong and sustainable return to the unitholders from real estate investment. The main focus of its real estate investment is the growth potential in terms of rental yield and capital values of the properties over a long term period. Performance of AmanahRaya REIT is assessed based on the following standards: (a) (b) (c) (d) Management expense ratio (MER) Total returns Distribution yield Net asset value Investment Management Sdn Bhd). As at 31 December 2011, the authorised share capital of ARRM is RM5 million and the paid-up share capital is RM1.5 million. ARRM is principally responsible for the management of AmanahRaya REITs investment strategies to meet its investment objectives. Its primary activity is to manage and administer AmanahRaya REIT on behalf of the unitholders in accordance with the Trust Deed dated 10 October 2006 and guidelines issued by the Securities Commission and Bursa Malaysia. ARRMs main role is to ensure good and sustainable return to AmanahRaya REIT unitholders.
ABOUT AMANAHRAYA-REIT MANAGERS SDN BHD AmanahRaya-REIT Managers Sdn Bhd (ARRM), a wholly owned subsidiary of Amanah Raya Berhad is the manager of AmanahRaya REIT. ARRM was formed on 8 May 2009 and took over the management of AmanahRaya REIT on 7 September 2009 upon the registration of the Second Supplemental Deed of AmanahRaya REIT with the Securities Commission from the former Manager i.e. AmanahRaya-JMF Asset Management Sdn Bhd (presently known as AmanahRaya
Annual report 2011
Property Portfolio
AMANAHRAYA REAL ESTATE INVESTMENT TRUST INVESTMENT PORTFOLIO FUNDS INVESTMENTS (as at 31 December 2011)
Real Estate(s) Location Type of Building Cost of Acquisition (RM000) Hospitality Holiday Villa Alor Setar Holiday Villa Langkawi Higher Education Building SEGi College, Subang Jaya Alor Setar, Kedah Langkawi, Kedah Subang Jaya, Selangor Hotel Resort Hotel 31,000 55,000 Appreciation in Value (RM000) 4,000 3,800 2,600 9,000 100% 100% 100% 100% Occupancy Unexpired Lease / Tenancy Period (approximate) 4.50 yrs 4.50 yrs 9.50 yrs 6.00 yrs Investment in Real Estate Value* (RM000) (a) 35,000 58,800 55,100 154,000 Value over Total Asset Value (%) (a/b) 3.36% 5.65% 5.30% 14.80%
Higher Education 52,500 Building Higher Education 145,000 Building 18,300 68,000 53,000
SEGi University Petaling Jaya, College, Selangor Kota Damansara Office Building Block A & B, SouthCity Plaza Wisma AmanahRaya Wisma Amanah Raya Berhad Wisma UEP
Seri Kembangan, Office Building Selangor Jalan Ampang, Kuala Lumpur Damansara Heights Kuala Lumpur Subang Jaya, Selangor Office Building Office Building
1,800 6,700 10,900
100% 100% 100%
4.30 yrs 0.70 yrs 3.00 yrs
20,100 74,700 63,900
1.93% 7.18% 6.14%
Office Building
35,500 99,120
3,500 9,800
30% 100%
3.00 yrs 8.30 yrs
39,000 108,800
3.75% 10.46%
Dana13, Dana 1 Ara Damansara, Office Building Commercial Petaling Jaya, Centre Selangor Industrial
Permanis Factory Bandar Baru Industrial Factory 27,550 * Bangi, Selangor Kontena Nasional Distribution Centre 11 AIC Factory Silver Bird Factory Gurun Automotive Warehouse Port Klang, Selangor Industrial Warehouse 28,500
950 2,160
100% 100%
9.50 yrs 7.50 yrs
28,500 30,660
2.74% 2.95%
Shah Alam, Selangor Shah Alam, Selangor Gurun, Kedah
Industrial Factory 19,200 Industrial Complex Industrial Warehouse Retail Mall 92,000 23,970
2,050 6,000 980
100% 100% 100%
4.30 yrs 4.20 yrs 6.00 yrs
21,250 98,000 24,950
2.04% 9.42% 2.40%
Retail
Selayang Mall
Selayang, Selangor
128,165
4,000
100%
5.00 yrs
132,000
12.69%
Real Estate-Related Assets Cash and security deposits Others (Trade and Other Receivables) Total Asset Value (RM000) (b) * Inclusive of upgrading works undertaken on the property
944,760 92,281 3,432 1,040,473
90.80% 8.87% 0.33% 100.00%
Key Investment Highlights of AmanahRaya REIT Property Portfolio

Diversified Portfolio of Properties AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) is known for its diversified portfolio with properties from various different sectors. Currently, AmanahRaya REIT has 15 properties from hospitality, higher education, office building, industrial and retail sectors. This diversification offers flexibility to its investment strategies and provides market strength in facing economic turbulence and market uncertainty. Security Deposits AmanahRaya REITs rental and lease obligations are backed by security deposits averaging more than one (1) year in the form of cash and bank guarantee. This higher-than-industryaverage level of security mitigates the tenant-default risk. Corporate Governance All investment decisions of AmanahRaya REIT are reviewed and deliberated by the Investment Committee which consists of independent members with the right mix of desired investment skills, experience and expertise.
Distribution Policy Triple Net Lease Most of AmanahRaya REITs assets have triple net lease arrangements whereby the lessee/tenant is fully responsible for regular maintenance during the lease tenure. With the approval of the Trustee on or before the distribution date for each distribution period, distribution of at least 90% (or such other percentage as determined by the Manager of AmanahRaya REIT in its absolute discretion) of the distributable income of AmanahRaya REIT will be made, provided always that the distributable amount shall be subject to the availability of funds and in compliance with applicable laws and requirements. Each distribution shall be paid every quarter and the Manager of AmanahRaya REIT may amend the distribution policy at any time by giving notice to the unitholders.
Long Term Lease Arrangements All AmanahRaya REIT properties, except Wisma UEP, are leased for a minimum of six (6) years to a maximum of fifteen (15) years. The long lease-maturity profile of its portfolio underpins the stable rental income of AmanahRaya REIT. Rental rates for the entire lease period are predetermined and will gradually increase at every rent review period.
Reputable Lessees/ Tenants Majority of the lessee/tenant of AmanahRaya REIT are public listed companies with good reputation and strong financial standing.
Annual report 2011
Financial Highlights of AmanahRaya REIT

Snapshot of AmanahRaya REIT as at 31 December 2011
Total Assest Value
Gearing Ratio
RM1.04 billion
34.91%
Highest Price (2011) Sectors
Hospitality, Higher Education, Office Building, Industrial and Retail Sectors
RM0.97 per unit (17 February & 5 May 2011)
Lowest Price (2011) Total no of Properties
15 properties
RM0.85 per unit (26 September 2011)

Price as at 31 December 2011
Total Units Issued
RM0.91 per unit
573,219,858
DPU for 2011 Market Capitalization
7.2213 sen per unit
RM521,630,071
Total Number of Unitholders Average 3 month Trading Volume (units) (Oct-Dec 2011)
2,809
183,739
Substantial Unitholders Net Asset Value ("NAV") per unit
RM1.0496
Kumpulan Wang Bersama (58.32%) Perbadanan Kemajuan Negeri Selangor (5.65%)
10
Property Portfolio
Well Structured Lease Profile
Rent Review Frequency
AIC Factory, Shah Alam Gurun Warehouse, Kedah Kontena Nasional, Port Klang Silverbird Factory, Bangi Permanis Factory, Bangi Segi University College, Kota Damansara Segi College, USJ Holiday Villa, Langkawi Holiday Villa, Alor Setar Dana 13, Subang Blok A & B, South City Plaza Wisma UEP, Subang Jaya* Wisma AmanahRaya, Jalan Ampang Wisma Amanah Raya Berhad, Jalan Semantan Selayang Mall
3+4+3 3+4+3 3+3+3 3+4+3 5+5+5 2+2+2+2+2 3+3+3+3+3 3+4+3 3+4+3 3+3+2+2 3+3+3+1 0 3+3 Reviewed annually 3+3+3+1
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Remaining Lease *
Lease Completed
Tenancy of Sime UEP Development Sdn Berhad as the master lessee of Wisma UEP has expired on 31/8/2011
Annual report 2011
11
2021
2022
Property Portfolio
3.0 Asset Value Based on Property Sector 4.0 Usage of Lettable Area by Lessees Business Sector 5.0 Gross Income Based on Property Sector
22% 10% 22% 32% 14%
Industrial Hotel Education Office Retail
23% 16% 12% 14% 19% 13% 3%
Manufacturing Logistic Hospitality Education Services Retail Property
22% 9% 22% 33% 14%
Industrial Hotels Education Office Retail
12
6.0 AmanahRaya REIT: Top Ten Tenants
12,000,000.00
10,000,000.00
8,000,000.00
6,000,000.00 2011 2010 2009 4,000,000.00
2,000,000.00
0 SEGi University College, Kota Damansara 11,016,000.00 11,016,000.00 10,440,000.00 Selayang Mall* Silverbird Factory Block D13* Wisma AmanahRaya Wisma AmanahRaya Berhad 4,032,208.62 3,561,069.68 3,435,000.00 Holiday Villa Langkawi SEGi USJ Holiday Villa Alor Setar Kontena Nasional
7.0 Distribution Per Unit (sen)

8
7.6
7.2
6.8
6.4 7.14 7.16 7.29 7.32 7.33 7.22 Forecast Actual
2009
2010
2011 Annual report 2011
2,151,000.00 639,325.00
9,312,000.00 6,057,806.45
7,296,000.00
7,296,000.00
6,942,000.00
6,970,896.48
4,534,830.51
6,609,319.20 6,609,319.20 5,908,000.00
3,849,999.96
3,849,999.96
3,762,000.00
3,284,400.00
3,284,400.00
3,236,000.00
2,169,999.96
2,169,999.96
2,126,000.00
13
Property Portfolio
AmanahRaya REIT Volume and Share Price Analysis for 2011
10.00% 8.00% 6.00% 4.00% 2.00% -2.00% -4.00% -6.00% -8.00% -10.00% -12.00% -14.00% -16.00% -18.00% -20.00% -22.00% 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec Relative Performance Volume 0.00%
1.13 1.10 1.07 1.04 1.01 0.98 Share Price (RM) 0.95 0.92 0.89 0.86 0.83 0.80 0.77 0.74 0.71 0.68 0.65 1 Jan
NAV as at 31 December 2011 (RM1.05) Correlative Performance Relative Price
AmanahRaya REIT Share Price Performance vs KLCI as at 31 December 2011

0.98 0.96 1,400,000 0.94 1,200,000 0.92 0.9 0.88 0.86 0.84 400,000 0.82 0.8 0.78 1 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 200,000 0 1,000,000 800,000 600,000 1,600,000
Share Price RM
Volume Share Price (RM)
14
8.0 AmanahRaya REIT Yearly Movement of Unitholders

2500
2000
1500
1000
500 1186 1804 2104 2009 2010 2011 2011 Corporate Foreigners Individuals
283
579
705
35
51
Corporate
Foreigners
49
Individuals
AmanahRaya REIT Quarterly Movement of Unitholders
2500
2000
1500
1000
500
0 2010 2011 2010 2011 2010 2011 2010
Q1
Q2
Q3
Q4
Annual report 2011
15
Overview of 15 Properties Under
AmanahRaya REIT
16
Holiday Villa Alor Setar

Address Lot 162 & 163, Jalan Tunku Ibrahim, 05000 Alor Setar, Kedah Darul Aman Location The property is located within the Central Business District of Alor Setar wherein several government & commercial buildings are located nearby amongst others are Majlis Bandaraya Alor Setar building, Bangunan KWSP, Bangunan Bank Simpanan Nasional, Menara Sentosa and University Tun Abdul Razak building. Alor Setar is the capital city of Kedah and one of the regions oldest cities. It is a distribution center for manufacturing and agricultural products such as paddy, and the royal seat of the Kedah state since the establishment of this city. Title details Held under Master Title H.S.(D) 21046, PT 3193, Town of Alor Setar, District of Kota Setar, State of Kedah Darul Aman Property type Hotel Description A commercial property comprising a 4-star hotel with 156-rooms in Alor Setar located within a 21-storey commercial complex with sub-basement level known as City Plaza Age of property Approximately 16 years Tenure of Master Title Leasehold for 99-years Unexpired lease period (14/12/2107) Approximately 96 years Lease period 10 years commencing from June 2006 Gross Floor Area 150,000 sq.ft Net lettable area Not applicable Existing use Used as a hotel under the brand name of Hotel Holiday Villa Date of acquisition 26th February 2007 Cost of acquisition RM31,000,000.00 Valuation as at November 2011 RM35,000,000.00 Valuer DTZ Nawawi Tie Leung Net Book Value RM35,000,000.00 Master Lessee Alor Setar Holiday Villa Sdn Bhd Occupancy rates 100% Net rental (per month) RM180,833.33 Next Rent Review June 2012 Property Manager Malik & Kamaruzaman Property Management Sdn Bhd
Annual report 2011
17
Holiday Villa Langkawi

Address
Lot 1698, Pantai Tengah, Mukim Kedawang, 07000 Langkawi, Kedah Darul Aman
Description
A purpose-built 4-star resort hotel with 238rooms located in Pantai Tengah, Langkawi
Cost of acquisition
RM55,000,000.00
Valuation as at November 2011 Location

The property is located along one of the most popular beach stretch which the locality is known as Pantai Tengah. Along the same stretch are other good hotel resorts which include Langkawi Beach Resort, Aseania Seaview Resort, Sunset Beach Resort, Moonlight Bay Resort, Tanjung Mali Beach Resort and Pelangi Beach Resort, to name a few. Langkawi International Airport is located 6 km to north of the property. Langkawi Island is one of premier tourist destination in Malaysia due to its status being a duty free zone apart from the wonderful beaches and historical sites it offers to tourist. Due to the heavy tourist arrivals and international events held, Langkawi Airport has been upgraded to an international airport.
Age of property
Approximately 20 years
RM58,800,000.00
Valuer Tenure
Freehold DTZ Nawawi Tie Leung
Net Book Value Unexpired lease period

Not Applicable RM58,800,000.00
Master Lessee Lease period

10 years commencing from July 2006 Langkawi Holiday Villa Sdn Bhd
Occupancy Rate Gross Floor Area

176,590 sq.ft. 100%
Net rental (per month) Net lettable area

Not Applicable RM320,833.33
Next Rent Review Existing use

Used as a resort hotel under the brand name of Hotel Holiday Villa July 2012
Title details
Lot No. 2504, Mukim of Kedawang, P.T. 107 & P.T. 108, both in town of Padang Mat Sirat, District of Langkawi, Kedah Darul Aman
Property Manager
Malik & Kamaruzaman Property Management Sdn Bhd
Parking spaces
55 parking bays
Property type
Resort Hotel
Date of acquisition
26th February 2007
18
SEGi College Subang Jaya

Address
SEGi College, Persiaran Kewajipan USJ 1, 47600 Subang Jaya, Selangor Darul Ehsan.
Description
A 12-storey purpose-built office building with 3 basement car park levels which is used as a Higher Learning Institution premises
Date of acquisition
26th February 2007
Cost of acquisition
RM52,500,000.00
Location
It is located within one of the Commercial Business District of Subang Jaya under zone USJ 1, Subang Jaya. Subang Jaya is an integrated mixed development comprises of residential, commercial and industrial developments which is mainly developed by Sime UEP. It is located about 15 kilometres to south-west of Kuala Lumpur city centre. Landmark development located next to the property is the Summit City which is an integrated development comprises of retail complex, office block and a 4-star hotel. In a larger neighbourhood, there are several prominent commercial buildings which include Subang Parade, Sunway Pyramid, Sunway Medical Centre and Sheraton Hotel.
Age of property
Valuation as at December 2011

RM55,100,000.00
Tenure
Freehold
Valuer
Raine & Horne
Unexpired lease period

Not Applicable
Net Book Value

RM55,100,000.00
Lease period
15 years commencing from May 2006
Master Lessee
SEG International Bhd
Gross Floor Area

280,575 sq. ft.
Occupancy Rate
100%
Net lettable area

131, 387 sq. ft.
Net rental (per month)

RM273,700.00
Title details
Geran 43527, Lot No. 13, Pekan Subang Jaya, District of Petaling, State of Selangor
Existing use
Used as a higher learning institution and training centre under the brandname of SEGi College
Next Rent Review

May 2012
Property type
Higher education building
Parking spaces
206 parking bays and 400 motorcycle parking bays
Property Manager
Annual report 2011
19
SEGi University College Kota Damansara

Address
SEGi University College (Malaysia Main Campus), No. 9, Jalan Teknologi, Taman Sains Selangor, Kota Damansara PJU 5, 47810 Petaling Jaya, Selangor
Description
An institutional complex comprising 7-storey administrative block and 5-storey academic block
Date of acquisition
28th December 2007
Cost of acquisition
RM145,000,000.00
Age of property Location

SEGi University College 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 25 kilometres to the west of Kuala Lumpur city centre. Notable commercial buildings within the neighbourhood are Tropicana Medical Centre, Sri KDU Kota Damansara and Kelab Golf Seri Selangor. Approximately 5 years
Valuation as at November 2011

RM154,000,000.00
Tenure
Leasehold for 99 years
Valuer
Raine & Horne

Net Book Value

RM154,000,000.00
Lease period
10 years commencing from January 2008
Master Lessee
Gross Floor Area

577,031 sq.ft.
Occupancy Rate
100%
Net lettable area Title details

Developers Lot No. 9, Mukim Sungai Buloh, District of Petaling, State of Selangor Darul Ehsan 337,710 sq.ft

RM918,000.00
Existing use
Used as a college campus under the brandname of SEGi University College
Next Rent Review

January 2012
Property type
Higher education building
Parking spaces
344 car parking bays and 1,031 motorcycle parking bays
Property Manager
IM Global Property Consultants
20
Block A & B South City Plaza Seri Kembangan

Address
Block A & B, South City Plaza, Persiaran Serdang Perdana, Taman Sedang Perdana, Section 1, 43300 Seri Kembangan, Selangor
Description
Two (2) blocks (Block A and Block B) of 5 storey purpose-built office buildings within a development known as South City Plaza
Date of acquisition
26th February 2007
Cost of acquisition
RM18,300,000.00
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. It is located within the locality known as Seri Kembangan which comprises of mixed development made up of mainly residential supported by several sections of commercial developments. Seri Kembangan is located about 15 kilometres to the south of Kuala Lumpur city centre. Prominent development within the neighbourhood is the Mines Resort City which comprises of Mines Beach resort & Spa, Mines Waterfront Business Park, Palace of the Golden Horses, Mines International Exhibition City Centre, The Mines Resort and Golf Country Club and Mines Shopping Fair.
Age of property

RM20,100,000.00
Tenure of Master Title

Valuer
Raine & Horne

82 years
Net Book Value

RM20,100,000.00
Lease period
10 years commencing from June 2006
Master Lessee
Gross Floor Area

72,505 sq. ft.
Occupancy Rate
100%
Net lettable area

66,605 sq.ft.

RM111,000.00
Existing use
Block A is used as a higher learning centre of SEGi College and Block B is currently used as an office for nature environment products Diamond Energy Water
Next Rent Review

August 2012
Title details
P.T. No. 520 held under Title No. H.S.(D) 226742, Pekan Serdang , District of Petaling, State of Selangor
Property Manager
Parking spaces Property type

Office building The property does not have any car park but shares the usage of 1,766 parking bays with the developer and owner of the individual units within the South City development
Annual report 2011
21
Wisma AmanahRaya Jalan Ampang

Address
Wisma AmanahRaya, No. 2, Jalan Ampang, 50450 Kuala Lumpur
Description
A 15-storey purpose built office building with 2 basement levels
Cost of acquisition
RM68,000,000.00

The property is located within the Central Business District of Kuala Lumpur which most of the financial institutions are located which include Standard Chartered Bank, Bank Muamalat, HSBC Bank, OCBC Bank, CIMB Bank and AIA Insurance. Close proximity to the property is the Light Railway Transit (LRT) station which connect the locality to other major areas such as Kuala Lumpur City Centre (KLCC) and Kuala Lumpur Central Station (centre of all public transport for Klang Valley). Within the immediate vicinity of the property are also several heritage buildings which include Bangunan Sultan Abdul Samad, High Court building, Dataran Merdeka and the Royal Selangor Club.
Age of property
RM74,700,000.00
Valuer Tenure
Leasehold for 99 years CH Williams Talhar & Wong

54 years RM74,700,000.00

6 years commencing from August 2006 Amanah Raya Berhad

235,000 sq.ft. 100%

166,902 sq.ft. RM550,776.60
Next Rent Review Existing use

August 2012 Used as Amanah Raya Berhad office headquarters
Title details
Pajakan Negeri (WP) 25414, Lot No. 21, and Pajakan Negeri (WP) 25415, Lot No. 22, Section 32, Town and District of Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur
Property Manager
Parking spaces
66 parking bays
Property type
Office building
Date of acquisition
26th February 2007
22
Wisma Amanah Raya Berhad Jalan Semantan

Address
Wisma Amanah Raya Berhad, No. 15, Jalan Sri Semantan 1, Damansara Heights, 50490 Kuala Lumpur

61 years
Master Lessee
CIMB Investment Bank Berhad
Lease period Location

Wisma Amanah Raya Berhad is located within the commercial area of the exclusive residential area of Damansara Heights. Damansara Heights is located approximately 4 kilometres to the south-west of Kuala Lumpur city centre. Some of the prominent commercial buildings within the same commercial area are premises of Institution of Bank of Malaysia, CIMB Bank, Shell Malaysia, KPMG and Manulife. 9 years commencing from November 2005
Occupancy Rate
100%
Gross Floor Area

170,000 sq.ft.

RM336,017.40
Net lettable area

125,227 sq.ft.
Next Rent Review

November 2012
Existing use
Used as offices for CIMB Group of Companies
Property Manager
Parking spaces Title details

Title Nos. H.S.(D) 83465 and P.N. 46441, Lot Nos P.T. 6 & 36622, Mukim and District of Kuala Lumpur 261 parking bays
Date of acquisition
26th February 2007
Property type
Office building
Cost of acquisition
RM53,000,000.00
Description
A 5-storey purpose-built office building with 6 lower ground levels inclusive 4-level car park

RM63,900,000.00
Valuer Age of property

Approximately 12 years CH Williams Talhar & Wong
Net Book Value Tenure

Leasehold for 99 years RM63,900,000.00
Annual report 2011
23
Wisma UEP Subang Jaya

Address
Wisma UEP, Jalan USJ10/1A, Pusat Perniagaan USJ 10, 47620 Subang Jaya, Selangor Darul Ehsan
Property type
Office building
Date of acquisition
26th February 2007
Description
A 11-storey purpose-built office building with 3 level of basement car park
Cost of acquisition
RM35,500,000.00
Location
Wisma UEP is located within the one of Commercial Business District of Subang Jaya under section USJ 10 of Subang Jaya. Subang Jaya is an integrated mixed development comprises of residential, commercial and industrial developments which is mainly developed by Sime UEP. It is located about 15 kilometres to south-west of Kuala Lumpur city centre. Nearby to the property is the local councils office which is Majlis Perbandaran Subang Jaya. In a larger neighbourhood, there are several prominent commercial buildings which include Summit City, Subang Parade, Sunway Pyramid, Sunway Medical Centre and Grand Dorsett Subang Hotel.
Valuation as at November 2011 Age of property

Approximately 14 years RM39,000,000.00
Valuer Tenure
Freehold CH Williams Talhar & Wong

Not Applicable RM39,000,000.00

198,499 sq. ft. 100% until 31 August 2011
Property Manager Net lettable area

90,541 sq.ft. Malik & Kamaruzaman Property Management Sdn Bhd
Parking spaces
178 parking bays
Title details
Title Nos. H.S.(D) 52531, P.T. 11303, Mukim of Damansara, District of Petaling, Selangor
24
Dana13, Dana 1 Commercial Centre Petaling Jaya

Address
Dana13, Dana 1 Commercial Centre, Jalan PJU 1A/46, Off Jalan Lapangan Terbang Subang, 47301 Petaling Jaya, Selangor Darul Ehsan
Description
A 13-storey stratified office building which forms part of Dana 1 Commercial Centre.
Cost of acquisition
RM99,120,000.00
Valuation as at November 2011 Age of property

Approximately 2 years RM108,800,000.00
Location
The property is situated within Dana 1 Commercial Centre, a newly completed commercial development by Puncakdana Sdn Bhd. Dana 1 comprises 152 units of two to five storey shopoffices and a 13 storey stratified office building with basement car park level as well as a serviced apartment block. The property is located about 35 kilometres due south-west of Kuala Lumpur city centre. Generally, the neighbourhood of the property comprises a mixture of residential and commercial developments which includes commercial shopoffices, offices buildings, condominiums, apartments, flats, and clubhouse as well a golf course.
Valuer Tenure
Leasehold interest for a term of 99 years expiring on 4th September 2097 Raine & Horne Net Book Value RM108,800,000.00

86 years
Master Lessee
Symphony House Berhad
Lease period
10 years commencing from September 2009
Occupancy Rate
100%
Gross Floor Area

333,438.60 sq.ft

RM591,470.00
Net lettable area

268,850 sq.ft
Next Rent Review

September 2012
Existing use Title details

Developed on the Parent Lot 59214, Mukim of Damansara, District of Petaling, Selangor Darul Ehsan, held under Master Title No PN 8024 Office Block
Property Manager
Parking spaces
The property has been allocated with 300 bays within Dana 1 Commercial Centre
Property type
Office building
Date of acquisition
7th May 2010
Annual report 2011
25
Permanis Factory Bangi

Address
Lots 5 & 7, Jalan P/5 and P/7, Kawasan Perusahaan Seksyen 13, Bandar Baru Bangi, Selangor Darul Ehsan.
Age of property
Cost of acquisition
RM23,550,000.00
Tenure
Valuation as at December 2011

RM28,500,000.00
Location
The property is located within Bangi Industrial Area under Section 13 of Bandar Baru Bangi, a mixed development comprises of residential, commercial and industrial developments. Bandar Baru Bangi is located about 25 kilometres to the south-east of Kuala Lumpur city centre. Notable premises within the same section of the property are premises of Carrier International Sdn Bhd, Denso (Malaysia) Sdn Bhd and Y.S.P Industries (Malaysia) Sdn Bhd, to name a few. It is about 3 kilometres to the south of Bandar Baru Bangi town centre which is located in Section 9.
Unexpired lease period (9/2/2089)

78 years
Valuer
Knight Frank
Lease period
Net Book Value

RM28,500,000.00
Gross Built Up Area

262,607 sq.ft.
Master Lessee
C.I. Holdings Berhad
Net lettable area

Not applicable
Occupancy Rate
100%
Existing use
Used as a manufacturing factory producing soft drinks / fruit juices.

RM162,750.67
Title details
H.S.(M) 13244A & H.S.(M) 13245A, P.T.20104 & P.T.20105 within Section 13, Bandar Baru Bangi, Mukim of Kajang, District of Hulu Langat, State of Selangor
Property Manager Parking spaces

Car park and motorcycle parking sheds are available within the compound of the property Malik & Kamaruzaman Property Management Sdn Bhd
Date of acquisition Property type

Industrial factory 26th February 2007
26
Kontena Nasional Distribution Centre 11 Port Klang

Address
KNDC11, Lot No. 11614, North Klang Industrial Area, 42000 Port Klang, Selangor
Age of property

RM30,660,000.00
Tenure Location
Kontena Nasional Distribution Centre 11 is located within an industrial area known as North Klang Straits Industrial Area, Port Klang. The area is located approximately about 15 kilometres from Klang town centre. Some of the prominent premises within the same area are Ayamas, Nichiden Seimitsu (M) Sdn Bhd, Scott & English Electronics Sdn Bhd, Behn Meyer & Co. (M) Sdn Bhd and Johann Frieght. Lot No. PT 799 Leasehold for 60 years Lot No. PT 21596 Leasehold for 99 years
Valuer
Hakimi & Associates Sdn Bhd

Lot No. PT 799 approximately 56 years Lot No. PT 21596 approximately 78 years RM30,660,000.00
Master Lessee
Kontena Nasional Berhad
Lease period
Occupancy Rate
100%
Gross Built Up Area

247,840 sq.ft.

RM179,250.00
Title details
Lot No. PT 799 held under Title No. H.S.D 128214 and Lot No. PT 21596 held under Title No. H.S(M) 19795, District of Klang, State of Selangor
Existing use
Used as a bonded warehouse
Next Rent Review

June 2013
Parking spaces
Available within the compound of the property Date of acquisition 28th December 2007
Property Manager
Property type
Industrial Warehouse
Description
Warehouse Complex comprising 13 units of single-storey warehouses and 2 units of guard house
Cost of acquisition
RM28,500,000.00
Annual report 2011
27
AIC Factory Shah Alam

Address
Wisma AIC, Lot 1&3, Persiaran Kemajuan, Seksyen 16, 40200 Shah Alam, Selangor Darul Ehsan
Description
An industrial complex comprising a 3-storey office block annexed with a double storey factory and a single storey factory with canteen and a guard house
Date of acquisition
28th December 2007
Cost of acquisition
RM19,200,000.00
Location
Wisma AIC is located within an industrial zone of Section 16 of Shah Alam. Shah Alam is a mixed development mainly developed by PKNS, a state-government owned developer. Shah Alam the capital city of Selangor State is located about 30 kilometres to the sout-west of Kuala Lumpur city centre. Some of the prominent industrial premises within the same section are Matsushita Electronic Devices, Lafarge Malayan Cement, Enersave, HL Industries and CCM Fertilisers.
Age of property

RM21,250,000.00
Tenure
Valuer

83 years
Net Book Value

RM21,250,000.00
Lease period
10 years commencing from September 2006
Master Lessee
AIC Corporation Berhad
Gross Built Up Area

130,252 sq.ft.
Occupancy Rate
100%
Title details
Lot No. PT 611 held under HSD No. 97328 and Lot No PT 612 held under HSD No. 97329, both situated in Town of Shah Alam, District of Petaling, State of Selangor
Existing use
A factory manufacturing electronic products mainly flat screen TV

RM118,750.00
Next Rent Review Parking spaces

September 2013 Available within the compound of the property
Property type
Industrial factory
Property Manager
28
Silver Bird Factory Shah Alam

Address
Silver Bird Complex, Lot 72, Persiaran Jubli Perak, Seksyen 21, 40000 Shah Alam, Selangor Darul Ehsan
Age of property

RM98,0000,000.00
Tenure
Freehold
Valuer
Raine & Horne
Location
SilverBird Complex is located within the industrial zone of section 21 of Shah Alam. The immediate surrounding is designated for industrial developments which comprises prominent industrial premises of Nippon Electrics Glass (M) Sdn Bhd, Panasonic, JVC Malaysia, DHL and TNT Logistics (M) Sdn Bhd. Section 21 is located about 4 kilometres from Shah Alam city centre and about 30 kilometres to the south-west of Kuala Lumpur city centre.

Not Applicable
Net Book Value

RM98,000,000.00
Lease period
10 years commencing from October 2006
Master Lessee
Silver Bird Group Berhad
Gross Built Up Area

274,238 sq.ft.
Occupancy Rate
100%
Existing use
Bread and confectionary manufacturing under the brand name of High 5

RM608,000.00
Title details
Lot No. 62048, held under Title No. GRN 285748, Pekan Baru Hicom, District of Petaling, State of Selangor

Available within the compound of the property October 2013
Property Manager Date of acquisition

IM Global Property Consultants 28th December 2007
Property type
Industrial Complex
Cost of acquisition Description

A factory complex comprising a 2-storey office block annexed to a single storey factory together with single storey canteen, archives, gallery, security houses and others RM92,000,000.00
Annual report 2011
29
Gurun Automotive Warehouse Gurun

Address
NAZA Warehouse, Lot 61B, Kawasan Perindustrian Gurun, 08800 Gurun, Kedah Darul Aman
Age of property

RM24,950,000.00
Tenure
Valuer
Location
NAZA Warehouse is located within Gurun Industrial Estate which is a new heavy industrial estate accommodating the premises of Petronas Urea Fertilizer Plant, NAZA Automotive Manufacturing and Assembly Plant, Sapura Automotive Industries Sdn Bhd, KIA Auto Accessories Sdn Bhd and ACE Polymers (M) Sdn Bhd.

93 years
Net Book Value

RM24,950,000.00
Lease period
10 years commencing from December 2007
Master Lessee
Teras Globalmas Sdn Bhd
Gross Built Up Area

214,450 sq. ft.
Occupancy Rate
100%
Title details
Lot No. PT 633 held under Title No. H.S.D 115340 Bandar Gurun, District of Kuala Muda, State of Kedah Darul Aman
Existing use
Used as a warehouse to store NAZA automotive parts

RM169,787.50

December 2014 Available within the compound of the property
Property type
Industrial Warehouse
Property Manager Date of acquisition

IM Global Property Consultants 28th December 2007
Description
An Industrial complex, comprising a single-storey warehouse and single storey office building
Cost of acquisition
RM23,970,000.00
30
Selayang Mall Selayang

Address
Lot 384451, Jalan SU 9, Taman Selayang Utama, 68100 Batu Caves, Selangor Darul Ehsan
Description
4 storey retail space, 6 storey car park & a roof level car park
Cost of acquisition
RM128,165,000.00

The property is located within Taman Selayang Utama, a medium-sized housing scheme situated off the south side of the SelayangKepong Expressway at about 17 kilometres due north-west of Kuala Lumpur City Centre. Generally, the neighbourhood comprises a mixture of residential and commercial developments. Retail complexes within a 5 kilometres radius of the property include the Selayang Capital Shopping Complex, Desa Shopping Complex and Metro Prima Shopping Complex. Prominent landmarks in the neighborhood include Selayang General Hospital, Forest Reserve Institute of Malaysia (FRIM), Selayang Municipal Council (MPS) and Gombak District Land Office
Age of property
RM132,000,000.00
Valuer Tenure
Leasehold for 99 years Knight Frank

68 years RM132,000,000.00

10 years commencing from December 2006 Seal Incorporated Berhad

861,530 sq.ft 100%

380,032 sq.ft RM776,000.00
Next Rent Review Title details

Lot 38451 held under Title No. PM 11660, Town of Selayang, District of Gombak, Selangor Darul Ehsan
Existing use
Used as a shopping complex under the brand name of Selayang Mall
January 2012
Property Manager
Parking spaces Property type

Shopping Complex 900 parking bays.
Date of acquisition
7th May 2010
Annual report 2011
31
STRONG AND SUSTAINABLE GROWTH
STRONG FUNDAMENTALS
32
Sustainable
Growth
As we set our sights on growing our portfolio to RM1.5 billion over the next three years, we will continue to introduce all the proper elements to ensure stellar growth. We will leverage on strong fundamentals and core values that call for us to be highly Responsible and Effective, to maintain absolute Integrity and to be absolutely Trustworthy. We will also inject astute financial management, expert insights and strong market experience to further cultivate growth. Only then can we expect our portfolio and reputation to achieve strong and sustainable growth.
Annual report 2011
33
Corporate Structure
Unitholders as at 31 December 2011

Kumpulan Wang Bersama Foreign Institutions Local Institutions Retail 58.32% 2.29% 31.66% 7.73%
REIT Manager
Trustee
CIMB TRUSTEE
Property Manager Malik & Kamaruzaman Property Management I.M. Global Property Consultant Property Assets and Other Investments
34
Organisational Chart
BOARD OF DIRECTORS
Investment Committee
Audit Committee
Chief Operating Officer
Real Estate Investment
Property Management
Legal & Compliance
Annual report 2011
35
Board of
Directors
36
From left to right:

Tan Sri Dato Ahmad Fuzi Abdul Razak Dato Abdul Mutalib Mohamed Razak Datuk Syed Hussian Syed Junid Dato Ahmad Rodzi Pawanteh Datin Aminah Pit Abd Raman Datuk Johar Che Mat Encik Shahrol Anuwar Sarman Tuan Haji Che Pee Samsudin Annual report 2011
37
Profile of the Board of Directors

Tan Sri Ahmad Fuzi is currently, Secretary-General of the World Islamic Economic Forum Foundation (WIEF); Chairman, Seremban Engineering Berhad; Chairman, Worldvest Energy Sdn Bhd; Chairman Theatre Management Associates Sdn Bhd, Chairman, The Guide To Malaysia Series; Chairman Optima Capital Sdn Bhd; Non-Executive Chairman, Sofgen (Malaysia); Non-Executive Chairman, Xadacorp Sdn Bhd; Deputy Chairman, Group Chairman; Ace Holdings Sdn Bhd, Asian-Development & Investment Bank (Labuan); Independent Non-Executive Director, Puncak Niaga Holdings Berhad; Non-Executive Director, Management Development Institute of Singapore and Member, Board of Trustees, F3 Strategies Berhad; Non-Executive Director; Maybank Islamic Berhad. Tan Sri Ahmad Fuzi is currently also a Distinguished Fellow, Institute of Strategic and International Studies (ISIS); Distinguished Fellow, Institute of Diplomacy and Foreign Relations; Deputy Chairman, Malaysian Member Committee of the Council for Security Cooperation in the Asia Pacific (CSCAP Malaysia); Member, Board of Trustees, MERCY, Malaysia; Member, Institute of Advanced Islamic Studies (IAIS); Member, Advisory Board, Asia Pacific Entrepreneurship Award (APEA); President, Association of Former Malaysian Ambassadors (AFMA) and Advisor, High School Bukit Mertajam Alumni Malaysia. He holds a Bachelor of Arts Degree (Honours) from the University of Malaya (1972) and a Certificate in Diplomacy (Foreign Service Course) from the University of Oxford (1974). In recognition of his service to the nation, he was awarded the AMN (1979), the JSM (1999), the DSPN (1999), the DMPN (2002) and the PSM (2003).
Tan Sri Dato Ahmad Fuzi bin Abdul Razak

(Independent, Non-Executive)
Tan Sri Dato Ahmad Fuzi bin Haji Abdul Razak, a Malaysian, aged 62, was appointed to the Board of AmanahRayaREIT Managers Sdn Bhd on 8 May 2009. Tan Sri Ahmad Fuzi was previously the Secretary General of the Ministry of Foreign Affairs Malaysia. He joined the Malaysian Diplomatic and Administrative Service in 1972, and served in various capacities at the Ministry of Foreign Affairs, mainly in the Political Division, and at the Malaysian Missions abroad in Moscow, the Hague, Canberra, Washington and Dhaka. He also served as the Director General, Institute of Diplomacy and Foreign Relations.
38
Dato Ahmad Rodzi bin Pawanteh

Member (Non-Independent, Non-Executive)
Datuk Syed Hussian bin Syed Junid

Member (Independent, Non-Executive)
Dato Ahmad Rodzi Pawanteh, a Malaysian, aged 56, is the Group Managing Director and Chief Executive Officer of Amanah Raya Berhad since July 2004. He has earlier pursued a professional banking career with the Bank of America NT&SA and Amanah-Chase Merchant Bank Berhad, gaining wide exposure in international banking and project finance. Subsequently, he held Directorship positions in companies related to the power transmission, food and beverage and pharmaceutical industries. He obtained an MBA in General Management from Southern Cross University, Australia and an MBA in Banking & Finance from the University of Hull, UK. Earlier, he earned a Bachelor of Economics (Hons) - Accounting from University of Malaya and a Bachelor of Laws (Hons) from the University of Wolverhampton, UK. He also holds a Professional Diploma in Marketing, a Member of the Chartered Institute of Marketing, UK and is a Registered Financial Planner of the Malaysian Financial Planning Council.
Datuk Syed Hussian bin Syed Junid, a Malaysian, aged 50, was appointed to the Board of AmanahRaya-REIT Managers Sdn Bhd on 8 May 2009. He is also a Member of the Audit Committee. Datuk Syed Hussian started his career with The American Malaysian Insurance Sdn Bhd as a Trainee Executive in 1982 in which he was later promoted as the Regional Manager covering Penang, Perlis, Kedah and Perak in 1989. He is currently a Senior Director of Business Operations & Sales Support Asia, Western Digital Sdn Bhd. Datuk Syed Hussian is also a Director and Chairman of the Audit Committee of Efficient E-Solutions Bhd and a Director of AWC Bhd, both of which are public listed companies. At Media Prima Berhad, Datuk Syed Hussian sits on the Boards of 8tv, Channel 9 and Primeworks Studios Sdn Bhd. Datuk Syed Hussian has extensive experience in insurance industry and entrepreneurship. He holds a Diploma in Insurance from The Association for Overseas Scholarship Tokyo in 1988 and a Certificate in Insurance from MARA Institute of Technology in 1982.
From left to right Dato Ahmad Rodzi bin Pawanteh Datuk Syed Hussian bin Syed Junid
Annual report 2011
39
Dato Abdul Mutalib bin Mohamed Razak

Member (Independent, Non-Executive)
Datin Aminah binti Pit Abd Raman

Dato Abdul Mutalib bin Mohamed Razak, a Malaysian, aged 68, was appointed to the Board of AmanahRaya-REIT Managers Sdn Bhd on 8 May 2009. Dato Abdul Mutalib was the Secretary / Legal Advisor to the Urban Development Authority (UDA) from 1972 to 1975. He then went into private practice under the name Messrs Mutalib, Sundra & Low, later renamed Mutalib, Wan & Co, of which he is currently the Principal Partner. In 1984, Dato Mutalib was appointed as the Trustee Director of Yayasan Pembangunan Ekonomi Islam Malaysia (YPEIM), a post he held until 1988. He was also the Secretary of Yayasan Bumiputra Pulau Pinang Berhad from 1980 to 1990 and Deputy Chairman of Setron (M) Berhad from 1987 to 1990. Dato Mutalib was the Chairman of Media Prima Berhad from 2003 to 2009. Whilst in Media Prima Group, he was also the Chairman of its subsidiaries namely Metropolitan TV Sdn Bhd (8TV), Natseven TV Sdn Bhd (ntv7), Ch-9 Media Sdn Bhd (TV9), Max - Airplay Sdn Bhd (Fly.FM) and Synchrosound Studio Sdn Bhd (Hot.FM). Dato Abdul Mutalib retired as Board Member of MARDEC Berhad and The New Straits Times Press (M) Berhad and as President of Tribunal for Consumer Claims Malaysia last year. Presently he sits as Director/Chairman of KL Airport Services Sdn Bhd (KLAS)(a subsidiary of DRB-Hicom Berhad) and TH Properties Sdn. Bhd. (a subsidiary of Tabung Haji). Dato Abdul Mutalib obtained his Bachelor of Arts (Honours) degree in Political Science from the University of Singapore in 1967 and was called to the Bar at The Honourable Society of Lincolns Inn, London in 1971.
Datin Aminah binti Pit Abd Raman, a Malaysian, aged 63, was appointed to the Board of AmanahRaya-REIT Managers Sdn Bhd on 8 May 2009 and is the Chairperson of the Audit Committee. Datin Aminah began her career as Administrative and Diplomatic Officer in 1972. In the government sector, she served as Director of the Planning and Development Division for the Ministry of Domestic Trade and Consumer Affairs in 1991, where she was directly involved in corporate planning at the ministerial level. She also served as the Deputy Director of Administration at the University Hospital Kuala Lumpur in 1986. Previously she served the Ministry of Finance, Ministry of Trade and Industry and Economic Planning Unit, Prime Ministers Department. After serving the government for 23 years, Datin Aminah embarked on a career in private sector where she was attached to Hong Leong Bank Berhad from 1995 to March 2002 as the General Manager for Economics and Islamic Banking Division. Datin Aminah was a Director of Amanah Raya Berhad and currently serves as a Director of AmanahRaya Trustees Berhad and AmanahRaya Investment Bank (Labuan) Ltd. She is also currently a Member of the Operation Review Panel of the Suruhanjaya Pencegahan Rasuah Malaysia (SPRM) and the Malaysian Institute of Integrity. Datin Aminah graduated with a Bachelor of Economics (Honours) from Monash University, Australia in 1971, and a PostGraduate Diploma in Business Studies from the London School of Economics and Political Science in 1985.
From left to right Dato Abdul Mutalib bin Mohamed Razak Datin Aminah binti Pit Abd Raman
40
Datuk Johar bin Che Mat

Shahrol Anuwar bin Sarman

Member (Non-Independent, Non-Executive
Datuk Johar bin Che Mat, a Malaysian aged 59 was appointed to the Board of AmanahRaya-REIT Managers Sdn Bhd on 23 August 2011. He is also currently a Director of Amanah Raya Berhad since August 2010, the Chairman of Audit Review Committee and Board Risk Management Committee and a member of Nomination and Remuneration Committee and Investment Committee of Amanah Raya Berhad. Datuk Johar was previously the Chief Operating Officer of Maybank Group. He was responsible for strategic and operational activities in Banking Operations, Information Technology, Business Process Improvement, Service Level Management, Property & Security, Custody Services and Mayban Trustees Berhad. He briefly served Federal Government after graduating from University of Malaya in 1975 with a Bachelor of Economics before joining Maybank. Since then, he has served in various capacities in banking operations and strategic innovation, including as the Head of Retail Financial Services and managing the Retail Banking portfolio which encompasses frontend activities at branches. His portfolio covers Transactional Banking (Operations), Retail Finance, Retail Marketing, Sales Management Private Banking, Retail Programme Management, Share Trading, e-Channels, Maybank Group Call Centre and Mayban Unit Trust Berhad. Prior to that, Datuk Johar was the Head of Enterprise Banking (Corporate/ Commercial) where he was in charge of Corporate, Commercial and Bumiputra unit. At present, he is a Board member of Bank Pertanian and Proton Group.
Shahrol Anuwar bin Sarman, a Malaysian, aged 39, was appointed to the Board of AmanahRaya-REIT Managers Sdn Bhd on 18 May 2010. Shahrol Anuwar joined the Malaysian Diplomatic and Administrative Service in 1996. His first assignment with the Government of Malaysia was as the Assistant Secretary of the Loans Management and Finance Policy Division at the Ministry of Finance, Malaysia from 1996 to 2002. From 2002 to 2003, Shahrol Anuwar furthered his studies in Wales, United Kingdom. Upon returning from his studies, he was assigned as the Assistant Director, Head of Finance and Accounts Unit of the Human Resource Management & Administration at the Anti-Corruption Agency Malaysia from 2003 to 2004. Shahrol Anuwar was later appointed as Principal Assistant Secretary at the Timber Industry Division of the Ministry of Plantation Industries and Commodities, Malaysia where he served from 2004 to 2006. Prior to his current position, Shahrol Anuwar served as Principal Assistant Secretary of Administration and Finance Division at the Chief Ministers Department, Melaka from 2006 to 2007. Shahrol Anuwar is currently the Special Officer to the Secretary General of Treasury at the Ministry of Finance, Malaysia. Shahrol Anuwar holds an MBA from the Cardiff University, Wales, United Kingdom, a Bachelor of Business Administration in Finance and a Diploma in Banking, both from the MARA University of Technology. He also holds a Diploma in Public Administration from the National Institute of Public Administration Malaysia.
From left to right Datuk Johar bin Che Mat Shahrol Anuwar bin Sarman
Annual report 2011
41
Tuan Haji Che Pee bin Samsudin

Haji Che Pee bin Samsudin, a Malaysian aged 53 was appointed to the Board of AmanahRaya-REIT Managers Sdn Bhd on 23 August 2011. He is also a Director of Amanah Raya Berhad since March 2011. Che Pee holds a Bachelor Honours Degree in Accounting and is a Chartered Accountant (CA) of the Malaysian Institute of Accountants (MIA). He began his career as an Accountant in the government sector since 1982. His extensive experience includes serving at various government divisions including Ministry of Finance, Langkawi Developement Authority (LADA), Malaysian Institute of Islamic Understanding (IKIM), Economic Planning Unit in Prime Ministers Department and Perbendaharaan State of Kedah as the State Treasurer for nine years. Che Pee is presently the Director of Central Operation and Agency Service Division in Accountant General Department of Malaysia, Putrajaya.
Tuan Haji Che Pee bin Samsudin
42
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 No conflict of interest has arisen between the Directors and AmanahRaya REIT during the financial year under review. Convictions for Offences None of the Directors have been convicted for offences within the past 10 years. Attendance at Board of Directors Meetings The Board currently comprises of eight (8) Directors, of which three (3) are independent non-executive and five (5) are non-independent non-executive. During the financial year, the Board met five (5) times. The number of meetings attended by each Director is as follows:
Directors
Number of Board meetings held during Directors tenure in office 5 5 5 5 5 5 3 3 3 2
Number of meetings attended by Directors 5 5 5 4 3 5 3 3 3 1
Tan Sri Dato Ahmad Fuzi bin Abdul Razak Dato Abdul Mutalib bin Mohamed Razak Datuk Syed Hussian bin Syed Junid Datin Aminah binti Pit Abd Raman Dato Ahmad Rodzi bin Pawanteh Encik Shahrol Anuwar bin Sarman Puan Sharizad binti Jumaat (resigned with effect from 23 August 2011) Puan Alina binti Hashim (resigned with effect from 23 August 2011) Encik Abas bin Abdul Jalil (resigned with effect from 23 August 2011) Datuk Johar bin Che Mat (appointed on 23 August 2011) Tuan Haji Che Pee bin Samsudin (appointed on 23 August 2011)
Annual report 2011
43
A BOUNTIFUL HARVEST
44
Purposeful
Growth
Our commitment to enhancing the AmanahRaya REIT portfolio is akin to the commitment of an expert gardener tending to his garden. From implementing strong corporate governance measures and undertaking activities to enhance unitholders value, our people have purposefully set about to deliver strong returns in a credible manner. As we skilfully cultivate our asset portfolio and grow it beyond the existing 15 properties we have today, our stakeholders can look forward to the promise of an outstanding and bountiful harvest.
Annual report 2011
45
Message from the
Chairman
Dear Unitholders,
On behalf of the Board of Directors of AmanahRaya-REIT Managers Sdn. Bhd. (ARRM), the Manager of AmanahRaya Real Estate Investment Trust (AmanahRaya REIT), it is a great pleasure for me to present the Annual Report and audited financial statement of AmanahRaya REIT for the financial period ended 31 December 2011.
46
TAN SRI DATO AHMAD FUZI BIN ABDUL RAZAK Chairman
Annual report 2011
47
Message from the Chairman
OPERATIONS REVIEW In 2011, despite the turbulence in the global economy which in many ways affected the Malaysian economy, AmanahRaya REIT was resilient towards the adverse market conditions and has continued to perform well. All properties except for Wisma UEP recorded a 100% occupancy rate. Following the exit of Sime UEP Properties Berhad as the master lessee of Wisma UEP in July 2011, the building occupancy rate dropped to only 30%. However, the Management managed to secure a prospective buyer and a sale and purchase agreement is expected to be signed within the Second Quarter of 2012. Rental collection has been outstanding with no default recorded. The year under review also saw AmanahRaya REIT embarking on several asset enhancement exercises in respect of the properties under its portfolio. Selayang Mall, Silver Bird Factory, Permanis Factory and KDNC 11 have been identified to undergo some form of refurbishment and expansion. In fact, the work has started on all four properties and completion is anticipated by the third quarter of 2012. The acquisition of PKNS properties was mutually aborted by both parties due to unforeseen circumstances and may be revisited in the future when conditions are more favourable.
OVERVIEW The year under review was a very challenging year for the Malaysian economy. In 2010, the Malaysian economy grew by 7.2%. However, Malaysia recorded a downward economic growth of 4.9% in the first quarter and 4.0% in the second quarter of 2011. The slower growth was due to the unfavourable conditions and uncertainties in the global economy. With inflation rate rising, unemployment rate at the highest level in the US and Europe and debt crisis affecting several European countries exacerbated by natural disasters in Japan, the global economy is currently facing turbulence. To cushion the impact of the unfavourable external economic situation, the Government had announced the implementation of several high impact projects under the ETP to strengthen domestic demand. On average the Malaysian economy is anticipated to grow albeit at a slower rate of between 5.0 to 6.0% in 2011.
In 2011 the property market was in a consolidation mode. The office sector recorded a downward pressure in terms of occupancy and rental rate due to an oversupply situation especially in the Klang Valley. The occupancy rate of office buildings in the Klang Valley in 2011 was averaging around 85-90% compared to 90-95% recorded last year. The retail sector continued to remain strong due to the increase in tourist arrivals and consumer spending. Other sectors remain stable. With regards to REIT, and on a positive note, the Government has in the 2012 budget, extended the concessionary tax rate of 10% on dividends of individuals and non-corporate institutional investors in Malaysian REITs by another five years until 31 Dec 2016. This augurs well with our effort to promote REITs to domestic and foreign investors.
FINANCIAL PERFORMANCE During the year under review, AmanahRaya REIT managed to distribute distribution per unit (DPU) of 7.22 sen as compared to 7.32 sen recorded in the previous year. Total asset value has increased by 4% to RM 1.04 billion surpassing the RM 1.0 billion mark following the revaluation exercise
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The challenge for ARRM is to find the right opportunities. ARRM will continue with its effort to grow AmanahRaya REIT in terms of its value and market capitalization. The Manager is hoping to increase the asset size of AmanahRaya REIT by another RM200 million in 2012 to about RM1.2 billion. The increase is important so as to improve returns to the unitholders.
Johar and Tuan Haji Che Pee also sit on the Board of Amanah Raya Berhad. The three directors who resigned from ARRM Board were Puan Sharizad Jumaat, Puan Alina Hashim and En. Abas Jalil.
APPRECIATION As Chairman, I wish to take this opportunity to express my gratitude to the Board Members, Investment Committee Members and especially the Management for their commitment in ensuring strong returns to the unitholders despite the volatility in the economy. I also wish to record my appreciation to the unitholders and business partners of AmanahRaya REIT for their continued support and confidence throughout the year and to Puan Sharizad, Puan Alina and En. Abas for their contribution to AmanahRaya REIT as Board members. Moving forward, AmanahRaya REIT will continue in its endeavour towards providing strong and sustainable returns to unitholders by focusing on enhancing its assets and acquiring quality assets with strong growth potential.
CHANGE IN THE BOARDROOM In September 2011, there was a change in the Boardroom of ARRM. Two new directors were appointed and at the same time three directors resigned. The two new directors are Y. Bhg. Dato Johar bin Che Mat and Tuan Haji Che Pee bin Samsudin. Y. Bhg. Dato Johar is a familiar figure in the banking industry where he was formerly holding the position of Chief Operating Officer at Maybank Group and currently sits on the Board of Bank Pertanian Malaysia Berhad and Proton Group. Tuan Haji Che Pee has vast experience in accounting and finance. He is presently the Director of Bahagian Perkhidmatan Operasi Pusat dan Agensi in Jabatan Akauntan Negara Malaysia, Putrajaya. Both Datuk
on all properties under AmanahRaya REIT portfolio in 2011. Revenue increased by 9.6% from RM59.5 million to RM 65.3 million and net income increased by 10% from RM57.7 million to RM63.3 million. Gearing level reduced from 36.4% in 2010 to 34.9% in 2011.
OUTLOOK 2012 is expected to be more challenging than 2011 in view of the weakening global economy and uncertainties ahead. The fear of the double dip recession in the US and Europe is also increasing. Investors are more cautious. Here, the investors are hoping that the Government is able to implement projects under the ETP program to soften the impact of the slowdown in the global economy. In terms of the property market, it is expected to consolidate further. Office and retail sectors are expected to record slower growth. However, in any downturn situation, there will always be opportunities.
AmanahRaya REIT Investment Committee Members
Mahadzir bin Azizan

Mahadzir bin Azizan, a Malaysian, aged 62, was appointed as an Independent Investment Committee Member on 27 December 2006. He has held key positions both in 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) as Assistant Company Secretary & Legal Adviser and later as Director of Corporate Affairs, Island & Peninsular Berhad, the property arm of Permodalan Nasional Berhad (PNB) for 23 years.
Datuk Yahya bin Yaacob

Chairman
Datuk Yahya bin Yaacob, a Malaysian, aged 67, was appointed as an Independent Investment Committee Member on 27 December 2006. He has served in various positions in government departments and ministries, including as the Secretary General of the Ministry of Information and the Secretary General of the Ministry of Works. He is a director of various companies, including listed companies such as IJM Corporation Berhad, LBI Capital Berhad, Damansara Realty Berhad and Emas Kiara Industries Berhad. Datuk Yahya holds a Bachelor of Arts (Hons) and a Diploma in Public Administration both from the University of Malaya. He also holds a Masters degree in Business Management from the Asian Institute of Management, Philippines.
Tengku Dato Seri Hasmuddin Tengku Othman

Tengku Dato Seri Hasmuddin Tengku Othman, a Malaysian, aged 49, was appointed as an Independent Investment Committee Member on 27 December 2006. He is a director of a number of companies including Bank Muamalat Malaysia Berhad, Aliran Ihsan Resources Berhad, Institut Jantung Negara Sdn. Bhd., HSK Corporate Advisory & Consultancy, Rangkaian Hotel Seri Malaysia Sdn. Bhd. and Amanah Ikhtiar Malaysia. He is also a member of Task Force on Islamic Finance Committee for Labuan IBFC and Member of Jawatankuasa Pemantauan dan Pengawasan Syarikat Jaminan Pembiayaan Perniagaan Berhad. Tengku Dato Seri Hasmuddin Tengku Othman holds a Bachelor of Laws (Hons) from University of Malaya and is currently a principal Partner in Messrs Hisham, Sobri & Kadir. Having practiced law for over 25 years, he gained extensive background and experience in various aspects of Islamic banking and finance, corporate banking and project financing, corporate matters, corporate Muamalat Islamic banking and litigation as well as matters relating to Syariah.
Mahadzir currently serves on the Boards of the following companies; ECM Libra Financial Group Berhad, ECM Libra Investment Bank Berhad, Libra Invest Berhad and Syarikat Takaful Malaysia Berhad. Mahadzir is a Barrister-at-Law from the Honourable Society of Lincolns Inn, London.
S. Elias bin Abd Rahman Alhabshi

S. Elias bin Abd. Rahman Alhabshi, a Malaysian, aged 68, was appointed as an Independent Investment Committee Member on 30 July 2008. A seasoned banker, S. Elias has vast experience in banking industry and has served both local and international banking institutions including Bank Bumiputra Malaysia Berhad, ASEAN Finance Corporation, Merrill Lynch & Co. and Hong Leong Group. Currently he is the Director of BIMB Holdings Berhad and a member of the Investment Panel for Lembaga Tabung Haji. S. Elias holds a Master of Management (with distinction) from Asian Institute of Management, the Philippines.
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Vasantha Kumar Tharmalingam

Conflict of Interest Vasantha Kumar Tharmalingam, a Malaysian aged 63, was appointed as an Independent Investment Committee Member on 11 February 2011. Kumar graduated from the College of Estate Management, London School of Economics with a B.Sc in Real Estate from University of London. He is a Fellow of the Royal Institution of Chartered Surveyors, Fellow of the Institution of Surveyors Malaysia (ISM) and registered as a Real Estate Valuer and Property Consultant with the Board of Valuers in Malaysia. He established the First Malaysian Property Trust (FMPT), a joint venture between the Bank of Commerce and Austwide, Australia in 1987. Subsequently he left in 1990 to establish the MBF Unit Trust. From 1992 to 1998 he was Executive Director of Taiping Consolidated Berhad (TCB) and was part of the team building the J.W. Marriott Hotel and Starhill Shopping Centre in Kuala Lumpur and originated Sentul Raya for the company, a joint venture with KTM Berhad to develop 270 acres of an inner city brown field project. In 1998 he left TCB and became Chairman of Hall Chadwick Asia Sdn. Bhd. which specializes in the origination of property assets for Pension Funds, Private Equity Funds and Real Estate Investment Trusts (REITs). Kumar is currently the Chief Executive Officer of Malaysia Property Incorporated (MPI) which is a Government of Malaysia initiative under the Economic Planning Unit (EPU) tasked to promote Malaysia as property investment destination and to induce Foreign Direct Investment (FDI) specifically into Malaysian real estate. He is also the Chairman of the Investment Committee for Aseana Properties Limited, a London AIMs listed Malaysian conglomerate which has property investment, construction and development in Vietnam and Malaysia. Kumar is an independent Director on the Board of Sime Darby Property Berhad. No conflict of interest has arisen between the Investment Committee Members and AmanahRaya REIT during the financial year under review. Convictions for Offences None of the Investment Committee Members have been convicted for offences within the past 10 years. Attendance at Investment Committee Meetings The Investment Committee currently comprises of five (5) Members of which all are independent and non-executive.
During the financial year, the Investment Committee met four (4) times. The number of meetings attended by each current Member is as follows:
Investment Committee Members
Number of Investment Committee meetings held during the Members tenure in office 4
Number of meetings attended by Members
Encik Mahadzir bin Azizan (appointed as Chairman with effect from 1 January 2012) Datuk Yahya bin Yaacob (resigned as Chairman with effect from 1 January 2012) Tuan Syed Elias bin Abd. Rahman Alhabshi Mr. Vasantha Kumar Tharmalingam (appointed with effect from 11 February 2011) Datuk Johar bin Che Mat (appointed with effect from 1 January 2012) Tengku Dato Seri Hasmuddin bin Tengku Othman (resigned with effect from 31 December 2011)
Annual report 2011
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Statement of Corporate Governance

AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) was established on 10 October 2006 pursuant to a trust deed (Deed) entered into between AmanahRayaJMF Asset Management Sdn Bhd (ARJMF or former Manager) and CIMB Trustee Berhad (the Trustee). AmanahRaya REIT had been listed on the Main Board of Bursa Malaysia (Bursa Malaysia) since 26 February 2007. On 7 September 2009, AmanahRaya-REIT Managers Sdn Bhd (ARRM or Manager), a wholly owned subsidiary of Amanah Raya Berhad took over the management of AmanahRaya REIT from the former Manager. ARRM as the Manager of AmanahRaya REIT has established operational policies and guidelines to ensure that effective corporate governance is adopted throughout the organisation. ARRM holds an obligation to act honestly, with due care and diligence, and in the best interest of the unitholders of AmanahRaya REIT. This obligation blends in with the Managers responsibility in managing the assets and liabilities of AmanahRaya REIT for the benefit of and towards enhancing returns to the unitholders. In ensuring the implementation and operation of good corporate governance, ARRM is guided by the measures recommended by the Securities Commissions Guidelines on Real Estate Investment Trust (REIT Guidelines), the Malaysian Code on Corporate Governance (Revised 2007) and the Main Market Listing Requirements of Bursa Malaysia. reviewing and approving key matters such as financial results, investments and divestments, acquisitions and disposals and major capital expenditure.
Board Balance The Board currently has eight (8) members, all of which are Non-Executive Directors. Three (3) of the Directors are independent Directors. This is to ensure compliance with the requirement for at least one-third of the Board to be independent. The Chairman leads the Board and is responsible for the vision and strategic direction of the Manager. The Chief Operating Officer is responsible for implementing the policies and decisions of the Board, overseeing the day-to-day operations, setting the plan and direction, benchmark and targets for the Manager, tracking compliance and progress of the operation, initiating innovative business ideas to create competitive edge and development of asset enhancement strategies with the aim of enhancing unitholders return. Board Meetings
THE MANAGER OF AMANAHRAYA REIT AmanahRaya REIT is externally managed by the Manager. The Manager has appointed experienced and well qualified personnel to handle its day to day operations. All Directors and employees of the Manager are remunerated by the Manager and not by the Fund. The Manager will be responsible for the following: development of business plans as well as strategic and investment policies for AmanahRaya REIT; provide recommendations on the acquisition, divestment or enhancement of assets for AmanahRaya REIT to the Trustee; monitor compliance to all legislation, rules and guidelines issued by the Securities Commission and Bursa Malaysia as well as AmanahRaya REIT's Deed;
ensure appropriate record keeping; formulate proper risk management policies; and supervising the Property Manager.
DIRECTORS OF THE MANAGER The Board The Board of Directors of the Manager (the Board) is responsible for the effective stewardship and control of the Manager. This responsibility of the Board, at the minimum, includes: the formulation of corporate policies and strategies; overseeing and evaluating the conduct of the Managers activities; identifying principal risks and ensuring the implementation of appropriate systems to manage these risks; and
Board meetings are scheduled at least once every quarter, and five (5) Board meetings were held throughout 2011. Access to and Supply of Information and Advice All Board members are supplied with information on a timely manner. Board reports are circulated prior to Board meetings and the reports provide among others, financial and corporate information, significant operational, financial and corporate issues, performance of AmanahRaya REIT and managements proposals. All directors have access to the advice and services of the Audit Committee, Legal & Compliance Department, Internal Auditor, Company Secretary as well as to independent professional advice.
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Appointment to the Board All new nominations are assessed and approved by the entire Board in line with its policy of ensuring nominees are persons of sufficient calibre and experience. Committees under the Board The Board has established the following committees to assist it in discharging its duties. The committees are:
To obtain external legal or other independent professional advice, opinion and/or reports and to secure the attendance of external parties with relevant experience and expertise whenever necessary; To review, together with the external auditors, the audit plan, scope of the audit and areas of audit for the Company; To discuss and highlight any problem arising from the audit and/or any other matters raised by the external auditors; To review the external auditors management letters and reports and Companys management response; To review the audit report prepared by the external auditors; To make appropriate recommendations to the Board on matters concerning resignations, dismissals and replacements of external auditors; To review and report the adequacy of the scope, functions and resources of the internal audit function and authorize it to carry out the audit works; To review all the financial results and financial statements of the Company and all portfolios under management; To review and highlight any relatedparty transactions within the Company and all portfolios under management; To ensure the Companys policy, strategy and operations are in compliance with all relevant laws and regulations; and To perform any other operational functions as may be agreed by the Board.
The Audit Committee meetings are scheduled at least once every quarter. Four (4) Audit Committee meetings were held in 2011.
INVESTMENT COMMITTEE The Investment Committee ("IC") for AmanahRaya REIT was formed on 4 August 2006. It operates under the delegated authority from the Board and is represented by members from various fields including legal, banking and property. Duties and responsibilities of the IC include: To review, deliberate and decide on any investments to be made by AmanahRaya REIT as recommended by the management; To review, assess and decide on any asset acquisition, disposal and fund raising exercise to be undertaken by AmanahRaya REIT before being presented to the Board for final approval; To review and deliberate on the following reports: Property Market and Outlook Report AmanahRaya REITs Performance Report
The Audit Committee; and The Investment Committee
Directors Training For the financial year 2011, the Directors attended various talks and lecture series organised by regulators and professional bodies to broaden their knowledge and to keep abreast with the development of the industry and corporate governance. Both the newly appointed directors have attended the Mandatory Accreditation Programme organised by Bursatra Sdn Bhd.
AUDIT COMMITTEE The Audit Committee (AC) was formed on 9 June 2009. It operates under the delegated authority from the Board and inline with the Malaysian Code on Corporate Governance (Revised 2007), consists of three (3) Non-Executive Directors. Duties and responsibilities of the AC include: To review all internal and external reports on Companys operations and portfolio under management and ensure compliance with all relevant laws and regulations; To initiate investigation of any activity within its terms of reference and to seek any information it requires from the management and/or any employee;
Ensure that AmanahRaya REIT is managed in accordance with: its investment objectives; its Trust Deed; its Prospectus; the Securities Commissions Guidelines on Real Estate Investment Trust and other securities laws; and the internal investment restrictions and policies.
Annual report 2011
53
Statement of Corporate Governance
To recommend to the Board the appropriate strategies to achieve the objectives of AmanahRaya REIT in accordance with the investment policies; To ensure the strategies selected are properly and efficiently implemented by the management or its fund management delegate (if any); To actively monitor, measure and evaluate the performance of the management company or its fund management delegate (if any); and To carry out other duties as may be determined from time to time by the Board
Relationship with Auditors An external auditor, independent of the Management and Trustee has been appointed. The appointment has been nominated by the Manager, and approved by the Trustee. The remuneration of the Auditor is approved by the Trustee. Legal and Compliance Department The Manager has a designated legal and compliance officer working towards ensuring compliance with all legislation, rules and guidelines issued by the SC and Bursa Malaysia as well as AmanahRaya REIT's Deed.
the Manager may not act as principal in the sale and purchase of real estate, securities and any other assets to and from AmanahRaya REIT.
RISK ASSESSMENT AND MANAGEMENT OF BUSINESS RISK The Manager operates within overall guidelines and specific parameters set by the Board. Risks are managed with support from the Group Risk Management Department of AmanahRaya, working within the overall strategy outlined by the Board.
The Investment Committee meetings are scheduled at least once every quarter. Four (4) Investment Committee meetings were held in 2011.
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 to the Securities Commissions REIT Guidelines, AmanahRaya REITs Deed and the Listing Requirement of Bursa Malaysia. Among the policies adopted by the Manager to deal with potential conflicts of interest issues include: transactions on arms length basis and on normal commercial terms which are not more favourable than those extended to third parties/ public and are not to the detriment of the minority unitholders; AmanahRaya REIT's cash or other liquid assets should be placed in a current or deposit account of institutions licensed or approved to accept deposits; and
COMMUNICATION WITH UNITHOLDERS The Board acknowledges the importance of regular communication with unitholders and investors via annual reports, circulars, and quarterly financial reports. Various announcements were also made during the period, through which unitholders and investors are able to obtain an overview of AmanahRaya REITs performance and operation. Additionally, the Chief Operating Officer regularly meets up with analysts, institutional unitholders and investors.
ACCOUNTABILITY AND AUDIT Financial Reporting The Board is responsible for ensuring the proper maintenance of accounting records for AmanahRaya REIT and that appropriate accounting policies had been consistently applied. Internal Control The Board has the 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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Corporate Calender
30 July
2011
AmanahRaya REIT participated in the REIT Roadshow programme organized by the Malaysian REIT Managers Association (MRMA) held at Kimanis Ballroom, Hyatt Regency Kinabalu, Sabah. The event, entitled An Alternative Investment Tool For Your Wealth Creation - REITs was an effort to promote awareness on REITs to retail investors.
30 July 2011
10 August
2011
During the month of Ramadhan, ARRM lent a helping hand to 32 orphans and unfortunate children at Pusat Jagaan Baitus Sakinah Wal Mahabbah, Kota Warisan, Sepang. The objective of this event is to aid these children to celebrate the coming Eid.
10 August 2011
22 December
2011
22 December 2011
University Technology of MARA, UiTM held a professional talk programme and ARRM was invited to deliver the talk to the students and faculty members of the Department of Estate Management. The event was held at UiTM Perak campus. The talk served as a practical method especially to the students in providing them better exposure on what REIT is about and employment opportunities in the Malaysian REIT industry.
Annual report 2011
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Profile of The Chief Operating Officer

to Senior Manager to head the property division. He was responsible in overseeing all property investment under the Group. With vast experience in project management, at Amanah Capital, he managed to complete two major projects i.e. the Menara UMNO Pulau Pinang and the Kirana/Ascott Kuala Lumpur, a high-end condominium project. Adenan gained valuable knowledge and experience in developing high end properties following the completion of Kirana and Ascott projects. He later joined a consultancy firm, Mediconsult Sdn. Bhd. where he was responsible in completing a teaching hospital in Semarang, Indonesia. Early 2003 Adenan joined KUB Malaysia Berhad as General Manager and thereafter was seconded to KUB Realty Sdn. Bhd, the property arm of KUB. Adenan left KUB and joined Terengganu Incorporated, a State investment arm in January 2008 to head its property investment division. As the Group General Manager, he was responsible in drafting a strategic plan for property investment. Prior to joining ARRM, he was the Assistant General Manager at the Group Managing Directors Office where he assisted the Group Managing Director in all matters related to property activities and investment undertaken by the Group. He was also responsible for the restructuring and streamlining of the property related companies within the Group. Adenan holds a Bachelor of Architecture from the Illinois Institute of Technology, Chicago, Illinois, USA. Family Relationship with any Director and/or Substantial Unitholder The Chief Operating Officer of the Manager does not have any family relationship with any Directors or Substantial Unitholders. Conflict of Interest No conflict of interest has arisen between the Chief Operating Officer and AmanahRaya REIT during the financial year under review. Convictions for Offences The Chief Operating Officer has not been convicted for offences within the past 10 years.
Adenan bin Md Yusof

Adenan bin Md Yusof
Chief Operating Officer / Principal Officer
Adenan Md Yusof, a Malaysian, aged 47, was appointed as Chief Operating Officer of AmanahRaya-REIT Managers Sdn Bhd (ARRM) on 18 May 2010. Upon graduation, Adenan worked for two of the largest architectural practice in the US i.e. Harry Weese and Associates and Lohan Associates where he gained tremendous design experience on various building types from residential to 5 star hotel and office building and exposure to project management. After almost 3 years of working in Chicago, Adenan returned to Malaysia and joined Perunding Alam Bina, a medium size architectural practice in Kuala Lumpur as Architect. Thereafter, in 1993, Adenan had the opportunity to join KLCC Berhad (KLCCB) and worked on the prestigious Petronas Twin Tower project. At KLCCB, he gained valuable knowledge and experience in managing big projects. Adenan later joined Amanah Capital Partners Berhad (Amanah Capital) in January 1995, and thereafter promoted
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The Management Team
From left to right:

Yusri bin Abdul Manaf (Head, Property Management) Kusuma Dewi binti Abdul Aziz (Accountant) Azmanira binti Ariff (Head, Legal and Compliance) Noorbaizura binti Hermeyney (Head, Real Estate Investment) Zaffarin bin Haji Zanal (Group Chief Risk Officer)
Annual report 2011
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Managers Report
The Board of Directors of AmanahRaya-REIT Managers Sdn Bhd (ARRM), the Manager of AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) is pleased to present the Annual Report and the Audited Financial Statements of AmanahRaya REIT for the financial year ended 31 December 2011.
consideration will be given to the lease tenure, economic environment, tenant profile and market demand. The analysis will focus on ensuring that the acquisition will contribute towards accretive rental yield and capital value to ensure stable and sustainable return to the unitholders. c. Building Condition The property should be in good tenantable condition and will be evaluated based on among others, the age of the building, interior and exterior condition, defects (particularly hidden defects), building equipments and systems and structural conditions and compliance with building by laws and local authorities. Engineering due diligence exercise, which include examining the condition of the mechanical and electrical equipment as well as the structural condition will be conducted by the Managers appointed engineers prior to completing the acquisition. d. Diversity in Portfolio The strength of AmanahRaya REITs is the diversity of its portfolio. The Manager believes that diversification is important to cushion the impact of any adverse condition in a particular sector or locality. e. Tenant/Lessee profile Tenant profiling plays a significant role in ensuring that the prospective tenants/lessee is capable of paying rentals during the tenancy or lease period. The due diligence exercise on tenant is material especially on single tenancy arrangement. Currently, the tenants of AmanahRaya REIT are mostly public listed companies.
ARRM The principal activity of ARRM is to act as the Manager of AmanahRaya REIT in accordance with the Trust Deed (Deed) dated 10 October 2006 and guidelines imposed by Securities Commission and Bursa Malaysia. ARRMs main objective is to ensure stable and sustainable return to unitholders of AmanahRaya REIT from real estate investments.
INVESTMENT STRATEGIES AND POLICIES The Manager will continue to diversify its property portfolio and invest in properties with potential growth in terms of rental and capital values in accordance with the Trust Deed, the Securities Commissions Guidelines on Real Estate Investment Trusts and other applicable guidelines imposed by the Securities Commission. The Manager adopts a stringent process in assessing properties prior to presenting it to the Investment Committee for endorsement. The process includes site visit, financial analysis, technical due-diligence, risk assessment and market study. The Managers criteria for investment are as follows: a. Location The location is evaluated based on its proximity to establish CBD/ industrial zones or populated areas with good accessibility to and from major roads, highways and public transportation. b. Price and Rental Yield The main criteria of investment is the rental yield in relation to the value. In general, the Manager will be looking at yields of more than 6% depending on the quality and location of the property. Strong
AMANAH RAYA REIT AmanahRaya REIT was established on 10 October 2006 pursuant to the Deed between the Manager and CIMB Trustee Berhad (Trustee). AmanahRaya REIT is classified as a real estate investment fund and was listed on the Bursa Malaysia on 26 February 2007.
AMANAH RAYA REIT INVESTMENT OBJECTIVE The investment objective of AmanahRaya REIT is to provide good and sustainable return to the unitholders from real estate investment. The prime focus of AmanahRaya REIT is the growth potential in terms of rental yield and capital values of the properties over a long term period. As per the Deed, AmanahRaya REIT portfolio consists of properties of diversified sectors.
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AMANAHRAYA REIT FINANCIAL PERFORMANCE For the Financial Year of 2011, despite the volatility in the economy, AmanahRaya REIT has achieved its objective following the proactive and hands on approach of the Manager in managing the portfolio. The financial highlights for the year 2011 are as follows: Net income available for distribution increased to RM41,393,876 during the financial year as compared to RM39,331,076 in the year 2010. Increase in total assets to RM1.04 billion from RM998 million in 2010 due to revaluation exercise during the financial year. Gearing reduced to 34.91% during the financial year from 36.36% in 2010. Distribution per unit (DPU) is 7.2213 sen in 2011, from 7.3209 sen in 2010.
The operational highlights for the year 2011 are as follows: Revaluation exercise on all properties under AmanahRaya REIT portfolio was carried out in November 2011. Asset enhancement exercise was conducted on 4 properties under the portfolio as listed below: Selayang Mall total replacement of lifts estimated at RM0.9m Silver Bird Factory expansion work estimated at RM12.0m KDNC 11 total refurbishment of cold room estimated at RM3.0m Expansion of Permanis Factory estimated at RM12.0m The acquisition of 3 properties from Perbadanan Kemajuan Negeri Selangor (PKNS) for a total purchase consideration of RM270 million was mutually terminated on 1 December 2011. Novation of the lease in Permanis Factory from CI Holdings Berhad to Permanis Sdn Bhd with corporate guarantee from Asahi Group Holdings Ltd of Japan. Extension in the lease tenure of Permanis Factory and Silver Bird Factory from 2016 to 2021.
FINANCIAL REVIEW Review of Performance 2011 601,636,025 573,219,858 1.0496 1.0496 0.9746 0.91 0.97 0.85 2010 568,165,061 573,219,858 0.9912 1.0690 0.9705 0.94 0.95 0.83 2009 440,103,776 431,553,191 1.0198 1.0650 1.0198 0.86 0.90 0.68 2008 440,104,122 431,553,191 1.0198 1.0198 0.9345 0.73 0.99 0.72
Total Net Asset Value (RM) Units in Circulation (units) Net Asset Value Per unit (RM) Highest Net Asset Value Per Unit (RM) Lowest Net Asset Value Per Unit (RM) Market Value per unit (RM) as at 31 December Highest Traded Price for the Twelve Months Period (RM) Lowest Traded Price for the Twelve Months Period (RM)
Annual report 2011
59
Managers Report
(continued)
Results of AmanahRaya-REITs Performance 2011 Total Gross Rental Income Total Property Expenses Net Rental Income Interest and Other Income Total Non-Property Expenses Earnings Before Taxation Net appreciation on Fair Value of Investment Properties Earnings Before Taxation Taxation* Earnings After Taxation Earnings Per Unit (EPU) after Taxation (sen) (Realised + Unrealised) EPU Yield (%) (Based on Closing Market Price) Distribution Per Unit (DPU) (sen) Distribution Yield (%) MER (%) Annual Total Return (%)**
* **
2010 59,509,971 (1,785,571) 57,724,400 2,607,949 (18,931,550) 41,400,799 41,400,799 NIL 41,400,799 7.8962 8.40 7.3209 7.79 0.59 20.59
2009
2008
65,305,820 (1,981,268) 63,324,552 834,684 (21,629,917) 42,529,319 31,143,000 74,714,992 NIL 73,672,319 12.8524 14.12 7.2213 7.94 0.70 12.11
46,519,068 45,560,808 (1,716,710) (1,448,058) 44,802,358 44,112,750 455,510 721,095 (14,380,556) (14,579,537) 30,877,312 30,254,308 30,877,312 NIL 30,877,312 7.1550 8.32 7.1550 8.32 0.38 (10.67) 36,812,000 67,066,308 NIL 67,066,308 15.5407 21.29 7.0105 9.60 0.46 7.54
The Trust 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 Income Tax Act, 1967 under the Finance Act, 2006. Based on movement in weighted average unit price & actual gross income distribution.
Note: The net asset value per unit of the Fund is largely determined by market factors. Therefore past performance is not necessarily indicative of future performance and that unit price and investment returns may fluctuate
FUNDS PERFORMANCE The manager is pleased to register another good result in 2011. The rental income of the Trust has increased by RM5.8 million or 9.7% to RM65,305,820. Net income for Distribution and Distribution Per Unit were registered at RM41,393,876 or 7.2213 sen per unit. As at 31 December 2011, the Trust recorded an increase of 6.5% in total income from RM62,117,920 to RM66,140,504. The 2011 total income comprised of rental income of RM65,305,820 and interest and other income of RM834,684. Total expenses of AmanahRaya REIT increased by 14% from RM20,717,121 to RM23,611,185. However, of the total expenses, only 8.4% was attributed to property expenses as most of the properties under the portfolio were on a triple-net basis except for Wisma Amanah Raya Berhad and Wisma UEP. The major portion of the total expenses was on finance cost at RM16,951,592.
INCOME DISTRIBUTION During the financial year ended 31 December 2011, the Trust has paid the first interim income distribution of RM10,386,727 on 19 July 2011 representing 1.8120 sen per unit for the first quarter of 2011, second interim income distribution of RM10,358,639 on 7 October 2011 representing 1.8071 sen per unit for the second quarter of 2011 and third interim income distribution of RM9,859,366 on 19 January 2012 representing 1.7200 sen per unit for the third quarter of 2011.
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The fourth and final income distribution of RM10,789,144 has been declared at 1.8822 sen per unit payable on 21 March 2012 for the fourth quarter ended 31 December 2011. 2011 Income distribution per unit (sen) First interim income distribution Second interim income distribution Third interim income distribution Proposed Fourth and final income distribution 1.8120 1.8071 1.7200 1.8822 7.2213 2010 1.8597 1.9997 1.7874 1.6741 7.3209 2009 3.4190 3.7360 7.1550 2008 3.5758 3.4347 7.0105
The total income distribution for the financial year ended 31 December 2011 totalling RM41,393,876 of which RM833,684 was interest income and tax-exempted. It represents 7.2213 sen per unit or 7.94% dividend yield based on closing price of RM0.91 on 31 December 2011.
NET ASSET VALUE Analysis of net asset value since the date of inception for the financial year ended 31 December 2011 of the Trust is as follows:2011 Net asset value (NAV) per unit (RM): before income distribution after income distribution 1.1197 1.0475 2010 1.0712 1.0026 2009 1.0884 1.0168 2008 1.0701 1.0000 2007 1.0299 1.0052
UNITS IN ISSUE As at 31 December 2011, the total number of units issued is 573,219,858.
GEARING As at 31 December 2011, AmanahRaya REITs total debt was RM363,260,671, a medium term debt with maturity in 2015. 2011 34.91 2010 36.36 2009 33.82 2008 33.62
Gearing ratio (%)
RELATED PERFORMANCE INDICATORS AND BENCHMARK 2011 12.11 2010 20.59 0.43 2009 (10.67) 2008 7.54
Total return (%)* Asset Portfolio Turnover (times)** *
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 the REIT for the respective year. Asset Portfolio Turnover is based on the average of total acquisitions and total disposals of investment in AmanahRaya REIT for the financial year ended 31 December 2011 to the average net asset value for the financial year calculated on a daily basis.
**
Annual report 2011
61
Managers Report
(continued)
BENCHMARK RELEVANT TO AMANAHRAYA REIT 2011 0.70 2010 0.59 2009 0.38 2008 0.46
Management Expense Ratio (MER)* *
The calculation of MER is based on the total expenses incurred by AmanahRaya REIT, including Managers fee, Trustees fee, audit fees, tax agents fee and administrative expenses, to the average net asset value of the Trust for the financial year calculated on a daily basis.
CORPORATE PROPOSAL AND DEVELOPMENT Acquisition in 2011 There is no property acquisition recorded in 2011. The Manager made an announcement on the acquisition of PKNS properties in which it was mutually terminated in view of the plan to carry out asset enhancements exercise on the properties by PKNS that would affect the market values. A Deed of Mutual Termination was signed between CIMB Trustee as the Trustee for AmanahRaya REIT and PKNS on 1 December 2011. Operation Review Most of AmanahRaya REIT tenancies are structured based on master lessee/triple net arrangement whereby the master lessees would bear all cost of maintenance, authority charges and insurances except for capital expenditures such as replacement of major equipments and enhancement or expansion work. The strategy is mainly geared towards preserving and enhancing the value of the properties as well as achieving sustainable growth in rental income. In the year 2011, a. Maintenance and Upkeep of Properties In 2011 total maintenance expenses was at RM1.4 million or 2.2% of total rental received. These expenses is inclusive of refurbishment work costing RM1 million. b. Enhancing Property Values In the year 2011, four properties underwent asset enhancement exercise: Selayang Mall total replacement of 6 units of lift estimated at RM1.0 million Silver Bird Factory expansion work estimated at RM12.0 million Permanis Factory expansion and enhancement work estimated at RM12.0 million KDNC11 total refurbishment of cold rooms estimated at RM3.5million c. Improving the Financial Performance of the Properties During the financial year, rentals of 2 properties were revised upwards:Previous Monthly Rental 307,641 157,250 Current Monthly Rental 321,004 162,751 Date of Review
No. 1 2
Property Wisma Amanah Raya Berhad, Jalan Semantan Permanis Factory, Bangi
% Increase
4.34 November 2011 3.50 June 2011
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Capital Management The Manager has been adopting prudent capital management strategy in managing AmanahRaya REIT portfolio. In addition to the above, the Manager has complied with the provisions of the Deed and all applicable rules and guidelines prescribed by the Securities Commission relating to the financing of AmanahRaya REIT. As at 31 December 2011, AmanahRaya REIT has reduced the debt level to 34.91% of the total asset from 36.36% in 2010.
MANAGERS REMUNERATION Pursuant to the Deed dated 10 October 2006, the Manager is entitled to receive from AmanahRaya REIT a base fee of up to a maximum of 1.0% per annum of the net asset value of AmanahRaya REIT calculated on daily basis. During the financial year, the Manager received a total fee amounting to RM3,379,488 calculated at 0.60% of net asset value of AmanahRaya REIT, and payable monthly.
SIGNIFICANT EVENTS OCCURED DURING THE YEAR For the year under review, the following events took place: 1. Asset enhancement exercise was conducted on 4 properties under AmanahRaya REIT portfolio as listed below: (a) Selayang Mall total replacement of lifts estimated at RM0.9m (b) Silver Bird Factory expansion work estimated at RM12.0m (c) KDNC 11 total refurbishment of cold room estimated at RM 3.0m (d) Expansion of Permanis Factory estimated at RM 12.0m On 1 December 2011, the Manager has announced on behalf of AmanahRaya REIT, the mutual termination of the proposed acquisition of 3 properties from Perbadanan Kemajuan Negeri Selangor (PKNS) for a total purchase consideration of RM270 million. The proposed acquisition was mutually aborted by both parties due to unforeseen circumstances and may be revisited in the future when conditions are more favourable. Following the execution of a Share Sale Agreement between CI Holdings Berhad and Asahi Group Holdings Ltd of Japan, the lease on Permanis Factory was novated from CI Holdings Berhad to Permanis Sdn Bhd with corporate guarantee from Asahi Group Holdings Ltd. This novation is however subject to several conditions precedent. Throughout the year 2011, the manager has managed to secure the extension in the lease tenure of Permanis Factory and SilverBird Factory from 2016 to 2021. On 30 December 2011, the Manager has on behalf of AmanahRaya REIT announced, the completion of the revaluation exercise on all properties under AmanahRaya REIT portfolio. The revaluation was conducted in accordance with the requirements of Securities Commissions Guidelines on Real Estate Investment Trusts which requires revaluation of all the real estates in the funds investment portfolio to be carried out once every three (3) years. Although the three-year period has not lapsed for KDNC 11, AIC Factory, SilverBird Factory, Gurun Automotive Warehouse and SEGI College, Kota Damansara, the revaluation exercise was still carried out on these properties to enable the next revaluation exercise to be varied out simultaneously for all properties under AmanahRaya REIT portfolio. The Manager had participated in road shows to promote REIT investment in general to the public throughout Malaysia. Subsequent to the road shows, the number of public holding units of AmanahRaya REIT has increased tremendously. As at 31 December 2011, the number of unit holders increased by 18% representing a total of 2,809 unitholders in 2011 compared to total of 2,383 unitholders in 2010.
2.
3.
4.
5.
6.
7.
Annual report 2011
63
Managers Report
(continued)
MOVING FORWARD Asset Enhancement Moving forward, asset enhancement exercise on 4 properties i.e. Selayang Mall, Silver Bird Factory, Permanis Factory and KDNC11 has commenced and is currently ongoing. The asset enhancement exercise for Selayang Mall and KDNC 11 was estimated at totalling RM4.25 million. Silver Bird Factory will be expanded to cater for the business expansion of Silver Bird Group Berhad. The expansion cost was estimated at RM12 million and would be funded through bank borrowings. The enhancement exercise on Permanis Factory is being carried out by the lessee and negotiation on the funding of the same is currently ongoing. Acquisition With regard to acquisition, the Manager will continue with its plan to increase AmanahRaya REIT total asset value to RM1.5 billion from the current RM1.04 billion in the next 3 years. Financial Performance Bearing unforeseen circumstances such as adverse market condition, we expect AmanahRaya REIT to perform well. DPU is expected to be in the region of 7.0 to 7.5 sen should investment environment remain the same as in 2011.
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 the Trust.
RESERVES AND PROVISIONS There were no material transfers to and from reserves or provisions during the financial year ended 31 December 2011 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 AmanahRaya REIT, the Manager took reasonable steps: a. to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that there are no known bad debts and that no allowance for doubtful debts is required. to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Company, have been written down to an amount which they might be expected so to realise.
b.
As at the date of this report, the Manager is not aware of any circumstances: a. b. that would require the writing off of bad debts, or the allowance for doubtful debts in the financial statements of the Company; or which would render the values attributed to current assets in the financial statements of AmanahRaya REIT misleading; or
64
c.
which have arisen and render adherence to the existing method of valuation of assets or liabilities of AmanahRaya REIT misleading or inappropriate. not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of AmanahRaya REIT as misleading.
d.
At the date of this report, there does not exist: a. any charge on the assets of AmanahRaya REIT which has arisen since the end of the financial year which secures the liability of any other person, except as disclosed in Note 5 to the financial statements; or any contingent liability of AmanahRaya REIT which has arisen since the end of the financial year.
b.
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.
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 misleading amount stated in the financial statements. The Manager opines: a. that the results of the operations of AmanahRaya REIT during the financial year under review were not substantially affected by any item, transaction or event of material and unusual in nature; and that there were no transactions or events 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.
b.
AUDITORS The auditors, Messrs BDO, have indicated their willingness to accept re-appointment. This concludes the Managers Report.
For and on behalf of AmanahRaya-REIT Managers Sdn Bhd signed in accordance with a resolution of the Directors.
Tan Sri Dato Ahmad Fuzi bin Abdul Razak Kuala Lumpur 15 February 2012 Annual report 2011
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Property Market Overview

1. Overview of Malaysian Economy in 2011 The Malaysian economic recovery continued its momentum from last year to the latter half of 2011 where the economy grew at 5.8% in Q3. The first and second quarters of 2011 saw a growth of 4.6% and 4% respectively. Chart 1: Key Economic Indicators, 2000 3Q 2011
Key Economic Indicators for the Year of 2000 - Q3,2011

Growth % 10.0%
GDP CPI
5.0%
BLR Unemployment
0.0% 00 -5.0% 01 02 03 04 05 06 07 08 09 10 11 Producer Price Index
-10.0%
Source: Bank Negara Reports The overall performance of Malaysian economy in 2010 showed an encouraging growth of 7.2% compared to -1.7% in 2009 year-on-year. The current strong performance is contributed by the sustainable expansion in domestic demand, increase in private sector spending and the recovery in external demand. Bank Negara Malaysia has increased the Base Lending Rate (BLR) from 6.3% in 2010 to the latest revised rate in 1H 2011 at 6.6% which is effective since 11 May 2011. Net inflows of Foreign Direct Investment (FDI) leapt to RM21.3 billion in the first half of 2011 (1H 2011) compared to RM12.1 billion recorded in the same period for the year 2010 registering an impressive 76% increment from the previous year. The recent announcement made by global management consulting firm, AT Kearney, highlighted that Malaysias ranking as an attractive foreign direct investment (FDI) destination had jumped from 21st in 2010 to 10th in 2011 (AT Kearneys FDI Confidence Index). The FDI Confidence Index is a regular measure of senior executive sentiment at the worlds largest companies. Higher FDIs would assist to cushion any possible impact from the possible challenges in 2012.
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Chart 2: Foreign Direct Investment Inflows
Foreign Direct Investment Inflows (FDI)

RM/Billion 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0 02 03 04 05 06 07 08 09 10 11 Net FDI (RM/Billion)
Source: Bank Negara Report, Department of Statistics With further liberalization of the financial market by Bank Negara Malaysia, several offshore fund houses and foreign banks have indicated their interests in establishing their presence in the country. This will boost the demand for office space, especially in Kuala Lumpur commercial centers, which is expected to stimulate further interests by secondary services establishments. The interest in Malaysia will be augmented by the multitude transformation programs to create, amongst others, a better business environment on the international stage. In September 2010, the Malaysian government launched the Economic Transformation Program (ETP) with the prime objective of turning Malaysia into a high income economy by year 2020. In realizing the objective, several National Key Economic Areas (NKEAs) were established which amongst others include Greater Kuala Lumpur, Wholesale and Retail, Tourism, Healthcare and Education. The NKEAs will inadvertently have high impact on the property sector and this will be done through the various Entry Point Projects or EPP. For instance, the proposed Sungai Buloh Kajang Mass Rapid Transit (MRT) under Greater Kuala Lumpurs NKEA will fuel growth outside Kuala Lumpur City Centre especially in Sungai Buloh, Kajang and Kota Damansara. The Healthcare NKEA emphasise on improving medical tourism focuses on providing quality care and high-value healthcare experience for outpatient treatments. Incentives are provided to allow local healthcare establishments to compete with similar healthcare services and providers offered by neighbouring countries such as Singapore and Indonesia. Duty-free shopping destination is among the key projects under tourism NKEA. In addition, the government has announced its intention to style Kuala Lumpur City Centre - Bukit Bintang area as a premier shopping precinct in Malaysia by establishing a well-linked integrated pedestrian walkway to connect several shopping malls and hotels situated therein. This will assist in the re-branding of Malaysian shopping experience and to address the increasing concern over issues on public transportation in Malaysia. The proposed pedestrian walkway will link several major shopping centres such as KL Pavilion, Farenheit88, Lot 10 and Sungei Wang Plaza. The implementation of these EPPs is supported and substantiated through the 2012 Budget. About RM6 billion was allocated for the rollout of the ETP. The sum, involving Government expenditure, accounts for 5.5% of the public sectors 8% share or RM109 billion of the total RM2.4 trillion investment to be realized over the next 10 years. To date, 82% of these initiatives have either started operations or commenced, with the remaining 18% in various stages of work-in-progress. More business owners are coming forward to express their commitment in investments that centered mainly in the oil, gas & energy sector, followed by tourism, education, E&E, communication content and infrastructure, healthcare services, agriculture and Greater KL NKEAs. This puts the NKEAs well on track to achieve their 2020 investment and incremental GNI and job targets.
Annual report 2011
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2.
Retail Sector Malaysia Retail Report Q4 2011 by Business Monitor International forecasted total retail sales to grow from RM182.44 billion (US$51.79 billion) in 2011 to RM279.83 billion (US$79.44 billion) by 2015. Low unemployment rate, rising disposable incomes and strong tourism industry are key factors behind the forecasted growth. With the population expected to increase to 30 million by 2015, GDP per capita is predicted to rise by 44.7%, from US$9,686 in 2011 to US$14,019 in 2015. As at 3Q 2011, the total Net Lettable Area (NLA) of retail space in Malaysia stood at 117.1 million sq.ft, with 22.8 million sq.ft or 19.5% located in Kuala Lumpur and 27.9 million sq.ft or 23.8% located in Selangor. In 2011, a total of 4.4 million sq.ft of new retail space had been injected into the market. Some of these new stocks are Suria KLCC (Lot C), Kenanga Wholesale City, Southgate in Sungai Besi, Viva Home in Jalan Loke Yew, 1 Shamelin Mall in Cheras and KL Festival City Mall in Taman Danau Kota, to name a few. Meanwhile, new supplies of shopping malls in Selangor are SS2 Mall in Petaling Jaya, Space U8 Shah Alam, Subang Avenue, CITTA Strip Mall in Ara Damansara and The Mines Phase 2 in Seri Kembangan. Despite the expectation of retail market in Klang Valley to hit oversupply, occupancy rate remains high. For instance, upon opening, Suria KLCC (Lot C) recorded 85% occupancy, Kenanga Wholesale City at 80%, Southgate City at 85%, Viva Home at 92% and KL Festival City Mall at 80%. In Selangor, we noted that some of these malls achieved encouraging occupancy rates, e.g. Jaya One (98%) and Tropicana City Mall (99%). On average, occupancy rate of shopping malls in Klang Valley in 3Q 2011 was rather stable, averaging at 86.9% in Kuala Lumpur and 85.6% in Selangor. In Selayang, Selangor, the occupancy rate in Selayang slightly declined from 89.6% (1H 2010) to 89.2% (1H 2011). Other malls within 10km radius from Selayang Mall recorded high occupancy rate of between 80.0% (Selayang Capitol) and 100.0% (Giant Batu Caves). Between 2012 to 2015, the market is expected to witness the additional supply of 12 new complexes to be opened in Kuala Lumpur and Selangor, which will contribute more than 7.5 million sq.ft of retail space, i.e. Nu Sentral Shopping Mall, Sunway Velocity, Damansara City Mall, The Strand Mall, IOI City Mall Putrajaya, Empire City Mall Damansara Perdana and several others. Rental rates remained relatively stable in 2011. Monthly rental rate in Seri Kembangan and Selayang ranged from RM3.00 psfpm to RM14.00 psfpm and RM1.50 psfpm to RM12.00 psfpm respectively. In terms of capital value, there were several transactions in 2011 in the Klang Valley as shown in Table 1 below with prices ranging from RM998 psf (The Gardens Mall, Mid Valley) and RM1,136 psf (Capsquare Retail Centre). Table 1: Transactions of Selected Retail Centres within Klang Valley in 2011
Property The Gardens Mall, Mid Valley Capsquare Retail Centre
NLA (sq ft) 821,887 128,541
Vendor IGB Corp Bhd Bandaraya Development Bhd
Purchaser Kriss Assets Ambang Sehati Sdn Bhd
Consideration RM820 mil RM146 mil
RM (psf) 998.00 1,136.00
Source: Rahim & Co Research Net yield for retail centers in the Klang Valley is estimated to range from 5.0% to 9.0% in 2012. Looking ahead, the retail market is expected to remain favourable, backed by improving economy and positive consumers sentiment. However, competition is expected to intensify due to possible oversupply of retail centres. This cautious sentiment is supported by The Malaysian Retailer Chains Association (MRCA). In December 2011, MRCA had urged developers to carry out extensive research before opening additional shopping malls as retailers have had difficulties in differentiating product offerings due to the excessive supply of shopping malls with the same positioning.
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3.
Hotel Sector In recent years, international tourism has grown significantly stimulated by initiatives and promotional efforts by the Government as well as private hoteliers. Malaysia is ranked as the 9th most visited country in the world in 2009 and 2010. By 2020, based on the target set by the government for the NKEA-Tourism, Malaysia is expected to receive 36 million tourist arrivals and RM168 billion tourist receipts. Chart 3: Tourist Arrival and Receipts, 1998 2015
Tourist Arrival and Receipts to Malaysia, 1998-2015

Million
30.0 25.0 20.0 15.0 10.0 5.0 0 98 99 00 01 02 03 04 05 06 07 08 09 10 11*12*13*14*15*
RM/Billion
60.0 50.0 40.0 30.0 20.0 10.0
Tourist Arrival (Million) Tourist Receipts (RM Billion)
Source: Tourism Malaysia At the end of 2010, majority of the tourists visiting Malaysia were from Singapore and Indonesia. This can be seen from the registered number of tourist arrivals which stood at 13,042,004 and 2,506,509 respectively. Increased accessibility via air travel due to the emergence and strengthening of low-cost airlines and no frills travel packages are key contributants to the growth of this sector. Currently, Singapore's Silk Air, Malaysia Airlines and Air Asia collectively operate more than 30 flights per week between Singapore and Langkawi. This facility provides more opportunity to increase tourist arrivals in Kedah. Between 1H 2010 and 1H 2011, supply of hotel rooms in Malaysia increased only by 1.3% from 168,980 rooms to 171,130 rooms. During the same period, supply of hotel rooms in Kedah increased by 0.9% from 9,578 rooms to 9,664 rooms. The trend of occupancy rate in Malaysia as well as Kedah has fluctuated for the past five years with the highest occupancy rate in the country recorded at 70.1% in Q3 2007 and in Kedah at 72.7% in Q1 2007. As of Q3 2011, the overall occupancy rate for Malaysia and Kedah was at 56.7% and 48.3% respectively (Chart 4). In Alor Setar, occupancy rates of selected hotels range from 50% to 56% and in Langkawi, the rates range from 50% to 78% (Table 2).
Annual report 2011
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Chart 4: Overall Occupancy Rate of Hotels in Malaysia & Kedah

% 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 Quater Quater Quater Quater Quater Quater Quater 05 06 07 08 09 10 11
Malaysia Kedah
Source: Leisure Property Stock Report Table 2: Occupancy Rates of Selected Hotels in Alor Setar and Langkawi as at Q3 2011 Hotel The Regency Hotel Hotel Grand Crystal Sentosa Regency Hotel Andaman Langkawi Resort The Datai Langkawi Resort The Westin Langkawi Resort & Spa Meritus Pelangi Beach Resort & Spa Four Season Resort Tanjung Rhu Resort Source: Rahim & Co Research, MIHR Based on our findings, the average room rate for 5-star hotels in Langkawi ranges from RM1,400 per night to about RM 9,600 per night. According to the Malaysian Association Hotel as at 1H 2011, the overall average room rate in Langkawi was at RM685, an increase of 25.7% compared to the previous year at RM545. The rate is higher compared to other nearby tourist destinations, such as Batu Ferringhi (RM338) and Georgetown (RM197). Meanwhile, in Alor Setar, room rate for 3-star hotel hovers between RM200 to RM690 per night. The percentage of foreign tourists visiting Kedah decreased from 1,941,678 tourists in 2009 to 1,168,044 tourists in 2010; registering a 39.8% drop. We believe this is a typical consequence of the recent global financial crisis. Nonetheless, various promotions and campaigns were carried out in order to attract foreign tourists, especially from China, India and Middle East to visit Kedah, particularly Langkawi. The recently launched Langkawi Tourism Blueprint 2011-2015 aims to make the resort island among the worlds top 10 island and eco-tourism destination by 2015. It provides a tourism portfolio comprising 14 initiatives designed to cover the three themes of product, infrastructure and enabler. Location Alor Setar Alor Setar Alor Setar Langkawi Langkawi Langkawi Langkawi Langkawi Langkawi Occupancy Rate as at Q3 2011 (%) 53% 50% 56% 55% 50% 78% 71% 72% 77%
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4.
Office Sector As of Q3 2011, the total supply of office space in purposed-built office (PBO) buildings in the Klang Valley was 100.7 million sq.ft, of which about 74.8 million sq.ft were located in Kuala Lumpur and the remaining 25.9 million sq.ft were in Selangor. Compared to the preceding years, the total supply in Kuala Lumpur and Selangor increased by 2.5% and 3.5% respectively. The year 2011 saw the completion of seven new office buildings supplying a total of 2.34 million sq.ft of office space, namely Capital Square Office Tower 2, Menara Bank Islam, Menara Worldwide, Hampshire Place, One Mont Kiara, Glomac Tower and Dijaya Plaza. All these newly completed buildings have managed to secure tenants since completion with occupancy rates of 98% for Dijaya Plaza, 50% for Menara Bank Islam, 30% for Hampshire Place & Glomac Tower, 35% for One Mont Kiara and 30% for Capital Square Office Tower 2 while Menara Worldwide is still waiting for the approval of its Certificate of Fitness for Occupation (CFO). Due to the increase in supply, the overall average occupancy rate of PBOs in Kuala Lumpur has declined slightly from 81.2% in 2010 to 79.6% in Q3 2011. As shown in Table 3 below, occupancy rates of selected PBOs within AmanahRaya REIT locality range from 80.0% to almost 100.0%, indicating high demand for office space within these areas. Stiff competition for tenants is noted due to wider choices available in the market. Landlords have came up with attractive tenancy terms to entice tenants. Rental rate is under pressure due to the increasing supply. Through repositioning of rental prices, despite the increase in space, we noted a slight decline in average rental rate. Rentals were rationalised in order to maintain high occupancy rates. The average rental rate in Kuala Lumpur for Golden Triangle and Central Business District area arrives at RM5.91 psf per month in Q3 2011, compared to RM6.05 psf per month in 2010. Similalrly, Petaling Jaya recorded a lower average rental rate at RM3.47psf compared to RM3.74psf in 2010. Within the vicinity of AmanahRaya REIT property area, Table 3 shows the rental rate as at 2011, ranging from minimum of RM3.40 psf to maximum of RM10.50 psf per month. Table 3: Occupancy and Rental Rates of Selected PBOs within AmanahRaya REIT Locality as at Q3 2011 Name of Building Menara Citibank Menara Maxis Wisma Selangor Dredging Sunway Tower Menara Safuan Bangunan Am Finance Kenanga International Menara IMC Plaza OSK Menara Great Eastern Vista Tower The ICON G Tower Subang Hi-Tech Wisma Consplant 1 Wisma Consplant 2 Wisma UEP Menara Summit First Subang (new building) Menara Manulife Menara Millenium Menara HP Bangunan Malaysia RE Wisma E&C Wisma Chase Perdana Plaza Damansara A Wisma UOA Damansara I Wisma UOA Damansara II Mines Waterfront Biz Park Mines 2 (new building) Source: Rahim & Co Research Annual report 2011 Location Jalan Ampang Jalan Ampang Jalan Ampang Jalan Ampang Jalan Ampang Jalan Ampang Jalan Ampang Jalan Ampang Jalan Ampang Jalan Ampang Jalan Tun Razak Jalan Tun Razak Jalan Tun Razak Subang Jaya Subang Jaya Subang Jaya Subang Jaya Subang Jaya Subang Jaya Damansara Height Damansara Height Damansara Height Damansara Height Damansara Height Damansara Height Damansara Height Damansara Height Damansara Height Seri Kembangan Seri Kembangan Occupancy Rate (%) 95% 93% 98% 90% 90% 95% 84% 96% 95% 90% 90% 90% 93% 90% 90% 90% 80% 80% 50% 100% 98% 93% 100% 80% 84% 90% 100% 100% 90% 50% Asking Rental Rate (RM psf) 8.50 10.50 6.00 6.50 6.00 6.00 6.80 8.50 5.50 5.00 7.50 9.50 7.50 8.00 3.80 4.00 4.00 3.50 4.00 3.50 3.50 4.50 4.50 5.00 5.00 3.80 4.50 4.40 3.40 3.70 3.50 5.00 5.00 3.50 3.70 4.50
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In terms of average capital value, based on several transactions recorded in 2011, there is an improvement of 6.0% from market average of RM755 psf to RM780 psf. Table 4 shows some of the notable transactions recorded as at Q3 2011. Table 4: Selected Transactions of PBOs as at Q3 2011 Office Building Dua Sentral Menara Multi-Purpose Wisma Goldhill, KL The Horizon (Phase 1) Source: Rahim & Co. Research In the next five years, an estimated 33.7 million sq.ft of new office space will be completed, of which about 14.4% (4.8 million sq.ft) will be located in the suburbs such as Damansara City 2 in Damansara City Centre, Kiara 163 in Mont Kiara, Office Tower@The Paradigm in Kelana Jaya and Point 92 Office Tower, 8trium, The Altium and Glomac Damansara in Damansara. The emergence of new supply in suburban areas in the last couple of years is a response to the growing trends, in line with the strong demand for suburban space. Demand for quality office space outside the city center is expected to be strong in the next few years due to the growing trend of decentralization from the city center to suburbs primarily driven by higher rents and traffic congestion issues in the city centre and fuelled by the vast improvement in suburban accessibility through major highways. We anticipate that the rental rates in Kuala Lumpur will be slightly depressed with an upcoming of about 7 million sq.ft of office space into the existing market by year 2015. 5. Industrial Sector As one of the largest contributors to the Malaysian economy, the manufacturing sector continued to play a major role in the countrys economic development. Basic economic activities, in macroeconomic terms, provided by this sector, translates to multiplier effects including increasing demand for real estate especially residential and commercial despite the activity within the industrial sector itself being relatively small. In 1H 2011, industrial property transactions accounted only 2.4% of the total transaction volume, representing 8.4% of the total transaction values. Compared to 1H 2010, the volume of transactions increased by 12.6% in 1H 2011 from 4,648 transactions to 5,232 transactions. During the same period, value of transactions increased by 23.1% from RM4.40 billion to RM5.42 billion. Such positive trend was also noted in the increase of manufacturing sales value between 1H 2010 and 1H 2011 by 12.9%, which showed a general recovery of the manufacturing sector after a slowdown in 2008. As at Q3 2011, the total supply of industrial properties in Malaysia was 93,729 units, of which Selangor and Kedah contributed about 36.7% and 3.4% of the total supply respectively. In addition, there were 2,792 units of incoming supply and 1,685 units of planned supply in Selangor, whereas in Kedah, there were 58 units of incoming supply and 3,635 units of planned supply. Table 5: Supply of Industrial Properties (units) as at Q3 2011 Location Selangor Kedah Malaysia Source: Property Market Report Existing Stock Incoming Supply Planned Supply 34,458 3,190 93,729 2,792 58 7,825 1,685 3,635 23,131 Tenure Freehold Freehold Freehold Freehold NLA (sq.ft) 430,000 541,424 270,000 46,100 Consideration RM232.2 RM375 RM174.5 RM36 mil mil mil mil RM/psf 540 693 646 780
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Rental rates of selected industrial properties where AmanahRaya REIT properties are located remained stable due to long term tenancy contracts of a period between five to ten years. Meanwhile, a few industrial properties noted some rental increment between 2010 and 2011. Factory unit in Bandar Baru Bangi registered the highest rental growth between 2010 to 2011 whereby it increased by 11.8% from RM1.52psf to RM1.70psf. In general, asking rental for other industrial properties within AmanahRaya REITs locality ranged between RM0.67psf (in Telok Gong, Klang) to RM2.30psf (in Bukit Jelutong, Shah Alam). Industrial areas within the AmanahRaya REIT locality include Shah Alam, Bukit Jelutong, Hicom Glenmarie, Bandar Baru Bangi, Kota Damansara and Klang. Table 6: Rental Rates of Industrial Properties within AmanahRaya REIT Locality, 2011 Asking Rental (RM/sq.ft), 4Q 2010 1.30 1.11 1.90 1.80 1.20 1.40 1.40 1.40 2.10 2.00 1.30 1.50 Asking Rental (RM/sq.ft), 4Q 2011 1.30 1.11 1.90 1.90 1.00 1.40 1.40 1.40 2.30 2.20 1.40 1.80
Area Shah Alam
Property Address Bukit Kemuning Section 15 Bukit Jelutong Temasya Industrial Park Section 27 Hicom Glenmarie Bandar Baru Bangi Bandar Baru Bangi Telok Gong Telok Gong
Type of Industrial Warehouse Warehouse Warehouse Factory Terraced Detached Factory Factory Warehouse Factory
B/Up (sq.ft) 20,000 13,500 30,000 10,000 4,000 30,000 40,000 18,000 50,000 20,000 6,000 43,000
% Change Stable Stable Stable 9.5% 7.7% 3.4% 11.8% 2.9% Stable Stable
Bangi
55,000 - 60,000 5,000 - 12,000 52,000 - 68,000 56,000 - 65,000
1.51 - 1.52 1.21 - 1.36 0.73 - 1.00 0.67 - 0.80
1.50 1.70 1.21 1.40 0.80 1.00 0.67 0.80
Klang
Source: Rahim & Co. Research Single-storey detached factories subsector dominated the industrial transaction market. Transaction of 1-storey detached factory in Seksyen 3, Kota Damansara marks the highest value at RM522psf while other similar industrial sectors averaged at RM204psf. Some industrial parks with active transaction markets are located at Kota Damansara, Shah Alam, Klang and Kajang. A 2-storey detached factory in Shah Alam registered the highest selling price rate of all industrial types in the AmanahRaya REITs locality arriving at RM1,204 psf. A vacant industrial land in Pulau Indah Industrial Park was transacted at RM22 psf. Selected transactions and rental rates for properties within the abovementioned areas is tabulated in the following page. As more industrial projects related to ETP takes off, the industrial market is likely to sustain the present momentum and have better opportunities in the future.
Annual report 2011
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Table 7: Transactions of Industrial Properties within AmanahRaya REIT Locality, 2011

Description Damansara Vacant Lot 3-storey Detached Light Factory Mukim Petaling Petaling Location Kota Damansara Taman Sains Selangor 1, Kota Damansara Seksyen 3, Kota Damansara Seksyen 3, Kota Damansara Seksyen 16, Shah Alam Seksyen 16, Shah Alam Seksyen 16, Shah Alam Seksyen 16, Shah Alam Sekyen 26, Shah Alam Seri Alam Industrial Park Pulau Indah Industrial Park Kawasan Perindustrian Bdr Sultan Sulaiman Perindustrian Sg Jati Seksyen 14, Bandar Baru Bangi Seksyen 10, Bandar Baru Bangi Seksyen 10, Bandar Baru Bangi Transaction Date Aug-11 Aug-11 Vendor Purchaser Consideration (RM - Mill) RM12.2 mil (RM70psf) RM18 mil (RM462psf)
Tamadun Biz-Markas Cemerlang Sdn Bhd Sdn Bhd Luxor YRM Sdn Bhd Cyber Business Solution Sdn Bhd
1-storey Pekan Baru Detached Factory Sg Buloh 1-storey semi-d Factory Shah Alam 1-s semi-d Factory 2-s Detached Factory 1-s Detached Factory 1-s Detached Factory 1-s Detached Factory Klang Vacant Industrial land Vacant Industrial land 1-s Detached Factory Pekan Baru Sg Buloh Bandar Shah Alam Bandar Shah Alam Bandar Shah Alam Bandar Shah Alam Pekan Hicom Kapar Klang Klang
Mar-11
Henikwon Corp. Sdn Bhd AT Transmissions Sdn Bhd FMC Manufacturing Sdn Bhd Hokuriku (M) Sdn Bhd Inagro Sdn Bhd Boustead Weld Court Sdn Bhd Polymatech (M) Sdn Bhd NPO Land Sdn Bhd Central Spectrum (M) Sdn Bhd AXIS REIT
Secret Recipe Manufacturing Sdn Bhd JAR Hardware Sdn Bhd XTRO Tech Sdn Bhd Greenway Link Sdn Bhd Lighting Editions Sdn Bhd Intermarco Devt Sdn Bhd Sunchirin Industries (M) Bhd Toyo Ink Group Bhd Scientex Bhd Freight Management (M) Sdn Bhd
RM28 mil (RM522psf) RM6 mil (RM1,058psf) RM2.4 mil (RM383psf) RM17 mil (RM1,204psf) RM7.5mil (RM148psf) RM5.5 mil (RM369psf) RM14.3 mil (RM340.55psf) RM8.97 mil (RM38psf) RM12.02 mil (RM22psf) RM14.5 mil (RM97psf)
Jan-11 Feb-11 May-11 May-11 Jul-11 Jun-11 Jun-11 Jun-11 Jan-11
1-s Detached Factory Bandar Baru Bangi 1-s Detached Factory 1-s semi-d Factory 1-s semi-d Factory
Klang Kajang
Mar-11 Apr-11
Leadken Industry Sdn Bhd Hitachi Consumer Products (M) Bangi Sdn Bhd Chia Ah Tee
Top Slings Trading Sdn Bhd Talent Team Sdn Bhd
RM15 mil (RM169psf) RM20 mil (RM105psf) RM3.2 mil (RM322psf) RM1.65 mil (RM353psf)
Bandar Baru Bangi Bandar Baru Bangi
Mar-11
Jusgreat Sdn Bhd
May-11
Ehsan Plant & Property Sdn Bhd
Ampang Press Sdn Bhd
Source: JPPH
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6.
Education Sector The education industry continues its growth momentum with the consistent educational promotion expositions organized by both public and private sectors. The number of enrolments overall (for both new entries and existing enrolments) for the country grew by 6.5% in 2010. There were a total of 1.43 million students within this collective category in 2009 which increased to 1.52 million in 2010. It is estimated that more than 1.6 million students are currently enrolled in various programs throughout the country. Looking at the trend of enrolments of foreign students in private and public Higher Education Institutions (HEIs), the numbers suggest that Malaysia continues to be a popular destination for tertiary education. This directly translates to increased demand for educational spaces which is popularly executed via conversion of office and commercial spaces into educational and training facilities. Chart 5: Total Enrolment of International Students in Public and Private Higher Education Institutions in Malaysia Total Enrolment of International Students in Public and Private Higher Education Institutions Year 2005-2010
100,000 90,000 80,000
80,750 69,164
86,923
No. of students
70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 05 06 07 08 09 10
47,928 40,525 44,390
Source: Ministry of Higher Education In 2010, there were 86,923 foreign students in various Higher Education Institutions around the country. The 44% jump in foreign students enrolment between 2007 and 2008 was not repeated in 2010; nevertheless, growth was still recorded by 7.6% in recent years which is still commendable. The surge in the past was probably due to the more open-door treatment to educational system in the country compared to other cities around the world, coupled with a more favourable currency exchange rate. Table 8: Total Number of Students Enrolled in Selected Programmes Total Students in Public & Private Higher Education Institutions in Selected Programs PhD Entries Enrolment Graduates 2010 2009 2010 2009 2010 2009 5,663 4,942 21,522 16,947 1,268 750 Masters 24,557 23,922 63,714 58,252 12,832 9,941 Degree 137,616 132,040 494,989 470,772 93,007 106,291 Others 222,699 220,432 Total 390,535 381,336 % Change 2.41% 7.94% -4.60%
553,909 1,134,134 504,755 1,050,726 132,196 133,854 239,303 250,836
Source: Ministry of Higher Education Annual report 2011
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With the continuing rise in the overall number of total enrolments at HEIs, it is believed that the number of enrolments shall continue to improve in the ensuing year. Whether the increase is a result of longer program timeframe or the productive outcome of other factors, higher number of enrolments is a favourable sign in terms of space requirement for educational institutions. Table 9: Distribution of Foreign Students Origin in IPTS, End 2010 Ranking 1 2 3 4 5 6 7 8 9 10 IPTS China Iran Indonesia Nigeria Yemen Libyan Arab Jamahiriya Botswana Sudan Saudi Arabia Bangladesh Others TOTAL Source: Ministry of Higher Education As per the previous years, most of the foreign students enrolled in HEIs come from China and Iran. Collectively, they accounted for almost a quarter of the total foreign students and one may want to continue focusing on new enrolments of foreign students from these countries. It is interesting to note that Korea entered the Top 10 List of Foreign Students Origin in 2010. 7. Outlook for 2012 Malaysias growth in 2012 will be driven mostly by domestic sector as the domestic demand is expected to remain strong due to supportive government policies such as the 10th Malaysia Plan, Economic Transformation Program (ETP) and the 2012 budget. Currently, the domestic demand has increased by 9.0% (estimated) from 5.6% in the previous quarter contributed by the expansion in private sector spending and higher public sector expenditure. Overall, private investment will continue to fuel Malaysias growth in 2012 where it has reached about RM75 billion during the first three quarters in 2011. As proven over the years, real estate in prime and established areas should command a rather consistent demand be it for its capital values as well as rental values. The residential market will continue to see renewed interest in established suburban locations such as in state capitals and major economic cities. The condominium market, especially in the high-end tier, may continue to consolidate but to a smaller extent as the market had gone through a correction phase in 2008/2009. The office market segment will see the arrival of a new class of Grade-A buildings in Klang Valley. With more than 7.6 million square feet of office space entering the market in 2012, expected rental rates will be under pressure especially in the ultraprime buildings category. There is a huge opportunity for older buildings to be repositioned just behind these ultra-prime buildings and priced strategically as value-for-space in the coming couple of years. It is expected that refurbishment exercises will be active in the next 24 months to capitalize on this opportunity. By 2015, average rental rates of prime office buildings in Kuala Lumpur is expected to record around RM7.00 psf compared to current rates averaging at RM6.00 psf. Similarly, a total of more than 7.5 million sq.ft of retail space is expected to enter the market by year 2015. As competition gets stiffer, occupancy and rental rate of newer shopping mall will be soften. We reckon competition will be stiffer as buyers/shoppers have more option to choose from and eventually dilute the profit margin of retailers. A branded and popular anchor tenant will significantly attract high patronage volume coupled with a good tenant mix that encourages the interchange of customers and retail activities. Suburban malls will be more popular if they can offer better variety of goods and services, synergized with a rebranding exercise. Branding has become increasingly significant in the hospitality segment as people do buy brands. It will become even more important for individual hotel units to develop methods to ensure they can be recognized to establish market penetration. Standing out among the competitors or within an individual community should be a continuing priority for all hotel operators and owners. Enrolment 2009 7,078 6,930 6,099 5,398 3,382 2,831 1,938 1,867 1,675 1,521 19,575 58,294 Percentage 12.1% 11.9% 10.5% 9.3% 5.8% 4.9% 3.3% 3.2% 2.9% 2.6% 33.6% 100.00% Ranking 1 2 3 4 5 6 7 8 9 10 IPTS China Iran Indonesia Nigeria Yemen Sudan Botswana Saudi Arabia Bangladesh Korea Others TOTAL Enrolment 2010 8,046 7,009 6,119 5,080 4,057 2,241 1,909 1,584 1,503 1,426 23,731 62,705 Percentage 12.8% 11.2% 9.8% 8.1% 6.5% 3.6% 3.0% 2.5% 2.4% 2.3% 37.8% 100.00%
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Statutory Financial Statements

78 79 80 81 83 84 86 87 88 127 Statement By Directors Of The Manager Statutory Declaration Report Of The Trustee To The Unitholders Independent Auditors Report To The Unitholders Statement Of Financial Position Statement Of Comprehensive Income Statement Of Changes In Net Asset Value Statement Of Cash Flows Notes To The Financial Statements Supplementary Information on Realised and Unrealised Profits or Losses
Statement by Directors of the Manager

In the opinion of the Directors of AmanahRaya REIT Managers Sdn. Bhd. (the Manager), the financial statements set out on pages 83 to 127 have been drawn up in accordance with the provisions of Novation Agreement dated 27 August 2009 in respect of the Trust Deed dated 10 October 2006 (as varied by Supplemental Trust Deed dated 4 January 2007) and the Second Supplemental Trust Deed dated 27 August 2009, the Securities Commissions Guidelines on Real Estate Investment Trusts, applicable securities laws and applicable approved Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of AmanahRaya Real Estate Investment Trust (AmanahRaya REIT or Trust) as at 31 December 2011 and of the financial performance and cash flows of the Trust for the financial year then ended.
Signed on behalf of the Manager, AmanahRaya-REIT Managers Sdn. Bhd., In accordance with a resolution of the Directors of the Manager
Tan Sri Dato Ahmad Fuzi bin Abdul Razak Director Kuala Lumpur 15 February 2012
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AmanahRaya REIT
Statutory Declaration
I, ADENAN BIN MD YUSOF, being the officer of the Manager, AmanahRaya-REIT Managers Sdn. Bhd., primarily responsible for the financial management of AmanahRaya Real Estate Investment Trust, do solemnly and sincerely declare that the financial statements set out on pages 83 to 127 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.
Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 15 February 2012
Adenan bin Md Yusof
Before me,
Commissioner for Oaths
Annual report 2011
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Report of the Trustee to the Unitholders of AmanahRaya Real Estate Investment Trust
We, CIMB Trustee Berhad, have acted as Trustee of AmanahRaya Real Estate Investment Trust (AmanahRaya REIT or Trust) for the financial year ended 31 December 2011. In our opinion and to the best of our knowledge: (a) AmanahRaya-REIT Managers Sdn. Bhd. (the Manager) has managed AmanahRaya REIT in accordance with the limitations imposed on the investment powers of the Manager and the Trustee under the Novation Agreement dated 27 August 2009 in respect of the Trust Deed dated 10 October 2006 (as varied by the Supplemental Trust Deed dated 4 January 2007) and the Second Supplemental Trust Deed dated 27 August 2009, the Securities Commissions Guidelines on Real Estate Investment Trusts, the Capital Markets and Services Act 2007 and other applicable laws during the financial year then ended;
(b) The procedures and processes employed by the Manager to value the units of AmanahRaya REIT are adequate and that such valuation is carried out in accordance with the Trust Deed and any other regulatory requirements; and (c) The creation of units is carried out in accordance with the Trust Deed and any other regulatory requirements.
We also confirm that the income distributions declared and paid during the financial year ended 31 December 2011 are in line with and are reflective of the objectives of the AmanahRaya REIT. Four distributions have been declared for the financial year ended 31 December 2011 as follow: 1) 2) 3) 4) First interim income distribution of 1.8120 sen per unit paid on 19 July 2011; Second interim income distribution of 1.8071 sen per unit paid on 7 October 2011; Third interim income distribution of 1.7200 sen per unit paid on 19 January 2012; Proposed fourth and final income distribution of 1.8822 sen per unit payable on 21 March 2012.
For and on behalf of the Trustee, CIMB TRUSTEE BERHAD (Company No. 167913 M)
KHOO LENG KEE Chief Operating Officer Kuala Lumpur, Malaysia
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AmanahRaya REIT
Independent Auditors Report To The Unitholders Of AmanahRaya Real Estate Investment Trust
(Established In Malaysia)
Report on the Financial Statements We have audited the financial statements of AmanahRaya Real Estate Investment Trust (AmanahRaya REIT or Trust), which comprise the statement of financial position as at 31 December 2011 of AmanahRaya REIT, and the statement of comprehensive income, statement of changes in net asset value and statement of cash flows of AmanahRaya REIT for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 83 to 127.
Directors of AmanahRaya-REIT Managers Sdn. Bhd.s Responsibility for the Financial Statements The Directors of AmanahRaya-REIT Managers Sdn. Bhd. (the Manager) of AmanahRaya REIT are responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Novation Agreement dated 27 August 2009 in respect of the Trust Deed dated 10 October 2006 (as varied by the Supplemental Trust Deed dated 4 January 2007) and the Second Supplemental Trust Deed dated 27 August 2009, the Securities Commissions Guidelines on Real Estate Investment Trusts, applicable securities laws and applicable approved Financial Reporting Standards in Malaysia, and for such internal control as the Directors of the Manager determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to AmanahRaya REITs preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of AmanahRaya REITs internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors of the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Annual report 2011
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Independent Auditors Report To The Unitholders Of AmanahRaya Real Estate Investment Trust
(Established In Malaysia)
Opinion In our opinion, the financial statements have been properly drawn up in accordance with the provisions of the Novation Agreement dated 27 August 2009 in respect of the Trust Deed dated 10 October 2006 (as varied by the Supplemental Trust Deed dated 4 January 2007) and the Second Supplemental Trust Deed dated 27 August 2009, the Securities Commissions Guidelines on Real Estate Investment Trusts, applicable securities laws and applicable approved Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the AmanahRaya REIT as at 31 December 2011 and of its financial performance, the changes in net asset value and the cash flows of AmanahRaya REIT for the financial year then ended.
Other Reporting Responsibilities The supplementary information set out in Note 33 to the financial statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other Matters This report is made solely to the unitholders of AmanahRaya REIT, as a body, in accordance with the Securities Commissions Guidelines on Real Estate Investment Trusts and for no other purpose. We do not assume responsibility to any other person for the content of this report.
BDO AF : 0206 Chartered Accountants Kuala Lumpur 15 February 2012
Rejeesh A/L Balasubramaniam 2895/08/12 (J) Chartered Accountant
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AmanahRaya REIT
Statement of Financial Position

As at 31 December 2011
2011 RM 2010 RM
Note ASSETS Non-current assets Investment properties Current assets Trade and other receivables Security deposits in trust accounts and financial institution Deposits placed with licensed financial institutions Cash and bank balances
944,760,000
913,617,000
6 7 8
3,432,445 62,544,331 29,732,200 3,614 95,712,590
3,091,644 60,668,261 20,476,774 339,439 84,576,118 998,193,118
TOTAL ASSETS LIABILITIES Non-current liabilities Borrowings Trade and other payables
1,040,472,590
9 10
363,260,671 57,282,246 420,542,917
362,965,282 56,891,786 419,857,068
Current liabilities Trade and other payables Provision for income distribution
10 11
8,433,920 9,859,728 18,293,648
10,170,989 10,170,989 430,028,057 568,165,061
TOTAL LIABILITIES NET ASSET VALUE (NAV) FINANCED BY: UNITHOLDERS FUNDS Unitholders capital Distributable income TOTAL UNITHOLDERS FUND NUMBER OF UNITS IN CIRCULATION (UNITS) NAV PER UNIT (RM) before income distribution after income distribution 12
438,836,565 601,636,025
519,685,915 81,950,110 601,636,025 573,219,858
519,685,915 48,479,146 568,165,061 573,219,858
1.1197 1.0475
1.0712 1.0026
The accompanying notes form an integral part of the financial statements.
Annual report 2011
83
Statement of Comprehensive Income

For the financial year ended 31 December 2011
2011 RM 65,305,820 (1,981,268) 63,324,552 833,684 1,000 31,143,000 95,302,236 2010 RM 59,509,971 (1,785,571) 57,724,400 580,889 2,027,060 60,332,349
Note Gross revenue Property operating expenses Net rental income Interest income Other income Changes in fair value of investment properties Total income Trust expenses Managers fee Trustees fee Auditors remuneration Tax agents fee Administrative expenses Valuation fees Corporate exercise expenses Finance costs Total trust expenses Income before taxation Income tax expense Net income/Total comprehensive income for the financial year Net income for the financial year is made up as follows: Realised Unrealised 15 16 13 14
21 17
(3,379,488) (281,624) (85,000) (7,000) (243,760) (320,118) (361,335) (16,951,592) (21,629,917) 73,672,319 73,672,319
(2,496,731) (240,463) (75,000) (7,200) (294,751) (15,737) (675,428) (15,126,240) (18,931,550) 41,400,799 41,400,799
18
42,529,319 31,143,000 73,672,319
41,400,799 41,400,799
Earnings per unit (sen) before managers fee after managers fee
19 13.4419 12.8524 8.3723 7.8962
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AmanahRaya REIT
Note Net income distribution* First interim income distribution of 1.8120 sen per unit paid on 19 July 2011 (2010: 1.8597 sen per unit paid on 27 May 2010) Second interim income distribution of 1.8071 sen per unit paid on 7 October 2011 (2010: 1.9997 sen per unit paid on 26 August 2010) Third interim income distribution of 1.7200 sen per unit paid on 19 January 2012 (2010: 1.7874 sen per unit paid on 21 December 2010) Proposed final income distribution of 1.8822 sen per unit payable on 21 March 2012 (2010: 1.6741 sen per unit paid on 6 April 2011) 20
2011 RM
2010 RM
10,386,727 10,358,639 9,859,366 10,789,144 41,393,876
8,025,588 11,462,667 10,245,715 9,597,106 39,331,076
Income distribution per unit (sen)* First interim income distribution Second interim income distribution Third interim income distribution Proposed final income distribution
20 1.8120 1.8071 1.7200 1.8822 7.2213 1.8597 1.9997 1.7874 1.6741 7.3209
* Withholding tax will be deducted for distributions made for the following categories of unitholders: Withholding tax rate 2011 2010 Resident corporate Resident non-corporate Non-resident individual Non-resident corporate Non-resident institutional ^ No withholding tax; tax at prevailing tax rate Nil^ 10% 10% 25% 10% Nil^ 10% 10% 25% 10%
Annual report 2011
85
Statement of Changes in Net Asset Value

For The Financial Year Ended 31 December 2011
Distributable income Unitholders capital RM 519,685,915 Realised RM 11,667,146 Unrealised RM 36,812,000 Total unitholders fund RM 568,165,061
Note At 1 January 2011 (restated) Operations for the financial year ended 31 December 2011 Total comprehensive income for the financial year Increase in net assets resulting from operations
42,529,319 42,529,319
31,143,000 31,143,000
73,672,319 73,672,319
Unitholders transactions Distributions to unitholders: 2011 interim 2010 final Increase in net assets resulting from unitholders transactions At 31 December 2011
11
(30,604,732) (9,596,623)
(30,604,732) (9,596,623)
519,685,915
(40,201,355) 13,995,110
67,955,000
(40,201,355) 601,636,025
At 1 January 2010 (restated) Operations for the financial year ended 31 December 2010 Total comprehensive income for the financial year Increase in net assets resulting from operations Unitholders transactions Proceeds from issuance of units Distributions to unitholders: 2010 interim 2009 final Unit issuance expenses Increase in net assets resulting from unitholders transactions At 31 December 2010 (restated)
32(a)
403,291,776
16,123,132
36,812,000
456,226,908
41,400,799 41,400,799
41,400,799 41,400,799
12 11 32(a) 12
119,000,000 (2,605,861)
(29,733,970) (16,122,815)
119,000,000 (29,733,970) (16,122,815) (2,605,861)
116,394,139 519,685,915
(45,856,785) 11,667,146
36,812,000
70,537,354 568,165,061
86
AmanahRaya REIT
Statement of Cash Flows

For The Financial Year Ended 31 December 2011
2011 RM 2010 RM
Note CASH FLOWS FROM OPERATING ACTIVITIES Income before taxation Adjustments for: Finance costs Interest income Changes in fair value of investment properties Operating income before working capital changes Increase in trade and other receivables Increase in security deposits in trust accounts and financial institution (Decrease)/Increase in trade and other payables Net cash from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Purchase of investment properties Net cash generated from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Distributions paid to unitholders In respect of current financial year In respect of previous financial year Repayments of term loans Proceeds from term loans Proceeds from issuance of units Unit issuances expenses Interest paid Net cash (used in)/generated from financing activities Net cash increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year CASH AND CASH EQUIVALENTS Cash and cash equivalents included in the statement of cash flows comprise the following in the statement of financial position amounts: Cash and bank balances Deposits placed with licensed financial institutions 11
73,672,319
41,400,799
17
16,951,592 (833,684) (31,143,000) 58,647,227 (340,801) (1,876,070) (1,346,609) 55,083,747
15,126,240 (580,889) 55,946,150 (1,583,512) (24,623,586) 28,288,783 58,027,835
833,684 833,684
580,889 (227,285,000) (226,704,111)
12 12 17
(20,745,366) (29,733,970) (9,596,261) (16,122,815) (168,000,000) 277,753,056 119,000,000 (2,605,861) (16,656,203) (14,914,014) (46,997,830) 8,919,601 20,816,213 29,735,814 165,376,396 (3,299,880) 24,116,093 20,816,213
3,614 29,732,200 29,735,814
339,439 20,476,774 20,816,213
Annual report 2011
87
Notes to the Financial Statements

31 December 2011
1. GENERAL INFORMATION AmanahRaya Real Estate Investment Trust (AmanahRaya REIT or Trust) is a Malaysia-domiciled real estate investment trust constituted pursuant to the Novation Agreement dated 27 August 2009 with respect to the Trust Deed dated 10 October 2006 (varied by the Supplemental Trust Deed dated 4 January 2007) and the Second Supplemental Trust Deed dated 27 August 2009 (collectively referred to the Deed) between AmanahRaya-REIT Managers Sdn. Bhd. (the Manager) and CIMB Trustee Berhad (the Trustee). The Deed is regulated by the Securities Commissions Guidelines on Real Estate Investment Trusts, the Listing Requirements of Bursa Malaysia Securities Berhad, the Rules of the Depository and taxation laws and rulings. AmanahRaya REIT will continue its operations until such time as determined by the Trustee and the Manager as provided under the provision of Clause 26 of the Trust Deed dated 10 October 2006. AmanahRaya REIT is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Manager of AmanahRaya REIT is located at Level 11, Wisma AmanahRaya, No. 2, Jalan Ampang, 50508 Kuala Lumpur. The principal place of business of the Manager of AmanahRaya REIT is located at Level 8, Wisma TAS, No. 21 Jalan Melaka, 50100 Kuala Lumpur. AmanahRaya REIT is principally engaged in the investment of a diversified portfolio of properties with the objectives of achieving an attractive level of return from rental income and for long term capital growth. There has been no significant change in the nature of this activity during the financial year. The financial statements are presented in Ringgit Malaysia (RM), which is the Trusts functional currency. The financial statements were authorised for issuance of information to the unitholders in accordance with a resolution by the Board of Directors of the Manager, AmanahRaya-REIT Managers Sdn. Bhd., on 15 February 2012.
2.
BASIS OF PREPARATION 2.1 Statement of compliance The financial statements of AmanahRaya REIT have been prepared in accordance with the provisions of the Novation Agreement dated 27 August 2009 with respect to the Trust Deed dated 10 October 2006 (varied by the Supplemental Trust Deed dated 4 January 2007) and the Second Supplemental Trust Deed dated 27 August 2009, the Securities Commissions Guidelines on Real Estate Investment Trusts, applicable securities laws and applicable approved Financial Reporting Standards (FRSs) in Malaysia. 2.2 Basis of accounting The financial statements of AmanahRaya REIT have been prepared under the historical cost convention except as otherwise stated in the financial statements. The preparation of financial statements requires the Directors of the Manager to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and contingent liabilities. In addition, the Directors of the Manager are also required to exercise their judgement in the process of applying the accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 2.3 and Note 2.4 to the financial statements. Although these estimates and assumptions are based on the Managers best knowledge of current events and actions, actual results could differ from those estimates. The estimates and underlying assumptions are assessed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
88
AmanahRaya REIT
2.
BASIS OF PREPARATION (continued) 2.3 Judgement made in applying the accounting policies There are no judgements made by management in the process of applying the Trusts accounting policies that have the most significant effect on the amounts recognised in the financial statements apart from those involving estimates, which are dealt with below. 2.4 Key sources of estimation uncertainty The following are key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting periods, that have significant risks of causing material adjustments to the carrying amounts of assets and liabilities within the next financial year. (i) Fair values of investment properties The fair values of investment properties are determined by independent firms of professional valuers. Significant judgements are involved in determining the fair values by using the various methods of valuation as disclosed in Note 5 to the financial statements. (ii) Fair values of borrowings The fair values of borrowings are estimated by discounting future contractual cash flows at the current market interest rates available to the Trust for similar financial instruments. It is assumed that the effective interest rates approximate the current market interest rates available to the Trust based on its size and its business risk. (iii) Deferred tax liabilities No deferred tax liabilities arose from the fair value gains to the investment properties as it is the intention of the Trust to hold the real estate properties as long term investment. In the event that the Trust decides to dispose of any real estate properties, any gain on such disposal in which the holding period is within five (5) years from the date of acquisition, it will be subject to real property gains tax at the rate of 5%. (iv) Impairment of receivables The Trust makes impairment of receivables based on an assessment of the recoverability of receivables. Impairment is applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the impairment of receivables. Where expectations differ from the original estimates, the differences will impact the carrying amount of receivables.
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs 3.1 New FRSs and amendments to FRSs adopted during the current financial year (a) Amendments to FRS 132 are mandatory for annual periods beginning on or after 1 March 2010 in respect of the classification of rights issues respectively. These Amendments clarify that rights, options or warrants to acquire a fixed number of the Trusts own equity instruments for a fixed amount of any currency shall be classified as equity instruments rather than financial liabilities if the Trust offers the rights, options or warrants pro rata to all of its own existing owners of the same class of its own non-derivative equity instruments. There is no impact upon adoption of these Amendments during the financial year. Annual report 2011
89

31 December 2011
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.1 New FRSs and amendments to FRSs adopted during the current financial year (continued) (b) IC Interpretation 12 Service Concession Arrangements is mandatory for annual periods beginning on or after 1 July 2010. This Interpretation applies to operators for public-to-private service concession arrangements, whereby infrastructure within the scope of this Interpretation shall not be recognised as property, plant and equipment of the operator. The operator shall recognise and measure revenue in accordance with FRS 111 Construction Contracts and FRS 118 for the services performed. The operator shall also account for revenue and costs relating to construction or upgrade services in accordance with FRS 111. Consideration received or receivable by the operator for the provision of construction or upgrade services shall be recognised at its fair value. If the consideration consists of an unconditional contractual right to receive cash or another financial asset from the grantor, it shall be classified as a financial asset. Conversely, if the consideration consists of a right to charge users of the public service, it shall be classified as an intangible asset. There is no impact upon adoption of this Interpretation during the financial year. (c) FRS 1 First-time Adoption of Financial Reporting Standards is mandatory for annual periods beginning on or after 1 July 2010. This Standard supersedes the existing FRS 1 and shall be applied when the Trust adopts FRSs for the first time via the explicit and unreserved statement of compliance with FRSs. An opening FRS statement of financial position shall be prepared and presented at the date of transition to FRS, whereby: (i) (ii) (iii) (iv) All assets and liabilities shall be recognised in accordance with FRSs; Items of assets and liabilities shall not be recognised if FRSs do not permit such recognition; Items recognised in accordance with previous GAAP shall be reclassified in accordance with FRSs; and All recognised assets and liabilities shall be measured in accordance with FRSs.
All resulting adjustments shall therefore be recognised directly in retained earnings at the date of transition to FRSs. There is no impact upon adoption of this Standard during the financial year. (d) FRS 3 Business Combinations is mandatory for annual periods beginning on or after 1 July 2010. There is no impact upon adoption of this Standard during the financial year. (e) FRS 127 Consolidated and Separate Financial Statements is mandatory for annual periods beginning on or after 1 July 2010. There is no impact upon adoption of this Standard during the financial year. Amendments to FRSs are mandatory for annual periods beginning on or after 1 July 2010. Amendments to FRS 2 Share-based Payments clarifies that transactions in which the Trust acquired goods as part of the net assets acquired in a business combination or contribution of a business on the formation of a joint venture are excluded from the scope of this Standard. There is no impact upon adoption of these Amendments during the financial year.
(f)
90
AmanahRaya REIT
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.1 New FRSs and amendments to FRSs adopted during the current financial year (continued) (f) Amendments to FRSs are mandatory for annual periods beginning on or after 1 July 2010. Amendments to FRS 5 clarifies that non-current asset classified as held for distribution to owners acting in their capacity as owners are within the scope of this Standard. The amendment also clarifies that in determining whether a sale is highly probable, the probability of shareholders approval, if required in the jurisdiction, shall be considered. In a sale plan involving loss of control of a subsidiary, all assets and liabilities of that subsidiary shall be classified as held for sale, regardless of whether the Trust retains a non-controlling interest in its former subsidiary after the sale. Discontinued operations information shall also be presented. Non-current asset classified as held for distribution to owners shall be measured at the lower of its carrying amount and fair value less costs to distribute. There is no impact upon adoption of these Amendments during the financial year. Amendments to FRS 138 clarifies that the intention of separating an intangible asset is irrelevant in determining the identifiability of the intangible asset. In a separate acquisition and acquisition as part of a business combination, the price paid by the Trust reflects the expectations of the Trust of an inflow of economic benefits, even if there is uncertainty about the timing or the amount of the inflow. Accordingly, the probability criterion is always considered to be satisfied for separately acquired intangible assets. The useful life of a reacquired right recognised as an intangible asset in a business combination shall be the remaining contractual period of the contract in which the right was granted, and do not include renewal periods. In the case of a reacquired right in a business combination, if the right is subsequently reissued to a third party, the related carrying amount shall be used in determining the gain or loss on reissue. There is no impact upon adoption of these Amendments during the financial year. Amendments to IC Interpretation 9 clarifies that embedded derivatives in contracts acquired in a business combination, combination of entities or business under common controls, or the formation of a joint venture are excluded from this Interpretation. There is no impact upon adoption of these Amendments during the financial year. (g) IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation is mandatory for annual periods beginning on or after 1 July 2010. This Interpretation applies to hedges undertaken on foreign currency risk arising from net investments in foreign operations and the Trust wishes to qualify for hedge accounting in accordance with FRS 139. Hedge accounting is applicable only to the foreign exchange differences arising between the functional currency of the foreign operation and the functional currency of any parent (immediate, intermediate or ultimate parent) of that foreign operation. An exposure to foreign currency risk arising from a net investment in a foreign operation may qualify for hedge accounting only once in the consolidated financial statements. Hedging instruments designated in the hedge of a net investment in a foreign operation may be held by any companies within a group, as long as the designation, documentation and effectiveness requirements of FRS 139 are met. There is no impact upon adoption of this Interpretation during the financial year.
Annual report 2011
91

31 December 2011
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.1 New FRSs and amendments to FRSs adopted during the current financial year (continued) (h) IC Interpretation 17 Distributions of Non-cash Assets to Owners is mandatory for annual periods beginning on or after 1 July 2010. This Interpretation applies to non-reciprocal distributions of non-cash assets by the Trust to its owners in their capacity as owners, as well as distributions that give owners a choice of receiving either non-cash assets or a cash alternative. This Interpretation also applies to distributions in which all owners of the same class of equity instruments are treated equally. The liability to pay a dividend shall be recognised when the dividend is appropriately authorised and is no longer at the discretion of the Trust. The liability shall be measured at the fair value of the assets to be distributed. If the Trust gives its owners a choice of receiving either a non-cash asset or a cash alternative, the dividend payable shall be estimated by considering the fair value of both alternatives and the associated probability of the owners selection. At the end of each reporting period, the carrying amount of the dividend payable shall be remeasured and any changes shall be recognised in equity. At the settlement date, any difference between the carrying amounts of the assets distributed and the carrying amount of the dividend payable shall be recognised in profit or loss. There is no impact upon adoption of this Interpretation during the financial year. (i) Amendment to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters is mandatory for annual periods beginning on or after 1 January 2011. This Amendment permits a first-time adopter of FRSs to apply the exemption of not restating comparatives for the disclosures required in Amendments to FRS 7. There is no impact upon adoption of this Amendment during the financial year. (j) Amendments to FRS 1 Additional Exemptions for First-time Adopters are mandatory for annual periods beginning on or after 1 January 2011. These Amendments permits a first-time adopter of FRSs to apply the exemption of not restating the carrying amounts of oil and gas assets determined under previous GAAP. There is no impact upon adoption of these Amendments during the financial year. (k) Amendments to FRS 7 Improving Disclosures about Financial Instruments are mandatory for annual periods beginning on or after 1 January 2011. These Amendments require enhanced disclosures of fair value of financial instruments based on the fair value hierarchy, including the disclosure of significant transfers between Level 1 and Level 2 of the fair value hierarchy as well as reconciliations for fair value measurements in Level 3 of the fair value hierarchy. By virtue of the exemption provided under paragraph 44G of FRS 7, the impact of applying these Amendments on the financial statements upon first adoption of FRS 7 as required by paragraph 30(b) of FRS 108 are not disclosed.
92
AmanahRaya REIT
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.1 New FRSs and amendments to FRSs adopted during the current financial year (continued) (l) Amendments to FRS 2 Group Cash-settled Share-based Payment Transactions are mandatory for annual periods beginning on or after 1 January 2011. These Amendments clarify the scope and the accounting for group cash-settled share-based payment transactions in the separate financial statements of the entity receiving the goods or services when that entity has no obligation to settle the share-based payment transaction. There is no impact upon adoption of these Amendments during the financial year. (m) IC Interpretation 4 Determining whether an Arrangement contains a Lease is mandatory for annual periods beginning on or after 1 January 2011. This Interpretation requires the determination of whether an arrangement is, or contains, a lease based on an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset and whether the arrangement conveys a right to use the asset. This assessment shall be made at the inception of the arrangement and subsequently reassessed if certain condition(s) in the Interpretation is met. There is no impact upon adoption of this Interpretation during the financial year because there are no arrangements dependent on the use of specific assets in the Trust. (n) IC Interpretation 18 Transfers of Assets from Customers is mandatory for annual periods beginning on or after 1 January 2011. This Interpretation applies to agreements in which an entity receives from a customer either an item of property, plant and equipment that must be used to either connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services or cash for the acquisition or construction of property, plant and equipment. The entity receiving the transferred item is required to assess whether the transferred item meets the definition of an asset set out in the Framework. The credit entry would be accounted for as revenue in accordance with FRS 118. There is no impact upon adoption of this Interpretation during the financial year because there are no such arrangement in the Trust. (o) Improvements to FRSs (2010) are mandatory for annual periods beginning on or after 1 January 2011. Amendments to FRS 1 clarifies that FRS 108 does not apply to changes in accounting policies made upon adoption of FRSs until after the first FRS financial statements have been presented. If changes in accounting policies or exemptions in this FRS are used, an explanation of such changes together with updated reconciliations shall be made in each interim financial report. Entities whose operations are subject to rate regulation are permitted the use of previously revalued amounts as deemed cost. There is no impact upon adoption of these amendments during the financial year. Amendments to FRS 7 clarifies that quantitative disclosures of risk concentrations are required if the disclosures made in other parts of the financial statements are not readily apparent. The disclosure on maximum exposure to credit risk is not required for financial instruments whose carrying amount best represents the maximum exposure to credit risk. There is no impact upon adoption of these Amendments during the financial year.
Annual report 2011
93

31 December 2011
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.1 New FRSs and amendments to FRSs adopted during the current financial year (continued) (o) Improvements to FRSs (2010) are mandatory for annual periods beginning on or after 1 January 2011. (continued) Amendments to FRS 3 clarifies that for each business combination, the acquirer shall measure at the acquisition date non-controlling interests that consists of the present ownership interests and entitle holders to a proportionate share of the entitys net assets in the event of liquidation. Un-replaced and voluntarily replaced share-based payment transactions shall be measured using the market-based measurement method in accordance with FRS 2 at the acquisition date. There is no impact upon adoption of these Amendments during the financial year. Amendments to FRS 101 clarify that a statement of changes in equity shall be presented as part of a complete set of financial statements and analysis of other comprehensive income shall also be presented in the statement of changes in equity. This has been reflected in the statement of changes in net asset value. Amendments to FRS 121 The Effects of Changes in Foreign Exchange Rates clarify that the accounting treatment for cumulative foreign exchange differences in other comprehensive income for the disposal or partial disposal of a foreign operation shall be applied prospectively. There is no impact upon adoption of these Amendments during the financial year. Amendments to FRS 128 clarify that the accounting treatment for the cessation of significant influence over an associate shall be applied prospectively. There is no impact upon adoption of these Amendments during the financial year. Amendments to FRS 131 clarify that the accounting treatment for the cessation of joint control over an entity shall be applied prospectively. There is no impact upon adoption of these Amendments during the financial year. Amendments to FRS 132 clarify that contingent consideration from a business combination that occurred before the effective date of the revised FRS 3 of 1 July 2010 shall be accounted for prospectively. There is no impact upon adoption of these Amendments during the financial year. Amendments to FRS 134 clarify that updated information on significant events and transactions since the end of the last annual reporting period shall be included in the Trusts interim financial report. There is no impact upon adoption of these Amendments during the financial year. Amendments to FRS 139 clarify that contingent consideration from a business combination that occurred before the effective date of the revised FRS 3 of 1 July 2010 shall be accounted for prospectively. There is no impact upon adoption of these Amendments during the financial year. Amendments to IC Interpretation 13 clarify that the fair value of award credits takes into account, amongst others, the amount of the discounts or incentives that would otherwise be offered to customers who have not earned award credits from an initial sale. There is no impact upon adoption of these Amendments during the financial year. 3.2 New Malaysian Financial Reporting Standards (MFRS) that have been issued, but not yet effective and not yet adopted, for annual periods beginning on or after 1 January 2012. On 19 November 2011, the Malaysian Accounting Standards Board (MASB) announced the issuance of the new MFRS framework that is applicable to entities other than private entities. The Trust is expected to apply the MFRS framework for the financial year ending 31 December 2012.
94
AmanahRaya REIT
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.2 New Malaysian Financial Reporting Standards (MFRS) that have been issued, but not yet effective and not yet adopted, for annual periods beginning on or after 1 January 2012. This would result in the Trust preparing an opening MFRS statement of financial position as at 1 January 2011 which adjusts for differences between the classification and measurement bases in the existing FRS framework versus that in the new MFRS framework. This would also result in a restatement of the annual and quarterly financial performance for the financial year ending 31 December 2011 in accordance with MFRS which would form the MFRS comparatives for the quarter ending 31 March 2012 and financial year ending 31 December 2012 respectively. The MFRSs and IC Interpretations expected to be adopted are as follows: Effective Date MFRS 1 MFRS 2 MFRS 3 MFRS 4 MFRS 5 MFRS 6 MFRS 7 MFRS 8 MFRS 9 MFRS 10 MFRS 11 MFRs 12 MFRS 13 MFRS 101 Amendments to MFRS 101 MFRS 102 MFRS 107 MFRS 108 MFRS 110 MFRS 111 MFRS 112 MFRS 116 MFRS 117 MFRS 118 MFRS 119 MFRS 119 MFRS 120 MFRS 121 MFRS 123 MFRS 124 MFRS 126 MFRS 127 MFRS 127 MFRS 128 MFRS 128 MFRS 129 MFRS 131 MFRS 132
First-time Adoption of Financial Reporting Standards Share-based Payment Business Combination Insurance Contracts Non-current Assets Held for Sale and Discontinued Operations Exploration for and Evaluation of Mineral Resources Financial Instruments: Disclosures Operating Segments Financial Instruments Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Fair Value Measurement Presentation of Financial Statements Presentation of Items of Other Comprehensive Income Inventories Statement of Cash Flows Accounting Policies, Changes in Accounting Estimates and Errors Events After the Reporting Period Construction Contacts Income Taxes Property, Plant and Equipment Leases Revenue Employee Benefits Employee Benefits (revised) Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates Borrowing Costs Related Party Dislcosures Accounting and Reporting by Retirement Benefit Plans Consolidated and Separate Financial Statements Separate Financial Statements Investments in Associates Investments in Associates and Joint Ventures Financial Reporting in Hyperinflationary Economies Interests in Joint Ventures Financial Instruments: Presentation
1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2013 1 January 2012 1 July 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2013 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2013 1 January 2012 1 January 2013 1 January 2012 1 January 2012 1 January 2012
Annual report 2011
95

31 December 2011
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.2 New Malaysian Financial Reporting Standards (MFRS) that have been issued, but not yet effective and not yet adopted, for annual periods beginning on or after 1 January 2012. (continued) Effective Date MFRS 133 MFRS 134 MFRS 136 MFRS 137 MFRS 138 MFRS 139 MFRS 140 MFRS 141 Improvements to MFRSs IC Interpretation 1 IC Interpretation 2 IC Interpretation 4 IC Interpretation 5 IC Interpretation 6 IC Interpretation 7 IC IC IC IC IC IC IC IC IC IC IC IC IC IC IC IC IC IC IC IC Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation Interpretation 9 10 12 13 14 15 16 17 18 19 20 107 110 112 113 115 125 129 131 132
Earnings Per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Financial Instruments: Recognition and Measurement Investment Property Agriculture Changes in Existing Decommissioning, Restoration and Similar Liabilities Members Shares in Co-operative Entities and Similar Instruments Determining Whether an Arrangement Contains a Lease Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Liabilities Arising from Participating in a Specific Market-Waste Electrical and Electronic Equipment Applying the Restatement Approach under MFRS 129 Financial Reporting in Hyper inflationary Economies Reassessment of Embedded Derivatives Interim Financial Reporting and Impairment Service Concession Arrangements Customer Loyalty Programmes MFRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Agreements for the Construction of Real Estate Hedges of a Net Investment in a Foreign Operation Distributions of Non-cash Assets to Owners Transfers of Assets from Customers Extinguishing Financial Liabilities with Equity Instruments Stripping Costs in the Production Phase of a Surface Mine Introduction of the Euro Government Assistance No Specific Relation to Operating Activities Consolidation Special Purpose Entities Jointly Controlled Entities Non-Monetary Contributions by Venturers Operating Leases Incentives Income Taxes Changes in the Tax Status of an Entity or its Shareholders Evaluating the Substance of Transactions Involving the Legal Form of a Lease Revenue Barter Transactions Involving Advertising Services Intangible Assets Web Site Costs
1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2013 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012 1 January 2012
Technical Release 3 Guidance on Disclosures of Transition to IFRSs (TR 3) provides voluntary disclosure requirements on the potential impact of adoption of MFRSs. However, the Trust is in the process of preparing the opening statement of financial statements.
96
AmanahRaya REIT
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.3 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 July 2012 and 1 January 2013 (a) Amendments to MFRS 101 Presentation of Items of Other Comprehensive Income are mandatory for annual periods beginning on or after 1 July 2012. These Amendments requires the Trust to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments) or otherwise. It does not change the option to present items of other comprehensive income either before tax or net of tax. However, if the items are presented before tax, then the tax related to each of the two groups of other comprehensive income items shall be shown separately. The Trust is in the process of assessing the impact of implementing this Standard since the effects would only be observable for the financial year ending 31 December 2013. (b) MFRS 9 Financial Instruments is mandatory for annual periods beginning on or after 1 January 2013. This Standard addresses the classification and measurement of financial assets and financial liabilities. All financial assets shall be classified on the basis of the Trusts business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. Financial assets are initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, particular transaction costs. Financial assets are subsequently measured at amortised cost or fair value. Financial liabilities are subsequently measured at amortised cost or fair value. However, changes due to own credit risk in relation to the fair value option for financial liabilities shall be recognised in other comprehensive income. The Trust is in the process of assessing the impact of implementing this Standard since the effects would only be observable for the financial year ending 31 December 2013. (c) MFRS 10 Consolidated Financial Statements is mandatory for annual periods beginning on or after 1 January 2013. This Standard defines the principle of control and establishes control as the basis for determining which entities are consolidated in the consolidated financial statements. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The investor is required to reassess whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. The Trust does not expect any impact on the financial statements arising from the adoption of this Standard. (d) MFRS 11 Joint Arrangements is mandatory for annual periods beginning on or after 1 January 2013. This Standard requires a party to a joint arrangement to determine the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the arrangement. A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangements are classified into two types; joint operations and joint ventures. A joint operation is a joint arrangement whereby joint operators have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the joint venturers have rights to the net assets of the arrangements. A joint operator recognises and measures the assets and liabilities in relation to its interest in the arrangement in accordance with applicable relevant MFRS whereas a joint venture recognises the investment using the equity method of accounting. The Trust does not expect any impact on the financial statements arising from the adoption of this Standard.
Annual report 2011
97

31 December 2011
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.3 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 July 2012 and 1 January 2013 (continued) (e) MFRS 12 Disclosure of Interests in Other Entities is mandatory for annual periods beginning on or after 1 January 2013. This Standard establishes disclosure objectives and requirements that enable users of financial statements to evaluate the nature of, and risks associated with, the Trusts interests in other entities, and the effects of those interests on its financial position, financial performance and cash flows. If the minimum disclosures required in this Standard are not sufficient to meet the disclosure objectives, the Trust is expected to disclose whatever additional information that is necessary to meet that objective. The Trust does not expect any impact on the financial statements arising from the adoption of this Standard. (f) MFRS 13 Fair Value Measurements is mandatory for annual periods beginning on or after 1 January 2013. This Standard applies to FRS that requires or permits fair value measurements or disclosures about fair value measurements. It explains how to measure fair value for financial reporting and does not require fair value measurements in addition to those already required or permitted by other MFRS. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The definition of fair value is a market-based measurement and not an entity-specific measurement whereby assumptions made by market participants would be used when pricing the asset or liability under current market conditions. Consequently, the Trusts intention to hold an asset or to settle or fulfil a liability is not relevant when measuring fair value. The Trust is in the process of assessing the impact of implementing this Standard since the effects would only be observable for the financial year ending 31 December 2013. (g) MFRS 127 Separate Financial Statements (revised) is mandatory for annual periods beginning on or after 1 January 2013. This revised Standard contains accounting requirements for investments in subsidiaries, joint ventures and associates when separate financial statements are prepared. An entity is required to account for those investments either at cost or in accordance with MFRS 9 in the separate financial statements. The Trust does not expect any impact on the financial statements arising from the adoption of this Standard. (h) MFRS 128 Investments in Associates and Joint Ventures (revised) is mandatory for annual periods beginning on or after 1 January 2013. This revised Standard defines the equity method of accounting whereby the investment in an associate or joint venture is initially measured at cost and adjusted thereafter for the post-acquisition change in the investors share of net assets of the investee. The profit or loss of the investor includes its share of the profit or loss of the investee and the other comprehensive income of the investor includes its share of other comprehensive income of the investee. The Trust does not expect any impact on the financial statements arising from the adoption of this Standard.
98
AmanahRaya REIT
3.
ADOPTION OF NEW FRSs AND AMENDMENT TO FRSs (continued) 3.3 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 July 2012 and 1 January 2013 (continued) (i) MFRS 119 Employee Benefits (revised) is mandatory for annual periods beginning on or after 1 January 2013. This revised Standard requires the Trust to recognise all changes in the defined benefit obligations and in the fair value of related plan assets when those changes occur. The Trust is also required to split the changes in the net defined benefit liability or asset into the following three components: service cost (presented in profit or loss), net interest on the net defined benefit liability (presented in profit or loss) and remeasurement of the defined benefit liability (presented in other income and not recycled through profit or loss). The Trust is in the process of assessing the impact of implementing this Standard since the effects would only be observable for the financial year ending 31 December 2013. (j) IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine is mandatory for annual periods beginning on or after 1 January 2013. This Interpretation clarifies that removed material that can be used to build up inventory is accounted for in accordance with the principles of MFRS 102 Inventories. The other removed material, that provides access to deeper levels of material that will be mined in future periods, is recognised as a non-current asset (referred to as a stripping activity asset) if recognition criteria are met. This Interpretation requires stripping activity assets to be measured at cost at initial recognition. Consequently, they are carried either at cost or revalued amount less depreciation or amortisation and any impairment losses. The Trust does not expect any impact on the financial statements arising from the adoption of this Interpretation.
4.
SIGNIFICANT ACCOUNTING POLICIES 4.1 Investment properties Investment properties are properties, which are held to earn rental yields or for capital appreciation or for both and are not occupied by the Trust. Investment properties are initially measured at cost, which includes transaction costs. After initial recognition, investment properties are stated at fair value. The fair value of investment properties are the prices at which the properties could be exchanged between knowledgeable, willing parties in an arms length transaction. The fair value of investment properties reflect market conditions at the end of the reporting period, without any deduction for transaction costs that may be incurred on sales or other disposal. Fair value of investment properties are arrived at by reference to market evidence of transaction prices for similar properties. It is performed by registered independent valuers with appropriate recognised professional qualification and has recent experience in the location and category of the investment properties being valued. A gain or loss arising from a change in the fair value of investment properties is recognised in profit or loss for the year in which it arises. Investment properties are derecognised when either they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The gains or losses arising from the retirement or disposal of investment properties is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recognised in profit or loss in the year of the retirement or disposal.
Annual report 2011
99

31 December 2011
4.
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.2 Leases (a) Finance leases and hire purchase Assets acquired under finance leases and hire purchase, which transfer substantially all the risks and rewards of ownership to the Trust are recognised initially at amounts equal to the fair value of the leased assets or, if lower, the present value of minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the Trusts incremental borrowing rate is used. Any initial direct costs incurred by the Trust are added to the amount recognised as an asset. The assets are capitalised as property, plant and equipment and the corresponding obligations are treated as liabilities. The property, plant and equipment capitalised are depreciated on the same basis as owned assets. The minimum lease payments are apportioned between finance charges and a reduction of the outstanding liability. The finance charges are recognised in profit or loss over the period of the lease term so as to produce a constant periodic rate of interest on the remaining lease and hire purchase liabilities. (b) Operating leases A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Assets leased out under operating leases are presented on the statement of financial position according to the nature of the assets. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term. 4.3 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially favourable to the Trust. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially unfavourable to the Trust.
100
AmanahRaya REIT
4.
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Financial instruments (continued) Financial instruments are recognised on the statement of financial position when the Trust has become a party to the contractual provisions of the instrument. At initial recognition, a financial instrument is recognised at fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the financial instrument. An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative is not closely related to the economic characteristics and risks of the host contract, a separate instrument with the same terms as the embedded derivative meets the definition of a derivative, and the hybrid instrument is not measured at fair value through profit or loss. (a) Financial assets A financial asset is classified into the following four categories after initial recognition for the purpose of subsequent measurement: (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss comprise financial assets that are held for trading (i.e. financial assets acquired principally for the purpose of resale in the near term), derivatives (both, freestanding and embedded) and financial assets that were specifically designated into this classification upon initial recognition. Subsequent to initial recognition, financial asset classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial asset classified as at fair value through profit or loss are recognised in profit or loss. Net gains or losses on financial asset classified as at fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such items are recognised separately in profit or loss as components of other income or other operating losses. However, derivatives that are linked to and must be settled by delivery of unquoted equity instruments that do not have a quoted market price in an active market are recognised at cost. (ii) Held-to-maturity investments Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed or determinable payments and fixed maturity that the Trust has the positive intention and ability to hold to maturity. Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as held-to-maturity are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process. (iii) Loans and receivables Financial assets classified as loans and receivables comprise non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, financial assets classified as loans and receivables are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as loan and receivables are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process.
Annual report 2011
101

31 December 2011
4.
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Financial instruments (continued) (a) Financial assets (continued) (iv) Available-for-sale financial assets Financial assets classified as available-for-sale comprise non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss. Subsequent to initial recognition, financial assets classified as available-for-sale are measured at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised directly in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognised, at which time the cumulative gains or losses previously recognised in other comprehensive income are recognised in profit or loss. However, interest calculated using the effective interest method is recognised in profit or loss whilst dividends on available-for-sale equity instruments are recognised in profit or loss when the Trusts right to receive payment is established. Cash and cash equivalents include cash and bank balances, bank overdrafts, deposits and other short term, highly liquid investments with original maturities of three (3) months or less, which are readily convertible to cash and are subject to insignificant risk of changes in value. A financial asset is derecognised when the contractual right to receive cash flows from the financial asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised directly in other comprehensive income shall be recognised in profit or loss. A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or marketplace convention. A regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using trade date accounting. (b) Financial liabilities Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. A financial liability is classified into the following two categories after initial recognition for the purpose of subsequent measurement: (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss comprise financial liabilities that are held for trading, derivatives (both, freestanding and embedded) and financial liabilities that were specifically designated into this classification upon initial recognition. Subsequent to initial recognition, financial liabilities classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial liabilities classified as at fair value through profit or loss are recognised in profit or loss. Net gains or losses on financial liabilities classified as at fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such items are recognised separately in profit or loss as components of other income or other operating losses.
102
AmanahRaya REIT
4.
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.3 Financial instruments (continued) (b) Financial liabilities (continued) (ii) Other financial liabilities Financial liabilities classified as other financial liabilities comprise non-derivative financial liabilities that are neither held for trading nor initially designated as at fair value through profit or loss. Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains or losses on other financial liabilities are recognised in profit or loss when the financial liabilities are derecognised and through the amortisation process. A financial liability is derecognised when, and only when, it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. An exchange between an existing borrower and lender of debt instruments with substantially different terms are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. 4.4 Impairment of financial assets The Trust assesses whether there is any objective evidence that a financial asset is impaired at each reporting period. Loans and receivables The Trust collectively considers factors such as the probability of bankruptcy or significant financial difficulties of the receivable, and default or significant delay in payments to determine whether there is objective evidence that an impairment loss on loans and receivables has occurred. Other objective evidence of impairment include historical collection rates determined on an individual basis and observable changes in national or local economic conditions that are directly correlated with the historical default rates of receivables. If any such objective evidence exists, the amount of impairment loss is measured as the difference between the financial assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of loans and receivables are reduced through the use of an allowance account. If in a subsequent period, the amount of the impairment loss decreases and it objectively relates to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of impairment reversed is recognised in profit or loss.
Annual report 2011
103

31 December 2011
4.
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.5 Income taxes Income taxes include all taxes on taxable profit. Income taxes also include other taxes, such as withholding taxes and real property gains taxes payable on disposal of properties. Taxes in the income statement comprise current and deferred tax. 4.5.1 Current tax Current tax is the amount of income taxes payable or receivable in respect of the taxable profit or loss for a period. Current tax for the current and prior periods is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted by the reporting period. 4.5.2 Deferred tax Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the statement of financial position and its tax base. Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit. A deferred tax asset is recognised only to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at the end of each reporting period. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profits. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax authority on either: (i) (ii) the same taxable entity; or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Deferred tax will be recognised as income or expense and included in the profit or loss for the year unless the tax relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax will be charged or credited directly to equity. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the reporting period
104
AmanahRaya REIT
4.
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.6 Provisions Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount of a provision will be discounted to its present value at a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the liability. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision will be reversed. Provisions are not recognised for future operating losses. If the Trust has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. 4.7 Contingent liabilities and contingent assets A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Trust or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Trust does not recognise a contingent liability but discloses its existence in the financial statements. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Trust. The Trust does not recognise contingent assets but disclose its existence where inflows of economic benefits are probable, but not virtually certain. 4.8 Revenue recognition Revenue is measured at fair value of the consideration received or receivable net of discounts and rebates. Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Trust, and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured and specific recognition criteria have been met for each of the Trusts activity as follows: (a) Rental income Rental income is accounted for on a straight line basis over the lease term of an ongoing lease. The aggregate cost of incentives provided to the lessee is recognised as a reduction of rental income over the lease term on a straight line basis. (b) Car park rental income Car park rental income is derived from renting the investment properties car park spaces to car park operators and is recognised on an accrual basis unless recoverability is in doubt, in which case, it is recognised on receipt basis. (c) Interest income Interest income is recognised as it accrues, using the effective interest method.
Annual report 2011
105

31 December 2011
4.
SIGNIFICANT ACCOUNTING POLICIES (continued) 4.9 Expenses (a) Property operating expenses Property operating expenses consist of property management fees, quit rent, assessment, and other outgoings in relation to investment properties where such expenses are the responsibility of the Trust. Property management fees are recognised on an accrual basis. (b) Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualified asset is capitalised as part of the cost of the asset until when substantially all the activities necessary to prepare the asset for its intended use or sale are complete, after which such expense is charged to profit or loss. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Capitalisation of borrowing cost is suspended during extended periods in which active development is interrupted. The amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on the borrowing during the period less any investment income on the temporary investment of the borrowing. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. (c) Establishment expenses and Unit issuances expenses Establishment expenses represent expenses incurred in establishing and listing the Trust. Transaction costs of an equity transaction are accounted for as a deduction from unitholders capital. (d) Managers and Trustees fees The Managers and Trustees fees are recognised on an accrual basis.
5.
INVESTMENT PROPERTIES 2011 RM At 1 January Additions Changes in fair value At 31 December Included in the above are: Land and buildings 944,760,000 913,617,000 913,617,000 31,143,000 944,760,000 2010 RM 686,332,000 227,285,000 913,617,000
106
AmanahRaya REIT
5.
INVESTMENT PROPERTIES (continued)
Description of property
Tenure
Term of of land
Location lease year
Existing use
Occupancy rates as at 31 December 2011 % Cost as at 31 December 2011 RM 31,000,000 5.82 % of fair value to Net Asset Value as 31 December 2011 100 35,000,000
Fair value as at 31 December 2011 RM
Holiday Villa Alor Setar (1)
Freehold Leasehold
N/A 99 years expiring 2084 N/A Pulau Langkawi Subang Jaya Kota Damansara Seri Kembangan Office (Block A) College (Block B) Industrial complex Office 100 100 20,100,000 College/ Campus 100 154,000,000 College 100 55,100,000 52,500,000 Hotel 100 58,800,000 55,000,000
Alor Setar
Hotel
Holiday Villa Langkawi (2)
Freehold
9.77
SEGi College (3)
Freehold
N/A
9.16
SEGi University College (4)*
Leasehold
99 years expiring 2106 99 years expiring 2093
145,000,000
25.60
Block A & B, South City Plaza (5)
Leasehold
18,300,000
3.34
Silver Bird Factory (6)*
Freehold
N/A
Shah Alam
98,000,000
92,000,000
16.29
Dana 13 (7)*
Leasehold
99 years expiring 2097 99 years expiring 2065 99 years expiring 2072 N/A 99 years expiring 2094 60 years expiring 2065 Subang Jaya Shah Alam Kuala Lumpur Kuala Lumpur Office
Petaling Jaya
100
108,800,000
99,120,000
18.08
Wisma AmanahRaya (8)*
Leasehold
100
74,700,000
68,000,000
12.42
Wisma AmanahRaya Berhad (9)* Freehold Leasehold
Leasehold
Office
100
63,900,000
53,000,000
10.62
Wisma UEP (10)
Office Industrial factory Gurun, Kedah Industrial warehouse
30 100
39,000,000 21,250,000
35,500,000 19,200,000
6.48 3.53
Annual report 2011 Leasehold
AIC Factory (11)*
Gurun Automotive Warehouse (12)
100
24,950,000
23,970,000
4.15
107
5.
INVESTMENT PROPERTIES (continued)
31 December 2011
108
Tenure Term of of land Location lease year Existing use Occupancy rates as at 31 December 2011 % 100 30,660,000 28,500,000 5.10 Fair value as at 31 December 2011 RM Cost as at 31 December 2011 RM % of fair value to Net Asset Value as 31 December 2011 Leasehold (Land A) Port Klang Bonded warehouse (Land B) 60 years expiring 2067 99 years expiring 2089 99 years expiring 2089 99 years expiring 2079 944,760,000 Selayang Utama Shopping complex 100 132,000,000 128,165,000 Bdr Baru Bangi Industrial factory 100 28,500,000 27,550,000 Leasehold 4.74 Leasehold 21.94 876,805,000 Tenure Term of of land Location lease year Existing use Occupancy rates as at 31 December 2010 % Fair value as at 31 December 2010 RM 100 34,000,000 Cost as at 31 December 2010 RM 31,000,000 % of fair value to Net Asset Value as 31 December 2010 5.98 Freehold Leasehold N/A 99 years expiring 2084 N/A Pulau Langkawi Subang Jaya Kota Damansara Seri Kembangan Hotel Alor Setar Hotel Freehold 100 58,310,000 55,000,000 10.26 Freehold 99 years expiring 2106 99 years expiring 2093 N/A College College/ Campus Office (Block A) College (Block B) N/A Shah Alam Industrial complex 100 54,000,000 52,500,000 100 152,000,000 145,000,000 9.50 26.75 Leasehold 100 19,500,000 18,300,000 3.43 Freehold 100 95,000,000 92,000,000 16.72
AmanahRaya REIT
Kontena Nasional Distribution Centre 11 (13) (formerly known as Tamadam Bonded Warehouse)
Permanis Factory (14)
Selayang Mall (15)*
Holiday Villa Alor Setar (1)
Holiday Villa Langkawi (2)
SEGi College (3)
SEGi University College (4)* Leasehold
Block A & B, South City Plaza (5)
Silver Bird Factory (6)*
Tenure
Term of of land
Location lease year
Existing use
Occupancy rates as at 31 December 2010 % 100 99,120,000 99,120,000 17.45
Fair value as at 31 December 2010 RM
Cost as at 31 December 2010 RM
% of fair value to Net Asset Value as 31 December 2010
Dana 13 (7)*
Leasehold
99 years Petaling Jaya expiring 2097 99 years Kuala Lumpur expiring 2065 99 years Kuala Lumpur expiring 2072 N/A 99 years expiring 2094 60 years expiring 2065 Gurun, Kedah Industrial warehouse 100 24,800,000 Shah Alam Industrial factory 100 20,000,000 Subang Jaya Office 100 38,000,000 35,500,000 19,200,000 Office 100 60,000,000 53,000,000 Office 100 73,000,000 68,000,000 12.85
Office
Wisma AmanahRaya (8)*
Leasehold
Wisma AmanahRaya * Berhad (9) Freehold Leasehold
Leasehold
10.56
Wisma UEP (10)
6.69 3.52
AIC Factory (11)*
Gurun Automotive Warehouse (12)
Leasehold
23,970,000
4.36
Kontena Nasional Leasehold Distribution Centre 11 (13) (Land A) 60 years (formerly known as Tamadam expiring 2067 Bonded Warehouse) (Land B) 99 years expiring 2089 Port Klang Bonded warehouse Leasehold 99 years expiring 2089 99 years expiring 2079 Selayang Utama Bdr Baru Bangi Industrial factory Shopping complex
100 29,500,000
28,500,000
5.19
Permanis Factory (14)
100 28,222,000
27,550,000
4.97
Selayang Mall (15)*
Leasehold
100 128,165,000 128,165,000
22.56
Annual report 2011
913,617,000 876,805,000
* The properties were charged to financial institutions for banking facilities granted to AmanahRaya REIT (Note 9). The pledging of assets of AmanahRaya REIT was conducted pursuant to the Trust Deed dated 10 October 2006 under Clause 11, sub-clause 11.2 and is not prejudicial to the interest of the unitholders.
109

31 December 2011
5.
INVESTMENT PROPERTIES (continued) a. The investment properties as at 31 December 2011 are stated at fair value based on valuations conducted by independent firms of professional valuers in November 2011 and December 2011. The properties were valued by the following appointed valuers adopting the suitable valuation approaches depending on the type of properties. Item (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) Description of property Holiday Villa Alor Setar Holiday Villa Langkawi SEGi College SEGi University College Block A & B, South City Plaza Silver Bird Factory Dana 13 Wisma AmanahRaya Wisma AmanahRaya Berhad Wisma UEP AIC Factory Gurun Automotive Warehouse Kontena Nasional Distribution Centre 11 (formerly known as Tamadam Bonded Warehouse) Permanis Factory Selayang Mall Valuer DTZ Nawawi Tie Leung Property Consultants Sdn. Bhd. DTZ Nawawi Tie Leung Property Consultants Sdn. Bhd. Raine & Horne International Zaki & Partners Sdn. Bhd. Raine & Horne International Zaki & Partners Sdn. Bhd. Raine & Horne International Zaki & Partners Sdn. Bhd. Raine & Horne International Zaki & Partners Sdn. Bhd. Raine & Horne International Zaki & Partners Sdn. Bhd. C.H. Williams Talhar & Wong Sdn. Bhd. C.H. Williams Talhar & Wong Sdn. Bhd. C.H. Williams Talhar & Wong Sdn. Bhd. Hakimi & Associates Sdn. Bhd. Hakimi & Associates Sdn. Bhd. Hakimi & Associates Sdn. Bhd. Method of valuation Profit and investment Profit and investment Investment and Comparison Investment and Comparison Investment and Comparison Investment and Comparison Investment and Comparison Investment
Investment Cost Cost Cost
(14) (15) b.
Knight Frank Ooi & Zaharin Sdn. Bhd. Knight Frank Ooi & Zaharin Sdn. Bhd.
Investment and Comparison Investment and Comparison
The title deeds of the properties of the Trust are registered under the name of the Trustee, except for Block A & B South City Plaza, Holiday Villa Alor Setar, Land B of Kontena Nasional Distribution Centre, Gurun Warehouse, SEGi University College and Dana 13,which are pending for the issuance of separate individual titles. All investment properties are leased/rented to third parties except for Wisma AmanahRaya, which is leased to the holding company of the Manager. Investment properties are leased out with different tenure of leases ranging from 3 to 15 years. Twelve (12) (2010: Twelve (12)) of the properties leases contain an initial non-cancellable period of 3 to 15 years. Subsequent renewals are negotiated with the lessees. No contingent rents are charged.
c.
d.
6.
TRADE AND OTHER RECEIVABLES 2011 RM Trade receivables Other receivables, deposits and prepayments 1,898,438 1,534,007 3,432,445 2010 RM 1,177,075 1,914,569 3,091,644
110
AmanahRaya REIT
6.
TRADE AND OTHER RECEIVABLES (continued) (a) The credit terms granted to trade receivables range from 7 days to 30 days (2010: 7 days to 30 days).
(b) Trade and other receivables are denominated in Ringgit Malaysia (RM). (c) The ageing analysis of trade receivables of the Trust are as follows: 2011 RM Neither past due nor impaired Past due, not impaired 31 to 60 days 61 to 90 days 91 to 120 days More than 121 days 790,450 790,450 3,200 3,200 311,138 1,107,988 1,898,438 Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Trust. None of the trade receivables of the Trust that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired Based on past experience, the Manager believes that no impairment loss is necessary in respect of these balances. Trade receivables that are past due but not impaired relates to debtors with good track record with the Trust. 2010 RM 717,000 179,250 179,250 101,575 460,075 1,177,075
Past due and impaired
7.
SECURITY DEPOSITS IN TRUST ACCOUNTS AND A FINANCIAL INSTITUTION 2011 RM Security deposits placed with ITA-ARB Security deposit placed with a licensed financial institution 61,461,971 1,082,360 62,544,331 2010 RM 59,619,891 1,048,370 60,668,261
Security deposits received from the lessees together with accrued interest are placed with Institutional Trust Account of Amanah Raya Berhad (ITA-ARB) and a licensed financial institution. The interest rates of the security deposits ranged from 3.15% to 4.25% (2010: 2.20% to 4.25%) per annum. Pursuant to the lease agreements, lessees are entitled to the interest earned from security deposits placed in trust accounts and a financial institution. The Trust has the right to deduct from the security deposits in the event of default or arrears in rental payment within the stipulated period in the lease agreement from the due date of the rental payment or early termination by the Lessees. The security deposits are denominated in Ringgit Malaysia (RM).
Annual report 2011
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31 December 2011
8.
DEPOSITS PLACED WITH LICENSED FINANCIAL INSTITUTIONS The deposits are placed with licensed financial institutions at interest rates ranging from 2.75% to 3.51% (2010: 1.80% to 3.05%) per annum. Information on financial risks of cash and cash equivalents are disclosed in Note 27 to the financial statements. The deposits are denominated in Ringgit Malaysia (RM).
9.
BORROWINGS 2011 RM Non-current liabilities: Term loan I Term loan II Term loan III 85,000,000 110,857,372 167,403,299 363,260,671 85,000,000 110,745,584 167,219,698 362,965,282 2010 RM
(a)
Term loan I bears interest at 4.85% (2010: 4.50%) per annum and is repayable in one lump sum in May 2015.
(b) Term loan II bears interest at 4.55% (2010: 4.55%) per annum and is repayable in one lump sum in May 2015. Included in term loan II are transaction costs incurred for the financing arrangement amounting to RM558,942. During the financial year ended 31 December 2011, an amount of RM111,788 (2010: RM137,700) has been amortised to profit or loss, as disclosed in Note 17 to the financial statements. (c) Term loan III bears interest at 4.45% (2010: 4.45%) per annum and is repayable in one lump sum in March 2015. Included in the term loan III are transaction costs incurred for refinancing arrangement amounting to RM918,002. During the financial year ended 31 December 2011, an amount of RM183,600 (2010: RM74,526) has been amortised to profit or loss as disclosed in Note 17 to the financial statements. The proceeds from the term loans are mainly used for the purpose of financing the acquisitions of the properties as disclosed in Note 5 to the financial statements. The term loans are secured by way of first legal charge on investment properties of the Trust amounting to RM652,650,000 (2010: RM627,285,000), as disclosed in Note 5 to the financial statements. The term loan interests are payable in arrears on a monthly basis. Information on financial risks of borrowings and its remaining maturity is disclosed in Note 27 to the financial statements. The term loans are denominated in Ringgit Malaysia (RM).
112
AmanahRaya REIT
10. TRADE AND OTHER PAYABLES
2011 RM Non-current liabilities Tenants deposits Current liabilities Trade payables Other payables and accrued expenses Tenants deposits
2010 RM
57,282,246
56,891,786
371,401 7,782,194 280,325 8,433,920 65,716,166
358,127 9,381,088 431,774 10,170,989 67,062,775
(a)
Included in tenant deposits are refundable deposits of RM56,887,666 (2010: RM57,021,666) received from Lessees for tenancy contracts with tenure of five (5) to six (6) years. These deposits are placed with Institutional Trust Account of Amanah Raya Berhad (ITA-ARB) and financial institution as disclosed in Note 7 to the financial statements.
(b) Included in trade payables are amount due to the Manager and the Trustee amounting to RM309,877 (2010: RM312,021) which are unsecured, interest-free and payable on demand in cash and cash equivalents. The normal credit term granted by trade payables is 30 days (2010: 30 days). (c) Included in other payables and accrued expenses are interest of RM5,656,665 (2010: RM3,646,595) generated from security deposits placed with ITA-ARB and financial institutions as disclosed in Note 7 to the financial statements.
(d) Since the inception of AmanahRaya REIT, the Manager has received rental deposits from tenants by way of bank guarantee which are contracted to but not recognised for in the financial statements as follows: Tenants SEG International Berhad Property SEGi College SEGi University College Block A & B, South City Plaza Silver Bird Factory Amount RM 9,853,200 22,032,000 2,664,000 7,296,000 Remarks Equivalent to three (3) years rental Equivalent to two (2) years rental Equivalent to two (2) years rental Equivalent to one (1) years rental
Silver Bird Trust Berhad Kontena Nasional Berhad Symphony House Berhad Total
Kontena Nasional Distribution Centre 11 2,648,300 (formerly known as Tamadam Bonded Warehouse) Dana 13 7,097,640
Equivalent to one (1) year rental
Equivalent to one (1) year rental
51,591,140
The bank guarantees are unconditional, irrevocable and guaranteed to be paid to AmanahRaya REIT in the event of default of the lease agreement by the Lessees. (e) Trade and other payables are denominated in Ringgit Malaysia (RM)
Annual report 2011
113

31 December 2011
11. PROVISION FOR INCOME DISTRIBUTION 2011 RM In respect of current financial year : Provisions during the financial year Distributions paid 2010 RM
30,605,094 (20,745,366) 9,859,728
29,733,970 (29,733,970)
12. UNITHOLDERS CAPITAL 2011 Number of units Authorised: At beginning of the financial year Increased during the financial year At end of the financial year Issued and fully paid: At beginning of the financial year Issuance and placement of new units for purchase of properties 141,666,667 units @ RM0.84 each Unit issuance expenses At end of the financial year 519,685,915 519,685,915 403,291,776 119,000,000 (2,605,861) 519,685,915 573,219,858 573,219,858 431,553,191 141,666,667 573,219,858 2010 Number of units
114
AmanahRaya REIT
12. UNITHOLDERS CAPITAL (continued) (a) As at 31 December 2011, the Manager and Directors of the Manager did not hold any units in AmanahRaya REIT. However, parties related to the holding company of the Manager held units in AmanahRaya REIT as follows: 2011 Percentage of total units %
Number of units held
Market value RM
Direct unitholdings in AmanahRaya REIT of the parties related to the holding company of the Manager Kumpulan Wang Bersama AmanahRaya Investment Bank Ltd. AmanahRaya Capital Sdn. Bhd. 334,280,908 2,400,000 2,032,600 338,713,508 58.32 0.42 0.35 59.09 302,524,222 2,172,000 1,839,503 306,535,725
Number of units held Direct unitholdings in AmanahRaya REIT of the parties related to the holding company of the Manager Kumpulan Wang Bersama AmanahRaya Investment Bank Ltd. AmanahRaya Capital Sdn. Bhd. 305,985,908 2,400,000 2,032,600 310,418,508
2010 Percentage of total units %
Market value RM
53.38 0.42 0.35 54.15
286,096,824 2,244,000 1,900,481 290,241,305
(b) The market value is determined by using the closing market price of the Trust as at 31 December 2011 of RM0.905 (2010: RM0.935) per unit. (c) In the previous financial year, AmanahRaya REIT completed the following transactions: (i) Placement of new units in AmanahRaya REIT (Placement Units) to raise proceeds of RM119,000,000 at issue price of RM0.84 per unit to investors for the purposes of part financing the acquisitions by AmanahRaya REIT from Kumpulan Wang Bersama of the following properties: (1) a piece of leasehold land held under PM 11660, Lot 38451, Bandar Selayang, District of Gombak, Selangor Darul Ehsan, on which is erected a six (6)-storey shopping complex with a basement level, known as Selayang Mall, for a purchase consideration of RM128,000,000; and (2) a thirteen (13)-storey stratified office building which forms part of the Dana 1 Commercial Centre, which is held under the parent title Pajakan Negeri 8024, Lot 59214, Mukim Damansara, District of Petaling, Selangor Darul Ehsan, known as Dana 13, for a purchase consideration of RM99,000,000.
Annual report 2011
115

31 December 2011
13. GROSS REVENUE 2011 RM Rental income Car park rental income 64,992,620 313,200 65,305,820 2010 RM 59,196,771 313,200 59,509,971
14. PROPERTY OPERATING EXPENSES 2011 RM Assessment and quit rent Service contracts and maintenance Property management fees Insurance Other operating expenses 412,591 987,960 486,900 65,864 27,953 1,981,268 2010 RM 351,185 984,733 367,600 64,701 17,352 1,785,571
(a)
Included in service contracts and maintenance expenses during the financial year is the write back of overprovision made in prior years of RM831,440.
(b) The Property Managers, Malik Kamaruzaman Property Management Sdn. Bhd. and IM Global Property Consultants, are entitled to property management fees in respect of the management of the investment properties owned by AmanahRaya REIT as provided in the Trust Deed. The fees are determined by a guaranteed scale based on the gross annual rental income as provided in the provisions of the revised Valuers, Appraisers and Estate Agents Act, 1981 as required by the Securities Commissions Guidelines on Real Estate Investment Trusts. The property management fees are payable monthly in arrears with permissible discounts.
15. MANAGERS FEE Pursuant to the Deed, the Manager is entitled to receive a fee of up to a maximum of 1.0% per annum of the Net Asset Value of AmanahRaya REIT. The Managers fee is payable in arrears, calculated and accrued daily. However, the Manager has only been charging at the rate of 0.6% (2010: 0.3% to 0.6%) per annum of the Net Asset Value.
16. TRUSTEES FEE Pursuant to the Deed, the Trustee is entitled to receive a fee of up to a maximum of 0.1% per annum of the NAV of the Trust. The Trustees fee is payable in arrears, calculated and accrued daily. However, the Trustee has only been charging at the rate of 0.05% (2010: 0.05%) per annum of the Net Asset Value.
116
AmanahRaya REIT
17. FINANCE COSTS 2011 RM Interest expense on term loans Amortisation of transaction costs of borrowings 16,656,203 295,389 16,951,592 2010 RM 14,914,014 212,226 15,126,240
18. INCOME TAX EXPENSE 2011 RM Current tax expense 2010 RM
The numerical reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rates of the Trust are as follows: 2011 RM Income before taxation Income tax using Malaysian tax rate at 25% (2010: 25%) Non-deductible expenses Effect of interest income not subject to tax Effect of changes in fair value of investment properties ot subject to tax Effect of income exempted from tax 73,672,319 18,418,080 133,965 (208,421) (7,785,750) (10,557,874) 2010 RM 41,400,799 10,350,200 361,232 (141,996) (504,290) (10,065,146)
Pursuant to Section 61A(1) of Income Tax Act, 1967 under the Finance Act, 2006, where in the basis period for a year of assessment, 90% or more of the total income of the Trust is distributed to its unitholders, the total income of the Trust for that year of assessment shall be exempted from tax. As the Trust distribute at least 95% (2010: 95%) of the distributable income, its total income for the financial year is exempted from tax.
19. EARNINGS PER UNIT The earnings per unit before Managers fee of 13.4419 sen (2010: 8.3723 sen) is calculated by dividing the net income after taxation but before deduction of managers fees for the financial year of RM77,051,807 (2010: RM43,897,530) by the weighted average number of units in circulation during the financial year of 573,219,858 (2010: 524,315,748). The earnings per unit after Managers fee of 12.8524 sen (2010: 7.8962 sen) is calculated based on the net income after taxation of RM73,672,319 (2010: RM41,400,799) for the financial year and on the weighted average number of units in circulation during the financial year of 573,219,858 (2010: 524,315,748).
Annual report 2011
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31 December 2011
20. DISTRIBUTIONS TO UNITHOLDERS Distributions to unitholders are from the following sources: 2011 RM Gross rental income Interest income Other income 65,305,820 833,684 1,000 66,140,504 (23,611,185) 42,529,319 483 42,529,802 (30,604,732) (10,789,144) 1,135,926 7.2213 2010 RM 59,509,971 580,889 2,027,060 62,117,920 (20,717,121) 41,400,799 317 41,401,116 (29,733,970) (9,597,106) 2,070,040 7.3209
Less: Expenses Total income available for distribution Underpayment in prior years Total income available for distribution Less: Income distributed Less: Proposed final income distribution Balance undistributed income Distribution per unit (sen)
As proposed in the previous financial year, the fourth and final distribution of RM9,597,106 would be paid for the financial year ended 31 December 2010. However, an amount of RM9,596,261 was paid during the financial year as against the proposed amount of RM9,597,106. Out of the shortfall of RM845, an amount RM483 has been distributed and paid to the unitholders during the current financial year. For the financial year ended 31 December 2009, the second and final distribution proposed was RM16,123,132. However, an amount of RM16,122,815 was paid as against the proposed amount of RM16,123,132. The shortfall of RM317 was distributed and paid to the unitholders during the financial year ended 31 December 2010.
21. CORPORATE EXERCISE EXPENSES (a) During the financial year, the Trust incurred costs attributable to the process of acquiring the three (3) properties belonging to Perbadanan Kemajuan Negeri (PKNS). However, on 1 December 2011, the acquisition was mutually terminated and the corporate exercise expenses as disclosed in Note 31(b) to the financial statements, amounting to RM361,335 were expensed off to profit or loss.
(b) In the previous financial year, expenses incurred, which were not directly attributable to the issuance and placement of new units amounting to RM675,428 were expensed off to profit or loss.
118
AmanahRaya REIT
22. PORTFOLIO TURNOVER RATIO (continued) 2011 Portfolio Turnover Ratio (PTR)(times) 2010 0.43
The calculation of PTR is based on the average of total acquisitions and total disposals of investment in AmanahRaya REIT for the year to the average net asset value of the Trust for the financial year calculated on a daily basis. Since the basis of calculating PTR may vary among real estate investment trusts, there is no sound basis for providing an accurate comparison of PTR of AmanahRaya REIT against other real estate investment trusts. There were no acquisitions or disposals of investment in AmanahRaya REIT during the financial year.
23. MANAGEMENT EXPENSE RATIO 2011 Management expense ratio (MER)(%) 0.70 2010 0.59
The calculation of the MER is based on the total expenses of AmanahRaya REIT incurred, including Managers fees, Trustees fees, audit fees, tax agents fees and administrative expenses, to the average net asset value of the Trust for the financial year calculated on a daily basis. Since the basis of calculating MER may vary among real estate investment trusts, comparison of MER of AmanahRaya REIT with other real estate investment trusts may not be an accurate comparison.
24. TRANSACTIONS WITH COMPANY RELATED TO THE MANAGER (a) Identities of related parties Parties are considered to be related to the Manager if the Manager has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Manager and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. (b) In addition to the transactions detailed elsewhere in the financial statements, the Manager and the Trust had the following transactions with related parties during the financial year: 2011 RM Rental received and receivable from holding company of the Manager Security deposits from lessees placed with the holding company of the Manager (Note 7) 6,609,319 61,461,971 2010 RM 6,609,319 59,619,891
The related party transactions described above were entered into in the normal course of business and are based on negotiated and mutually agreed terms.
Annual report 2011
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31 December 2011
25. TRANSACTIONS WITH BROKERS/DEALERS There were no transactions made with brokers/dealers during the financial year.
26. FINANCIAL INSTRUMENTS (a) Capital management The primary objective of the Manager is to ensure that the Trust would be able to continue as a going concern while maximising the returns to unitholders through a balance of issuance of new AmanahRaya REIT units and loan financing. The overall strategy of the Manager remains unchanged from financial year ended 31 December 2010. The Manager manages the capital structure of the Trust and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Manager may adjust the income distribution to unitholders or issue new units. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2011 and 31 December 2010. The Manager will also comply with the provisions of the Deed and all applicable rules and guidelines prescribed by the Securities Comission relating to the financing of the Trust. The Manager monitors capital using a gearing ratio, which is total borrowings divided by total assets of the Trust pursuant to Securities Commissions Guidelines on Real Estate Investment Trusts. 2011 RM Total borrowings Total assets Gearing ratio 363,260,671 1,040,472,590 34.91% 2010 RM 362,965,282 998,193,118 36.36%
(b)
Financial instruments (i) Categories of financial instruments Loans and receivables RM 2011 Financial assets Trade and other receivables Security deposits in Trust accounts and financial institutions Cash and cash equivalents
3,432,445 62,544,331 29,735,814 95,712,590
120
AmanahRaya REIT
26. FINANCIAL INSTRUMENTS (b) Financial instruments (continued) (i) Categories of financial instruments (continued) Other financial liabilities RM Financial liabilities Borrowings Trade and other payables 363,260,671 65,716,166 428,976,837
Loans and receivables RM 2010 Financial assets Trade and other receivables Security deposits in Trust accounts and financial institutions Cash and cash equivalents
3,091,644 60,668,261 20,816,213 84,576,118 Other financial liabilities RM
Financial liabilities Borrowings Trade and other payables 362,965,282 67,062,775 430,028,057 (c) Determination of fair value Methods and assumptions used to estimate fair value The fair value of financial assets and financial liabilities are determined as follows: (i) Financial instruments that are not carried at fair value and whose carrying amounts are a reasonable approximation of fair value The carrying amounts of financial assets and liabilities, such as trade and other receivables, and trade and other payables, are reasonable approximation of fair value, due to their short-term nature. (ii) Borrowings and tenants deposits The fair value of bank borrowings and tenants deposits is determined using estimated future cash flows discounted at market related rate for similar instruments at the end of the reporting period.
Annual report 2011
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31 December 2011
27. FINANCIAL RISKS MANAGEMENT OBJECTIVES AND POLICIES The Trusts financial risk management objective is to optimise value creation for unitholders whilst minimising the potential adverse impact arising from fluctuations in interest rates and the unpredictability of the financial markets. The Trust has written risk management policies and guidelines which sets out its overall business strategies and general risk management philosophy. The Trust is exposed mainly to credit risk, interest rate risk and liquidity risk, which arises in the normal course of the Trusts business. Information on the Trust of the related exposures is detailed below: i) Credit risk The Trust is exposed to credit risk mainly from receivables. The Trust extends credit to its tenants based upon established credit evaluation and credit control and monitoring guidelines. The maximum exposure to credit risk is represented by the carrying amount of financial assets. As at the end of the reporting period, other than the amount owing by one (1) major tenant of the Trust constituting 35% (2010: 38%) of the total receivables of the Trust, there were no significant concentrations of credit risk. The maximum exposure to credit risk for the Trust is represented by the carrying amount of each class of financial assets in the statement of financial position. The Trust seeks to invest cash assets safely and profitably with placement of such assets with creditworthy licensed banks and financial institutions. In respect of deposits placed in Trust accounts and financial institutions in Malaysia, the Directors of the Manager believe that the possibility of non-performance by these financial institutions is remote on the basis of their financial strength. Exposure to credit risk At the reporting date, the Trusts maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. Information regarding credit enhancements for trade and other receivables is disclosed in Note 6 to the financial statements. (ii) Liquidity and cash flow risk The Manager monitors and maintains a level of cash and cash equivalents and bank facilities deemed adequate to finance the Trusts operations and to mitigate the effects of fluctuations in cash flows. In addition, the Manager also monitors and observes the Securities Commissions Guidelines on Real Estate Investment Trusts concerning limits on total borrowings. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Trusts liabilities at the end of the reporting period based on contractual undiscounted repayment obligations.
122
AmanahRaya REIT
27. FINANCIAL RISKS MANAGEMENT OBJECTIVES AND POLICIES (continued) (ii) Liquidity and cash flow risk (continued) On demand or within one year RM 2011 Financial liabilities Tenants deposits Trade and other payables Borrowings Total undiscounted financial liabilities
One to five years RM
Over five years RM
Total RM
280,325 8,153,595 8,433,920
57,282,246 419,903,839 477,186,085
57,562,571 8,153,595 419,903,839 485,620,005
On demand or within one year RM 2010 Financial liabilities Tenants deposits Trade and other payables Borrowings Total undiscounted financial liabilities
One to five years RM
Over five years RM
Total RM
431,774 9,739,215 10,170,989
56,891,786 436,563,304 493,455,090
57,323,560 9,739,215 436,563,304 503,626,079
(iii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Trusts financial instruments will fluctuate because of changes in market interest rates. The Trusts exposure to fluctuation in interest rates relates primarily to interest-earning financial assets and interestbearing financial liabilities. Interest rate risk is managed by the Manager on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. Interest rate exposure which arises from borrowing is managed through the use of fixed rate debt with long term tenure.
Annual report 2011
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31 December 2011
27. FINANCIAL RISKS MANAGEMENT OBJECTIVES AND POLICIES (continued) (iii) Interest rate risk (continued) Sensitivity analysis for interest rate risk As at 31 December 2011, if interest rates at the date had been 10 basis points lower or higher with all other variables held constant, post-tax profit for the financial year would have been RM339,126 (2010: RM286,319) higher or lower, arising mainly as a result of lower or higher interest expense on variable borrowings and interest income from deposits. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. In respect of interest-bearing financial assets and financial liabilities, the following tables set out the carrying amounts, the weighted average effective interest rates as at the end of the reporting period and the remaining maturities of the Trusts financial instruments that are exposed to interest rate risk: Weighted average effective interest rate (per annum) % At 31 December 2011 Fixed rate Borrowings (Note 9) Floating rate Deposits placed with licensed financial institutions (Note 8) At 31 December 2010 Fixed rate Borrowings (Note 9) Floating rate Deposits placed with licensed financial institutions (Note 8) 4.49 362,965,282 362,965,282 4.57 363,260,671 363,260,671
Within 1 year RM
1-5 years RM
Total RM
3.32
29,732,200
29,732,200
2.80
20,476,774
20,476,774
124
AmanahRaya REIT
28. OPERATING LEASES Leases whereby AmanahRaya REIT is the Lessor The Trust leases out its investment properties with different tenure of leases (Note 5). The future minimum lease payments under non-cancellable leases are as follows: 2011 RM Not later than one year Between two to five years Later than five years 67,062,638 255,981,410 37,541,088 360,585,136 2010 RM 63,509,179 242,481,691 111,906,739 417,897,609
29. OPERATING SEGMENT As the principal activity of AmanahRaya REIT is to invest in properties currently all located in Malaysia with the primary objective to derive rental income, there are no risk and returns distinguishable between business and geographical segments. No operating segment reporting is thus presented.
30. CAPITAL COMMITMENT Capital expenditure in respect of the following has not been provided for in the financial statements: 2011 RM Authorised but not contracted for: Acquisition of investment properties 2010 RM
270,000,000
As disclosed in Note 31 (b) to the financial statements, the acquisition was mutually terminated during the financial year.
31. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (a) Asset enhancement exercises were conducted on four (4) properties under AmanahRaya REIT portfolio as listed below, all of which are currently ongoing: (i) Total replacement of lifts at Selayang Mall estimated at RM0.9 million. (ii) Expansion work at Silverbird factory estimated at RM12.0 million. (iii) Total refurbishment of cold room at Kontena Nasional Distribution Centre 11 estimated at RM3.0 million. (iv) Expansion of Permanis Factory estimated at RM12.0 million.
(b) On 1 December 2011, the Manager has announced for AmanahRaya REIT on the mutual termination of the proposed acquisition of three (3) properties from Perbadanan Kemajuan Negeri Selangor (PKNS) for a total purchase consideration of RM270 million. The proposed acquisition was mutually aborted by both parties due to unforeseen circumstances.
Annual report 2011
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31 December 2011
31. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (continued) (c) Following the execution of a Share Sale Agreement between CI Holdings Berhad and Asahi Trust Holdings Ltd of Japan, the lease on Permanis Factory was novated from CI Holdings Berhad to Permanis Sdn Bhd with corporate guaranteeship from Asahi Trust Holdings Ltd. This novation is however subject to several conditions precedent.
(d) Sime UEP Development Sdn. Bhd. ended their tenancy at Wisma UEP on 30 July 2011. At present, the occupancy rate of Wisma UEP is at 30%. Proactive measures have been taken by the Manager to improve the occupancy rate. (e) On 30 December 2011, the Manager has announced for AmanahRaya REIT on the completion of the revaluation exercise on all properties under AmanahRaya REIT portfolio. This valuation has increased the investment properties fair values by 3.4% from RM913,617,000 in 2010 to RM944,760,000 in 2011.
32. COMPARATIVE FIGURES (a) The following comparative figures have been restated pursuant to FRS 110 Events After the Reporting Period: As previously reported RM Statement of financial position Current liabilities Provision for income distribution Unitholders funds Distributable income
As restated RM
9,597,106
38,882,040
48,479,146
Statement of changes in net asset value Distributable income as at 1 January 2010: Realised Unrealised Unitholders transactions Distributions to unitholders 2010 final 2009 final
36,812,000
16,123,132 36,812,000
(9,596,789)
(16,122,815)
126
AmanahRaya REIT
32. COMPARATIVE FIGURES (continued) (b) The following comparative figures have been reclassified to conform with current years presentation: As previously reported RM Statement of financial position Non-current liabilities Trade and other payables Current liabilities Trade and other payables
As restated RM
56,891,786
67,062,775
10,170,989
33.
SUPPLEMENTARY INFORMATION ON REALISED AND UNREALISED PROFITS OR LOSSES The distributable income as at the end of the reporting period may be analysed as follows: 2011 RM Total distributable income of the Trust Realised Unrealised 2010 RM
13,995,110 67,955,000 81,950,110
11,667,146 36,812,000 48,479,146
The unrealised income relates to the cumulative net change arising from the fair value adjustments to the investment properties. The supplementary information on realised and unrealised profits or losses has been prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad.
Annual report 2011
127
Unitholders Statistics
Analysis of Unitholdings
Distribution of Unitholders as at 31 December 2011

No. of unitholders 7 397 1,421 815 167 2 2,809 No. of unitholding 155 356,545 7,978,500 28,067,100
Unit Class Less than 100 100 1,000 1,001 10,000 10,001 100,000 100,001 to less than 5% of issued holdings 5% and above the issued holdings
% 0.25 14.13 50.59 29.01
% 0.00 0.06 1.39 4.90 29.69 63.96 100.00
5.95 170,176,650 0.07 366,640,908 100.00 573,219,858
The units in circulation remained at 573,219,858 during the financial year.
Classification of Unitholders as at 31 December 2011

No. of Holders Malaysian NonBumiputra 1,915 3 0 38 0 252 2,208 20 Foreign No. of securities hold Malaysian NonBumiputra 42,881,600 2,096,800 0 28,159,000 0 70,940,300 352,700 0 0 40,000 0 13,083,600 13,476,300 Foreign
Category of Unitholder 1) 2) Individual Body Corporate a. Banks/finance companies b. Investments trust/ foundation/charities Other types of companies Government agencies/Institutions* Nominees
Bumiputra 169 7 0 7 1 368 552
Bumiputra 1,105,000
0 358,506,058 0 1 0 28 49 0 13,702,000 32,360,000 9,992,800
c. 3) 4)
415,665,858 144,077,700
128
AmanahRaya REIT
Analysis of Unitholdings (continued)
Thirty Largest Unitholders as at 31 December 2011

Unitholders 1. Amanah Raya Berhad Kumpulan Wang Bersama Perbadanan Kemajuan Negeri Selangor Citigroup Nominees (Tempatan) Sdn Bhd Allianz Life Insurance Malaysia Berhad (P) Citigroup Nominees (Tempatan) Sdn Bhd Exempt An for American International Assurance Berhad Kurnia Insurans (Malaysia) Berhad Amanah Raya Berhad Amanah Raya Berhad - 1818 Valuecap Sdn Bhd HSBC Nominees (Asing) Sdn Bhd The Royal Bank of Scotland Public Limited Company (Fixed Income) Kurnia Insurans (Malaysia) Berhad No. of unit Percentage
334,280,908 32,360,000
58.32 5.65
2. 3.
25,794,800
4.50
4.
21,514,200 12,000,000
3.75 2.09
5. 6.
11,006,450 10,916,100
1.92 1.90
7. 8.
10,000,000 7,773,200 5,000,000 5,000,000
1.74 1.36 0.87 0.87
9.
10. Cahya Mata Sarawak Berhad 11. Koperasi Permodalan Felda Malaysia Berhad 12. Citigroup Nominees (Tempatan) Sdn Bhd MCIS Zurich Insurance Berhad (LIFE PAR FD) 13. Citigroup Nominees (Tempatan) Sdn Bhd MCIS Zurich Insurance Berhad (ANN FD) 14. AmanahRaya Investment Bank Ltd 15. Citigroup Nominees (Tempatan) Sdn Bhd MCIS Zurich Insurance Berhad (GEN FD) 16. Amanah Raya Berhad Amanah Raya Capital Sdn Bhd
4,022,000
0.70
2,470,200 2,400,000
0.43 0.42
2,400,000
0.42
2,032,600
0.35
Annual report 2011
129
Unitholders Statistics
Analysis of Unitholdings (continued)
Thirty Largest Unitholders as at 31 December 2011 (continued)

Unitholders 17. HwangDBS Investment Bank Berhad IVT (JBD) 18. Mayban Nominees (Tempatan) Sdn Bhd Mohd Iskandar Lau bin Abdullah 19. Dev Kumar Menon 20. Malaysian Rating Corporation Berhad 21. Citigroup Nominees (Asing) Sdn Bhd CBHK PBGHK FOR SABLE INVESTMENT CORPORATION 22. Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Pee Siew Boon (8057713) 23. SEG Equity Sdn. Bhd. 24. HSBC Nominees (Tempatan) Sdn Bhd HSBC (Malaysia) Trustee Berhad for Amanah Saham Sarawak 25. State Insurance Brokers Sdn Bhd 26. Citigroup Nominees (Tempatan) Sdn Bhd Chartis Malaysia Insurance Berhad 27. Citigroup Nominees (Tempatan) Sdn Bhd MCIS Zurich Insurance Berhad (SHH FD) 28. Citigroup Nominees (Tempatan) Sdn Bhd MCIS Zurich Insurance Berhad (GRP LIFE FD) 29. Labuan Reinsurance (L) Ltd 30. Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Woo Beng Keong (8026873) No. of unit 1,687,500 Percentage 0.29
1,150,000 1,127,000 1,095,000
0.20 0.20 0.19
1,063,800
0.19
1,030,500 1,000,000
0.18 0.17
1,000,000 1,000,000
0.17 0.17
1,000,000
0.17
992,800
0.17
825,000 760,000
0.14 0.13
737,000 503,439,058
0.13 87.83
130
AmanahRaya REIT
Additional Disclosure
ADDITIONAL INFORMATION PURSUANT TO LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD 1. UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSAL There were no proceeds received during the current financial year.
2.
SHARE BUY-BACKS DURING THE FINANCIAL YEAR The Fund did not carry out any share buy-backs exercise during the financial year ended 31 December 2011.
3.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED The Fund did not issue any warrants or convertible securities for the financial year ended 31 December 2011.
4.
AMERICAN DEPOSITORY RECEIPTS (ADR)/GLOBAL DEPOSITORY RECEIPT (GDR) The Fund has not sponsored any ADR/GDR programme during the financial year ended 31 December 2011.
5.
SANCTION/PENALTIES There were no sanctions and/or penalties imposed on the Fund and/or the Manager during the financial year ended 31 December 2011.
6.
NON-AUDIT FEES There is no non-audit fee paid by the Fund to the auditors during the financial year ended 31 December 2011.
7.
PROFIT GUARANTEES There were no profit guarantees given by the Manager during the financial year ended 31 December 2011.
8.
MATERIAL CONTRACTS There were no material contracts which had been entered into by the fund involving the interest of Directors and major Unitholders, either still subsisting at the end of the financial year ended 31 December 2011 or entered into since the end of the previous financial period.
Annual report 2011
131
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www.amanahrayareit.com.my
AmanahRaya-REIT Managers Sdn Bhd (856167-A)

(The Manager of AmanahRaya Real Estate Investment Trust)
Level 8, Wisma TAS No.21, Jalan Melaka 50100 Kuala Lumpur Tel : 603 2078 0898 Fax : 603 2026 6322

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Growing Value

ANNUAL REPORT 2011

Higher Education Building

Ama nahR a y a R EIT

ARREIT 5127 (Listed on the Main Board on 26 February 2007)

Annual report 2011

Hospitality Retail Industrial Higher Education Oce Building

Ama nahR a y a R EIT

Annual report 2011

Ama nahR a y a R EIT

About AmanahRaya REIT

Annual report 2011

1,800 6,700 10,900

100% 100% 100%

4.30 yrs 0.70 yrs 3.00 yrs

20,100 74,700 63,900

1.93% 7.18% 6.14%

3.00 yrs 8.30 yrs

9.50 yrs 7.50 yrs

Shah Alam, Selangor Shah Alam, Selangor Gurun, Kedah

2,050 6,000 980

100% 100% 100%

4.30 yrs 4.20 yrs 6.00 yrs

21,250 98,000 24,950

2.04% 9.42% 2.40%

944,760 92,281 3,432 1,040,473

90.80% 8.87% 0.33% 100.00%

Ama nahR a y a R EIT

Key Investment Highlights of AmanahRaya REIT Property Portfolio

Annual report 2011

Financial Highlights of AmanahRaya REIT

Total Assest Value

Highest Price (2011) Sectors

Hospitality, Higher Education, Office Building, Industrial and Retail Sectors

RM0.97 per unit (17 February & 5 May 2011)

Lowest Price (2011) Total no of Properties

RM0.85 per unit (26 September 2011)

Total Units Issued

RM0.91 per unit

7.2213 sen per unit

Kumpulan Wang Bersama (58.32%) Perbadanan Kemajuan Negeri Selangor (5.65%)

Ama nahR a y a R EIT

Rent Review Frequency

Annual report 2011

22% 10% 22% 32% 14%

Industrial Hotel Education Office Retail

23% 16% 12% 14% 19% 13% 3%

Manufacturing Logistic Hospitality Education Services Retail Property

22% 9% 22% 33% 14%

Industrial Hotels Education Office Retail

Ama nahR a y a R EIT

6.0 AmanahRaya REIT: Top Ten Tenants

6,000,000.00 2011 2010 2009 4,000,000.00

7.0 Distribution Per Unit (sen)

6.4 7.14 7.16 7.29 7.32 7.33 7.22 Forecast Actual

2011 Annual report 2011

6,609,319.20 6,609,319.20 5,908,000.00

NAV as at 31 December 2011 (RM1.05) Correlative Performance Relative Price

AmanahRaya REIT Share Price Performance vs KLCI as at 31 December 2011

Volume Share Price (RM)

Ama nahR a y a R EIT

8.0 AmanahRaya REIT Yearly Movement of Unitholders