KUALA LUMPUR (April 23): Axis Real Estate Investment Trust (Axis REIT) is adding a freehold industrial property in Shah Alam, Selangor, which it is acquiring for RM87 million, to its portfolio.

The REIT, the first to be listed on Bursa Malaysia, said in a statement yesterday that this will raise its asset under management to RM2.64 billion.

Its trustee, RHB Trustees Bhd, inked a sale and purchase agreement with Teraju Sinar Sdn Bhd (TSSB) to acquire the asset, which comprises two adjoining parcels of land on which four warehouse blocks, a double-storey detached office building, a double-storey canteen building, and two guardhouses have been erected.

On completion of the acquisition, the asset will be leased back to TSSB for six years.

"The acquisition has a starting net yield of 7% before Islamic financing cost. The agreed lease rental of the property has a contractual step up of 10% on year four onwards," said Axis REIT in a press statement.

The property is located in the prime industrial hub of Section 28, Shah Alam where light terrace factories to heavy industry operators are situated, it said.

"This acquisition will strengthen our portfolio of industrial properties and it is expected to contribute positively to the earnings of the trust for the financial year ending Dec 31, 2018,” said Leong Kit May, chief executive officer of the REIT's manager, Axis Reit Managers Bhd.

The REIT will finance the buy via debt financing, which will raise the REIT's gearing ratio to 35.26% of audited total assets as at Dec 31, 2017, which it said is "below the gearing limit of 50% prescribed" by the Securities Commission Malaysia's REIT guidelines.

It expects to complete the acquisition in the second half of this year.

Axis REIT's units closed 2 sen or 1.45% higher at RM1.40 yesterday, for a market capitalisation of RM1.73 billion. — theedgemarkets.com

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