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Wisma AmanahRaya, Kuala Lumpur

4 Corporate Directory

6 Property Portfolio

14 Corporate Structure

15 Organisation Chart of the REIT Manager

16 Financial Highlights

17 Corporate Events

18 Profile of the Board of Directors

24 Message from the Chairman

28 Managing Director’s Statement

32 AmanahRaya REIT

Investment Committee Members

36 Statement of Corporate Governance

40 AmanahRaya -JMF Asset Management Team

42 The Manager’s Property Team

44 Manager’s Report

68 Financial Statement

95 Unitholders’ Statistics

CONTENTS

CORPORATE DIRECTORY

BOARD OF DIRECTORS OF THE MANAGER

Independent Directors

Tan Sri Datuk (Dr) Arshad Ayub

(Chairman)

Datuk Mohamed Adnan Ali

Tuan Haji Ahmad Kamal Abdullah Al-Yafii

Non-Independent Directors

Dato’ Ahmad Rodzi Pawanteh

Datuk Mohamed Azahari Mohamed Kamil

(Managing Director)

Tai Siong Choi

(Executive Director)

Tuan Haji Rozan Mohd Sa’at

Sharizad Jumaat

(Executive Director)

Dato’ Dr. Mohd Irwan Serigar Abdullah

(Appointed on 29 November 2007)

Alina Hashim

(Alternate Director to Dato’ Ahmad Rodzi Pawanteh)

(Appointed on 4 May 2007)

COMPANY SECRETARIES OF THE MANAGER

Zainul Abidin Haji Ahmad

Chu Kum Yoon (f)

See Siew Cheng (f)

INVESTMENT COMMITTEE OF AMANAHRAYA REIT

Datuk Yahya Ya’acob

(Chairman)

Tengku Dato’ Hasmuddin Tengku Othman

Dato’ Mani Usilappan

Mahadzir Azizan

Sudirman Masduki

AUDIT, RISK MANAGEMENT AND COMPLIANCE COMMITTEE


(Chairman)



Alina Hashim

(Alternate Member to Dato’ Ahmad Rodzi Pawanteh)

4 AmanahRaya • REIT

MANAGERAmanahRaya-JMF Asset Management Sdn. Bhd. (309646-H)

(Incorporated in Malaysia)

MANAGER’S REGISTERED OFFICELevel 15, Wisma AmanahRayaNo.2, Jalan Ampang50450 Kuala Lumpur.

PRINCIPAL PLACE OF BUSINESSLevel 7 & 8, Wisma AmanahRayaNo.2, Jalan Ampang50450 Kuala Lumpur.Tel : 03-26875200Fax : 03-26875300

AmanahRaya • REIT 5

MANAGEMENT TEAM


(Managing Director)

Tai Siong Choi

(Executive Director, Equity)

Sharizad Jumaat

(Executive Director, Fixed Income/Property)

Tai Ai Ngoh

(General Manager, Finance and Operations)

Azlan Azizuddin

(General Manager, Marketing & Client Services)

Lee Wei Chung

(General Manager, Equity)

Mohd Zamri Shariff

(General Manager, Managing Director’s Office)

Abas Abd Jalil

(Assistant General Manager, Property Investment & REIT)

Rizal Abdullah

(Senior Manager, Compliance & Legal)

Zaffarin Hj Zanal

(Senior Manager, Risk Management)

Fakru Radzi Ab Ghani

(Manager, Property Investment)

PROPERTY MANAGER

Malik & Kamaruzaman Property

Management Sdn Bhd (721939-X)

3rd Floor, Wisma Yakin, Jalan Melayu

50100 Kuala Lumpur

REGISTRAR AND TRANSFER OFFICE

Symphony Share Registrars Sdn Bhd (378993-D)

Level 26, Menara Multi-Purpose

Capital Square, No.8, Jalan Munshi Abdullah

50100 Kuala Lumpur

Tel : 03-27212222

Fax : 03-27212530/1

TRUSTEE

CIMB Trustee Berhad (167913 M)

Level 5, Bangunan CIMB

Jalan Semantan, Damansara Heights

50490 Kuala Lumpur

PRINCIPAL FINANCIERS OF THE FUND

Mayban Life Assurance Berhad (235175-H)

L15, Mayban Life Tower

Dataran Maybank, 1, Jalan Maarof

59000 Kuala Lumpur

Malaysia National Insurance Berhad (9557-T)

Level 26, Tower 1, MNI Twins

11, Jalan Pinang

50450 Kuala Lumpur

Affin Bank Berhad (25046-T)

17th Floor, Menara Affin,

80 Jalan Raja Chulan,

50200 Kuala Lumpur

AUDITORS

BDO Binder (AF 0206)

12th Floor, Menara Uni.Asia

1008, Jalan Sultan Ismail

50250 Kuala Lumpur

BURSA MALAYSIA STOCK CODE

ARREIT 5127

PROPERTY PORTFOLIO

ABOUT AMANAHRAYA REIT

The AMANAHRAYA REIT (“ARREIT”) is currently the second largest real estate investment trust in Malaysia, with total investment properties at a book value of RM645.52 million. ARREIT has a diverse portfolio encompassinghospitality, industrial, educational and commercial properties situated within a variety of strategic locations acrossthe nation. The market capitalization of the REIT as at 31 December 2007 stood at RM427.24 million.

The principal investment objective of ARREIT is to provide stable distributions per unit, with the potential forsustainable long term growth in both distributions and Net Asset Value (“NAV”) per unit.

ABOUT AMANAHRAYA-JMF ASSET MANAGEMENT SDN BHD (“ARJMF”)

ARJMF is an asset management company with combined expertise in Equity, Fixed Income, Real Estate Investment

and Capital Market activities. As at 31 December 2007, the authorized and paid up share capital of ARJMF stood

at RM5,000,000.00 and RM2,000,000.00 respectively. ARJMF currently manages several funds including ARREIT

with total funds under management of approximately RM8.4 billion.


% of Total

Property Book Value Appraised Value Book Value

Holiday Villa Alor Setar RM31,000,000 RM31,000,000 4.8%

Holiday Villa Langkawi RM55,000,000 RM55,000,000 8.5%

Permanis Factory RM23,550,000 RM24,000,000 3.7%

SEGi College, Subang Jaya RM52,500,000 RM52,500,000 8.1%

Block A & B, South City Plaza RM18,300,000 RM18,300,000 2.8%

Wisma AmanahRaya RM68,000,000 RM70,000,000 10.5%

Wisma Amanah Raya Berhad RM53,000,000 RM55,000,000 8.2%

Wisma UEP RM35,500,000 RM36,000,000 5.5%

Tamadam Bonded Warehouse RM28,500,000 RM29,500,000 4.4%

AIC Factory RM19,200,000 RM20,000,000 3.0%

Silver Bird Factory RM92,000,000 RM94,700,000 14.3%

Gurun Automotive Warehouse RM23,970,000 RM24,000,000 3.7%

SEGi College, Kota Damansara RM145,000,000 RM149,000,000 22.5%

PROPERTY PORTFOLIO CONT’D



The Manager’s philosophy is to create and build

its clients’ investment by offering personalized and

value-added fund management services in order to

deliver consistent and superior returns while

preserving capital and achieving the clients'

investment objectives.

INVESTMENT HIGHLIGHTS OF THEAMANAHRAYA REIT PORTFOLIO

Diversified Portfolio

ARREIT portfolio of 13 properties is well diversified

comprising office and industrial buildings, hotels,

and institution of higher education buildings.

This spreads the sectoral risks across the property

market as well as giving ARREIT more opportunities

to acquire high-yielding assets.

Long-term Lease Arrangements

With the exception of Wisma UEP, all ARREIT

properties have leases of between six to fifteen

years. Rental increments for all the properties are

pre-determined for the entire lease period and occur

every one to five years. These pre-determined

increments provide a clear potential upside in

terms of income distributions.

Reputable Lessees

Properties in ARREIT are occupied by reputable

Lessees, mainly public listed companies, as their

main business offices or operational facilities.

The strong profile of the Lessees reflects the quality

of ARREIT’s property portfolio. Through leases that

allow Lessees to conduct their businesses in ARREIT

properties for a long term period, close partnerships

are established between the Lessor and Lessee for

the benefit of both parties.

“Triple Net” Lease Arrangement

Most of the properties in ARREIT’s portfolio are under

a “triple net” lease arrangement whereby the Lessees

are responsible for the operation and maintenance

of the properties, including paying the quit rents,

assessments and building insurance. This arrangement

enables ARREIT to mitigate the risks of a potential

increase in maintenance costs or statutory payments,

thus protecting the income of ARREIT. To ensure that

all the properties are well maintained and to preserve

their value, the Manager and the Property Manager

actively monitor both the Lessees’ activities within

the premises and the quality of their property

maintenance.

High Security Deposit

Most properties owned by ARREIT are backed by

security deposits ranging from one to three years’

rental. The high amount of the security deposits

minimizes the risk of rental payment defaults.

For most of the industrial properties, restoration

deposits are imposed on the tenants or Lessees to

ensure that ARREIT has sufficient funds to remove the

plant and machinery as well as restore the properties

to tenantable condition when the lease expires or in

the event of a default.

Tax Transparency

Based on Section 61A of the Income Tax Act 1967,

ARREIT is exempted from Malaysian Income Tax for any

given year of assessment provided that at least 90% of

its taxable income is distributed to the unitholders.


Wisma AmanahRayaNo. 2, Jalan Ampang,

50450 Kuala Lumpur

Wisma UEPJalan USJ 10/1A,

Pusat Perniagaan USJ 10,

47620 Subang Jaya,

Selangor Darul Ehsan

Holiday Villa LangkawiLot 1698,

Pantai Tengah,

Mukim Kedawang,

07000 Langkawi,

Kedah Darul Aman



Wisma Amanah Raya BerhadNo. 15, Jalan Sri Semantan 1,

Off Jalan Semantan,

Bukit Damansara,

50490 Kuala Lumpur

Holiday Villa Alor SetarLot 162 & 163,

Jalan Tunku Ibrahim,

05000 Alor Setar,

Kedah Darul Aman

Block A & B, South City PlazaSouth City Plaza,

Persiaran Serdang Perdana,

Taman Serdang Perdana, Section 1,

43300 Seri Kembangan,


Permanis FactoryLot 5 & 7, Jalan P/5 & P/6,

Kawasan Perusahaan Seksyen 13,

43650 Bandar Baru Bangi,




SEGi College - Kota DamansaraLot No. 9, Jalan Teknologi,

Taman Sains Selangor 1,

Kota Damansara, 47810 Petaling Jaya,


SEGi College - Subang JayaPersiaran Kewajipan, USJ 1,

47600 Subang Jaya,


Wisma AICLot Nos. 1 & 3,

Persiaran Kemajuan, Seksyen 16,

40200 Shah Alam,



Silver Bird FactoryLot 72, Persiaran Jubli Perak,

Seksyen 21, 40000 Shah Alam,


Gurun Automotive WarehouseLot 61B, Kawasan Perindustrian Gurun,

08800 Gurun,

Kedah Darul Aman

Tamadam Bonded WarehouseTamadam 1, Lot 11614,

Jalan Pelaburan Utara,

North Klang Straits Industrial Area,

42000 Port Klang,


CORPORATE STRUCTURE


ORGANISATION CHART OF THE REIT MANAGER


FINANCIAL HIGHLIGHTS


CORPORATE EVENTS


15 December 2006

26 January 2007

26 February 2007

26 October 2007

13 February 2007 15 December 2006The signing of the underwriting agreement for

AmanahRaya REIT’s IPO at Crowne Plaza Mutiara,

Kuala Lumpur

26 January 2007Launching of AmanahRaya REIT’s Prospectus at

Mandarin Oriental Hotel, Kuala Lumpur

13 February 2007Balloting ceremony of the AmanahRaya REIT at

MIDF Building, Kuala Lumpur

26 February 2007Listing ceremony of the AmanahRaya REIT at

Bursa Malaysia, Kuala Lumpur

26 October 2007AmanahRaya REIT Unitholders’ Meeting at

Equatorial Hotel, Kuala Lumpur.

PROFILE OF THE BOARD OF DIRECTORS


Sitting from left to right:


Tuan Haji Ahmad Kamal Abdullah Al-Yafii

Tan Sri Datuk (Dr) Arshad Ayub (Chairman)


Dato’ Dr. Mohd Irwan Serigar Abdullah

Standing from left to right:

Sharizad Jumaat


Tai Siong Choi


(Managing Director)


PROFILE OF THE BOARD OF DIRECTORS CONT’D

Tan Sri Datuk (Dr) Arshad AyubChairman (Independent Non-Executive)

Tan Sri Datuk (Dr) Arshad Ayub, Malaysian wasappointed to the Board on 11 October, 1995. He obtained a Diploma in Agriculture from College of Agriculture, Malaya, Serdang, Selangor in 1954 and a Bachelor of Science (Hons) Degree in Economicsand Statistics from University College of Wales,Aberystwyth, United Kingdom in 1958. In 1964 heobtained a postgraduate Diploma in BusinessAdministration (IMEDE), Switzerland.

He joined the Malaysian Civil Service upon hisgraduation and had a successful career. He was DeputyController, Industrial Development Division Ministry ofCommerce and Industry (Ministry of Trade and Industry)from 1961 to 1965. He was the First Director of MaraInstitute of Technology for 10 years from 1965 to 1975,Deputy Governor of Bank Negara Malaysia from 1975 to 1977, Deputy Director General in the EconomicPlanning Unit of the Prime Minister's Department from1977 to 1978. He was Secretary General to the Ministryof Primary Industries (1978), Ministry of Agriculture(1979 to 1981) Ministry of Land and RegionalDevelopment (1981 to 1983). He also sat on a numberof committees at National and International level. Hewas a Member of Justice Harun's Salaries Commissionfor Statutory bodies and Local Government.

He sits on the Board of Directors of several public listedcompanies. He is a Chairman of Malayan Flour MillsBerhad, LBI Capital Berhad and Tomypak HoldingsBerhad. He is a Director of Kulim (M) Berhad, KPJHealthcare Bhd, Sindora Berhad and Top GloveCorporation Berhad. He also sits on the Board ofDirectors on several private companies, among othersPFM Capital Holdings Sdn Bhd, Ladang Moccis SdnBhd, CSR Building Materials Sdn Bhd, Pelaburan JohorBerhad, Bistari Johor Berhad, Land Rover (M) Sdn Bhd,Bata (M) Sdn Bhd and Zalaraz Sdn Bhd. He is also aChairman of Koperasi MOCCIS Berhad.

He currently serves as President of the MalaysianRubber Products Manufactures Association (MRPMA),Chairman of Malaysian Rubber Export Promotion

Council (MREPC) and a Member of Lembaga GetahMalaysia (LGM). He is Pro Chancellor of UiTM, Chairmanof University Malaya Board and a member of theCouncil of Cooperative College Malaysia. He was amember of the Council of Kolej Ugama Sultan ZainalAbidin (KUSZA) and Institute Professional Bailtulmal.

Datuk Mohamed Azahari Mohamed KamilManaging Director

Datuk Mohamed Azahari, graduated from the InstitutTeknologi Mara (UiTM) in Shah Alam with a Diploma inBanking in 1980 and subsequently obtained his BBA(Finance) from the Western Michigan University in1982. He obtained his MBA (Finance) from the CentralMichigan University in the US in 1984.

He started his career with the Malaysian French Bank in 1984 as a Credit and Marketing Officer, after whichhe joined Malaysian Industrial Development FinanceBerhad in 1985 as a Project Officer. In 1988, he joinedMIDF Corporate Consultancy Services Sdn Bhd as aManager, Public Issues and Marketing. From 1989 to1992, he was attached to Bapema Corporation SdnBhd as a Senior Manager, Investment and CorporatePlanning. From January 1993 to May 1993, he was theAssistant General Manager of Business Developmentfor Island and Peninsular Berhad. From June 1993 toMarch 1994 he was attached to Kimara Equities SdnBhd as an Executive Director, after which he joined PB Securities Sdn Bhd in April 1994 as a CorporateInstitutional Dealer until October 1994.

In November 1994, he established JMF AssetManagement Sdn Bhd assuming the role of ManagingDirector. In September 2005, Amanah Raya Berhadacquired 70% of JMF-Asset Management and DatukAzahari was appointed Managing Director of the newly-formed entity AmanahRaya-JMF AssetManagement Sdn. Bhd.

He is a Director of Sapura Technology Berhad, Al-NibrasLtd and PA Resources Bhd.

He has been a Licensed Fund Manager’sRepresentative under the Securities Industry Act (1983) since 1995.


Dato’ Ahmad Rodzi PawantehDirector (Non-Independent Non-Executive)

Dato’ Ahmad Rodzi holds an MBA (GeneralManagement) from Southern Cross University, Australiaand an MBA (Banking & Finance) from the University of Hull, UK. He graduated from the University of Malayawith a Bachelor of Economics in Accounting and also from the University of Wolverhampton, UK with aBachelor of Laws (Hons).

He is the Group Managing Director of Amanah RayaBerhad since July 2004. He is also a member of theChartered Institute of Marketing, UK and was a Directorand EXCO Member of KUB Malaysia Berhad. He is alsoa Registered Financial Planner.

Datuk Mohamed Adnan AliDirector (Independent Non-Executive)

Datuk Mohamed Adnan is a Fellow of the CharteredInstitute of Management Accountants, UK.

He was formerly Accountant-General of Malaysia. He has served as Accountant with various Ministriessuch as the Ministry of Trade and Industry and theMinistry of Energy and Public Works. He was also aSenior Manager, Investment with the EmployeesProvident Fund (EPF), Bursar of Universiti TeknologiMalaysia and Treasurer of International IslamicUniversity Malaysia.

Tuan Haji Rozan Mohd Sa’atDirector (Non-Independent Non-Executive)

Tuan Haji Rozan holds a Bachelor of Economics (Hons)degree with a major in Statistics from UniversitiKebangsaan Malaysia.

He was appointed to the Board of Sindora Berhad on 23 May 2002 and assumed the position ofManaging Director of Sindora Berhad on 1 September2002. He was appointed to the Board of JMF AssetManagement Sdn. Bhd. on 17 April 2003.

He started his career in 1983 as an AdministrativeOfficer in the Corporate Planning & ResearchDepartment of Johor Corporation before beingseconded as an Operations Manager at Sergam Berhad (a subsidiary of Johor Corporation) in 1986.From 1988 to 1993, he was Executive Director ofseveral subsidiaries in Johor Corporation Group and in 1994, he was appointed as the General Manager of Johor Corporation’s Tourism Division beforeassuming the post as Chief Executive of the sameDivision in 1996. Prior to his appointment as theManaging Director of Sindora Berhad, he served as theSenior General Manager, Business Development ofJohor Corporation from 1999 until August 2002.

Dato’ Dr. Mohd Irwan Serigar AbdullahDirector (Non-Independent Non-Executive)

Dato’ Dr. Mohd Irwan Serigar Abdullah graduated from the University of Malaya, Kuala Lumpur with aBachelor of Arts (Hons) in Demography in 1982 andsubsequently obtained his Masters of Science inEnergy, Management and Policy from the University ofPennsylvania, Philadelphia USA. He obtained his Ph.Din Economics from International Islamic UniversityMalaysia, Kuala Lumpur.

He started his career in the Prime Minister’sDepartment as Assistant Director in 1984, after whichhe was posted to the Industry Division of the EconomicPlanning Unit in 1986, being later promoted to Senior Assistant Director. In 2003, he was posted tothe Economics and International Division, Ministry ofFinance as a Principal Assistant Secretary. From 2004to 2006, he headed the Econometrics Section of the Economics and International Division, Ministry of Finance. He is currently the Deputy Under Secretary, Economics and International Division,Ministry of Finance.

He is a Director of Universiti Putra Malaysia (UPM),Institute of Strategic and International Studies (ISIS)Malaysia and Pendinginan Megajana Sdn Bhd. He serves as a member of the Blue Ocean StrategyGroup of the Economic Planning Unit, SteeringCommittee of the PRO3-Based Learning Project,German-Malaysia Institute as well as the Strategic KPIand Panel on Strategic Planning, Ministry of Finance.


PROFILE OF THE BOARD OF DIRECTORS CONT’D


Sharizad JumaatExecutive Director

Sharizad Jumaat holds an MBA (Finance) from MichiganState University, USA and a BSc (Hons) in Biochemistryfrom Universiti Kebangsaan Malaysia.

She has been in the fund management industry for over 18 years. She has accumulated enormousexperience in the area of fixed income and equities,having started her career with Permodalan NasionalBerhad (PNB) and later moved to the EmployeesProvident Fund (EPF). At EPF, she managed a portfolioof fixed income and equities amounting to RM100billion and RM45 billion respectively. Her lastappointment was General Manager, Equity Investmentof EPF.

She has been a Licensed Fund Manager’sRepresentative under the Securities Industry Act (1983) since 2004.

Alina Hashim(Alternate Director to Dato’ Ahmad Rodzi Pawanteh)

Alina holds a Bachelor of Business (Accounting) from Chisholm Institute of Technology, Melbourne,Australia (presently known as “Monash University”)and is a Certified Practicing Accountant of CPAAustralia, a Chartered Accountant of MalaysianInstitute of Accountants (MIA) and a Certified FinancialPlanner of Financial Planning Association of Malaysia.She sat as a council member of MIA from 2005 to 2007and at the same time served as the Vice President of the Malaysian Association of AccountingAdministrators, a company sponsored by MIA.

She started her career in 1990 as an Account Officer in TDM Berhad and later migrated to the bankingindustry in 1992 by joining Southern Finance Berhad.She joined Amanah Raya Berhad in August 2004 andpresently holds a post of Chief Operating Officer. She is responsible for the overall operational functionof the Branches and Finance and Accounts Department.

Tuan Haji Ahmad Kamal Abdullah Al-YafiiDeputy Chairman (Independent Non-Executive)

Tuan Haji Ahmad Kamal is a Fellow of the Institute of Chartered Accountants, England and Wales. He is a Chartered Accountant by training, with more than 42 years experience in accounting andmanagement consulting.

He has held senior managerial positions in local andmultinational public listed companies. He was aPartner of Hanafiah, Raslan & Mohamad, an accountingfirm, from 1970 to 1999 and was Financial Controller of Malayawata Steel Berhad from 1968 to 1970. He is a Board Member of Chase Perdana Berhad Group,Keramat Tin Dredging Berhad, Sitt Tatt Berhad Groupand Integrated Rubber Berhad.

Tai Siong ChoiExecutive Director

Tai Siong Choi possesses a Banking Diploma from theInstitute of Bankers, London and is an associatemember of the Institute.

He is the co-founder and Executive Director of JMFAsset Management Sdn. Bhd. He has more than 20years experience in managing funds for investments inthe Malaysian equity market. Prior to this, he was theGroup Treasurer of Kumpulan Guthrie from 1988 to1994, where he managed an investment portfolioexceeding RM300 million. He has also had exposure to equity markets in the USA, Japan, Hong Kong,Singapore and Thailand. From 1970 to 1976, heworked as a bank officer in the foreign exchange andmoney market department of a local bank in Malaysia.

He has been a Licensed Fund Manager’sRepresentative under the Securities Industry Act (1983)since 1995.

MESSAGE FROM THE CHAIRMANFOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007


Tan Sri Datuk (Dr) Arshad AyubChairmanAmanahRaya-JMF Asset Management Sdn Bhd

On behalf of the Board of Directors of AmanahRaya-JMF AssetManagement Sdn Bhd (“AmanahRaya-JMF”), it is my pleasure to present to you the Annual Report and audited financial statements of the AmanahRaya Real Estate Investment Trust (“ARREIT” or the “Trust”)for the financial period ended 31 December 2007.

BACKGROUNDDespite challenging conditions, I am happy to record that ARREIT had achieved sterling results

in its first ten months.

Ever since the sub-prime lending crisis became a global issue in July 2007, the economic

climate has been difficult. Fortunately, though the crisis has affected local market sentiment,

Malaysia is not directly exposed, and the fallout has largely been offset by the rise in oil prices.

The fundamentals of the Malaysian economy remain solid with GDP growth for 2008 expected

to reach 6%, while the Government’s capital market liberalisation programme is attracting

increased investment from abroad.

Meanwhile, Malaysia’s REIT market is steadily maturing, as investors become more aware of

the benefits of REITs as a relatively high-yield, low risk investment.

Against this background, ARREIT has performed strongly since listing on the Main Board of

Bursa Malaysia Securities Bhd on 26 February 2007. The Trust initially consisted of eight

anchor properties with a total book value of RM337 million. These properties are located

throughout the country with a broad diversification encompassing the commercial, industrial,

hospitality and educational sectors. I am delighted to report that during the year the Trust was

further strengthened by the injection of five more prime properties bringing the total number of

properties to 13.

At the initial launch of the fund, more than 60% of the units offered under private placement

were subscribed by foreign investors.

FINANCIAL PERFORMANCE

ARREIT is designed to meet the needs of both institutional and retail investors who wish to

preserve their asset value while achieving both a stable yield and medium to long term capital

growth. Since our institutional investors have an obligation to pay dividends to their clients,

they require a certain basic level of returns. Therefore, from day one, the Trust declared its

intention to pay out 100% of its distributable income to unitholders for the first three years.

To date, ARREIT has met the projection since our initial public offering (“IPO”) on 26 January

2007. As at the year end, the total book value of the investment properties of ARREIT stood

at RM645.52 million, while total net income was RM10,646,633 with the existing leases

delivering a healthy rental income.


MESSAGE FROM THE CHAIRMAN CONT’D

FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007

The acquisitions are in line with the objectives of ourgrowth strategy, and all the master tenants of the five new properties are public listed companies inMalaysia. Although the five properties are largely single master tenant and single purpose industrialproperties, they provide the ARREIT property portfoliowith vertical diversity.

The acquisitions were funded by a combination of bankborrowings, a private placement of 98.9 million newunits in ARREIT, and the issuance of consideration units with no liabilities including contingent liabilitiesand guarantees, to be assumed by ARREIT arising from the acquisitions. In addition to part-financing the acquisitions, the placement of new units increasedthe fund size and improved the trading liquidity ofARREIT units.

As well as boosting the value of the Trust’s investmentproperties to RM645.52 million, these acquisitionsreduced the gearing of ARREIT to below 40% (as against 49% on the launch of the REIT in February).The new total of 13 properties is expected to enhanceARREIT’s net property yield to 7.4% based on theplacement price of RM0.94 per unit.


0n 14 January 2008, the Board was pleased toannounce the third interim income distribution of0.2563 sen per unit, payable on 25 February 2008.This was in addition to a first interim incomedistribution of 2.37 sen per unit paid on 16 October2007, and a second interim income distribution of 2.8149 sen per unit which was announced on 10 December 2007 and paid on 25 January 2008,giving our unitholders a total distribution of 5.4412sen per unit for the financial period under review.

FUND DEVELOPMENT

ARREIT focuses on high quality properties with strongrecurring rentals. We are currently concentratingexclusively on the Malaysian market so as to enableour unitholders to capitalise on the robust growth inlocal property development and on the NorthernCorridor, East Coast and Iskandar Development Region projects.

The Trust has recently added five new high-yielding and diversified properties to its portfolio, making itMalaysia’s second largest REIT in terms of value of theproperties. The new properties, valued at RM308.67 million, are Tamadam Bonded Warehouse in PortKlang, Silver Bird factory in Shah Alam, AIC factory in Shah Alam, SEGi Campus College in Kota Damansaraand an Automotive Warehouse in Gurun. No other local REIT has made an asset injection just ten months after listing.

With this positive outlook – coupled with ouraggressive and proactive asset and capitalmanagement and long term acquisition plans – we are confident of ARREIT’s ability to build its assetsize and deliver enhanced returns.

In the year ahead we will continue to focus ongenerating optimal returns for our unitholders. To accomplish this, we will be innovative and dynamicin terms of moving into new products. Our strategy willbe to identify high-yielding properties at the initialstage and later inject them into ARREIT when they are fully developed.

THANKS

On behalf of the Board of Directors of AmanahRaya-JMFAsset Management Sdn Bhd, I wish to offer heartfeltthanks for the outstanding support we received duringthe year from our unitholders, our business partnersand various Government authorities. I would also liketo take this opportunity to express my profoundappreciation of the skill and dedication so consistentlydisplayed by all the members of the Board and theentire management team of AmanahRaya-JMF, beingARREIT’s manager.

Tan Sri Datuk (Dr) Arshad Ayub

6 February 2008


As at the time of writing, we have identified and areevaluating several more properties for injection intothe Trust in 2008.

CORPORATE GOVERNANCE

We are committed to the highest standards ofprofessionalism, transparency and governance for aGovernment-owned corporation. All AmanahRaya-JMFSdn Bhd’s staff are expected to demonstrateresponsibility, diligence and absolute integrity in theirbusiness dealings. In addition, ARREIT is the onlyMalaysian REIT to have an independent investmentcommittee to advise on acquisitions and disposals and to monitor transactions. By having ARREIT rated by an international rating agency, we are also fulfillingthe Government’s objective of creating a transparentinvestment instrument.

PROSPECTS

The outlook is good for Malaysia’s property sector and, in 2008, the property market should continue to benefit from increased Government incentives.

The average occupancy rate for all ARREIT propertiescurrently stands at 100%, with an upward rentalrevision to occur every two to five years for all theproperties except Wisma Amanah Raya Berhad, whoserental revision is annual.

MANAGING DIRECTOR’S STATEMENTFOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007


Throughout the financial period under review, all of the ARREITproperties performed at optimum level, with low and cost-effectivemaintenance and a healthy income stream.

During the financial period, we initiated a programme of enhancement works on existingproperties. This included the construction of additional villas and a new swimming pool at Holiday Villa Resort, Langkawi and the expansion of facilities at the Permanis Factory. The extension of the Permanis Factory has increased the net lettable area, resulting in a higher rental income from which the Trust is now benefiting. Ongoing enhancements at otherproperties include replacing the existing mechanical and electrical equipment and reinstatingthe buildings in enhanced condition. The Manager continuously monitors the management andmaintenance of all assets to ensure that the property values are preserved in the long term.

The objectives of ARREIT’s growth strategy are to provide unitholders with stable incomedistributions and to achieve growth in Net Asset Value by acquiring yield-accretive assets and good quality properties with steady, recurring rental income. To achieve these objectives,ARREIT employs a number of key acquisition and management strategies.

INVESTMENT STRATEGIES

ARREIT’s dynamic acquisition strategy is designed to continuously improve the yield and valueof the unit. The strategy involves:

Asset ManagementTo ensure that all properties are efficiently managed and maintained to maximize yields, whileproactively identifying avenues for asset enhancement.

Yield EnhancementTo progressively inject yield-accretive assets in order to maintain stability of income distribution.

Capital ManagementTo optimise ARREIT’s capital structure by minimising the cost of funding in order to maximisereturns to unitholders.

We are actively seeking new asset acquisitions. Our acquisition strategy focuses on sectoraldiversification. ARREIT thus includes assets from different industries, namely the commercial,industrial, hospitality and educational. As each sector moves in a different cycle, bydiversifying its asset classes, ARREIT reduces its risk exposure.

There is stiff competition among Malaysia’s nine REITs to acquire quality buildings. Under thecurrent guidelines, REITs are allowed to invest only in completed properties. As a result, Amanah Raya at its Group level has initiated several projects as part of its downstreamactivities to readily create sources of assets for future injection into ARREIT. For example, in August 2007, Amanah Raya Bhd (AmanahRaya) and Kuwait Finance House (M) Bhdcollaborated to launch Al-Nibras, a US$200million real estate fund focusing on real estatedevelopment projects in Malaysia and the region.


Datuk Mohamed Azahari Mohamed KamilManaging DirectorAmanahRaya-JMF Asset Management Sdn Bhd


MANAGING DIRECTOR’S STATEMENT CONT’D

FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2007

MANAGEMENT STRATEGIES

To ensure a strong, stable and secure income stream,ARREIT applies a variety of carefully coordinatedmanagement strategies:

Quality LesseesARREIT is highly selective in its choice of Lessees. To maximise security and stability of income, it leasesout its properties mainly to public-listed or relatedcompanies with a solid track record, lease profile andtenant base.

Single LesseesMost of ARREIT properties are leased by a singlecompany, since it is more efficient to deal with a singlerather than multiple Lessees.

Long Term, “Triple Net” LeasesTo ensure long term sustainability of income, ARREITproperties are leased for a period of between six tofifteen years. This minimises the disruption of having to constantly find new tenants. In addition, most leases are on a triple net basis by which the Lesseesare responsible for the maintenance and propertyexpenses such as utilities, quit rent, assessment,insurance premiums and other operating costs. This ensures that the income received by ARREIT is nett of all expenses.

High Security DepositsMost Lessees are required to provide a security depositof at least two to three years since a strong Lessee islikely to fulfil its obligations and remain in business forthe duration of the lease. The deposit is forfeited in theunlikely event that the Lessee fails to honour itsobligations under the lease. Should the Lessee default,ARREIT can also claim rental from any sub-tenants.

ARREIT also requires a restoration deposit for industrialbuildings so that even specialised buildings can bemade tenantable quickly in case the current Lesseesvacate the premises.

HUMAN CAPITAL DEVELOPMENT

AmanahRaya-JMF benefits tremendously from thetransfer of knowledge resulting from Amanah Raya’sstrategic collaborations with global partners such asAsian Finance Bank, Kuwait Finance House, GoldmanSachs, Macquarie Group, Royal Bank of Scotland andSwiss-based Faisal Private Bank. It is through thesestrategic collaborations, rather than through organicgrowth, that the transfer of knowledge and expertisecan be achieved rapidly.

CONCLUSION

At the end of our first ten months of operation, we arebullish about our future growth story. We recognizethat, ultimately, the prosperity of ARREIT depends onour ability to attract high quality Lessees. Their successdetermines the success of ARREIT, and the quality ofour assets can only be maintained if our partnersperform well in their business. We are thereforecommitted to treating our Lessees as our partners inthe quest to develop ARREIT.

With this as our core philosophy, we look forward tothe coming year with confidence and dynamism.

Datuk Mohamed Azahari Mohamed Kamil6 February 2008

AMANAHRAYA REIT INVESTMENTCOMMITTEE MEMBERS


From left to right:



Datuk Yahya Ya’acob (Chairman)

Sudirman Masduki

Mahadzir Azizan

Datuk Yahya Ya’acobChairman

Datuk Yahya Ya’acob 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. His academic

qualifications include a Bachelor of Arts, a Diploma in

Public Administration and a Masters in Business

Management. He is a director of various companies,

including listed companies such as IJM Corporation

Berhad, LBI Capital Berhad and Damansara Realty

Berhad. He is also chairman of a number of companies,

including Rangkaian Segar Sdn Bhd, which is the

operator of the Touch ‘n Go electronic payment system.

AMANAHRAYA REIT INVESTMENTCOMMITTEE MEMBERS CONT’D



Dato’ Mani Usilappan was appointed as an

Independent Investment Committee Member on

27 December 2006. He is a member of the Royal

Institution of Chartered Surveyors. He has vast

experience in the field of property valuation. He holds

a Masters in Property Development from the Southbank

University in London. He was the Director General of

the Valuation and Property Services Department in

the Ministry of Finance. He has also held various posts

in various academic and professional institutions in

Malaysia, such as the President of the Institution

of Surveyors Malaysia. His current academic posts

include being an Adjunct Professor in University of

Malaya’s Faculty of Built Environment and Universiti

Tun Hussein Onn. In addition, he has written various

books and articles on property valuation. He is also

active in research and development in areas relating

to the property sector.


Tengku Dato’ Hasmuddin Tengku Othman was

appointed as an Independent Investment Committee

Member on 27 December 2006. He is a practicing

lawyer and is currently the principal partner of Messrs

Hisham, Sobri & Kadir. His areas of expertise include

the various expects 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. He is a

director of a number of companies, including Aliran

Ihsan Resources Berhad. He is also a member and

adviser to the Labuan Offshore Financial Services

Authority as well as an adviser to the Association of

Islamic Banking Institutions.

Mahadzir Azizan

Mahadzir Azizan was appointed as an Independent

Investment Committee Member on 27 December 2006.

He is a Barrister-at-law from Lincoln’s Inn, London.

He was called to the bar of England & Wales in 1978

and had served in various capacities in government

and private sector. He served as Federal Counsel

and Legal Adviser in the Ministry of Trade & Industry

in 1978-1979 after which he served as Assistant

Company Secretary / Legal Adviser of Malaysia

International Shipping Corporation Berhad (MISC).

In 1983 he joined Island & Peninsular Berhad

(“I&P”), a property development company within the

Permodalan Nasional Berhad (“PNB”) Group as Group

Company Secretary and Legal Adviser subsequently

he was promoted to Director, Corporate Affairs in

1994 and held the position until April 2007.

He currently sits on the Boards of various companies

namely ECM Libra Avenue Bhd, Avenue Invest Bhd,

TH Properties Sdn Bhd and Syarikat Takaful Malaysia

Berhad and was a member of the Board of Majlis

Amanah Rakyat (MARA) from 2000 to 2003.

Sudirman Masduki

Sudirman Masduki was appointed as a Non

Independent Investment Committee Member on

27 December 2006. He holds a Master of Business

Administration from Universiti Kebangsaan Malaysia

and he is a Fellow of the Association of Chartered

Certified Accountants, United Kingdom. He has vast

experience in the field of finance and accounting from

his service in Jabatan Akauntan Negara Malaysia and

the Inland Revenue Board of Malaysia. He was the

General Manager of Corporate Services responsible

for the overall function of the Finance and Accounts

Department, Information Technology Department,

Management Services Department and Human

Resource Department of Amanah Raya Berhad.


STATEMENT OF CORPORATE GOVERNANCE


STATEMENT OF CORPORATE GOVERNANCE

The AmanahRaya Real Estate Investment Trust (“ARREIT”) was established on 10 October

2006 pursuant to a trust deed (the “Deed”) entered into between AmanahRaya-JMF Asset

Management Sdn Bhd (“ARJMF” or the “Manager”) and CIMB Trustee Berhad (the “Trustee”).

ARREIT was listed on the Main Board of Bursa Malaysia Securities Berhad (“Bursa Securities”)

on 26 February 2007.

ARJMF as the Manager of ARREIT has established policies and procedures to ensure that

effective corporate governance is adopted throughout the organization and its activities.

ARJMF has an obligation to act professionally, with due care and diligence, and in the best

interest of ARREIT unitholders. This obligation ties in with the Manager’s responsibility in


DIRECTORS OF THE MANAGER

The Board

The Board of Directors of the Manager (the “Board”) is

responsible for the effective management and control

of the Manager.

The responsibility of the Board includes:

• Formulating corporate policies and strategies;

• Overseeing and evaluating the conduct of the

Manager’s activities;

• Identifying principal risks and ensuring the

implementation of appropriate systems to manage

these risk; and

• Reviewing and approving key matters such as

financial results, investments and divestments,

acquisitions and disposals, and other major

capital expenditure.

Board Balance

The Board currently has nine Directors, with an

alternate director, comprising three executive members

and six non-executive members. Three members of the

Board are independent to ensure compliance with the

requirement of 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 Managing Director is responsible for implementing

the policies and decisions of the Board, overseeing the

day-to-day operations, setting the plan, direction,

benchmark and targets for the Manager, tracking the

compliance and progress of the operation, initiating

innovative business ideas to create competitive edge,

and developing asset enhancement strategies with the

aim of enhancing unitholder returns.

managing the assets and liabilities of ARREIT for the

benefit of unitholders, and the Manager will endeavour

to continue enhancing returns to unitholders.

In ensuring the implementation and operation of

good corporate governance, ARJMF is guided by the

measures recommended by the Securities Comission

Guidelines on Real Estate Investment Trusts (“SC’s

Guidelines”), the Malaysian Code on Corporate

Governance and the Listing Requirements of

Bursa Securities.

THE MANAGER OF ARREIT

ARREIT is externally managed by the Manager and as a

result has no employees. The Manager has appointed

experienced and well qualified personnel to manage its

day to day operations. All Directors and employees of

the Manager are remunerated by the Manager and not

by the Fund.

The Manager is responsible for the following:

• Developing business plans and strategic and

investment policies for ARREIT;

• Providing to the Board recommendations on the

acquisition, divestment or enhancement of

ARREIT’s assets;

• Monitoring compliance with all legislation, rules

and guidelines issued by the Securities Comission

(“SC”) and Bursa Securities as well as ARREIT's

Deed;

• Ensuring appropriate record keeping;

• Formulating risk management policies, and

supervising the Property Manager.

Board MeetingsBoard meetings are scheduled at least once everyquarter.

Since the listing of ARREIT on 26 February 2007, up to31 December 2007, three Board meetings were heldand the details of attendance are as follows:

Name AttendanceTan Sri Datuk (Dr) Arshad Ayub 3Datuk Mohamed Azahari Mohamed Kamil 3Tuan Haji Ahmad Kamal Abdullah Al-Yafii 2Datuk Mohamed Adnan Ali 3Dato’ Ahmad Rodzi Pawanteh 2Alina Hashim 1(as alternate Director to Dato’ Ahmad Rodzi Pawanteh)

Tuan Haji Rozan Mohd Sa’at 2Tai Siong Choi 3Sharizad Jumaat 2Dato’ Dr. Mohd. Irwan Serigar Abdullah 1(appointed on 29 November 2007)

Access to and Supply of Information and AdviceAll Board members are supplied with information in a timely manner. Board reports are circulated prior to Board meetings and the reports provide,among others, financial and corporate information,information on significant operational, financial andcorporate issues, and on the performance of ARREIT,and management proposals which require the approvalof the Board.

All directors have access to the advice and services of the Investment Committee, the Audit, RiskManagement & Compliance Committee, the RiskManagement Department, the Compliance & LegalDepartment, and the Company Secretary as well as to independent professional advisors.

Appointments to the BoardAll new nominations are assessed and approved by the entire Board in line with its policy of ensuringnominees are persons of sufficient calibre andexperience.

Additionally, the Manager, being a licensed FundManager under the purview of the SC, has to obtainpost-appointment approval from the SC for theappointment of any new members of the Board.

Committees under the BoardThe Board has established the following committees toassist it in discharging its duties in relation to ARREIT.The committees are:

• The Audit, Risk Management & ComplianceCommittee; and

• The Investment Committee.

AUDIT, RISK MANAGEMENT & COMPLIANCE COMMITTEE

The Audit, Risk Management & Compliance Committee(“ARCC”) was formed on 27 January 2006. It operatesunder authority delegated by the Board and in line with the Malaysian Code on Corporate Governanceand consists of three non-executive directors. The Chairman of the ARCC is a Fellow of the CharteredInstitute of Management Accountants and was theformer Accountant-General of Malaysia. As such he can effectively read, analyze and interpret financialstatements to effectively discharge the functions of the ARCC.

The duties and responsibilities of the ARCC include:

• Overseeing compliance with applicable laws and regulations;

• Ensuring the performance, qualifications andindependence of the external auditors and thatthe results of the internal and external auditfindings are brought to the highest level ofconsideration;

• Safeguarding the integrity of financial reporting;• Recognizing and managing risk; and• Identifying and recommending the

implementation of best practices in order to addvalue to the company.

INVESTMENT COMMITTEE

The Investment Committee ("IC") for ARREIT was formed on 4 August 2006. It operates under authoritydelegated by the Board and is represented by fully-independent members from various fields includinglegal and property.

STATEMENT OF CORPORATE GOVERNANCE CONT’D


The duties and responsibilities of the IC include:

• Reviewing, deliberating and deciding on any

investment made by ARREIT;

• Reviewing, assessing and deciding on any fund

raising exercise to be undertaken by the REIT;

• Reviewing and deliberating on the following

reports:

- Property Market and Outlook Report

- REIT Performance Report

- Statutory Report

• Reviewing compliance of ARREIT’s Investment

Policies & Guidelines.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board is responsible for ensuring the proper

maintenance of accounting records for ARREIT and

that appropriate accounting policies are consistently

applied.

Internal Control

The Board has the overall responsibility of maintaining

a system of internal control which covers financial and

operational controls and risk management. The system

provides reasonable but not absolute assurance

against material misstatement of management and

financial information and against financial losses

and fraud.

Relationship with Auditors

An external auditor, independent of the Management

and Trustee, has been appointed. The appointment

was nominated by the Manager and approved by the

Trustee. The remuneration of the Auditor is approved

by the Trustee.

Compliance & Legal Department

The Manager, being a licensed fund manager, has a

registered compliance officer and a department

dedicated to working towards ensuring compliance

with all legislation, rules and guidelines issued by the

SC and Bursa Securities as well as ARREIT's Deed.

RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST

The Manager has established procedures to ensure

that related party transactions and conflict of interest

issues are handled in full compliance with the SC’s

Guidelines, ARREIT’s Deed and the Listing Requirement

of Bursa Securities.

The policies adopted by the Manager to deal with

potential conflict of interest issues include:

• Transactions being on an arm’s length basis and

on normal commercial terms which are no more

favourable than those extended to related third

parties;

• ARREIT's cash or other liquid assets being placed

in a current or deposit account of institutions

licensed or approved to accept deposits; and

• The Manager not acting as principal in the sale

and purchase of real estate, securities and any

other assets to and from ARREIT.

RISK ASSESSMENT AND MANAGEMENT OF BUSINESS RISK

The Manager operates within overall guidelines and

specific parameters set by the Board. Responsibility for

managing risk lies initially with the Risk Management

Department, working within the overall strategy

outlined by the Board.

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, giving unitholders and investors an

overview of ARREIT’s performance and operation.

Additionally, the Managing Director regularly meets

with analysts, institutional unitholders and investors.


AMANAHRAYA-JMF ASSETMANAGEMENT TEAM


From left to right

Sharizad Jumaat

Datuk Mohamed Azahari

Mohamed Kamil (Managing Director)

Tai Siong Choi

Mohd Zamri Shariff

Azlan Azizuddin


From left to right

Zaffarin Haji Zanal

Lee Wei Chung

From left to right

Tai Ai Ngoh

Rizal Abdullah

THE MANAGER’SPROPERTY TEAM


From left to right

Abdul Farid Abdul Kadir

Abas Abd Jalil


From left to right

Fakru Radzi Abdul Ghani

Razlan Raghazli

From left to right

Ida Azura Ahmad Zamri

Muhamad Hafiz Jantan

MANAGER’S REPORT

The Directors of AmanahRaya-JMF Asset Management Sdn Bhd, the Manager of the AmanahRaya Real Estate

Investment Trust (“ARREIT” or the “Trust”) have pleasure in presenting to the unitholders of ARREIT the Annual

Report and audited financial statements of ARREIT for the financial period ended 31 December 2007.

Principal Activity

The Manager’s principal activity is fund management and its related services, and is licensed to act as a fund

manager under the Capital Markets and Services Act, 2007. ARREIT is one of the property portfolios currently

managed by us. There have been no significant changes in the nature of our activities during the financial period.

Highlights

In the financial period ended 2007, ARREIT:

• Recorded a net income available for distribution totalling RM10,646,633 – 1.57% higher than the net

income projected in the IPO Prospectus

• Achieved a distribution per unit of 5.4412 sen, which translates to an annualised distribution per unit

of 6.5294 sen

• Successfully acquired five additional properties at total cost of RM308,670,000 with a market valuation of

RM317,200,000, the approval for the acquisition being obtained from the Securities Commission (SC) on

30 August 2007

• Held its first Unitholders’ Meeting on 26 October 2007 to seek unitholders’ approval for the Acquisition of

new properties and placement of new units

• Announced the issuance and placement of 247,553,191 units on 27 December 2007, with approval

being granted by the SC on 30 August 2007

THE TRUST AND ITS INVESTMENT OBJECTIVE

ARREIT was established on 10 October 2006 by means of a trust deed (the “Deed”) executed by the Manager and

CIMB Trustee Berhad (the “Trustee”) which classified it as a real property trust fund.

ARREIT was listed on Bursa Malaysia Securities Berhad on 26 February 2007. The investment objective of ARREIT is

to invest in a diversified portfolio of properties with the potential for capital growth and strong recurring rental

yields, generating an attractive level of return for unitholders.

As a result of the continuous efforts to further enhance the existing portfolio, the Manager has completed the

acquisition of five additional properties for ARREIT. Following the injection of these additional five properties,

the Manager forecasts a dividend of 6.96 sen per unit for 2008, 7.14 sen per unit for 2009, and 7.66 sen per unit

for 2010. During the financial period under review, the Manager is pleased to announce that ARREIT is the second

largest REIT in the country in terms of value of the properties.


BENCHMARK RELEVANT TO THE TRUST

Financial period ended

31 December 2007

Management Expenses Ratio (“MER”) 0.44%

The calculation of the MER is based on the total expenses of ARREIT incurred, including Manager’s fees, Trustee’s

fees, audit fees, tax agent’s fees and administrative expenses, to the average net asset value of the Trust during

the financial period calculated on a daily basis.

Since the basis of calculating MER may vary among real estate investment trusts, comparisons of MER of ARREIT

with other real estate investment trusts may not be an accurate comparison.

REVIEW OF PERFORMANCE

As At 31 December 2007

Total Net Asset Value (RM) 404,967,451

Units in Circulations (units) 431,553,191

Net Asset Value per unit (RM) 0.9384

Market Value per unit (RM) as at 31 December 2007 0.9900

Highest Traded Price for the ten months period (RM) 1.0500

Lowest Traded Price for the ten months period (RM) 0.8250

RESULTS OF TRUST’S PERFORMANCE

RM


Total Gross Rental Income 19,272,059

Total Property Expenses 728,823

Net Rental Income 18,543,236

Interest Income 382,960

Total Non-Property Expenses 8,279,563

Earnings before taxation and net appreciation on fair value of

of investment properties 10,646,633

Net appreciation on fair value of investment properties -

Earnings before Taxation 10,646,633

Taxation NIL


MANAGER’S REPORT CONT’D

RESULTS OF TRUST’S PERFORMANCE cont’d

RM


Earnings after Taxation 10,646,633

Earnings per Unit after Tax (sen)*

- after manager fee 5.6872

- before manager fee 5.9330

Annualised earnings per Unit after Tax (sen)***

- after manager fee 6.8246

- before manager fee 7.1196

Distribution per Unit (DPU) (sen)** 5.4412

Annualised distribution per Unit (DPU) (sen)*** 6.5294

* Earnings per unit after tax are computed based on the weighted average number of units in circulation, i.e. 187,204,572

units during the financial period.

** The distribution per unit shown above was the actual distribution to unitholders during the financial period.

*** Annualised earnings per unit and distribution per unit are calculated based on ARREIT’s operation results for the

financial period 2007 commencing from 26 February 2007 to 31 December 2007 annualised over the 12 months of

the calendar year 2007.

The Manager is pleased to report that, for the financial period ended 31 December 2007, revenue totalled

RM19,655,019, comprising gross rental income of RM19,272,059 and interest income of RM382,960.

The effective interest rate received for funds placed with licensed financial institutions was between 3.00%

and 3.52% per annum, significantly higher than the IPO forecast rate of 1.5%. Higher post-tax earnings

resulted mainly from the interest income and higher rental rates received for Wisma Amanah Raya Berhad

following the renewal of the tenancy and revision of the rental rates.

As at 31 December 2007, ARREIT incurred total expenses of RM9,008,386, with only 8% being property expenses

since almost all of our properties have triple-net arrangements whereby all property-related expenses are paid by

the Lessees. The exceptions are Wisma Amanah Raya Berhad and Wisma UEP. During the financial period, the main

expenditure was interest expenses totalling RM7,477,273. However, after the second property injection, the

gearing ratio of the Trust improved from 49.10% to 37.90%.


NET ASSET VALUE (“NAV”)

Analysis of net asset value of the Trust from the date of inception to 31 December 2007:

As at As at date31 December 2007 of inception

Total net asset value (“NAV”) (RM)- before provision for income distribution 411,252,938 174,183,060- after provision for income distribution 404,967,451 N/A

Total net asset value (“NAV”) (RM) per unit- before provision for income distribution 0.9530 0.9466- after provision for income distribution 0.9384 N/A

In compliance with the listing requirements, the weekly NAV of the Trust is submitted to Bursa Malaysia’s websitefor public review.

Effect of NAV Per Unit

Effect on NAV after the issuance of new units during the financial period is as follows:

Total NAV Number of Units NAV Per UnitRM RM

Before (27 December 2007)* 175,042,125 184,000,000 0.9513After (31 December 2007)** 406,073,522 431,553,191 0.9410

* After provision for second income distribution amounting to RM5,179,416

** Before provision for third income distribution amounting to RM1,106,071

Related Performance Indicators and Benchmarks

As at Since Date31 December 2007 of inception

Total return (%)* 5.84 N/AGearing ratio (%)** 37.90 49.10Portfolio Turnover Ratio (times)*** 1.78 N/A

* Total returns are calculated based on the actual gross income distribution and the net change in the weighted average market

price for the period to date, over the weighted average market price of the REIT for the respective year.

** The gearing ratio is calculated based on total borrowings over total assets (total assets excluding RM41,079,733, which is

the total amount of rental and security deposits held on behalf of lessees, and RM81,251,198 in trade and other receivables

which are to be disbursed to other payables).

*** The calculation of Portfolio Turnover Ratio (“PTR”) is based on the average of total acquisitions and total disposals of

investments in ARREIT for the period ended 31 December 2007 to the average net asset value during the period calculated on

a daily basis.



GEARING LEVEL

Debt Facilities

At the commencement of ARREIT, the Trust entered into a facility arrangement comprising a four (4)-year term loan

totalling RM168,000,000 at an interest rate of 5.25% per annum fixed throughout the tenure of the facility.

Anticipating rising inflation costs and fluctuating interest rates on 31 December 2007 the Trust secured additional

loan facility with three (3)-years tenure from Affin Bank Berhad amounting RM85,000,000.00 with a locked-in

interest rate of 4.50% per annum. As at that date, the overall gearing ratio improved from 49.10% to 37.90% .

These facilities are structured to mature simultaneously on 28 February 2011.

Gearing capacity

As at 31 December 2007, the gearing ratio of ARREIT was 37.90%. The Trust still has the capacity to borrow up to

another 12.10% before reaching its permitted limit of 50% under SC Guidelines on Real Estate Investment Trusts.

The additional capacity will be utilised to finance the future growth of the Trust both organically and through the

acquisition of further properties.

INVESTMENT STRATEGIES AND POLICIES

Investment Strategies

During the financial period, the Manager continued to carry out the following investment strategies in order to

achieve the business and investment objectives of ARREIT:

Operating Strategy

The operating strategy is mainly geared towards preserving and enhancing the value of the properties as well as

achieving sustainable growth in rental income based on the following:

a. Actively monitor the maintenance and upkeep of the properties under lease

The Manager works closely with the Property Manager in order to monitor the maintenance and upkeep of

the properties as conducted by the Lessee. Although the maintenance and upkeep of the properties are

the responsibility of the Lessee, constant monitoring is required to ensure that the long term quality and

the physical condition of the building are preserved.

b. Foster close relationships with Lessees and ensure the delivery of high quality services to them

The Manager fosters close relationships with the Lessees of the properties which result in both parties

understanding each other’s needs and requirements. This enables the Manager to consistently deliver

prompt responses and tailored solutions to achieve high Lessee satisfaction.

c. Enhance Property Value

The Manager works closely with the Property Manager to constantly find ways to enhance the value of the

properties via internal and external improvements. In determining improvements to be undertaken, financial

analysis and market studies are conducted to ensure that such improvements will genuinely increase the

value of the properties.


d. Improve financial performance of the properties

To enable ARREIT to sustain its potential earnings, expiring leases are replaced without delay, and re-

negotiated rental rates are locked-in, including future rental rate increases. Equally important, proactive

marketing is used to ensure that outgoing Lessees are quickly replaced without disruption to income.

The above objectives are achieved by:

• Commencing timely negotiations with Lessees whose leases are about to expire

• Adopting marketing strategies that emphasize the properties’ competitive strengths to raise public

awareness and maximize Lessee interest

• Pursuing leads from real estate agents and other referrals

• Offering the Lessees competitively priced rental rates with pre-determined increases that will sufficiently

compensate the ARREIT over the long term

• Ensuring that the Lessees of the properties possess good credit ratings and are able to make rental

payments as and when they fall due in order to ensure that the cashflow of ARREIT is well managed

Acquisition Strategy

Before investment proposals are presented to the Investment Committee for endorsement, the Manager assesses

the appeal of the property based on a rigorous prescribed process.

All potential acquisitions undergo a desktop evaluation using pre-determined acquisition criteria consistent with

ARREIT’s investment objectives. A summary of these criteria is as follows:

a. Location

The location of the potential property is evaluated with particular reference to its proximity to public transport,

major roads and highways, populated commercial districts and residential areas.

b. Price and Yield

All investment proposals are subject to vigorous scrutiny based on our investment criteria which take into

account the price, yield and tenure of the potential acquisition. Consideration is also given to the expected

future economic environment and the market demand for short and long term leases. The analysis focuses on

ensuring that the terms of the acquisitions allow the current value of the portfolio to be at least maintained

while enhancing the accretion and/or the overall quality of the portfolio. For most property acquisitions, the

purchase prices are below market value (see the Property Portfolio section), thus delivering an immediate

appreciation in value upon completion of the transaction.

c. Building Condition

The condition of the property is evaluated mostly via physical inspections and checks. These focus on, among

others, the building’s age and size, interior and exterior condition, defects (particularly hidden defects),

mechanical and electrical equipment, civil and structural condition as well as the condition of the security, fire

and any other protection systems, and compliance with local rules and regulations. Engineering due diligence

exercises examining the condition of the mechanical and electrical equipment as well as the structural

condition are conducted by the Manager’s appointed engineers.



INVESTMENT STRATEGIES AND POLICIES cont’d

Acquisition Strategy cont’d

d. Diversity of Portfolio

It is planned to further increase the geographical and sectoral diversity of the ARREIT property portfolio in

order to cushion the impact of any adverse development in a particular sector or region and provide a reliable

flow of income to ARREIT. The potential acquisition of properties from various segments will therefore be

carefully evaluated. The Manager is well aware of property market conditions and will capitalise on the rising

rental and capital values of high performing sectors.

After applying the above criteria and conducting the necessary analysis, studies, inspections and checks,

the recommendation is forwarded to the Independent Investment Committee of ARREIT for further evaluation

and approval.

Capital Management Strategies

To optimise returns to unitholders, we plan to finance future property acquisitions and enhancements by means of

a balance of new units and loans.

The strategies employed to achieve this are:

a. Sourcing the most favourable terms of funding while maintaining a comfortable level of loan service capability

b. Diversifying our sources of funding

c. Managing cashflows by matching inflows from lessees with outflows arising from financial obligations

d. Managing our interest rate exposure

In addition to the above, the Manager will also comply with the provisions of the Deed and all applicable rules and

guidelines prescribed by the SC relating to the financing of ARREIT. As at 31 December 2007, ARREIT had achieved

a debt level of 37.90% of the total asset level.

Investment Policies

The Manager will continue to comply with the Deed, the SC’s Guidelines on Real Estate Investment Trusts and other

applicable guidelines imposed by the SC and other relevant bodies, including:

a. Only making investments permitted by the SC and other relevant bodies

b. Ensuring that the investment portfolio requirements and limits imposed by the Deed and the SC’s Guidelines

on Real Estate Investment Trusts are adhered to

The Manager will also ensure that ARREIT will not be involved in:

a. Extending loans and credit facilities to any party

b. Entering into forward purchases or forward sales in any currencies or any foreign contract

c. Property development unless the development has met the criteria imposed by the SC’s Guidelines on Real

Estate Investment Trusts


COMPOSITION OF INVESTMENT PROPERTIES

As at balance sheet, ARREIT’s composition of investment properties is as below:

Property Book Value %

Holiday Villa Alor Setar RM31,000,000 4.8%

Holiday Villa Langkawi RM55,000,000 8.5%

Permanis Factory RM23,550,000 3.7%

SEGi College, Subang Jaya RM52,500,000 8.1%

Block A & B, South City Plaza RM18,300,000 2.8%

Wisma AmanahRaya RM68,000,000 10.5%

Wisma Amanah Raya Berhad RM53,000,000 8.2%

Wisma UEP RM35,500,000 5.5%

Tamadam Bonded Warehouse RM28,500,000 4.4%

AIC Factory RM19,200,000 3.0%

Silver Bird Factory RM92,000,000 14.3%

Gurun Automotive Warehouse RM23,970,000 3.7%

SEGi College, Kota Damansara RM145,000,000 22.5%

Total RM645,520,000 100%

Real Estate Property Acquired During The Financial Year

The Trust recently acquired three (3) properties from Kumpulan Wang Bersama, a party related to the holding

company of AmanahRaya-JMF Asset Management Sdn. Bhd. (the “Manager”) for a purchase consideration of

RM139,700,000, satisfied by the issuance of 148,617,021 vendors’ units in ARREIT at an issue price of RM0.94

per unit. These properties were issued with a certificate of fitness for occupation and were valued at

RM144,200,000 by Azmi & Co Sdn Bhd, an independent registered valuer using the cost and investment

methods of valuation.

Subsequent to the acquisition of the three (3) properties, the Trust acquired two (2) additional properties from

SEG International Berhad and Teras Globalmas Sdn Bhd which are independent parties for purchase consideration

of RM168,970,000 satisfied by cash. The properties obtained their certificate of fitness for occupation and were

valued at RM173,000,000 by Azmi & Co Sdn Bhd, an independent registered valuer using the cost and investment

methods of valuation.

The details of real estate owned by the Trust as at the balance sheet date are as follow:

1 Holiday Villa Alor Setar

Address/Location Lot 162 & 163, Jalan Tunku Ibrahim, 05000 Alor Setar, Kedah Darul Aman.

Title details Geran 7040 and H.S.(D) 1100/85, Section 5, Town of Alor Setar,

District of Kota Setar, Kedah Darul Aman.

Property type Hotel.

Description A commercial property comprising a 4-star hotel with 155-rooms in

Alor Setar and is located within a 21-storey commercial complex with

sub-basement level known as City Plaza.

Date of Certificate of Fitness 30 May 1995.

Age of property Approximately 9 years.



COMPOSITION OF INVESTMENT PROPERTIES cont’d

1 Holiday Villa Alor Setar cont’d

Tenure Freehold for Geran 7040 and leasehold for H.S.(D) 1100/85 is

99-year leasehold land expiring on 23 March 2084.

Unexpired lease period Approximately 78 years.

Lease period 10 years – commenced on 23 June 2006.

Gross Floor Area 150,000 sq.ft.

Net lettable area Not applicable.

Existing use Hotel and commercial complex.

Parking spaces 44 bays.

Date of acquisition 26th February 2007.

Valuation RM31,000,000.00

Cost of acquisition RM31,000,000.00

Master Lessee Alor Setar Holiday Villa Sdn Bhd.

Occupancy rates 100%

Net rental RM173,083.33 per month.

2 Holiday Villa Langkawi

Address/Location Lot 1698, Pantai Tengah, Mukim Kedawang, 07000 Langkawi,

Kedah Darul Aman.

Title details Lot No. P.T. 344, P.T. 107 & P.T. 108, Town of Padang Mat Sirat,

District of Langkawi, Kedah Darul Aman.

Property type 4-star hotel with 238-rooms.

Description Commercial property comprising a 4-star hotel with 238-rooms

located in Pantai Tengah, Langkawi.

Date of Certificate of Fitness 7 January 1991.


Tenure Freehold.

Unexpired lease period Not Applicable

Lease period 10 years – commenced on 13 July 2006.


Net lettable area Not Applicable. It is a single tenant property and for this purpose we have

taken up the net lettable area to be equal to the gross floor area.

Existing use Hotel.

Parking spaces 55 bays.




Master Lessee Langkawi Holiday Villa Sdn Bhd.





3 Permanis Factory

Address/Location Lots 5 & 7, Jalan P/6 and P/7, Kawasan Perusahaan Seksyen 13,

Bandar Baru Bangi, Selangor.

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 type Single-storey warehouse.

Description Permanis Factory is an single storey warehouse industrial property located

within Kawasan Perusahaan Seksyen 13, Bandar Baru Bangi.



Tenure Leasehold for 99 years expiring on 9 February 2089.


Lease period 10 years – commenced on 31 May 2006.


Net lettable area Not Applicable. It is a single tenant property and for this purpose we have

taken up the net lettable area to be equal to the gross floor area.

Existing use Factory.

Parking spaces Car park sheds (gross floor area 1,481 sq.ft.)

Motorcycle parking shed (gross floor area of 824 sq.ft.)




Master Lessee C.I. Holdings Berhad.



4 SEGi College, Subang Jaya

Address/Location SEGi College, Persiaran Kewajipan USJ 1, 47600 Subang Jaya, Selangor.Title details Geran 43527, Lot No. 13, Pekan Subang Jaya, District of Petaling,

State of Selangor.Property type Commercial.Description 12-storey commercial building with 3 Level Basement Carpark.Date of Certificate of Fitness 12 January 2006.Age of property Approximately 1 year.Tenure Freehold.Unexpired lease period Not Applicable.Lease period 15 years – commenced on 22 May 2006.Gross Floor Area 280,575 sq.ft.Net lettable area 131,387 sq.ft.Existing use Higher Learning Institution and training centre.Parking spaces 206 bays.




4 SEGi College, Subang Jaya cont’d

Date of acquisition 26 February 2006.



Master Lessee SEG International Bhd.



Easement ARREIT has purchased the property subject to an easement granted on the

land by a Deed of Easement dated 20 December 2001 entered into

between Wismuda Sdn Bhd, Warisan Megah Sdn Bhd, Integrated

Logistics Berhad and Heitech Padu Berhad.

5 Block A & B, South City Plaza

Address/Location Block A & B, South City Plaza, Persiaran Serdang Perdana, Taman Sedang

Perdana, Section 1, 43300 Seri Kembangan, Selangor.

Title details Developed on land held under Master Title Pajakan Negeri 7393, Lot 1,

Pekan Serdang, District of Petaling, Selangor (previously known as

H.S.(D) 91640, P.T. 32218, Mukim and District of Petaling,

State of Selangor.

Property type Commercial.

Description Two (2) blocks (Block A and Block B) of 5 ½-storey office buildings

within a development known as South City Plaza.

Date of Certificate of Fitness 21 April 2005.



Lease period 10 years – commenced on 21 August 2006.


Net lettable area 66,606 sq.ft.

Existing use Block A is used as an institution of higher learning and Block B is currently

used as an office block.

Parking spaces The property does not have any carparks but shares the usage of 1,766

parking bays with the developer and owner of the individual units

within South City development.









6 Wisma AmanahRaya

Address/Location Wisma AmanahRaya, No. 2, Jalan Ampang, 50450 Kuala Lumpur.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, WilayahPersekutuan Kuala Lumpur.

Property type Commercial.Description Commercial Property comprising a 15-storey purpose built office building

2 basement levels.Date of Certificate of Fitness Not ApplicableAge of property Approximately 41 years.Tenure Leasehold Interest for 99 years.Unexpired lease period Approximately 57 years.Lease period 6 years – commenced on 26th October 2006.Gross Floor Area 235,000 sq.ft.Net lettable area 166,902 sq.ft.Existing use Office Building.Parking spaces 59 Parking Bays.Date of acquisition 26 February 2007.Valuation RM70,000,000.00Cost of acquisition RM68,000,000.00 Master Lessee Amanah Raya Berhad.Occupancy rates 100%Net rental RM450,635.40 per month.

7 Wisma Amanah Raya Berhad

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

Title details Title Nos. H.S.(D) 83465 and 79671, P.T.Nos 6 and 7, Mukim and District of Kuala Lumpur.

Property type Commercial. Description Commercial Property comprising 5-storey purpose built

office buildings with 6 lower ground levels inclusive 4-level car park and cafeteria facilities.

Date of Certificate of Fitness 29 October 1999.Age of property Approximately 7 years.Tenure Leasehold for 99 yearsUnexpired lease period Approximately 65 years.Lease period 9 years – commenced on 1st November 2005.Gross Floor Area 170,000 sq.ft.Net lettable area 125,227 sq.ft.Existing use Office. Parking spaces 261 parking bays.Date of acquisition 26 February 2007.Valuation RM55,000,000.00Cost of acquisition RM53,000,000.00Master Lessee CIMB Investment Bank Berhad.Occupancy rates 100%Rental received RM298,433.00 per month.




8 Wisma UEP

Address/Location Wisma UEP, Jalan USJ10/1A, Pusat Perniagaan USJ 10,

47620 Subang Jaya, Selangor.

Title details Title Nos. H.S.(D) 52531, P.T. 11303, Mukim of Damansara,

District of Petaling, Selangor.


Description Commercial Property comprising an 11-storey office building with

3 levels of Basement Car Park.

Date of Certificate of Fitnesss 14 May 1997.

Age of property 8 years.

Tenure Freehold.

Unexpired lease period Not Applicable.

Lease period 6 years – commenced on 1st January 2004.


Net lettable area 90,541 sq.ft.

Existing use Office.

Parking spaces 178 Parking Bays.




Master Tenant Sime UEP Properties Bhd.


Rental received RM175,000.00 per month.

9 Tamadam Bonded Warehouse

Address/Location Tamadam 1, Lot No. 11614, Jalan Perlabuhan Utara, North Klang Straits

Industrial Area, 42000 Port Klang, Selangor.

Title details Lot No. 11614 held under PN4564 and Lot No. PT 21596 held under

HSM19795, all situated in Mukim and District of Klang,

State of Selangor.

Property type Industrial.

Description Warehouse Complex comprising 12 units of single-storey warehouses

and 2 units of guard house.

Date of Certificate of Fitness 28 December 1978.


Tenure Lot 11614 – Leasehold for 60 years.

Lot No. PT 21596 – Leasehold for 99 years.

Unexpired lease period Lot 11614 – unexpired period of 60 years.

Lot No. PT 21596 – unexpired period of 82 years.

Lease period 10 years – commenced on 1st January 2007.

Built Up Area 237,033 sq.ft.

Existing use Industrial Warehouse.


COMPOSITION OF INVESTMENT PORTFOLIO cont’d

9 Tamadam Bonded Warehouse cont’d

Parking spaces Available within the compound of the property.Date of acquisition 28 December 2007.Valuation RM29,500,000.00Cost of acquisition RM28,500,000.00Master Lessee Tamadam Bonded Warehouse Berhad.Occupancy rates 100%Net rental RM172,050.00 per month.

10 AIC Factory

Address/Location Wisma AIC, Lot 1 & 3, Persiaran Kemajuan, Seksyen 16, 40200 Shah Alam, Selangor.

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 ofPetaling, State of Selangor.

Property type Industrial.Description Two Industrial complex comprising 3-storey office block annexed with a

single storey factory and single storey factory with canteen and aguard house.

Date of Certificate of Fitness 13 November 2005.Age of property Approximately 15 years.Tenure Leasehold for 99 years.Unexpired lease period 87 years expiring 20 February 2094.Lease period 10 years – commenced on 13 September 2006.Built Up Area 159,708 sq.ft.Existing use Manufacturing of Motor Vehicles Spare part and flat screen TV.Parking spaces Available within the compound of the property.Date of acquisition 28th December 2007.Valuation RM20,000,000.00Cost of acquisition RM19,200,000.00Master Lessee AIC Corporation Berhad.Occupancy rates 100%Net rental RM110,833.33 per month.

11 Silver Bird Factory

Address/Location Silver Bird Complex, Lot 72, Persiaran Jubli Perak, Seksyen 21, 40000 Shah Alam, Selangor.

Title details Lot No. PT 93, held under HSD No. 232293, Pekan Baru Hicom (formerly Mukim of Damansara), District of Petaling, State of Selangor.

Property type Industrial.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.

Date of Certificate of Fitness 13 November 2005.Age of property Approximately 4 years.




11 Silver Bird Factory cont’d

Tenure Freehold.

Unexpired lease period N/A

Lease period 10 years – commenced on 11th October 2006.

Built Up Area 279,010 sq.ft.

Existing use Food manufacturing.

Parking spaces Available within the compound of the property.

Date of acquisition 28 December 2007.



Master Lessee Silver Bird Group Berhad.



12 Gurun Automotive Warehouse

Address/Location NAZA Warehouse, Lot 61B, Kawasan Perindustrian Gurun,

08800 Gurun, Kedah Darul Aman.

Title details Plot No. 61B (Part of Lot No. PT 6736), Town of Gurun,

District of Kuala Muda, State of Kedah Darul Aman.

Property type Industrial.

Description Industrial complex, comprising a single-storey warehouse and

single storey office building.


Age of property Approximately 1 ½ year.

Tenure 99-years Leasehold interest and will be granted a sub-lease of

approximately 60 years by KSDC.

Unexpired lease period 97 years.

Lease period 10 years – commenced on 28th December 2007.

Net Lettable Area 214,450 sq.ft.

Existing use Industrial.

Parking spaces Available within the compound of the property.

Date of acquisition 28th December 2007.



Master Lessee Teras Globalmas Sdn Bhd.





13 SEGi College, Kota Damansara

Address/Location SEGi College (Malaysia Main Campus), No. 9, Jalan Teknologi,

Taman Sains Selangor, Kota Damansara PJU 5,

47810 Petaling Jaya, Selangor.

Title details Developer’s Lot No. 9, Mukim Sungai Buloh, District of Petaling,

State of Selangor Darul Ehsan.


Description An institutional complex comprising of 7-storey administrative block

and 5-storeys academic block.

Date of Certificate of Fitness 24 April 2007.

Age of property Newly completed.

Tenure Leasehold for 99 years.


Lease period 10 years – commenced on 28th December 2007.

Gross Lettable Area 337,710 sq.ft.

Net Lettable Area 211,194 sq.ft.

Existing use Private College.

Parking spaces 334 car parking and 808 motorcycle parking.

Date of acquisition 28th December 2007.








REVIEW OF PROPERTY MARKET

Overview of the Property Market

The Malaysian real estate market outlook is positive, given the country’s sustainable population growth, in

excess of 2.5% of its population of 26 million, its conducive macroeconomic environment, and its flourishing

tourism industry.

The three factors that should drive the real estate market to a higher level are structural, sectoral and short-term.

The Government’s move to reduce stamp duty by 50% on properties worth up to RM250,000 should help to boost

property investments by the middle income group.

The Government has set up a Public Partnership Unit (PPU) under the Economic Planning Unit to cultivate

more private sector participation in attracting Foreign Direct Investment (FDI) including in the property sector.

The PPU will be the country’s central economic development planning agency, acting as a platform for more

dynamic private sector participation. One of the first PPU projects is to make Malaysia a preferred property

investment destination, and the PPU is working closely with developers and the FIABCI (the International Real

Estate Federation) to this end.

Malaysia will continue seeking to attract FDI in a fiercely competitive environment. Indeed, the Government’s

efforts are already paying off, with Malaysia being ranked 16th by a global strategic management consultancy

AT Kerney in the list of the 25 most favourable FDI destinations due to its political stability, comprehensive

infrastructure and young population. The country’s total net FDI comes mainly from the manufacturing sector

which contributed 52% in the first quarter of 2007. This will give a significant boost to the property market,

pushing up the demand especially for industrial and office properties. ARREIT should benefit from this trend as

nine of its 13 properties are in the office and industrial sectors.


The Government has also taken other steps to revitalize the property sector, which include the liberalization of

foreign exchange controls, the lifting of the restrictions on the number of properties foreigners can buy, and the

launch of the Malaysia My Second Home programme.

Looking at the country’s macroeconomic outlook and real estate market drivers, we believe that there will be

further upside potential for capital values and rental yields, thus the improved fundamentals will be reflected in

higher prices for listed property companies, Real Estate Investment Trusts (REITs) and direct property investments.

Office Sector

For the past few years, there has been a limited supply of quality office spaces in the Klang Valley, particularly in

the Kuala Lumpur (KL) city centre, and a combination of strong demand and limited supply has gradually pushed

up rental levels. Since the recovery from the economic crisis that hit Southeast Asia in 1998, the demand for office

accommodation has been growing, mainly from financial and educational institutions, Government agencies,

and companies relocating to bigger spaces.

Improved business sentiment plus the spill-over contribution from the services and construction sectors have

resulted in the upgrading and expansion of existing operations. The demand for office space has been further

improved through the Government’s effort to promote the country as a centre for operational headquarters by

providing full tax exemption for foreign multinational companies.

Some major office transactions in 2007 were as follows:

Date Office Building Locality Transacted/Price Gross Rental

(RM/sq.ft.) (RM/sq. ft.)

1Q07 Wisma Denmark Jalan Dang Wangi 530 4.75

1Q07 Menara Maxis KLCC 1,038 7.20

2Q07 MRCB’s office tower KL Sentral 663 5.00

2Q07 Mah Sing’s ‘The Icon’ along Jalan Tun Razak 714 5.50

4Q07 Glomac’s ‘Glomac Tower’ KLCC 1,120 7.20

4Q07 Menara Bumiputra – Commerce Jalan Raja Laut 730 n/a

Since current office rentals are still running at a low rate, rental increases have been outstripped by increases in

capital values. Rents will increase after the expiry of existing leases, and should then reflect the higher capital

values. The unprecedented appreciation in capital values demonstrates that investors are willing to pay high

prices, recognising that KL’s office properties are still among the cheapest in Southeast Asia, and that there is

significant further potential for Malaysia’s office sector.

Demand for office space should continue to rise in 2008 as long as the services sector continues to record steady

growth on the back of increasing construction activities and higher global electronics demand. The services sector

is expected to grow by 8.6% in 2008.

Prospects for the office sector are good as interest in investment grade offices from foreign investors and

institutions continues to be strong. Tight supply coupled with healthy demand augurs well for the prime office

market in the immediate term.


Industrial Sector

Together, the industrial units in Selangor and Johor accounted for 51.6% to the total market share. In terms of total

incoming supply, Selangor lead the rest of the state contributing 43.1% of the total for the third quarter of 2007.

The transaction of industrial properties accounted for less than 5% of total transactions every quarter, with the

second and third quarters accounting for 4.2% and 3.7% respectively. However, from the second to the third

quarters, the transaction for industrial properties increased by 23%. The transaction of industrial properties worth

more than RM1 million (mainly detached factories/warehouses) also increased substantially, by 17% from the

second to the third quarters.

Transactions of detached factories/warehouses were especially active in the Petaling and Klang districts.

The number of transactions recorded within these districts was 51 and 21 respectively. Together, these 72

transactions accounted for about 78% of total transactions of that type within the state of Selangor. This is

almost double the figure of 35 transactions recorded in the third quarter of 2006.

The Petaling and Klang districts are where all of ARREIT’s industrial properties are located except the Permanis

Factory, which is in Hulu Langat. Hulu Langat ranks third in terms of the number of factory/warehouse transactions

for the third quarter of 2007. This demonstrates that ARREIT’s industrial properties are situated in favourable

industrial locations, which should deliver higher rentals and capital appreciation than other localities.

Hotel Sector

Nationwide, there are 2,184 hotels with 151,014 rooms, 26% of the hotels being 1 to 5 star. ARREIT’s two

hotels are in this category, and are both located in Kedah. In terms of tourist arrivals, Kedah (including Langkawi)

is Malaysia’s fifth most visited state/federal territory, the most popular being Kuala Lumpur. Kedah boasts no

recently-completed or upcoming hotels.

The Northern Corridor Economic Region (NCER), which was introduced in 2007, is a Government-initiated

programme that strategizes economic growth and income levels in the northern region. The participating states

are Perlis, Kedah, Penang and the north of Perak. The ‘Island Corridor’, which is part of the programme, covers

Pulau Pinang and Pulau Langkawi. Because of their international airports and seaports, these islands will focus

on both premier tourism activities and distribution services. ARREIT’s two hotels, Holiday Villa Alor Setar and

Holiday Villa Langkawi are located within this region and should benefit from its growth potential.

Generally, the occupancy rate of 3 to 5 star hotels nationwide increased to 68.7% for the third quarter of 2007,

up about 7% on the second quarter. Hotels in Kuala Lumpur performed best, with 5-star and 3-star hotels within

the city recording an average occupancy of 94.3% and 82.1% respectively. Since 2003, the number of tourist

arrivals and the average occupancy rate for 1 to 5 star hotels nationwide have been parallel.

The Government continually strives to raise the image of Malaysia as a quality, premier, value-for-money

destination. This requires support from the private sector to develop niche products that meet the demands of

high-end tourists. The Visit Malaysia year (VMM) campaign for 2007 exceeded expectations by attracting 20.7

million tourists, surpassing the Government target of 20.1 million. MAS Airlines and Air Asia helped contribute to

the success of VMM 2007 by adding more flights and charging affordable fares. Expenditure by tourists during the

campaign hit a record high of RM45.7 billion.



Over the years, tourist spending has been the main contributor to earnings in the services sector, averaging 45%

of gross receipts annually. Accommodation providers are the main beneficiaries from tourist expenditure, and the

VMM campaign year earned them RM17.4 billion as against only RM12.8 billion the year before.

Recognizing tourism as major source of foreign exchange earnings, the Government has allocated a further RM858

million for the sector under the 9th Malaysia Plan.

Education Sector

The education sector should benefit from the 2008 budget as the Government has allocated RM12 billion for the

implementation of various higher education projects which include rebranding community colleges, establishing

new ones, and intensifying collaboration with private companies.

For 2008, human capital development will remain a key focus in response to the increasing demand for skilled and

knowledge workers. Institutions of Higher Education must play their part in producing graduates to take up the

available jobs which, in 2007, amounted to some 11.8 million, a rise of 2% from 2006.

The Government has also encouraged private colleges to upgrade to university status as part of its effort to

boost education tourism and make Malaysia a recognized Education Hub in Southeast Asia by 2010.

(Source: JPPH Property Quarterly Market Report 2007, Star and NST publications, Chesterton Research Report and

Rahim & Co Publication)

DISTRIBUTION OF INCOME

The Board of Directors of the Manager declared and paid its first interim income distribution of RM4,360,800 on 16 October 2007, representing 2.37 sen per unit in respect of the period from 26 February 2007 to 30 June 2007.This distribution represents a 100% pay-out of the net income earned during the period and was approved byCIMB Trustee Berhad on 30 August 2007.

On 10 December 2007, the Board of Directors of the Manager announced a second interim income distributionamounting to RM5,179,416, representing 2.8149 sen per unit for the period from 1 July 2007 to 30 November2007. The entitlement date for this income distribution was 26 December 2007 which was two days prior to thelisting of new units on Bursa Malaysia Securities Berhad. CIMB Trustee Berhad approved the income distributionon 10 December 2007, concurrently with the date of the announcement, and payment was made on 25 January2008. The second income distribution represents 100% of distributable income for the period.

The Board of Directors of the Manager on 14 January 2008 announced the third interim income distribution of0.2563 sen per unit totalling RM1,106,071 for the financial period up to 31 December 2007. The entitlement datefor this income distribution was 28 January 2008 and payment will be made on 25 February 2008. The Trustee,CIMB Trustee Berhad, approved the income distribution on 14 January 2008 concurrently with the date ofannouncement. With this final income distribution, the Trust had distributed 100% of the total earnings aftertaxation for the financial period ended 31 December 2007. The dividend entitlement will rank pari-passu betweenthe initial unitholders and the new unitholders from the second capital injection.


Summary of distribution since ListingDPU/unit

First Interim Income Distribution 2.3700 senSecond Interim Income Distribution 2.8149 senProposed Third Interim Income Distribution 0.2563 sen

The total income distribution for the financial period ended 31 December 2007 amounting to RM10,646,287, of which RM382,960 was interest income. The total distribution of 5.4412 sen per unit represented an annualiseddistribution per unit of 6.5294 sen, which reflect an annualised yield of 6.90% based on the initial public offeringIPO price of RM0.94 per unit.

Breakdown of Unitholdings

The analysis of unitholdings of ARREIT as at 31 December 2007:

Unit Class No. of unitholders % No. of unitholding %

5,000 and below 897 70.91 1,867,000 0.435,001 – 10,000 131 10.36 1,111,300 0.2610,001 – 50,000 136 10.75 3,538,700 0.8250,001 – 500,000 71 5.61 12,616,400 2.92500,001 and above 30 2.37 412,419,791 95.57

1,265 100.00 431,553,191 100.00

There is no exercise to split unit being carried out during the financial period.

Directors Directors who have served since commencement are:

Independent DirectorsDirector Alternate Director

Tan Sri Datuk (Dr) Arshad bin Ayub (Chairman) -Datuk Mohamed Adnan bin Ali -Tuan Haji Ahmad Kamal bin Abdullah Al-Yafii(Re-designated from Non-Independent to Independent on 4 May 2007) -

Non-Independent DirectorsDirector Alternate Director

Dato’ Ahmad Rodzi bin Pawanteh Alina binti Hashim(Appointed on 4 May 2007)

Datuk Mohamed Azahari bin Mohamed Kamil (Managing Director) -Tai Siong Choi (Executive Director) -Tuan Haji Rozan bin Mohd Sa’at -Sharizad binti Jumaat (Executive Director) -Dato’ Dr. Mohd Irwan Serigar Abdullah -(Appointed on 29 November 2007)




Director’s Benefit

During the financial period ended 31 December 2007, no arrangement subsisted to which AmanahRaya-JMF Asset

Management Sdn Bhd is a party, with the object(s) of enabling the Directors of the Manager to acquire benefits by

means of the acquisition of units in ARREIT or any other body corporate.

For the financial period ended 31 December 2007, no Director of the Manager has received or become entitled to

receive any benefit by reason of a contract made by AmanahRaya-JMF Asset Management Sdn. Bhd. for ARREIT,

or a related corporation with the Director of the Manager or with a firm of which he is a member, or with a company

in which he has a substantial financial interest, except as disclosed in the notes to the financial statements.

Save as disclosed above, Directors of the Manager who held office at the end of the financial period under review

did not have any interest in the units of ARREIT.

Manager’s Remuneration

Pursuant to the Deed dated 10 October 2006, the Manager is entitled to receive from the Trust:

i. A base fee (exclusive of GST, if any) of up to a maximum of 1.0% per annum of the net asset value of ARREIT

calculated on a daily basis and payable to the Manager in monthly arrears.

ii. Any increase in the maximum permitted level of the Manager’s fee by way of approval from the Trustee and

Unitholders through a resolution of not less than two thirds of all Unitholders passed at the Unitholders’s

meeting.

The Manager has only been charging at the rate of 0.3% per annum of the Net Asset Value pursuant to the Initial

Public Offering’s Prospectus dated 26 January 2007. The Manager’s fees for the ten (10) months ended

31 December 2007 amounted to RM460,164. No soft commission was received by the Manager during the

financial period.

As per the Trust Deed Agreement, other expenses directly related and neccessary to the business and operation of

the trust are reimbursable to the manager.

Soft Commission

During the financial period 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 period ended 31 December

2007 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 ARREIT the Manager took reasonable steps:

a. To ascertain that proper action had been taken in relation to writing off bad debts and making allowance for

doubtful debts, to satisfy itself that there were no known bad debts and that provision need not be made for

doubtful debts; and


b. To ensure that any current assets which were unlikely to realise their values in the accounting records of

ARREIT in the ordinary course of business have been written down to an amount which they might be expected

to realise.

At the date of this report, the Manager is not aware of any circumstances:

a. Which would necessitate the writing off of bad debts or provision for doubtful debts; or

b. Which would render the values attributed to current assets in the financial statements of ARREIT

misleading; or

c. Which have arisen which render adherence to the existing method of valuation of assets or liabilities of

ARREIT misleading or inappropriate.

At the date of this report, there does not exist:

a. Any charge in the assets of ARREIT which has arisen since the end of the financial period which secures the

liability of any other person, except as disclosed in Note 8 to the financial statements; or

b. Any contingent liability of ARREIT which has arisen since the end of the financial period.

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 period which, in the opinion of the Directors of AmanahRaya-JMF

Asset Management Sdn Bhd, will affect the ability of ARREIT to meet its obligations as and when they fall due.

Other Statutory Information

The Directors of AmanahRaya-JMF Asset Management Sdn Bhd state that:

At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the

financial statements of ARREIT which would render any amount stated in the financial statements misleading.

In their opinion,

a. the results of the operations of ARREIT during the period under review were not substantially affected by any

item, transaction or event of a material and unusual nature; and

b. there has not arisen in the interval between the end of the period under review and the date of this report, any

item, transaction or event of a material and unusual nature likely to affect substantially the results of the

operations of ARREIT for the financial period in which this report is made.

FINANCIAL STATEMENT

68 AmanahRaya • REITEstablished in Malaysia

Holiday Villa Langkawi, Kedah

AmanahRaya • REIT 69Established in Malaysia

70 Statement by Directors of the Manager

71 Statutory Declaration

72 Report of the Trustee to the

Unitholders of AmanahRaya

Real Estate Investment Trust

73 Report of the Auditors to the

Unitholders of AmanahRaya

Real Estate Investment Trust

74 Balance Sheet

75 Income Statement

76 Statement of Changes in Net Asset Value

77 Cash Flow Statement

78 Notes to the Financial Statements


STATEMENT BY DIRECTORS OF THE MANAGER

In the opinion of the Directors, the financial statements set out on pages 74 to 94 have been drawn up in

accordance with the provisions of the Trust Deed dated 10 October 2006 and the Supplemental Trust Deed dated 4

January 2007, the Securities Commission’s 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 state

of affairs of AmanahRaya Real Estate Investment Trust as at 31 December 2007 and the results of its operations

and cash flows for the financial period from 26 February 2007 to 31 December 2007.

Signed on behalf of the Manager,

AmanahRaya-JMF Asset Management Sdn. Bhd.

In accordance with a resolution of the Directors of the Manager

Tan Sri Datuk (Dr) Arshad Ayub Datuk Mohamed Azahari bin Mohamed Kamil

Kuala Lumpur

Date: 6 February 2008


STATUTORY DECLARATION

I, TAI AI NGOH, being the officer of the Manager, AmanahRaya-JMF Asset Management 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 74 to 94, 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 in Kuala Lumpur in the Federal Territory

on 6 February 2008

Tai Ai Ngoh

Before me:

Commissioner for Oaths


REPORT OF THE TRUSTEE TO THEUNITHOLDERS OF AMANAHRAYA REAL ESTATE INVESTMENT TRUST (ESTABLISHED IN MALAYSIA)

We, CIMB Trustee Berhad, have acted as Trustee of AmanahRaya Real Estate Investment Trust (“ARREIT” or “Trust”)

for the financial period from 26 February 2007 to 31 December 2007. In our opinion and to the best of our

knowledge, AmanahRaya-JMF Asset Management Sdn. Bhd. (“the Manager”) has managed AmanahRaya Real

Estate Investment Trust in accordance with the limitations imposed on the investment powers of the Manager and

the Trustee under the Trust Deed dated 10 October 2006 and the Supplemental Trust Deed dated 4 January 2007,

other applicable provisions of the Trust Deed, the Securities Commission’s Guidelines on Real Estate Investment

Trusts, the Capital Markets and Services Act 2007 and other applicable laws during the financial period from 26

February 2007 to 31 December 2007.

We also confirm that the income distributions declared and paid during the financial period ended 31 December

2007 are in line with and are reflective of the objectives of ARREIT. Three (3) distributions have been declared for

the financial period ended 31 December 2007 are as follows:-

1. First interim income distribution of 2.3700 sen per unit paid on 16 October 2007;

2. Second interim income distribution of 2.8149 sen per unit paid on 25 January 2008; and

3. Proposed third interim income distribution of 0.2563 sen per unit payable on 25 February 2008.

We have also ensured the followings:

a. the procedures and processes employed by the Manager to value and price the units of ARREIT are adequate

and that such valuation/pricing is carried out in accordance with the Trust Deed, Supplemental Trust Deed

and other regulatory requirements; and

b. the creation of units are carried out in accordance with the Trust Deed, Supplemental Trust Deed and other

regulatory requirements.

For and on behalf of the Trustee,

CIMB TRUSTEE BERHAD (Company No. 167913 M)

KHOO LENG KEE

Chief Operating Officer

Kuala Lumpur, Malaysia



REPORT OF THE AUDITORS TO THEUNITHOLDERS OF AMANAHRAYA

REAL ESTATE INVESTMENT TRUST(ESTABLISHED IN MALAYSIA)

We have audited the financial statements set out on pages 74 to 94.

These financial statements are the responsibility of the Directors of AmanahRaya-JMF Asset Management Sdn. Bhd.

(“the Manager”) of AmanahRaya Real Estate Investment Trust.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to

report our opinion to you, as a body, in accordance with the Securities Commission’s 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.

We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by the Directors of the Manager, as well as evaluating the overall financial statements

presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements of AmanahRaya Real Estate Investment Trust have been properly drawn up

in accordance with the provisions of the Trust Deed dated 10 October 2006 and the Supplemental Trust Deed

dated 4 January 2007, the Securities Commission’s 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 state of affairs of AmanahRaya Real Estate Investment Trust as at 31 December 2007 and the results of

its operations and cash flows for the financial period from 26 February 2007 to 31 December 2007.

BDO Binder

AF : 0206

Chartered Accountants

NG CHEE HOONG

2278/10/08 (J)

Partner

Kuala Lumpur



BALANCE SHEETAS AT 31 DECEMBER 2007

As at 31.12.2007

Note RM

ASSETS

Non-current assets

Investment properties 4 645,520,000

645,520,000

Current assets

Trade and other receivables 5 85,613,677

Money market placement 6 41,079,733

Deposits placed with licensed financial institutions 7 17,310,494

Cash and bank balances 360,364

144,364,268

TOTAL ASSETS 789,884,268

LIABILITIES

Non-current liabilities

Borrowings 8 253,000,000

253,000,000

Current liabilities

Trade and other payables 9 125,631,330

Provision for income distribution 10 6,285,487

131,916,817

TOTAL LIABILITIES 384,916,817

NET ASSET VALUE (“NAV”) 404,967,451

FINANCED BY:

UNITHOLDERS’ FUND

Unitholders’ capital 11 404,967,105

Undistributed income 346

Total unitholders’ fund 404,967,451

NUMBER OF UNITS IN CIRCULATIONS (UNITS) 431,553,191

NAV PER UNIT (RM)

- before provision for income distributions 0.9530

- after provision for income distributions 0.9384

The accompanying notes form an integral part of the financial statements.


FOR THE FINANCIAL PERIOD FROM 26 FEBRUARY 2007 (DATE OF COMMENCEMENT) TO 31 DECEMBER 2007

INCOME STATEMENT

26.2.2007to 31.12.2007

Note RM

Gross revenue 12 19,272,059Property expenses 13 (728,823)

Net rental income 18,543,236Interest income 382,960

Total income 18,926,196

Trust expenses Manager’s fee 14 (460,164)Trustee’s fee 15 (61,356)Auditors’ remuneration (38,000)Tax agent’s fee (18,000)Administrative expenses (224,770)Interest expense 16 (7,477,273)

Total trust expenses (8,279,563)

Income before taxation 10,646,633Taxation 17 -

Net income for the financial period 10,646,633

Net income for the financial period is made up as follows:Realised 10,646,633Unrealised -

10,646,633

Earnings per unit (sen) 18- before manager’s fee 5.9330- after manager’s fee 5.6872

Net income distribution* 19

Sen per unit RM

- First interim income distribution paid on 16 October 2007 (Gross) 2.3700 4,360,800

- Second interim income distribution paid on 25 January 2008 (Gross) 2.8149 5,179,416

- Proposed third interim income distribution payable on 25 February 2008 (Gross) 0.2563 1,106,071

5.4412 10,646,287

* Withholding tax will be deducted for distributions made to the following types of unitholders;

Resident corporate - tax at prevailing rateResident non-corporate - withholding tax 15%Non-resident individual - withholding tax 15%Non-resident corporate - withholding tax 27%Non-resident institutional - withholding tax 20%

The accompanying notes form an integral part of the financial statements


STATEMENT OF CHANGES IN NET ASSET VALUE

Distributable

Undistributed Total

Unitholders’ Income unitholders’

Capital - realised fund

RM RM RM

At 26 February 2007 - - -

Operations for the financial period

ended 31 December 2007

Net income - 10,646,633 10,646,633

Increase in net assets resulting from operations - 10,646,633 10,646,633

Unitholders’ transactions

Proceeds from initial public offering 180,274,060 - 180,274,060

Listing expenses (Note 20) (8,006,955) - (8,006,955)

Proceeds from creation of units 232,700,000 - 232,700,000

Distribution to unitholders – Paid (Note 10) - (4,360,800) (4,360,800)

Distribution to unitholders – Provision (Note 10) - (6,285,487) (6,285,487)

Increase in net assets resulting from

unitholders’ transactions 404,967,105 (10,646,287) 394,320,818

At 31 December 2007 404,967,105 346 404,967,451

(Note 11)





CASH FLOW STATEMENT

26.2.2007to 31.12.2007

RM

Cash flows from operating activities

Income before taxation 10,646,633Adjustment for:-

Interest expense 7,477,273Interest income (382,960)

Operating income before working capital changes 17,740,946

Changes in working capital:-Increase in trade and other receivables (85,613,677)Increase in money market placement (41,079,733)Increase in trade and other payables 125,475,866

Net cash from operating activities 16,523,402

Cash flows from investing activitiesInterest received 382,960Purchase of investment properties (645,520,000)

Net cash used in investing activities (645,137,040)

Cash flows from financing activitiesDistribution paid to unitholders (4,360,800)Listing expenses (8,006,955)Proceeds from issuance of units 232,700,000Proceeds from borrowings 253,000,000Interest expense (7,321,809)

Net cash from financing activities 466,010,436

Net decrease in cash and cash equivalents (162,603,202)Cash and cash equivalents at date of commencement 180,274,060

Cash and cash equivalents at end of period 17,670,858

Cash and cash equivalentsCash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts:-

Cash and bank balances 360,364Deposits placed with licensed financial institutions 17,310,494

17,670,858



NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL

AmanahRaya Real Estate Investment Trust (“ARREIT” or “Trust”) is a Malaysian-domiciled real estate

investment trust constituted pursuant to the Trust Deed dated 10 October 2006 and the Supplemental Trust

Deed dated 4 January 2007 (collectively referred to “the Deed”) between AmanahRaya-JMF Asset Management

Sdn. Bhd. (the “Manager”) and CIMB Trustee Berhad (the “Trustee”). The Deed is regulated by the Capital

Markets and Services Act 2007, the Securities Commission’s Guidelines on Real Estate Investment Trusts, the

Listing Requirements of Bursa Malaysia Securities Berhad, the Rules of the Depository and taxation laws and

rulings. ARREIT 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.

ARREIT was listed on the Main Board of Bursa Malaysia Securities Berhad on 26 February 2007.

ARREIT is principally engaged in investment of a diverse portfolio of properties with the objective 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 period.

The registered office of the Trust is located at Level 15, Wisma AmanahRaya, No. 2, Jalan Ampang, 50450

Kuala Lumpur. The principal place of business of the Trust is located at Level 7 & 8, Wisma AmanahRaya,

No. 2, Jalan Ampang, 50450 Kuala Lumpur.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

2.1 Statement of compliance

The financial statements of ARREIT have been prepared in accordance with the provisions of the

Trust Deed dated 10 October 2006 and the Supplemental Trust Deed dated 4 January 2007, the

Securities Commission’s Guidelines on Real Estate Investment Trusts, applicable securities laws,

applicable approved Financial Reporting Standards (“FRS”) and accounting principles generally

accepted in Malaysia.

The Malaysian Accounting Standards Board (“MASB”) has issued a number of new and revised Financial

Reporting Standards that are effective for accounting periods beginning on or after 1 January 2006.

In this set of financial statements, ARREIT has adopted FRS 117, Leases and FRS 124, Related Party

Disclosures which are effective for annual periods beginning on or after 1 October 2006. The MASB has

also issued FRS 139, Financial Instruments: Recognition and Measurement but for which MASB has yet

to announce the effective date of this standard. ARREIT has not adopted FRS 139 and by virtue of the

exemption in paragraph 103AB of FRS 139, the impact of applying FRS 139 on its financial statements

upon first adoption of this standard as required by paragraph 30(b) of FRS 108, Accounting Policies,

Changes in Accounting Estimates and Errors is not disclosed.

The MASB also issued FRS 6, Exploration for and Evaluation of Mineral Resources and Amendment to FRS

119, Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures which will be effective

for annual periods beginning on or after 1 January 2007 and which is not applicable to ARREIT. Hence, no

further disclosure is warranted.


2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont’d

2.1 Statement of compliance cont’d

At the date of authorisation of these financial statements, the following FRS, Amendments to FRS and

Issues Committee (“IC”) Interpretations were issued. The Trust has not elected to early adopt them.

• FRS 107: Cash Flow Statements

• FRS 111: Construction Contracts

• FRS 112: Income Taxes

• FRS 118: Revenue

• FRS 119: Employee Benefits

• FRS 120: Accounting for Government Grants and Disclosures of Government Assistance

• FRS 126: Accounting and Reporting by Retirement Benefit Plans

• FRS 129: Financial Reporting in Hyperinflationary Economies

• FRS 134: Interim Financial Reporting

• FRS 137: Provision, Contingent Liabilities and Contingent Assets

• Amendment to FRS 121: The Effects of Changes in

Foreign Exchange Rates – Net Investment in a Foreign Operation

• IC Interpretation 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities

• IC Interpretation 2: Member’s Shares in Co-operative Entities and Similar Instruments

• IC Interpretation 5: Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation Funds

• IC Interpretation 6: Liabilities arising from Participating in

a Specific Market – Waste Electrical and Electronic Equipment

• IC Interpretation 7: Applying the Restatement Approach under

FRS 129 – Financial Reporting in Hyperinflationary Economies

• IC Interpretation 8: Scope of FRS 2

The abovementioned FRS, Amendments to FRS and Issues Committee (“IC”) Interpretations will become

effective for financial statements covering periods beginning on or after 1 July 2007.

The adoption of the above is not expected to have any significant financial impact on the Trust’s financial

statements upon their initial application.

2.2 Basis of measurement

The financial statements of the Trust have been prepared under the historical cost convention unless

otherwise indicated in the significant accounting policies.

2.3 Functional and presentation currency

The financial statements are presented in Ringgit Malaysia, which is the Trust’s functional currency.

2.4 Use of estimates and judgements

The preparation of financial statements requires the Directors of the Manager to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts

of assets, liabilities, income and expenses.


2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont’d

2.4 Use of estimates and judgements cont’dAlthough these estimates and assumptions are based on the Manager’s best knowledge of currentevents and actions, actual results may ultimately differ from these estimates.

Revisions to accounting estimates are recognised in the period which the estimate is revised and in anyfuture periods affected.

The estimates and underlying assumptions are assessed on an ongoing basis.

2.4.1 Judgement made in applying the accounting policiesJudgements have been made by the Directors of the Manager in applying the Trust’s accountingpolicies. Amongst others, the classification of the sale and leaseback transactions entered into in respect of investment properties recorded in Note 4 may have significant effect on the amounts recognised in the financial statements. Judgement is required to be made inclassification of the said transactions. These leases have been classified as the Trust’sinvestment properties by the Trust, as the lessee has transferred substantially all the risks and rewards incidental to ownership to the Trust and the lessee has an option to buyback the properties upon the expiry of the lease period, at purchase price equivalent to the prevailing market value of the properties at that time.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies set out below have been applied consistently to the period presented inthese financial statements:

3.1 Investment propertiesInvestment properties consist of freehold land, leasehold land and buildings held for investmentpotential and rental income.

Investment properties are measured initially at cost, including transaction costs. The carrying amountincludes the cost of replacing part of an existing investment property at the time that cost is incurred ifthe recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property.

Subsequent to initial recognition, investment properties are stated at fair value, which reflects marketconditions at the balance sheet date. Gains or losses arising from changes in the fair values ofinvestment properties are included in the income statement in the year which they are arise.

Investment properties are derecognised either when they have been disposed of or when the investmentproperty is permanently withdrawn from use and no future economic benefit is expected from itsdisposal. Any gains or losses on the retirement or disposal of an investment property are recognised inthe income statement in the year of retirement or disposal.

3.2 Financial instrumentsFinancial instruments are classified as liabilities or equity in accordance with the substance of thecontractual arrangement. Interest, dividends and gains and losses relating to a financial instrumentclassified as a liability, are reported as expense or income. Distributions to holders of financialinstrument classified as equity are charged directly to equity. Financial instruments are offset when theTrust has legally enforceable right to offset and intends to settle either on a net basis or to realise theasset and settle the liability simultaneously.

NOTES TO THE FINANCIAL STATEMENTS CONT’D


3. SIGNIFICANT ACCOUNTING POLICIES cont’d

3.2 Financial instruments cont’d

3.2.1 ReceivablesTrade and other receivables are initially recognised at their cost when the contractual right toreceive cash or another financial asset from another entity is established.

Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts.

3.2.2 Cash and cash equivalentsCash and cash equivalents consist of cash and bank balances and deposits placed withlicensed financial institutions which are subject to insignificant risk of changes in value.

3.2.3 PayablesPayables are measured initially and subsequently at cost. Payables are recognised when thereis a contractual obligation to deliver cash or another financial asset to another entity.

3.2.4 BorrowingsBorrowings are stated at amortised cost with any difference between cost and redemption valuebeing recognised in the income statement over the period of the borrowings using the effectiveinterest method.

3.3 Income taxIncome tax on profit or loss for the financial period comprises current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of taxable profit for the financialperiod, and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for under the liability method in respect of all temporary differences between thecarrying amounts of assets and liabilities at the balance sheet date and their related tax bases.Temporary differences are not recognised for the initial recognition of assets or liabilities that at the timeof the transaction affects neither accounting nor taxable profit. Deferred tax is measured at the tax ratesthat are expected to be applied to the temporary differences when they reverse, based on the laws thathave been enacted or substantively enacted at the balance sheet date.

Deferred tax asset is recognised only to the extent that it is probable that taxable profit will be availableagainst which the deductible temporary differences, unabsorbed tax losses and unutilised capitalallowances can be utilised.

Deferred tax is recognised in the income statement, except when it arises from a transaction which isrecognised directly in equity, in which case the deferred tax is also charged or credited directly in equity.

3.4 Provisions and contingent liabilitiesA provision is recognised when it is probable that an outflow of resources embodying economic benefitswill be required to settle a present obligation (legal or constructive) as a result of a past event and areliable estimate can be made of the amount.



3. SIGNIFICANT ACCOUNTING POLICIES cont’d

3.4 Provisions and contingent liabilities cont’dProvision for income distribution is recognised when any distribution is declared, determined or publiclyrecommended by the Directors of the Manager and approved by the Trustee but not distributed at thebalance sheet date.

A contingent liability is disclosed, unless the possibility that an outflow of resources embodyingeconomic benefits is remote except for cases where the amount involved is material and the Directors ofthe Manager are of the opinion that disclosure is appropriate.

3.5 Revenue recognitionRevenue is recognised when it is probable that the economic benefits will flow to the Trust and therevenue can be reliably measured.

3.5.1 Rental incomeRental income is recognised in the income statement as they accrue over the period of the rental.

3.5.2 Interest incomeInterest income is recognised in the income statement as it accrues, taking into account the effective yield on the assets.

3.6 Expenses

3.6.1 Property expensesProperty expenses consist of property management fees, quit rents, assessment, and otheroutgoings in relation to investment properties where such expenses are the responsibilities ofthe Trust. Property management fees are recognised on an accrual basis.

3.6.2 Interest expenseAll borrowing costs are recognised in the income statements using the effective interestmethod, in the period in which they are incurred.

3.6.3 Establishment and issue expensesEstablishment expenses represent expenses incurred in establishing and listing the Trust andissue expenses relate to expenses incurred in the issuance and placement of additional units inthe Trust. These expenses are deducted directly against unitholders’ capital.

3.6.4 Manager’s and Trustee’s feesThe Manager’s and Trustee’s fees are recognised on an accrual basis.


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4. INVESTMENT PROPERTIES cont’d

The title deeds of certain properties are pending transfer to the name of the trustee or issuance by the relevant authority.

Certain properties are charged to financial institutions for banking facilities granted to ARREIT.

All investment properties are leased / rented to third parties except for Wisma AmanahRaya which is leased tothe holding company of the Manager.

Investment properties leases out with different tenure of leases ranging between 6 to 15 years. Twelve of theproperties contain an initial non-cancellable period of 3 years to 15 years (Note 27). Subsequent renewals arenegotiated with the lessees. No contingent rents are charged.

The fair value of the investment properties as at 31 December 2007, were derived from the Directors’assessment based on indicatives value obtained from latest valuation conducted by independentprofessional valuers.

5. TRADE AND OTHER RECEIVABLES

31.12.2007RM

Trade receivables 461,562Other receivables, deposits and prepayments 85,152,115

85,613,677

Trade receivables represent unpaid rental income as at 31 December 2007.

Included in other receivables is an amount of RM85,000,000 representing the additional facility drawndownduring the financial period but held in trust in the stakeholders account. An amount of RM81,251,198 hasbeen disbursed on 3 January 2008 to vendor being final payment for balance of purchase price of SEGICampus College, Kota Damansara. The remaining balance amounting to RM3,748,802 is for the purpose ofcapital expenditure of the properties which will increase the net lettable area and the rental income.

6. MONEY MARKET PLACEMENT

31.12.2007RM

Security deposits placed with ITA-ARB (Note 23) 40,325,454Security deposit placed with licensed financial institution 754,279

41,079,733

Money market placement consists of security deposits received from Lessees which are placed into theInstitutional Trust Account of Amanah Raya Berhad (“ITA-ARB”) and licensed financial institution with interest rates ranging from 3.5% to 5.5% per annum (Note 9).

In accordance to the lease agreements, Lessees will be entitled to the interest earned from money marketplacement. Certain amount due from Lessees will be deducted by the Trust directly from this money marketplacement in the event of default or arrears in rental payment within stipulated period in the lease agreementfrom the date of rental payment due or whereby any early termination occurred by the Lessees.



7. DEPOSITS PLACED WITH LICENSED FINANCIAL INSTITUTIONS

The deposits were placed with licensed financial institutions at interest rates ranging from 3.00% to 3.52% per annum.

8. BORROWINGS

31.12.2007RM

Non current:Term loan – secured 253,000,000

The term loan facilities have tenures of four (4) years and shall be repayable in one lump sum on 28 February2011. The term loans bear fixed interest ranging from 4.50% to 5.25% per annum. The proceeds from the termloan are mainly used for the purpose of financing the acquisition of the properties as disclosed in Note 4 tothe financial statements.

The term loans are secured by way of legal charge on certain properties of the Trust.

The term loans interest is payable on monthly basis.

9. TRADE AND OTHER PAYABLES

31.12.2007RM

Trade payables (Note a) 125,926Other payables and accrued expenses (Note b) 83,760,391Rental deposits (Note c) 41,745,013

125,631,330

a. Included in trade payables are amount due to the Manager and the Trustee amounting to RM61,549.b. Included in the other payables and accrued expenses is an amount due to vendor of RM81,251,198 for

the purchase of SEGI Campus College at Kota Damansara which had been fully settled on 3 January 2008. c. Included in rental deposits are security deposits of RM41,079,733 received from Lessees which are

placed with financial institutions and Amanah Raya Berhad-Institutional Trust Account as disclosed inNote 6 to the financial statements.

10. PROVISION FOR INCOME DISTRIBUTION

31.12.2007RM

At 26 February 2007 (date of commencement) -Provision made during the period 10,646,287Distribution paid during the period (4,360,800)At 31 December 2007 6,285,487

During the financial period ended 31 December 2007, the Manager proposed a second interim income

distribution of 2.8149 sen per unit totalling RM5,179,416 paid on 25 January 2008 and announced a third

interim income distribution of 0.2563 sen per unit totalling RM1,106,071 payable on 25 February 2008.


11. UNITHOLDERS’ CAPITAL

31.12.2007Authorised: Number of unitsAt 26 February 2007 (date of commencement) 184,000,000Created during the period 247,553,191At 31 December 2007 431,553,191

31.12.2007Issued and fully paid: RMAt 26 February 2007 (date of commencement) -Issue of new units:

128,801,000 units of RM1.00 each for purchase of properties 128,801,00045,999,000 units of RM0.94 each 43,239,0609,200,000 units of RM0.895 each 8,234,000Listing expenses (Note 20) (6,091,000)

Additional issuance and placement of units:148,617,021 units of RM0.94 each for purchase of properties 139,700,00098,936,170 units of RM0.94 each 93,000,000Listing expenses (Note 20) (1,915,955)At 31 December 2007 404,967,105

As at 31 December 2007, the Manager and Directors of the Manager did not hold any units in ARREIT.However, parties related to the holding company of the Manager held units in ARREIT as follows:

Number of Units HeldName Direct % Indirect %Kumpulan Wang Bersama 248,847,691 57.66 - -ARSM Trust Fund 2,036,600 0.47 - -

250,884,291 58.13 - -

12. GROSS REVENUE

26.2.2007 to31.12.2007

RMRental income 19,026,194Car park income 245,865

19,272,059

13. PROPERTY EXPENSES

26.2.2007 to31.12.2007

RMAssessment and quit rent 295,633Service contracts and maintenance 265,057Property management fees 140,000Insurance 21,133Others 7,000

728,823



13. PROPERTY EXPENSES cont’d

The Property Manager, Malik & Kamaruzaman Property Management, is entitled to a property management

fees in respect of the management of the investment properties owned by ARREIT as provided in the Trust

Deed. The fee is 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

Commission’s Guidelines on Real Estate Investment Trusts. The property management fees are payable

monthly in arrears with permissible discounts.

14. MANAGER’S FEES

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 ARREIT. The Manager’s fee is payable in arrears, calculated and accrues daily. However, the

Manager has only been charging at the rate of 0.3% per annum of the Net Asset value pursuant to Initial

Public Offering’s Prospectus dated 26 January 2007. The Manager’s fees for ten (10) months ended 31

December 2007 amounting to RM460,164.

15. TRUSTEE’S FEES

Pursuant to the Trust 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 Trustee’s fee is payable in arrears, calculated and accrued on daily. Total trustee’s fee

of RM61,356 had been paid for the financial period ended 31 December 2007.

16. INTEREST EXPENSE

26.2.2007 to

31.12.2007

RM

Interest on term loan 7,477,273

17. TAXATION

The Trust distributed 100% of the distributable income to its unitholders, which is exempted from tax

pursuant to Section 61A(1) of Income Tax Act, 1967 under the Finance Act, 2006, thus the Trust has not

provided any tax expense during the financial period.


17. TAXATION cont’d

A reconciliation between the applicable income tax expense and effective income tax expense of the Trust isas follows:

26.2.2007 to31.12.2007

RM Current tax expense -

Reconciliation of effective tax expenseIncome before taxation 10,646,633

Income tax using Malaysian tax rate @27% 2,874,591Non deductible expenses 91,921 Effect of interest income not subject to tax (103,399)Effect of income distribution exempted from tax (1,000,491)Utilisation of capital allowances (1,862,622)Tax expense -

18. EARNINGS PER UNIT

The earnings per unit before Manager’s fee of 5.9330 sen is calculated based on the net income after taxationof RM11,106,797 for the financial period to the weighted average number of units in circulation during thefinancial period of 187,204,572 units.

The earnings per unit after Manager’s fee of 5.6872 sen is calculated based on the net income after taxationof RM10,646,633 for the financial period to the weighted average number of units in circulation during thefinancial period of 187,204,572 units.

19. DISTRIBUTIONS TO UNITHOLDERS

26.2.2007 to31.12.2007

RMDistributions to unitholders are from the following sources:Gross rental income 19,272,059Interest income – tax exempted 382,960

19,655,019Expenses (9,008,386)

10,646,633

Total income distribution 10,646,287Gross provision for distribution per unit (sen) 5.4412*Net provision for distribution per unit (sen) 5.4412*

* Annualised distribution per unit is 6.5294 sen and annualised yield based on the closing price of RM0.99 on31 December 2007 is 6.60%.



19. DISTRIBUTIONS TO UNITHOLDERS cont’d

The total income distribution for the financial period ended 31 December 2007 amounting to RM10,646,287of which RM382,960 is interest income representing 0.0887 sen per unit.

The total actual distribution paid and payable during the financial period are:

Sen per unit RM- First interim income distribution paid on 16 October 2007 (Gross) 2.3700 4,360,800- Second interim income distribution paid on 25 January 2008 (Gross) 2.8149 5,179,416- Proposed third interim income distribution payable on 25 February 2008 (Gross) 0.2563 1,106,071

5.4412 10,646,287

* Withholding tax will be deducted for distributions made to the following types of unitholders;

Resident corporate - tax at prevailing rateResident non-corporate - withholding tax 15%Non-resident individual - withholding tax 15%Non-resident corporate - withholding tax 27%Non-resident institutional - withholding tax 20%

20. LISTING EXPENSES

26.2.2007 to31.12.2007

RMBrokerage and commissions 3,906,784Professional fees 2,568,233Miscellaneous expenses 1,531,938

8,006,955

At 31 December 2007, an amount of RM1,915,955 (Note 11) is due to holding company of the Manager. Thisamount is interest free and without fixed term of repayment.

21. PORTFOLIO TURNOVER RATIO

26.2.2007 to31.12.2007

(Times)Portfolio Turnover Ratio (“PTR”) (times) 1.78

The calculation of Portfolio Turnover Ratio (“PTR”) is based on the average of total acquisitions and totaldisposals of investment in ARREIT for the period ended 31 December 2007 to the average net asset valueduring the period calculated on a daily basis.

Since the basis of calculating PTR may vary among real estate investment trusts, comparison of PTR of ARREITwith other real estate investment trusts may not be an accurate comparison.


22. MANAGEMENT EXPENSE RATIO

26.2.2007 to31.12.2007

%Management expense ratio (“MER”) 0.44

The calculation of the MER is based on the total expenses of ARREIT incurred, including Manager’s fees,Trustee’s fees, audit fees, tax agent’s fees and administrative expenses, to the average net asset value of theTrust during the financial period calculated on a daily basis.

Since the basis of calculating MER may vary among real estate investment trusts, comparison of MER ofARREIT with other real estate investment trusts may not be an accurate comparison.

23. TRANSACTIONS WITH COMPANY RELATED TO THE MANAGER

26.2.2007 to31.12.2007

RM

Acquisition cost of properties paid to holding company 476,550,000of the Manager [Part of the acquisitions costs are satisfied by the issuance of 277,417,021 units (“Consideration Units”)to Kumpulan Wang Bersama at an issue price of RM1.00 per unit for first tranche representing 128,800,000 units and RM0.94 per unit for second tranche representing 148,617,021 units].

Issuance of units to holding company of the Manager 268,500,000Rental received and receivable from holding company of the Manager 4,554,636Security deposit from Lessees placed with holding company of the Manager (Note 6) 40,325,454

The above transactions have been entered into in the normal course of business and have been establishedon terms and conditions that are not materially different from these obtainable in transactions with unrelatedparties.

24. TRANSACTIONS WITH BROKERS/DEALERS

There were no transactions made with brokers/dealers during the financial period.

25. FINANCIAL INSTRUMENTS & RISK MANAGEMENT

Financial risks management objectives and policies

Exposure to credit, interest rate and liquidity risk arises in the normal course of ARREIT’s business. ARREIT has

written risk management policies and guidelines which sets out its overall business strategies and its general

risk management philosophy.



25. FINANCIAL INSTRUMENTS & RISK MANAGEMENT cont’d

Credit risk

At balance sheet date, there were no significant concentrations of 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 & monitoring guidelines. The maximum exposure to credit risk is represented by the

carrying amount of financial assets.

Interest rate risk

Trust’s exposure to fluctuation in interest rates relates primarily to interest-earning financial assets and

interest–bearing financial liabilities. Interest rate risk is managed by the Trust 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. The Trust seeks to invest cash assets safely and profitably with placement of such

assets with creditworthy licensed banks and financial institutions.

Liquidity risk

The Manager monitors and maintains a level of cash and cash equivalents and bank facilities deemed

adequate by management to finance the Trust’s operations and to mitigate the effects of fluctuations in cash

flows. In addition, the Manager also monitors and observes the Securities Commission’s Guidelines on Real

Estate Investment Trusts concerning limits on total borrowings.

Effective interest rates and re-pricing analysis

In respect of interest-earning financial assets and interest-bearing liabilities, the following table indicates

their average effective interest rates at the balance sheet date and the periods in which they mature:

2007

AVERAGE

EFFECTIVE WITHIN 2 – 5 AFTER

INTEREST RATE TOTAL 1 YEAR YEARS 5 YEARS

% RM RM RM RM

Financial assets

Deposits placed with 3.00 - 3.52 17,310,494 17,310,494 - -

licensed banks

Financial liabilities

Long term borrowings 5.30% 168,000,000 - 168,000,000 -

(first injection)

Long term borrowings 3.89% 85,000,000 - 85,000,000 -

(second injection)


25. FINANCIAL INSTRUMENTS & RISK MANAGEMENT cont’d

Fair value of recognised financial instruments

The carrying amounts of the financial assets and liabilities of the Trust are approximate to their fair values due

to the relatively short term nature of these financial instruments except as set out below:

2007 2007

Carrying Fair

amount value

RM RM

Term loans 253,000,000 227,412,829

Fair value is determined using estimated future cash flows discounted using market related rate for a similar

instrument at the balance sheet date. The interest rate used to discount the estimated cash flow is 7%.

26. COMPARATIVE FIGURE

There are no comparative figures presented as this is the first set of financial statements prepared by

the Trust.

27. OPERATING LEASES

Leases whereby ARREIT is the Lessor

The Trust leases out its investment property with different tenure of leases (Note 4). The future minimum

lease payments under non-cancellable leases are as follows:

26.2.2007 to

31.12.2007

RM

Not later than one year 42,644,953

Between two to five years 169,989,554

Later than five years 187,663,797

400,298,304



28. CONTINGENT ASSETS

Since the inception of the ARREIT, the Manager has received a rental deposit from tenants by way of bank

guarantee letter which are contracted to but not recognised for in the financial statements as follows:

Amount

Tenants Property RM Remarks

SEG International Berhad SEGi College, 9,148,500 Equivalent to three

Subang Jaya (3) years rental

SEGi Campus College, 20,880,000 Equivalent to two

Kota Damansara (2) years rental

Block A & B, 2,412,000 Equivalent to two

South City Plaza (2) years rental

Silver Bird Group Berhad Silver Bird Factory/ 7,296,000 Equivalent to one

Industrial Complex (1) year rental

TOTAL 39,736,500

The bank guarantees are unconditional, irrevocable and guaranteed to be paid to ARREIT in the event of

default of the lease agreement by the Lessees.

29. SEGMENTAL REPORTING

As the principal activity of ARREIT is to invest in properties with the primary objective to generate rental

income, there are no risk and returns distinguishable between business and geographical segments.

No segmental reporting is thus presented.

30. AUTHORISATION FOR ISSUE OF FINANCIAL STATEMENTS

These financial statements of the Trust for the financial period ended 31 December 2007 were authorised

for issue by the Board of Directors of the Manager, AmanahRaya-JMF Asset Management Sdn. Bhd. on

6 February 2008.


UNITHOLDERS’ STATISTICS

Analysis of Unitholdings

Distribution of Unitholders as at 31 December 2007

Unit Class No. of unitholders % No. of unitholding %

Less than 100 2 0.16 100 0.00

100 – 1,000 419 33.12 394,000 0.09

1,001 – 10,000 607 47.98 2,584,200 0.60

10,001 – 100,000 170 13.44 6,570,100 1.52

100,001 and above 67 5.30 422,004,791 97.79

1,265 100.00 431,553,191 100.00

There is no exercise to split units being carried out during the financial period.

Classification of Unitholders as at 31 December 2007

No. of Holders No. of securities hold

Malaysian Foreign Malaysian Foreign

Bumiputra Non- Bumiputra Non-

Category of Unitholder Bumiputra Bumiputra

1. Individual 269 802 7 1,998,700 7,744,200 118,000

2. Body Corporate

a. Banks/finance 1 3 - 18,010,600 468,700 -

companies

b. Investments trust/ - - - - - -

foundation/

charities

c. Other types 2 14 - 1,002,000 30,528,000 -

of companies

3. Government agencies/ - - - - - -

Institutions*

4. Nominees 93 36 38 258,433,891 16,235,500 97,013,600

365 855 45 279,445,191 54,976,400 97,131,600

Thirty Largest of Unitholders as at 31 December 2007

Unitholders No. of unit Percentage

1. Amanah Raya Nominees (Tempatan) Sdn Bhd 248,847,691 57.66%

- Kumpulan Wang Bersama

2. Cartaban Nominees (Asing) Sdn Bhd 38,295,000 8.87%

- Royal Bank of Scotland Plc

3. Aseambankers Malaysia Berhad 18,010,600 4.17%

- CLR (E) for AmanahRaya-JMF Asset Management Sdn Bhd*


UNITHOLDERS’ STATISTICS CONT’D

Analysis of Unitholdings cont’d


4. HSBC Nominees (Asing) Sdn Bhd 17,500,000 4.06%

- ABN Amro Bank N.V. (SG Proprietary)

5. Kurnia Insurans (Malaysia) Berhad 12,000,000 2.78%

6. DB (Malaysia) Nominee (Asing) Sdn Bhd 10,000,000 2.32%

- Deutsche Bank AG London

7. Kurnia Insurans (Malaysia) Berhad 9,000,000 2.09%

8. Citigroup Nominees (Asing) Sdn Bhd 9,000,000 2.09%

- CB Spore GW for NTUC Income Insurance Co-Operative LTD (LIFEPAR)

9. Cartaban Nominees (Tempatan) Sdn Bhd 7,734,100 1.79%

- Petronas for Petronas Retirement Benefit Scheme


- Exempt An for American International Assurance Company Limited


- CB GW Spore for American International Assurance Co Ltd (SLF Par)

12. MCIS Zurich Insurance Berhad 4,250,000 0.98%


- Petronas for Petroliam Research Fund

14. Mayban Securities Nominees (Asing) Sdn Bhd 3,500,000 0.81%

- Exempt An for Aseambankers Malaysia Berhad (AmanahRaya REIT)


- Petroliam Nasional Berhad (Trading PF)

16. MCIS Zurich Insurance Berhad 2,250,000 0.52%

17. Amanah Raya Nominees (Tempatan) Sdn Bhd 2,036,600 0.47%

– For ARSM Trust Fund


- CBSGP GW for AIG International Funds-Singapore Bond Fund


- CB Spore GW for AIA Regional Fixed Income Fund


Analysis of Unitholdings cont’d



– CBHK PBGHK for Sable Investment Corporation

21. Johari Bin Mat 1,000,000 0.23%


- American Home Assurance Company


- CB SGP for AIG International Funds-Acorns of Asia Balanced Fund

24. SEG Equity Sdn Bhd 1,000,000 0.23%

25. HSBC Nominees (Tempatan) Sdn Bhd 1,000,000 0.23%

- HSBC (Malaysia) Trustee Berhad for Amanah Saham Sarawak

26. CIMSEC Nominees (Tempatan) Sdn Bhd 1,000,000 0.23%

- CIMB for Ahmad Bin Muhamed (PB)

27. State Insurance Brokers Sdn Bhd 1,000,000 0. 23%

28. Washington Square Investment Management (Asia Pacific) Ltd 1,000,000 0.23%

29. Cimsec Nominees (Tempatan) Sdn Bhd 992,000 0.23%

- CIMB for Mohamad Azmadi Bin Fadzil (PB)

30. Citigroup Nominees (Asing) Sdn Bhd 700,000 0.16%

- CB GW Spore for American International Assurance Co Ltd

(AIA Growth FD)

412,419,791 95.55

* This is a temporary account held by Aseambankers Malaysia Berhad to facilitate the sale transaction on behalf

of the fund manager’s client to ABN Amro Bank N.V. (SG Proprietary). The shares were credited within T+3 to

ABN Amro Bank N.V. (SG Proprietary) on 3 January 2008.

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