This article first appeared in The Edge Financial Daily on October 15, 2019

KUALA LUMPUR: Axis Real Estate Investment Trust (REIT) plans to buy a single-storey warehouse-cum-office building in Johor for RM65 million from Rancak Beta Sdn Bhd.

In a Bursa Malaysia filing yesterday, Axis REIT said the proposed purchase will be funded by existing bank financing. It will not assume any liabilities in the transaction.

The proposed debt financing will raise Axis REIT’s gearing to 38.7% of audited total assets as at Dec 31, 2018. The property, together with ancillary buildings, currently occupies a portion of leasehold land, with an unexpired 35 years and five months sub-lease term, the REIT said.

The property, within the Pelabuhan Tanjung Pelepas Free Trade Zone, is about 41km from Senai International Airport and 40km from the Port of Singapore Authority.

The lessee, Schenker Logistics (M) Sdn Bhd, is a one-stop logistics provider offering total integrated logistic services to local and global customers, and also one of Axis REIT’s existing top ten tenants in the portfolio in terms of revenue contribution to the fund.

On some 8.177-acre (3.31ha)land, the property has a net lettable area of 222,723.20 sq ft. Its net book value was RM34.88 million as at June 30, 2018. The proposed buy is only expected to contribute positively to Axis REIT’s earnings upon completion, targeted by the first half of 2020, Axis REIT said.