KUALA LUMPUR (July 18): Axis Real Estate Investment Trust (Axis REIT) is acquiring a property in Bayan Lepas, Penang from Ire-tex Corp Bhd for RM20.5 million in cash.

Axis REIT said its trustee, RHB Trustee Bhd, has signed an agreement with Zoomic Technology (M) Sdn Bhd, a wholly-owned subsidiary of Ire-tex, in relation to the acquisition.

The acquisition of the property is in line with the REIT's investment objectives, it added in a filing with Bursa Malaysia.

“Furthermore, the proposed acquisition of the property would enable Axis REIT to strengthen its portfolio of industrial properties and is expected to benefit the fund in the long-term as a result of economies of scale,” said Axis REIT.

The property, sitting on a piece of leasehold land measuring 90,040 sq ft, comes with a double-storey factory-cum-office building. Currently, the occupancy rate of the factory is 100%.

The REIT said that Bayan Lepas is Penang’s prime industrial area sought after by local and multinational operators and investors.

“Penang also continues to attract strong demand from both local and foreign manufacturers due to its high-quality supply chain for the electronics industry, logistics, sustainable manufacturing infrastructure, access to talent and strong Government support,” it added.

The acquisition will be funded by Axis Reit’s existing bank financing.

Axis Reit also said it expects the acquisition to contribute positively to its earnings in the future after the completion of this transaction, which is projected to be completed by end-2019.

In a separate filing with Bursa Malaysia, Ire-tex said the company decided to dispose of the property after taking into consideration the challenges of the upkeep of the premises.

“The proceeds arising from the proposed disposal shall be utilised to settle the banking facilities and the balance will be utilised for working capital purposes,” said Ire-tex.

The property has a recorded book value of RM22.6 million and Ire-tex has estimated a loss on disposal of RM2.1 million based on the disposal price of RM20.5 million.

Axis Reit’s unit price closed three sen or 1.68% higher yesterday at RM1.82, giving it a market capitalisation of RM2.25 billion. It saw some 3.73 million shares traded.

Shares in Ire-tex settled half a sen or 5.26% higher yesterday at 10 sen, giving it a market capitalisation of RM18.48 million. The counter saw some 114,800 shares changing hands.

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