Axis-REIT to offer reinvestment option

AXIS-REAL Estate Investment Trust Managers Bhd (Axis-REIT) has become the third listed company and the first real estate investment trust (REIT) to offer the option of new units in the REIT as dividend payment.

In an announcement to Bursa Malaysia yesterday, the company said it will seek unitholders' approval to offer a reinvestment plan, giving unitholders the option of a cash payout, new units or a combination of cash and new units (electable portion).

It proposes to issue new units of up to 20 per cent of the current fund size of Axis-REIT of 375.9 million units.

This comes after Malayan Banking Bhd and AMMB Holdings Bhd announced similar plans last year.
Maybank's reinvestment plan was dubbed a success, enticing some 80 per cent of shareholders to reinvest in the financial institution, while AMMB's plan is yet to be issued.

Axis-REIT shares fell 0.01 sen yesterday to close at RM2.40.

Bloomberg Consensus shows that eight of research firms have a "buy" call on the stock, while four recommend a "hold". Its average target price is RM2.60.

"Placements are restricted to a pool of investors, and we don't do rights issues because it's dilutive in nature, so the reinvestment plan seems (to be) a very fair way of distributing units to our investors," Axis-REIT Managers Bhd chief executive officer Stewart LaBrooy told Business Times yesterday.

The cash secured from the reinvestment plan will help bolster the REIT's borrowings-to-total assets ratio, which could breach 35 per cent, in view of future acquisition plans.

While there is no rule to specify it, syariah-compliant REITs' debt-to-asset ratio has generally hovered between 30 and 35 per cent.

The total amount of income distribution to be declared, the size of the electable portion and consequently, the maximum number of new units to be issued under the proposed income distribution reinvestment plan would depend on the financial performance and cash flow position of Axis-REIT, and prevailing economic conditions.

"It's a much easier, nicely well- managed way to manage our debt- to-asset ratio," LaBrooy said.

The exercise will also help make the stock more tradeable.

While the issue price of the new units has a 10 per cent discount cap to the average market price prior to the price-fixing date, Axis-REIT has traditionally accorded discounts of between 4 and 5 per cent.

Axis-REIT records RM16m profit in Q4

AXIS REIT Managers Bhd has reaped RM16.16 million profit in its fourth quarter ended December 2010 and plans to distribute 5.25 sen a unit to investors.

"Last year, we saw the highest gain in fair value of investment properties for a single year since the listing of the trust," said chief executive officer Stewart Labrooy. He said the company revalued 14 of its stable properties.

"It has led to an increase in the net asset value of the trust to close at RM2.009 a unit compared with RM1.842, a year ago," he told reporters at a briefing in Kuala Lumpur yesterday.

In the fourth quarter of 2010, Axis-REIT bought three more properties, namely Tesco Hypermarket, Axis PDI Centre and Axis Technology Centre. It also concluded the purchase of two IDS warehouses in Seberang Prai, Penang.

Two days ago, Axis-REIT said it will sell an industrial complex in Port Klang for RM14.5 million by June 2011.

"We need to maintain growth by culling smaller assets where the returns have stagnated. We will bring in assets that have capital gain potentials," said Labrooy.

"We'll gain RM764,000 from the sale of industrial complex in Port Klang and this will be chanelled back to unitholders," he added.

On outlook for 2011, he said Axis-REIT is looking to buy five more warehouses in Johor and the Klang Valley and two more office blocks in Cyberjaya. So far, the company has set aside RM365 million for these acquisitions.

Axis-REIT to reposition assets

Axis Real Estate Investment Trust (Axis-REIT) aims to enhance and reposition its assets to increase performance, said Axis REIT Managers Bhd chief executive officer Stewardt Labrooy.

Axis REIT Managers is the manager of Axis-REIT.

"The aim of the asset enhancement is to assess the REIT's portfolio from a property player's perspective. It will increase the occupancy rate, rental as well as valuation of the properties," Labrooy told a media briefing today.

He said asset enhancement was currently being undertaken for Menara Axis, Crystal Plaza, Fuji Xerox Asia Pacific and Infinity Centre.

Major enhancements would also be undertaken this year on Kayangan Depot in Shah Alam and the Cycle & Carriage complex in Petaling Jaya, he said.

He said the Kayangan Depot building would be repositioned to face Section 15 Shah Alam roundabout while building cladding systems and power supply would be improved and upgraded.

As for the Cycle & Carriage complex, Labrooy said refurbishment of the existing building would include enhancing the exterior and adding new space for optimium use.

He said Axis-REIT, which currently owned a portfolio of 26 commercial, office and industrial real estate in Malaysia, managed total assets worth RM1.3 billion.

Last year, Axis REIT Managers acquired Tesco Hypermarket, Axis PDI Centre and Axis Technology Centre and concluded the purchase of two warehouses from IDS Logistics Services (M) Sdn Bhd in Seberang Prai, Penang.

Axis-REIT recorded a higher pre-tax profit of RM101.401 million for the financial year ended December 31, 2010, compared with RM61.976 million recorded in 2009.

Revenue increased 25 per cent to RM89.851 million from RM71.870 million previously.

The realised income before taxation and available for distribution amounted to RM52.598 million, for the year under review, bringing the total distribution in 2010 to 16 per cent per unit. — Bernama

Axis REIT to grow 19.6pc in 2011: ECM

ECM Libra expects a 19.6 per cent earnings growth in Axis Real Estate Investment Trust (REIT) Financial Year 11 (FY11) due to contributions from four recently acquired properties.

Axis REIT has completed acquisition of PTP D8 in Johor, Axis Technology Centre in Petaling Jaya, Axis PDI centre in Kuala Langat, Selangor and Tesco Johor as well as its proposal to acquire an office building in Cyberjaya for RM51.3 million which will be completed in the first quarter of this year.

In its research note on Axis REIT, ECM Libra said it expects more acquisitions going forward.

"We understand that the management is working on the acquisition of an office warehouse in Petaling Jaya, a logistics warehouse in Johor and a warehouse/logistics and manufacturing facility in Shah Alam/Klang," ECM Libra said.

"Despite its defensive quality, Axis' average annual total return of 23 per cent since its listing in 2005 outperforms the equity market as represented by the total return of the benchmark FBMKLCI over the corresponding period," the research house said.

ECM Libra said another plus point is its distribution visibility as Axis commits to distribute 99 per cent of its earnings on quarterly basis.

Axis has the most enviable acquisition track record among M-REITs as it has grown its asset under management (AUM) from five properties with AUM of RM260.4 million to 27 properties with AUM of RM1.4 billion now. — Bernama

Axis-REIT records higher Q3 pre-tax profit

Axis Real Estate Investment Trust (Axis-REIT) recorded a higher pre-tax profit of RM24.26 million in its third quarter ended Sept 30, 2010, compared to RM10.25 million in the same period last year.

Revenue increased to RM22.39 million from RM17.67 million previously, said Axis REIT Managers Bhd (ARMB), the manager of Axis-REIT, in a statement today.

ARMB said the trust's current quarter earnings per unit which included unrealised income stood at 7.60 sen. Of this, the realisable income of RM12.589 million translated to a declared distribution per unit of four sen for the third quarter.

On Sept 5, Axis-REIT declared a third interim income distribution of 3.05 sen per unit, amounting to RM9.365 million, in respect of the realised income from the July 1 to Sept 5 period. 

ARMB said the total number of units issued had increased from 307,081,200 to 375,901,000, increasing the liquidity and market capitalisation of the trust to RM811.95 million.

It said that seven of the trust's properties were subjected to comprehensive valuation in the third quarter as part of the requirement of the Securities Commission (SC) guidelines on REITs.

This has resulted in an unrealised fair value gain of RM11.702 million, thus bringing the total fair value gain for year-to-date to RM22.58 million, resulting in the increase of the net asset value per unit of the trust to RM1.8891.

ARMB said the balance of the nine properties which are not subjected to the SC guidelines for comprehensive valuation will be revalued by the last quarter of this year via update valuation to be conducted by independent valuers. — Bernama

Axis-REIT in talks to buy stake in Philippine firm

AXIS-REIT Managers Bhd is looking into expanding its real estate investment trust (REIT) business by acquiring a stake in a future REIT manager in the Philippines.

“We are in discussions with a party in Manila to take an equity position and assist in the management of its future listed REIT,” Axis-REIT chief executive officer Stewart LaBrooy told Business Times.

LaBrooy was asked to comment on online reports in the Philippines last month that Axis-REIT is scouting for investment opportunities in the Philippines.

According to reports, overseas REIT investment firms, including Axis-REIT, are turning their radar to the Philippines following the recent approval of the respective REIT rules by the Securities Exchange Commission and the Philippine Stock Exchange.
Unfortunately, LaBrooy said there are delays in publishing the implementing rules, which will prolong the launch of any new REITS in the Philippines.

He maintained that Axis-REIT has always taken the stand that it will focus on Malaysian assets and not take on cross-border acquisitions due to the possible risks the strategies present.

Labrooy also confirmed that he was in Manila as one of the speakers during the REIT Asia Pacific Philippines Summit 2010 held from July 27 to 28.

A REIT is a fund that mainly owns income-producing real estate such as shopping centres, offices, warehouses and hotels. The units of many REITs are traded on major stock exchanges.

To qualify as a REIT, a fund must have most of its assets and income tied to real estate investment and must distribute at least 90 per cent of its total income to unitholders annually.

Asked on the potential of REIT market in the Philippines, LaBrooy said the country has a large cluster of excellent shopping malls, offices and BPO properties that are REIT-able and an emerging logistics market as well.

“These are owned by well-known property companies like Alaya, Robinsons and S&M. They should have a successful REIT industry with good growth opportunities,” he added.

Axis-REIT private placement oversubscribed

The private placement of 68.82 millionnew units of Axis Real Estate Investment Trust (Axis-REIT) has been oversubscribed.

In a statement here today, Axis REIT Managers Bhd said the private placement represented 22.4 per cent of the existing approved fund size of 307.08 million units and would increase the approved fund size to a maximum of 375.90 million units.

"The private placement is to be issued at RM1.97 per unit, representing a discount of approximately 4.37 per cent to the five-day volume weighted average market price up to Aug 26," it said.

It said the gross proceeds of about RM136 million from the exercise would be used to pare down the borrowings of Axis-REIT for the financial year to-date.

Trading of the new units is expected to commence at 9am on Sept 15. Axis REIT Managers Bhd is the management company of Axis REIT. — Bernama

Axis-REIT to acquire Tesco JB for RM75m

Axis Real Estate Investment Trust (Axis-REIT) proposed to acquire the Tesco JB Hypermarket Complex for a total lump sum cash consideration of RM75.6 million from Bukit Indah (Johor) Sdn Bhd.

The latest acquisition will increase the assets under management to over RM1.2 billion, Axis-REIT said in a filing to Bursa Malaysia today.

Axis-REIT trustee, OSK Trustees Bhd, has entered into a sale and purchase agreement with Bukit Indah Johor for the proposed acquisition.

The proposed acquisition will be funded by existing bank borrowings of Axis-REIT.

Axis REIT Managers Bhd, the management company of Axis-REIT, intends to utilise a debt facility of RM75.60 million from Axis-REIT’s existing credit lines.

The proposed debt financing will increase Axis-REIT”s gearing ratio to 39 per cent of audited total assets as at December 31, 2009, which is below the gearing limit of 50 per cent prescribed by the REIT guidelines.

Axis REIT Managers expects the proposed acquisition to contribute positively to the fund’s earnings for the financial year ending December 31, 2010.

The proposed acquisition is expected to be completed on or before October 31, 2010.

The Tesco JB Hypermarket Complex is located within the main commercial precinct of Setia EcoCity in Taman Bukit Indah, a comprehensive mixed development project. — Bernama

Axis REIT to raise RM132mil

Company plans to use the money to buy more properties, reduce gearing

KUALA LUMPUR: Axis REIT Managers Bhd (ARMB), the manager of the world’s first office/industrial Islamic real estate investment trust (REIT), plans to raise RM132mil next month as part of its capital management process, said chief executive officer/executive director Stewart LaBrooy.

“The funds raised will be used to expand our property portfolio and to reduce our gearing,” he told reporters here yesterday at a media briefing in conjunction with its unaudited half yearly results announcement.

LaBrooy said ARMB was looking to acquire two new logistics houses and a retail warehouse in Johor, as well as an office building in Cyberjaya, which would cost about RM190mil in total to add to the existing 23 assets it currently owned.

Axis REIT properties include assets in commercial, office and industrial real estate.

“Upon conclusion of the acquisitions, our total assets under management will be RM1.2bil from the current RM900mil,” he said, adding that on average, the group acquired about five assets annually.

He also said ARMB planned to have at least US$500mil worth of assets so that it could attract attention from the international market and that the group was pushing hard to reach that level.

“Our aim is to acquire good assets in good locations such as in Penang, Klang Valley and Johor Baru that can bring value and benefit to the group and also to the unit holders,” he said.

On the group’s financial results, LaBrooy said ARMB was on the right track, with growth seen in revenue and distribution per unit compared to the preceding quarter despite the volatility in global markets.

“This year also saw us comprehensively revalued five of our properties – Axis Shah Alam DC, BWM Centre PTP, Giant Hypermarket, Nestle Office & Warehouse and Quattro West – and this resulted in a positive change in fair value of RM9.07mil,” he said. Axis REIT, which owns mostly industrial properties, posted a 74.51% rise in net profit to RM21.87mil for the second quarter ended June 30, compared with the same quarter a year ago.

LaBrooy attributed the jump in net profit to a combination of revaluation surplus and realised gains from distributed profit and revaluation gains. Revenue for the quarter under review stood at RM21mil, a rise of just over 21% compared with a year ago.

LaBrooy said Axis REIT’s performance in the third quarter would improve due to the satisfactory performance of its existing portfolio and with Quattro West property coming on stream.

Axis REIT posts rise in Q2 net profit

Axis Real Estate Investment Trust (Axis REIT), which owns mostly industrial properties, has posted a 74.51% rise in net profit to RM21.87mil for the second quarter ended June 30, compared with the same quarter a year ago.

According to Axis-REIT Managers Bhd CEO and executive director Stewart Labrooy, the jump in net profit was due to a combination of revaluation surplus and realised gains from distributed profit and revaluation gains. He told StarBiz that the revaluation brought the REIT a surplus of RM9mil. Axis-REIT Managers is the manager of Axis REIT.

Revenue for the quarter under review stood at RM21mil, a rise of just over 21% compared with year ago. Labrooy said in a statement that performance for the third quarter would improve due to the satisfactory performance of the existing portfolio and Quattro West coming onstream.