CEO Morning Brief

Axis REIT to Acquire Two Auto Service Centres for RM125m

Publish date: Fri, 24 May 2024, 09:19 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (May 23): Axis Real Estate Investment Trust (KL:AXREIT), which mainly manages offices and warehouses, said on Thursday it is acquiring two automotive service centres worth RM125 million.

Under the purchase agreements, the trust will then lease the properties back to the seller, Cycle & Carriage Bintang Bhd, Axis said in an exchange filing. The deal — to be completed by December — would be funded with existing bank financing, the trust said.

“The proposed acquisition of the properties will be accretive to Axis’ distributable income, and adds to the portfolio of properties that will benefit the fund in the long term,” the trust added.

The properties are the latest assets targeted by Axis. Last month, Axis announced that it will buy an industrial complex and open storage yard from Amsteel for RM351.8 million following the planned acquisition of another industrial complex for RM49 million, also from Amsteel.

In April, the trust announced the disposal of its Axis Steel Centre @ SiLC for RM162 million cash to a data centre operator to redeploy the capital toward other potential-yield accretive properties.

Axis however said it intends to draw on existing financing credit lines for the acquisitions which will raise its financing ratio to 36.1% of total assets, still under the gearing limit of 50% under listing regulations for REITs.

The acquisition of the service centres, one in Seksyen 51A of Petaling Jaya and another in Batu Caves in Gombak, is expected to generate a starting gross yield of about 6.2% per year, Axis said.

The properties, located in established areas in the Klang Valley, have lettable area of 227,000 square feet with fixed lease period of 10 years, the trust noted.

Axis’ units closed unchanged at RM1.86 on Thursday ahead of the acquisition’s announcement. The trust has gained 3.9% so far this year, lagging the 7% gain of Bursa Malaysia REIT Index that tracks 19 trusts.

Source: TheEdge - 24 May 2024

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