Axis REIT Q2 profit soars as property value jumps

AXIS Real Estate Investment Trust says its second quarter net profit almost doubled due to the higher value of its properties.

Axis REIT is bullish on its performance for the rest of the year.

Its net profit for the quarter to June 30 2010 was RM21.9 million, up from RM12.5 million in the same quarter a year earlier.

Revenue went up 21 per cent to RM21 million due to higher gross rental income.
The higher net profit was largely due to the change in its properties’ fair value. The value of its assets rose by some RM9 million in the quarter, compared with RM2 million a year ago.

Excluding this unrealised value, its pre-tax profit increased 15 per cent to RM12.1 million.

Axis REIT plans to pay an income distribution of 4 sen a unit for the second quarter, which is 97 per cent of its realised pre-tax profit.

For the first six months, Axis REIT made a net profit of RM36.1 million, up from RM23 million in the same period last year. Revenue rose 18 per cent to RM40.9 million.

“The (REIT) manager is optimistic that in view of the current satisfactory performance of Axis-REIT’s existing investment portfolio and its growth strategy to actively pursue quality acquisitions, it will be able to maintain its current performance for the coming quarter and the rest of the financial year,” it said in a statement to Bursa Malaysia yesterday.

Axis REIT has leased out all of the space at Quattro West, its property in Petaling Jaya, Selangor.

It bought the building for RM39.8 million in 2007 and budgeted RM7 million for its makeover.

Axis REIT’s properties are now worth RM928 million on its books at the end of June.

Its manager, AXIS REIT Managers Bhd, has targeted to manage RM1 billion worth of assets by the year-end.

It plans to buy five properties valued at about RM180 million in 2010.

In January, it said it was assessing two new warehouses in Port of Tanjung Pelepas in Johor, a factory or a warehouse in Puchong, Selangor, and an office building in Cyberjaya.

Axis REIT eyes RM1b assets

Axis REIT Managers Bhd, the manager of Axis Real Estate Investment Trust (REIT), targets to manage RM1 billion worth of assets by the end of this year.

It plans to buy five properties, valued at about RM180 million, this year. It is now assessing two new warehouses in Port of Tanjung Pelepas in Johor, a factory or a warehouse in Puchong, Selangor, and an office building in Cyberjaya.

“We are targeting another capital raising in early 2010,” said chief executive officer Stewart LaBrooy during a media briefing yesterday.

Axis REIT plans to place out another 61.4 million units or about 20 per cent of its current fund size, which will raise some RM113 million.

As at December 31 2009, it managed 21 properties ranging from offices and warehouses to logistic centres, with a total asset value of RM907.74 million.

For 2009, Axis REIT’s revenue rose 13.4 per cent to RM71.9 million, while net income stood at RM42.9 million against RM39 million in 2008. It has borrowings of RM308.9 million.

The manager is optimistic of maintaining this performance despite a soft property market outlook this year. LaBrooy said he is confident of the property trust’s growth strategy to actively pursue quality acquisitions.

“When we buy, we look for a property with strong yield and possibly a locked-in tenant. We also continuously innovate our existing buildings to attract and retain tenants,” he said.

Axis REIT is spending RM10 million to refurbish two buildings this year, namely Nestle House, which is now known as Quanttro West, and Crystal Plaza in Petaling Jaya.

Nestle Products Sdn Bhd moved out of Nestle House in November last year. The group is spending some RM7 million to upgrade Quanttro and it should be ready by April 2010.

“We have anchor tenants for 50 per cent of the space and are currently undergoing talks with another MNC (multinational company) for another 25 per cent of the space. We hope to have the building fully occupied by April,” said LaBrooy.

Axis REIT plans new acquisitions

Axis Real Estate Investment Trust (REIT) plans to acquire another three to five properties in 2010 and raise RM113 million in the early part of the year.

Its target was expand the total assets to at least RM1 billion from RM907.7 million as at December last year, said Axis REIT Managers Bhd Chief Executive Officer Stewart LaBrooy.

Axis REIT Managers is the promoter of Axis REIT. LaBrooy said the potential acquisition targets included two units of brand new logistics warehouses in Johor, a factory or warehouse in Puchong and an office building in Cyberjaya.

The acquisitions will total RM180 million.

As at Dec 31, 2009, Axis REIT had 21 properties in Malaysia.

In a media briefing on Axis REIT’s financial performance for last year and its future growth prospects, he said: “We are positive about our financial results this year despite the soft property market.

“Our strategy is to maintain occupancy rates and make new acquisitions.”

He said the trust also planned another capital raising exercise in early 2010. “There is potential to place out another 61.4 million units and raise a war chest of RM113 million for future acquisitions,” he disclosed.

LaBrooy said that among other developments for this year would be on its corporate property in Petaling Jaya called Quattro West which was formerly known as Nestle House.

“We are undergoing a complete refurbishment of the building to reposition the asset and increase revenue,” he said.

He said Quattro West would be taken up by another listed company that had committed to a 15-year lease of 50 per cent of the space commencing July.

Another property that would provide unitholders with opportunities for capital gain was the proposed acquisition of two logistics warehouses in Seberang Perai, Penang which was expected to be completed by March.

The Seberang Perai warehouse acquisition at RM24.25 million, he said, was at a 9.2 per cent discount to market value and would provide unitholders with a cpaital gain of approximately RM1.78 million.

“The acquisition will increase gearing level from 34.03 per cent to 35.61 per cent,” he added.

LaBrooy said 35 per cent would be the trigger point for gearing level and should it touch above this level, Axis REIT would a undertake private placement to bring it down.

Axis REIT’s unit price, he pointed out, saw an improvement at the end of 2009 as compared to end of 2008. “It closed at RM1.93, a 72 per cent increase from the 2008 closing price,” he added. — BERNAMA

Axis-REIT targets RM66m rental income

AXIS Real Estate Estate Investment Trust (Axis-REIT) expects to increase its rental income to RM66 million from RM60 million annually with its latest acquisition of the Axis Steel Centre.

To date, the company has about 20 asset properties worth RM800 million.

Chief executive officer Stewart LaBrooy said the company had acquired the Axis Steel Centre, an industrial complex in Klang, from Maximum Icon Sdn Bhd for RM65 million.

“We expect better income growth with the purchase of this new property,” he told reporters after Axis-REIT unitholders” meeting in Kuala Lumpur today.

“The acquisition is in line with the manager’s objective which is to provide the unitholders with a stable income distribution and to achieve growth in net asset value per unit of Axis-REIT,” he said.

Axis-REIT’s net asset value is currently trading at 9.04 per cent.
LaBrooy said the company was in negotiations to acquire more assets such as logistics warehouse, offices, industrial building and factory which are estimated to be worth RM220 million.

“Axis-REIT is typically looking at places in Section 14 in Petaling Jaya, Shah Alam And Johor Baru,” he said.

According to him, the company’s REIT looks more appealing in the current gloomy economic climate due to its diversified tenancy portfolio.

In its second quarter ended June 30, 2009, the company recorded a revenue of RM17.36 million, up from RM15.67 million in the same quarter of last year.

Islamic REITs can perform better globally with standardised regulations, forum told

KUALA LUMPUR: Islamic real estate investment trusts (IREITs) can perform much better in global markets if there are standard syariah regulations among the countries involved in Islamic finance, a global conference on Islamic finance here was told.

Axis REIT Managers Bhd chief executive officer Stewart LaBrooy said there were lots of properties globally that could be tapped if the international Islamic finance regulatory environment could be standardised.

“Malaysia is the only country that comes out with syariah rules and guidelines for IREITs but for the global market, there is no proper regulation yet,” he said yesterday during a session on IREITs at the IFN 2009 Issuers & Investors Asia Forum.

IREITs had the potential to attract big Islamic institutional investors such as Tabung Haji, he added.

“We at Axis REIT Managers have converted our REITs to IREITs and we managed to do that as our investment focus is the commercial office space that comply with syariah law,” Labrooy said, adding that he hoped to see standard syariah rules governing IREITs globally.

Another panelist, Abdul Raman Saad & Associates partner Zain Azra’i Abd Samad, noted that to convert conventional properties into IREITs, a lot of work needed to be done to comply with syariah rules.

“Hotels for example must not serve liquor as this is against syariah compliance,” he said.