MANAGEMENT DISCUSSION AND ANALYSIS CAPITAL REVIEW GEARING RATIO Al-`Aqar’s gearing ratio are calculated based on the proportion of total Islamic financings to the total asset value in accordance with the SC Guidelines. The gearing ratio at the end of the reporting period are as follows: 2021 2022 Total Islamic financings (RM’ mil) 683.9 855.6 Total assets value (RM’ mil) 1,664.7 1,867.1 Total Islamic financings to total asset value ratio (%) 41.1 45.8 As at 31 December 2022, Al-`Aqar’s gearing ratio stood at 45.8%, below SC’s Guidelines on Listed REITs’ limits of up to the permitted 50% of Total Asset Value. Al-`Aqar’s Islamic financing increased from RM683.9 million as at 31 December 2021 to RM855.6 million after completion acquisitions of 3 KPJ properties in December 2022. The temporary increase in gearing is expected to be reduced via series of private placement exercises to be undertaken in FY2023. The private placement exercise will involve the issuance of new placement units which will increase the number of units in circulation and is expected to improve the trading liquidity of the units. Debt Maturity Profile Fixed Rate vs Floating Rate Ratio 100% 0% Floating Rate Fixed Rate On 23 December 2022, Al-`Aqar obtained Islamic financing facilities (“Commodity Murabahah”) amounting to RM172.0 million from CIMB Islamic Bank Berhad. The Commodity Murabahah comprises of Revolving Credit - i (“RC-i”) amounting to RM100.0 million and Term Financing – i (“TF-i”) amounting to RM72.0 million to part finance the acquisitions of KPJ Pasir Gudang, the extended building of KPJ Seremban and the extended building of Taiping Medical Centre and to pay related cost for the acquisitions. The RC - i and TF - i that are payable over a period of 60 months from the date of first disbursement with bullet repayment of the principal sum on the 60th month. The RC - i bears a profit rate of 1.20% per annum above the bank’s COF. As at reporting date, the profit rate for the RC - i is 4.40% per annum. The TF - i bears a profit rate of: (i) 1.20% per annum above the bank’s COF when Total Financing over Total Assets is greater than or equal to 40%; & (ii) profit rate of 1.00% per annum above the bank’s COF when Total Financing over Total Assets is less than 40%. As at reporting date, the profit rate for the TF - i is 4.40% per annum. The RC - i and TF - i were secured against the investment properties which amounting to RM272.5 million. Islamic Financing Facility Loan Maturity Commodity Murabahah I RM80.0 million 2024 Commodity Murabahah II RM29.9 million 2025 Commodity Murabahah III – Tranche 1 RM280.0 million 2026 Revolving Credit-i and Term Financing-i RM172.0 million 2027 Commodity Murabahah III – Tranche 2 RM300.0 million 2028 AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2022 52
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