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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

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)

Sime Darby Property invests RM15mil to enhance security

PETALING JAYA: Sime Darby Property Bhd wants to change the concept of developing properties by putting safety and security as the top criteria to gain buyers’ confidence.

From left: Home Affairs Minister Datuk Seri Hishammuddin Tun Hussein, Deputy IGP Tan Sri Ismail Omar and Datuk Seri Ahmad Zubir Murshid viewing the closed circuit TV surveillance system after the launch of the Safe City Initiative on Tuesday

President and group chief executive Datuk Seri Ahmad Zubir Murshid said the group had so far invested about RM15mil to enhance the security and safety at its existing townships and would extend the concept to its other new township developments.

“Ara Damansara township will be the role model for this concept of security and safety and we plan to introduce this concept in our future developments,” he said yesterday at the launch of the Safe City Initiative and the launch of Ara Damansara police station.

Zubir said the group had invested about RM4mil alone for security and safety measures in Ara Damansara that included building the new police station, closed circuit television surveillance system, manned guard houses at each entry point and three cars for the police to do patrolling.

He added that in responding to the Government’s call to create a safer living environment for its citizens, Sime Darby Property was making an effort to transform Ara Damansara into one of the safest townships in the country.

On the group’s business performance this year, Zubir said it might not be as good as last year’s performance.

“Last year, the (high) price of crude palm oil (CPO) contributed strongly to the group. Nevertheless, this year, our other divisions will offset the low CPO price to achieve our expectation for this year,” he said.

On the group’s venture in Weifang prefecture in China, he said a team had been sent to do a study before drawing up a proper master plan.

“Initially, the size of this development project spanned about 700 sq km but our team found that it is actually about 100 sq km. It will be a mixed development project but we don’t know yet its gross development value at this moment,” he said.

It was reported last month that China had offered Sime Darby a multi-billion dollar property development project in the Weifang prefecture city in Shandong measuring 700 sq km.

By The Star

Rehda, MBAM appeal against stamp duty

KUALA LUMPUR: The Real Estate and Housing Developers’ Association Malaysia (Rehda) and Master Builders Association Malaysia (MBAM) are appealing against the Government’s recent decision to apply ad valorem stamp duty of 0.5% for second-tier private as well as Government contracts from RM10 previously.

In a statement, Rehda urged the Government to abolish this imposition as it was burdening members of the building fraternity, including contractors, consultants and developers.

President Datuk Ng Seing Liong said with the stamp duty of 0.5%, a construction contract of RM10mil would now attract ad valorem duty of RM50,000 while previously only a nominal duty of RM10 per document was imposed regardless of the contract amount.

“This would definitely push up building costs,” he said.

Rehda is asking the Government to consider exempting the imposition of the new stamp duty rate on all service agreements without security including consultancy, operation and maintenance contacts.

In a separate statement, MBAM president Ng Kee Leen said the duty was exorbitant as Construction Industry Development Board also imposed a levy of 0.125% on a construction contract.

“The ruling would cost the construction industry an additional RM300mil per annum, which is burdensome,” he said.

MBAM appealed to the Government to consider reverting to the old stamp duty of RM10.

By The Star

China builder to raise US$7b from share sale

BEIJING: The Chinese company that built the "Water Cube" swimming centre for the Beijing Olympics said yesterday it hopes to raise up to US$7.3 billion (US$1 = RM3.54) in the world's biggest initial public offering (IPO) since March 2008.

The decision to let China State Construction Engineering Corp proceed with such a huge IPO indicates regulators believe China's markets have regained their strength after a plunge last year that prompted a ban on new offerings.

China's main market index is up more than 75 per cent this year and was the world's best performer for the first half of 2009.

"There will be no problem selling all those shares in the current market mood," said Mao Nan, an analyst for Oriental Securities in Shanghai.

State Construction will offer 12 billion shares at 3.96 yuan to 4.18 yuan (1 yuan = RM0.53) each, the firm said in a statement through the Shanghai Stock Exchange. That would bring in 50.1 billion yuan, or about US$7.3 billion, if all shares sell at the highest price.

State Construction said earlier it hoped to raise 42.6 billion yuan. The increase might reflect increased confidence in the price Chinese investors are willing to pay.

Regulators banned new IPOs in September after the benchmark Shanghai Composite Index plunged more than 65 per cent from its October 2007 peak. Investors worried that new IPOs would flood the market and further depress prices.

The moratorium was lifted in June after a surge in stock prices amid massive government stimulus spending.

State Construction is China's biggest builder of housing and is known for the "Water Cube" and other showcase projects such as the futuristic state TV headquarters and China's tallest skyscraper, the 492m tall Shanghai World Financial Center.

Its IPO would be the world's biggest since Visa's US$19.7 billion listing in March 2008, according to financial data firm Dealogic. It would be China's biggest since PetroChina Ltd in October 2007 and the country's fourth-largest to date.

State Construction said last year it received approval for an IPO before the moratorium.