Sentral REIT Sentral (formerly known as MRCB-Quill REIT) known (formerly www.sentralreit.com ANNUAL REPORT 2020 REPORT ANNUAL Sentral REIT Management Sdn Bhd (formerly known as MRCB Quill Management Sdn Bhd) Company No. 200601017500 (737252-X) (the Manager of Sentral REIT) Level 35, Menara NU 2, No. 203, Jalan Tun Sambanthan, Kuala Lumpur Sentral, 50470 Kuala Lumpur. Tel : +603 2786 8080 / 2859 7070 Fax : +603 2780 0098 ANNUAL REPORT 2020 CONTENTS CORPORATE OVERVIEW 02 Corporate Information 03 Salient Features of Sentral REIT 04 Trust Structure 05 Organisation Structure of the Manager 06 Profile of Directors of the Manager 10 The Management Team of the Manager BUSINESS HIGHLIGHTS 12 Management Discussion and Analysis 12 - Financial Highlights 13 - Portfolio Overview 27 - Operational Review 38 - Trading Performance and Investor Relation 44 Property Market Updates 66 In The News GOVERNANCE & ACCOUNTABILITY 69 Corporate Governance Overview Statement 83 Audit Committee Report 87 Statement on Risk Management and Internal Control 91 Statement on Directors’ Responsibility SUSTAINABILITY STATEMENT 92 Sustainability Statement FINANCIAL STATEMENTS 142 The Manager’s Report 146 Statement by Manager and Statutory Declaration 147 Trustee’s Report 148 Independent Auditors’ Report 152 Consolidated Statement of Comprehensive Income 155 Consolidated Statement of Financial Position 157 Consolidated Statement of Changes in Net Asset Value 158 Consolidated Statement of Cash Flows 159 Notes to the Financial Statements UNITHOLDERS’ INFORMATION 214 Analysis of Unitholdings as at 5 February 2021 217 Notice of Ninth Annual General Meeting (AGM) Proxy Form 2 SENTRAL REIT | Annual Report 2020 corporate information MANAGER SECRETARY OF THE REGISTRAR MANAGER Sentral REIT Management Boardroom Share Registrars Sdn. Bhd. Mohamed Noor Rahim Bin Sdn. Bhd. (formerly known as MRCB Quill Yahaya 11th Floor, Menara Symphony, Management Sdn. Bhd.) (MAICSA 0866820) No. 5, Jalan Prof. Khoo Kay Kim, (Company No. 200601017500 Seksyen 13 46200 Petaling Jaya, (737252-X)) Ho Ngan Chui Selangor Darul Ehsan, Malaysia. (Incorporated in Malaysia) (MAICSA 7014785) Telephone No. : 603-7890 4700 Facsimile No. : 603-7890 4670 REGISTERED ADDRESS OF BANKERS THE MANAGER Malayan Banking Berhad AUDITOR Level 33A, Menara NU 2, No. 203, Jalan Tun Sambanthan, Ernst & Young PLT Kuala Lumpur Sentral, STOCK EXCHANGE LISTING Level 23A, Menara Milenium, 50470 Kuala Lumpur. Jalan Damanlela, Main Market of Bursa Malaysia Pusat Bandar Damansara, Securities Berhad Telephone No. : 603-2786 8080 50490 Kuala Lumpur, Malaysia. Facsimile No. : 603-2780 7668 Telephone No. : 603-7495 8000 WEBSITE Facsimile No. : 603-2095 5332 PRINCIPAL PLACE OF www.sentralreit.com BUSINESS OF THE MANAGER TAX AGENT Level 35, Menara NU 2, TRUSTEE No. 203, Jalan Tun Sambanthan, Ernst & Young Tax Consultants Kuala Lumpur Sentral, Maybank Trustees Berhad Sdn. Bhd. 50470 Kuala Lumpur. 8th Floor, Menara Maybank, Level 23A, Menara Milenium, 100, Jalan Tun Perak, Jalan Damanlela, Telephone No. : 603-2786 8080 50050 Kuala Lumpur, Malaysia. Pusat Bandar Damansara, Facsimile No. : 603-2780 7988 50490 Kuala Lumpur, Malaysia. Telephone No. : 603-2078 8363 Facsimile No. : 603-2070 9387 Telephone No. : 603-7495 8000 BOARD OF DIRECTORS Facsimile No. : 603-2095 5332/ OF THE MANAGER 7043 PROPERTY MANAGER Non-Independent Non-Executive Directors Zaharin Nexcap Property INTERNAL AUDITOR Tan Sri Saw Choo Boon Consultants Sdn. Bhd. (Chairman) Suite 23-5, Oval Tower BDO Governance Advisory Dato’ Dr. Low Moi Ing, J.P. Damansara, Sdn. Bhd. Dato’ Michael Ong Leng Chun Menara Permata Damansara, Level 8, BDO @ Menara CenTARa Ann Wan Tee No. 685, Jalan Damansara, 360 Jalan Tuanku Abdul Kwan Joon Hoe 60000 Kuala Lumpur. Rahman 50100 Kuala Lumpur, Malaysia. Independent Telephone No. : 603-7733 2122 Non-Executive Directors Facsimile No. : 603-7733 2103 Telephone No. : 603-2616 2888 Datuk Dr. Roslan Bin A. Ghaffar Facsimile No. : 603-2616 2829 Datuk Kamalul Arifin Bin Othman Frances Po Yih Ming CORPORATE OVERVIEW 3 SALIENT FEATURES OF SENTRAL REIT (“SENTRAL”) Category of Fund Real Estate Investment Trust Type of Fund Income and growth Termination Date / The earlier of: Duration of the Fund a) The occurrence of any events listed in clause 26.2 of the Restated Deed of Trust dated 2 December 2019; or b) The expiration of a period of twenty one (21) years after the death of the last survivor of the issue now living of his majesty, the current Yang Di Pertuan Agung in Malaysia or until such further period as the law may permit Approved Fund Size 1,071,783,000 Investment Objective To acquired and invest in commercial properties primarily in Malaysia with a view to provide long term growth and sustainable distribution of income to unitholders and to achieve long term growth in net asset value per unit of SENTRAL Distribution Policy Semi-annual distribution Manager’s Fee l Base fee: 0.4% per annum of the total asset value (“TAV”) l Performance fee: 3% per annum of the net investment income l Acquisition fee: 1% of the acquisition price l Divestment fee: 0.5% of the disposal price Trustee’s Fee 0.03% per annum on the RM2.5 billion of the TAV and 0.02% per annum on the TAV in excess of RM2.5 billion Financial Year End 31 December Board Lot 100 units per board lot Listing Main Market of Bursa Malaysia Securities Berhad Stock Name SENTRAL Stock Code 5123 Date of Listing 8 January 2007 4 SENTRAL REIT | Annual Report 2020 TRUST STRUCTURE Background of Investment SENTRAL Objective n Listed as Quill Capita Trust on 8 To acquire and invest in commercial January 2007. properties primarily in malaysia n Changed its name to MRCB-Quill with a view to provide long-term REIT effective on 14 April 2015 growth and sustainable distribution following change in sponsors. of income to unitholders to achieve n Changed its name to SENTRAL long-term growth in the net asset following a rebranding exercise value (“nav”) per unit. on 11 January 2021. SENTRAL Structure Unitholders Distribution in the form of dividends & Investment in SENTRAL other distributions Management services Trustee’s fee Sentral REIT Maybank Management Trustees Sdn Bhd Management Acts on behalf Berhad (“Manager” or fee of Unitholders (“Trustee”) “SRM”)(1) Rental and other Ownership of income assets (vested in Trustee) Property management Portfolio Assets services Zaharin Nexcap Property Quill Building 1 – DHL1 Consultants Property Quill Building 4 – DHL2 Sdn Bhd management Quill Building 2 – HSBC (“Property fee Quill Building 3 – BMW Manager”) Wisma Technip Part of Plaza Mont Kiara Quill Building 5 – IBM Tesco Penang Platinum Sentral Menara Shell Note: (1) Shareholders of the Manager comprise of Malaysian Resources Corporation Berhad (“MRCB”) (41%), Quill Resources Holding Sdn Bhd (39%), and Global Jejaka Sdn Bhd (20%). CORPORATE OVERVIEW 5 ORGANISATION STRUCTURE OF THE MANAGER Board of Directors Non-Independent Non-Executive Directors Tan Sri Saw Choo Boon (Chairman) Dato’ Dr. Low Moi Ing, J.P. Audit Committee Dato’ Michael Ong Leng Chun Ann Wan Tee Kwan Joon Hoe Nomination and Remuneration Committee Independent Non-Executive Directors Datuk Dr. Roslan bin A. Ghaffar Datuk Kamalul Arifin Bin Othman Frances Po Yih Ming Chief Executive Officer Yong Su-Lin Asset Legal & Investment Management Compliance Investor Leasing Finance Relations 6 SENTRAL REIT | Annual Report 2020 PROFILE OF DIRECTORS OF THE MANAGER TAN SRI SAW CHOO BOON DATO’ DR. LOW MOI ING, Chairman and J.P. Non-Independent Non-Independent Non-Executive Director Non-Executive Director Malaysian/75/Male Malaysian/60/Female Date Appointed to the Board Date Appointed to the Board 22 January 2016 12 June 2006 Board Committee Membership Board Committee Membership Nil Nil No. of Board Meetings Attended in 2020 No. of Board Meetings Attended in 2020 6/6 6/6 Academic/Professional Qualification/Professional Academic/Professional Qualification/Professional Membership Membership Bachelor of Science (Chemistry), University of Malaya • Doctor of Philosophy in Design, Millennium (1969) International University, State of Delaware, U.S.A (2010) Present Directorships • Doctor of Philosophy in Entrepreneurship (Honoris • DiGi.Com Berhad Causa) (2010) • Wah Seong Corporation Berhad Present Directorships Working Experience: Quill Group of Companies (“Quill Group”) Tan Sri Saw has 40 years of continuous service with Shell, having joined the company in 1970 as a Working Experience: Refinery Technologist in Shell Refining Company Dato’ Dr. Low Moi Ing, J.P. started her career with MAA (Federation of Malaya) Berhad. He served in various Architect in 1981 and in 1986, set up Quill Design. capacities in manufacturing, supply, trading and The Quill Group was set up in 1988 and is involved in planning in Malaysia, Singapore and Netherlands. In the investment of properties, which includes integrated 1996, he was appointed as the Managing Director property development, construction, interior design (“MD”) of Shell MDS (Malaysia) Sendirian Berhad. and architectural services. She is in charge of the Quill Group’s strategic planning and jointly manages the From 1998 until 1999, he was MD for Oil Products finance, administration, legal, property development, (Downstream) Shell Malaysia and MD of Shell building construction and renovation, procurement and Refining Company (Federation of Malaya) Berhad. In project management of the Quill Group. 1999, with the globalisation of the Shell Oil Products business, he was appointed the Vice President (VP) Dato’ Dr. Low is a director and substantial