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Thursday, July 25, 2019

Axis REIT expects 7% net yield for FY19

Bernama / Bernama
July 25, 2019 15:25 pm +08

KUALA LUMPUR (July 25): Axis Real Estate Investment Trust (Axis REIT) is expected to bag a decent seven per cent net yield for the financial year ending Dec 31, 2019 (FY19), should seven acquisitions at a cost of nearly RM250 million be completed in the second half of the year, as scheduled.

The acquisitions are two manufacturing facilities costing RM55.8 million in Nusajaya, two manufacturing facilities of RM55.8 million in Shah Alam, a manufacturing facility in Kota Kinabalu (RM66 million), a manufacturing facility in Nilai (RM50 million) and a RM20.5 million property in Bayan Lepas.

Axis REIT Managers Bhd chief executive officer and executive director Leong Kit May said once the seven acquisitions were completed by year-end, it would bring the total assets under management to RM3.2 billion from the current of RM2.9 billion.

“But every year, revaluation would be done at year-end. So, any revaluation adjustment would be captured in Q4 2019,” she told a media briefing, here today.

Axis REIT Managers Bhd is the manager of Axis REIT.

Leong said the seven acquisitions would be funded mostly via bank borrowings with potential placement.

“Our gearing stands at 38 per cent currently, which is quite healthy from the 50 per cent threshold set by the Securities Commission Malaysia,” she said, adding that the completion of the acquisitions would also improve the trust’s properties portfolio to 52 for FY19 from the current 45.

On the leasehold land in Batu Kawan of which Axis REIT had proposed to lease from Penang Development Corporation, to be developed and sub-lease to Federal Express Services (M) Sdn Bhd (FedEx), she expected once the acquisition was completed in 2020, it would generate a nine per cent net yield for the trust.

Moving forward, Leong said Malaysia’s real estate outlook remained resilient, particularly the industrial space due to the ongoing US-China trade war which had boosted the demand for the segment.

“We do see positive demand in the industrial space, and as such (the relocation of businesses) is happening and that will further drive the demand moving forward,” she said when asked if the demand was due to businesses relocation from China to Malaysia.

Meanwhile, real estate head Jackie Law said the demand for the company’s industrial space portfolio was overwhelming as they had been receiving enquiries every day, especially from e-commerce players and information technology start-ups.

She added that of its 45 properties, 34, which are industrial assets, were fully occupied as at June 30, 2019.

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