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Wednesday, July 22, 2009

Axis REIT on expansion trail to buy more properties

KUALA LUMPUR: Axis Real Estate Investment Trust (Axis REIT), which posted its best second-quarter results since listing, is on an aggressive expansion plan to inject more properties into the trust this year.

Net property income for its second quarter ended June 30 was up 15%, or RM12.54mil, compared with RM9.59mil in the previous corresponding period.

Stewart LaBrooy, chief executive officer-cum-executive director of Axis REIT Managers Bhd, which manages Axis REIT, said conditions were now “right” for selective acquisitions of properties in prime locations to be placed into the REIT.

“Up until October last year, we were conservative in our acquisition plans but conditions have improved significantly, which is why we are back on the acquisition trail,” he said at a briefing on the company’s results yesterday.

LaBrooy said with the FTSE Bursa Malaysia KLCI closing at an 11-month high of 1,110 points and the narrowing of the discount between market price and the net asset value of Axis REIT units, it was timely for a placement exercise to raise capital for property acquisition.

As at June 30, Axis REIT had 19 properties under its stable with assets under management worth about RM728mil and approved fund size of 255.9 million units.

“The placement of 51,180,200 new units is slated for this third quarter. We hope to raise a minimum of RM75mil, assuming Axis REIT’s share price at the time of placement is at least RM1.55,” LaBrooy said.

The REIT’s latest proposed acquisition is Axis Steel Centre, an industrial complex in Klang, Selangor, for RM65mil cash.

“It’s our second property purchased from a related party at a favourable discount to market price and it can accommodate more rental space, if renovated,” LaBrooy said.

He said Axis REIT had the option to acquire assets from the market or promoters, depending on the price and market condition.

“Who we buy the property from does not matter as long as the purchase is in the interest of our shareholders,” he noted.

On the target number of properties to be injected into the trust this year, LaBrooy said it depended on the funds raised.

Axis REIT Managers director Stephen Tew said on the promoters’ side, there could be three or four properties if funds were available to purchase them.

On the company’s good performance in tough times, Axis REIT Managers general manager (assets & lease management) David Abound said besides solid management and selection of assets purchase, the quality of clients as well as rental to a group of diverse sectors helped cushion the trust from any major fallout in payment from one sector.

Axis REIT’s unaudited gearing was 33.09% or RM242.5mil of its total asset value as at June 30.

By The Star

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