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Wednesday, July 22, 2009

Axis REIT again on the prowl

Axis Real Estate Investment Trust, which has just agreed to buy its first property this year, is in talks for another four buildings worth RM220 million.

They include logistic warehouses in Johor, Puchong and Petaling Jaya, said Stewart LaBrooy, chief executive officer of Axis REIT Managers Bhd, which manages the property trust.

Axis REIT plans to sell the maximum number of new units it can to private investors for the acquisitions since its debt-to-assets ratio is already close to the 50 per cent limit under the rules, leaving it little room to gear up further.

A REIT is only allowed to sell up to a fifth of its current units according to Securities Commission rules, LaBrooy said, which means that it may be able to raise about RM75 million from the private placement.

Axis REIT's unit price has risen 51 per cent this year to RM1.69 on Bursa Malaysia yesterday, outpacing the 29 per cent gain in the benchmark FTSE Bursa Malaysia KLCI.
"There could be a window of opportunity to place out new units in the third and fourth quarters this year," LaBrooy said during a media briefing in Kuala Lumpur yesterday.

"We had deferred the private placement earlier because we just couldn't do it when there was a huge disparity between the unit price and our net asset value. Now, it has narrowed," he added.

Axis REIT owns RM728 million of assets in Malaysia, ranging from offices and warehouses to logistic centres.

The property trust is back on the acquisition trail this week with the planned purchase of the RM65 million Axis Steel Centre in North Port, Klang, reflecting a marked change from the management's gloomy outlook early in the year.

The purchase is expected to bring its debt-to-assets ratio up to 38 per cent while adding 1.28 sen earnings per unit in the next financial year.

In addition, there are five more properties being groomed by its private equity fund, the bulk of which may be ready to be sold into the REIT next year, LaBrooy said.

"Six months ago, we thought we couldn't raise fresh money this year to buy assets. But things just happened suddenly and people are now talking about the green shoot.

"The bankers' strong support to our refinancing took us by surprise and our unit price has greatly improved as mutual funds like Amanah Saham are snapping up our units like crazy."

By Business Times (by Chong Pooi Koon)

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