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Wednesday, December 25, 2019

Axis REIT buys Shah Alam industrial land for RM37mil

PROPERTY
Wednesday, 25 Dec 2019

Axis REIT Managers Bhd chief executive officer and executive director Leong Kit May(pic) said the property is strategically located in the Klang Valley that is well facilitated by an existing comprehensive transportation network, which includes the Federal Highway and New Klang Valley Expressway.

PETALING JAYA: Axis Real Estate Investment Trust (Axis REIT) has acquired 5.6 acre industrial land close to Shah Alam in Selangor for RM37mil.

In a statement, Axis REIT said its trustee, RHB Trustees Bhd, had entered into a sale and purchase agreement to acquire the property within the Bukit Raja Industrial Area from Lion Steelworks Sdn Bhd.

“The Bukit Raja industrial area is an established industrial zone which is easily accessible via major highways.”

The company said the land consists of two blocks of detached factory and a double-storey office building annexed, plus other ancillary structures.

“The net lettable area is 149,605 sq ft. The land’s 99-year leasehold will expire in 2088. As of Dec 24,2019, the property is fully-occupied where the factory is being used by Lion Steelworks to manufacture and distribute office equipment, security equipment and steel-related products.

“Upon the completion of the acquisition, the property will be leased by Lion Steelworks.

“The tenancy is for a fixed period of two years and five months from the tenancy agreement’s commencement date, with an option to renew for another two terms of one year each.”

Upon commencement of the tenancy, Lion Steelworks will pay the rental for the first 24 months of the initial term amounting to RM5.4mil (RM225,000 per month) to Axis REIT.

It said the acquisition would be funded via Axis REIT’s existing bank financing.

Axis REIT said the proposed debt financing would increase its gearing ratio to 38.1% of the audited total assets as at Dec 31,2018, which is below the gearing limit of 50%.

“The proposed acquisition is expected to contribute positively to Axis REIT’s earnings for the financial year ending Dec 31,2020 as the acquisition is expected to be completed by the first quarter of 2020.

“The property’s market value is RM39mil, as appraised by PA International Property Consultants Sdn Bhd, an independent firm of registered valuers, in its valuation report dated Oct 28,2019.”

On the rationale of the proposed acquisition, Axis REIT Managers Bhd chief executive officer and executive director Leong Kit May said the property is strategically located in the Klang Valley that is well facilitated by an existing comprehensive transportation network, which includes the Federal Highway and New Klang Valley Expressway.

“This is in line with Axis REIT’s strategy to acquire yield-accretive assets which are located strategically and served by good amenities, ” she said.

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