Axis REIT 3Q NPI flat; trust declares two sen DPU

KUALA LUMPUR (Oct 24): Axis Real Estate Investment Trust (REIT) has announced a net property income (NPI) of RM35.92 million for the third quarter ended Sept 30, 2017 (3QFY17), up a marginal 0.33% from RM35.8 million a year ago, thanks to rental proceeds from newly acquired Scomi Facility @ Rawang and Kerry Warehouse.

The better earnings, which came on the back of a flattish revenue growth — its 3QFY17 top line came in at RM42 million, versus RM41.98 million a year ago — were also due to positive rental revision and the rental of 17.6 acres (7.12ha) of land at Axis PDI Centre.

In its quarterly financial report to Bursa Malaysia, Axis REIT said these had offset the short-term rental loss from Delfi Warehouse and D21 Logistics Warehouse, and the loss of contributions from Axis Eureka, which has been sold. The REIT noted that new tenants have now been secured for Delfi Warehouse and D21 Logistics Warehouse.

The REIT declared a third interim distribution of two sen distribution per unit (DPU) to unitholders, payable on Dec 13. Unitholders can choose to reinvest a quarter or half of that in new units in the REIT, with the issue price of such units fixed at RM1.49 each.

For the nine months ended Sept 30 this year, Axis REIT recorded an NPI of RM109.53 million, up 2.11% year-on-year from RM107.27 million previously, as revenue grew 1.08% to RM126.33 million from RM124.97 million. Axis REIT said the office market is expected to continue to remain challenging for the rest of 2017, with new supply continuing to outstrip demand.

But with increasing demand from the logistics and manufacturing sectors, the industrial market is expected to remain positive.

“The development of Nestle Distribution Centre is on schedule and upon completion will increase the portfolio size by 515,000 sq ft of space by early 2018. This additional space will start contributing to the fund by June 2018,” Axis REIT said.

“Vacancy in the portfolio stands at 753,404 sq ft. We are in advanced stages to conclude new tenants. The focus in 2017 is to fill the void and tenant retention. By filling the current vacant spaces, we expect to add as much as 1.72 sen to the annual DPU,” it added.

As at 3QFY17, its portfolio occupancy rate stood at 90.1%, with a weighted average lease expiry period of 4.51 years based on rental.

This article first appeared in The Edge Financial Daily, on Oct 24, 2017.

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