Axis REIT to acquire industrial property from Xin Hwa for RM75m

The property is located in the same row as its Kerry Warehouse


AXIS Real Estate Investment Trust (Axis REIT) has entered into a sale and purchase agreement with Xin Hwa Holdings Bhd’s unit, Xin Hwa Trading and Transport Sdn Bhd, to acquire land with buildings located in the Pasir Gudang Industrial Area, Johor, for RM75 million.

The property comprises two contiguous parcels of land totalling 6.57ha. Each parcel has a single-storey warehouse, a three-storey office annex and other ancillary buildings erected on it.

In a filing to Bursa Malaysia yesterday, Axis REIT Managers Bhd said RHB Trustees Bhd, the trustee for Axis REIT, had on its behalf signed a conditional agreement to buy the property, which is located in the same row as Axis REIT’s

Kerry Warehouse. “The proposed acquisition of the property is in line with the fund’s investment objectives and its growth strategy to provide unitholders with stable income distribution and to achieve growth in the net asset value per unit of Axis REIT, by acquiring high-quality, earnings accretive properties with strong recurring rental income.

“It will be accretive to Axis REIT’s distributable income. Furthermore, the proposed acquisition of the property would enable Axis REIT to strengthen its portfolio of industrial properties and is expected to benefit the fund in the long term,” the company said.

Axis REIT Managers CEO Leong Kit May said this is the second proposed acquisition for 2021.

“We like the property because of its long lease term of 10 years and this will improve the weighted average lease expiry of Axis REIT’s portfolio. Furthermore, the property sits on prime industrial land within Pasir Gudang Industrial Area and is located within the same row as Axis REIT’s Kerry Warehouse,” she said in a separate statement.

Due to its proximity to the Pasir Gudang Port and good all-round accessibility, coupled with good infrastructure in place, Pasir Gudang has traditionally been a sought-after industrial locality in this part of Johor for medium and heavy industries.

Axis REIT Managers said for the acquisition, it will utilise financing facility of about RM75 million from its existing credit line, thus increasing Axis REIT’s financing ratio to 34.52% of audited total assets as at Dec 31, 2020.

This is below the gearing limit of 50% prescribed by the Guidelines on Listed REITs issued by the Securities Commission Malaysia on March 15, 2018.