Thursday 28 Mar 2024
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KUALA LUMPUR (Aug 8): Axis REIT has paid RM18.5 million cash for an industrial facility in Senawang, Negeri Sembilan, which yields some 7.7% before financing costs.

In a statement today, its manager Axis REIT Managers Bhd (ARMB), said the reit’s trustee, RHB Trustees Berhad, had entered into a sale and purchase agreement with Gandour (Malaysia) Sdn Bhd to acquire the property which has a land area of 183,342 sq.ft comprising a three-storey office annexed with a 1.5-storey warehouse factory and other ancillary buildings.

The freehold property is located within the Senawang Industrial Park and currently tenanted to Nippon Wiper Blade (M) Sdn Bhd for a fixed 10-year lease which had commenced on 1 July 2016.  

"The starting net yield of the property before Islamic financing cost is at 7.7%," ARMB said, adding the acquisition price is below the RM21 million market price but did not elaborate.

The acquisition is expected to be completed by the end of 2018, and will increase the number of properties owned by Axis REIT to a total of 45 properties from the current 42, including two industrial facilities at i-PARK Iskandar Malaysia, Johor that are currently pending completion.

To complete the acquisition, ARMB intends to utilise its debt facility from Axis-REIT’s existing credit lines.

The proposed debt financing will increase Axis-REIT’s gearing ratio to 33.5% of audited total assets as at December 31, 2017 which is below the gearing limit of 50% prescribed by the Guidelines on Listed Real Estate Investment Trusts issued by the Securities Commission Malaysia on March 15, 2018, and which took effect on April 9, 2018.

ARMB chief executive officer-cum-executive director Leong Kit May said acquisitions made or completed in 2018 will provide the fund with a stable income stream and contribute positively towards its earnings.

"This is our third acquisition for the year, and we have one more in the pipeline, and two more pending completion by the end of 2018.”

Axis-REIT closed up one sen or 0.67% to RM1.51 for a market capitalisation of RM1.86 billion.

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