Axis REIT aims RM140m of new assets in 2020

It will focus on properties sought by the manufacturing, warehousing and logistics sector as there is a strong demand for them, says ARMB CEO


AXIS Real Estate Investment Trust (REIT) has identified RM140 million worth of new assets to buy this year, in an effort to expand its industrial properties portfolio.

It will focus on properties sought by the manufacturing, warehousing and logistics sector as there is a strong demand for them at the moment, Axis REIT Managers Bhd (ARMB) CEO Leong Kit May (picture) said.

“The company has already acquired seven properties worth RM288 million previously. Three of the acquisitions are expected to be completed within the first quarter of this year (1Q19).

“We are also actively looking around for RM140 million worth of REIT assets to be added into the portfolio,” she told reporters at a briefing on Axis REIT’s 4Q results in Kuala Lumpur yesterday.

The manager will maintain an “aggressive acquisition strategy”, focusing on well-located industrial properties with strong tenant profiles and covenant, she added.

This includes Grade A logistics and manufacturing facilities, retail warehousing in locations ideal for last-mile distribution, and office, business parks and industrial properties with potential for future enhancements.

“In 2019, our portfolio size increased by three to a total of 48 properties and registered a take-up rate of 96% on spaces expiring for 2019 with positive rental reversion of 2%,” Leong said.

The REIT announced eight property purchases last year, the most recent being a property in Bukit Raja, Klang, for RM37 million revealed in December.

It has also submitted a letter of offer for its maiden 144,000 sq ft property in Kota Kinabalu Industrial Park, Sabah, for RM60 million.

The REIT’s portfolio encompasses 48 properties located in the Klang Valley, Johor, Penang, Pahang, Negri Sembilan and Kedah.

On the property management outlook, Leong said Axis REIT is very upbeat on industrial assets, especially in the warehousing segment.

“With the growth of e-commerce, requirements for warehousing and logistics space will result in higher demand,” she said.

However, the oversupply in the office segment persists, though the REIT continues to enjoy good occupancy rates.

“Our Menara Axis occupancy rate improved to 78% (in 2019) from 68% in 2018. So, I think given the prime location of the property, it is still enjoying good marketability in terms of space,” Leong said.

The REIT recognised a 2% increase in average rental rates across its portfolio last year.

“It is also a factor of market conditions. I think to sustain a positive 2% rental rate reversion is very much achievable for 2020,” Leong stated.

For 4Q19 ended Dec 31, 2019, Axis REIT’s net property and investment income rose to RM148.68 million from RM87.85 million a year ago, mainly supported by the fair value gain of its investment properties of RM101.55 million.

For the full financial year (FY19), the REIT’s net property and investment income rose 27.6% to RM283.93 million from RM222.47 million the year before.

Distribution per unit amounted to 9.26 sen in FY19 against 8.74 sen in FY18.