Axis REIT's latest purchase earnings-accretive, price tag reasonable — analysts

KUALA LUMPUR (June 26): Axis Real Estate Investment Trust’s (KL:AXREIT) latest asset in its shopping cart will be earnings accretive as it comes with a reasonable price tag, analysts said.

The proposed acquisition of a courier company’s distribution centre is expected to generate a yield of 5.8% to 6.2% based on the announced monthly rental rate of RM661,878, according to estimates from Hong Leong Investment Bank, CIMB Securities and Maybank Investment Bank Bhd.

The 15-year sale-and-leaseback agreement with “a single creditworthy tenant eliminates near-term vacancy risk and provides a long-dated, predictable income stream,” said CIMB Securities.

On Thursday, Axis REIT announced that it is acquiring a fully-occupied distribution centre for RM128 million. The property comprises distribution centres and ancillary buildings sitting on land spanning over 46,000 sq m.

The property is currently fully occupied by City-Link Express (M) Sdn Bhd as one of its key distribution hubs.

While the assets’ gross yields sit below Axis REIT’s portfolio gross yields of 7.1% for 2026 and 7.3% for 2027, Hong Leong Investment still views the deal favourably given its fully debt-funded structure that is non-dilutive to unitholders.

The price tag is also marginally below the independent valuation of RM129.0 million, “supportive of an attractive entry,” for a property that is also strategically located within an established Klang Valley logistics belt, the house noted.

For Maybank Investment, the deal is also positive for reinforcing Axis REIT’s strategy of expanding its logistics and industrial portfolio even as it made no changes to its earnings forecasts.

“Given continued demand for well-located logistics facilities, we believe the asset should remain competitive over the longer term,” the research house added.

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