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Monday, October 6, 2008

Axis to inject RM300mil assets over next two years

AXIS REIT Managers Bhd has lined up more than RM300mil worth of assets to be injected into Axis real estate investment trust (REIT) over the next two years.

According to Axis REIT Managers chief executive officer Stewart Labrooy, the group will be acquiring assets from developers or third parties, as well as tapping into its eight private equity assets.

The properties from its private equity fund comprise office, warehouse, industrial or showroom type properties. The first of the asset has been injected into Axis REIT recently at a cost of RM32mil, which was a discount of some 12.5% from the market value.

“We have proven that Axis REIT has the capability to undertake yield accretive acquisitions in the open market. Today we have committed to a portfolio of 21 properties of which 18 assets worth RM670mil have been concluded.

“We have pre-qualified three assets in Johor and the Klang Valley worth a total RM150mil and expect these acquisitions to be completed by year end,” Stewart told StarBiz, adding that Axis’ target to increase its asset base to RM1bil would be achievable next year.

He said besides resorting to bank borrowings, the group would also undertake equity raising exercises to raise capital to fund the acquisitions.

The private placement of 50 million new units at RM1.80 each in January has raised RM88mil. This has given the company the flexibility to pursue more aggressive yield accretive acquisitions without raising its gearing.

Axis REIT has been approved to issue another 51.18 million units valued at around RM82mil, which is equivalent to 20% of the approved fund size of 255.9 million units.

REITs in the country are allowed to gear up to 50% of their asset value but Axis REIT is sticking to its target of maintaining a gearing ratio of between 35% and 40%. Its current gearing ratio is about 39%.

An analyst with a local brokerage said the line up of strategic office cum industrial buildings would give a boost to Axis REIT’s income yielding potential.

“We continue to like Axis REIT for its ability to acquire yield-accretive properties and a proven track record in growing its property portfolio as well as its hands-on and experienced management.

“We maintain an outperform rating on the stock,” she said.

She added that industrial buildings, being location-centric within industrial hubs, offered better yields as they have single tenants and longer-term tenure of at least five years.

“Axis REIT can look forward to good rentals and long-term defensive earnings,’’ the analyst pointed out.

By The Star (by Angie Ng)

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