Axis-REIT to acquire 7 warehouses for RM96 million

KUALA LUMPUR: Axis Real Estate Investment Trust (Axis-REIT) acquired seven logistics warehouse buildings in Bukit Raja, Klang and Seberang Perai, Pulau Pinang for RM96 million.

In a statement on Nov 19, Axis-REIT Managers Bhd (ARMB) said its trustee, OSK Trustees Bhd, has entered into two sale and leaseback agreements with IDS Logistics Services (M) Sdn Bhd for the deal.

Under the agreement, Axis-REIT will acquire the latter's Bukit Raja Distribution Centre -- which comprises five logistics warehouse buildings, built on two freehold land areas in Bukit Raja, Klang -- for RM71.75 million. The trust fund will also buy two logistics warehouses built on separate leasehold land areas in Seberang Perai, Pulau Pinang for RM24.25 million.

The deal also comes with a 15-year fixed lease agreement, with an option to renew the lease for a further 15 years with IDS Logistics Services Sdn Bhd, a wholly owned subsidiary of Hong Kong-based Integrated Distribution Services Group Ltd.

The lease agreements come with an agreed step up in rental every three years over the 15-year period. For the first term of the lease, Axis-REIT will receive RM8 million per annum in gross income.

Stewart Labrooy, chief executive and executive director of ARMB, intends to utilise facilities from Axis-REIT’s existing credit lines to finance the purchase, adding that he expected the acquisition to contribute positively to the earnings of the trust for 2010. The proposed debt financing would increase Axis-REIT’s gearing ratio to 35.26% upon completion of the exercise.

“The proposed sale and leaseback agreements are consistent with the investment objectives and strategy of the Fund and will be accretive to Axis-REIT’s distributable income. When we listed in 2005, we had an initial portfolio of five subject properties worth RM296 million, which has now increased to 23 properties with this acquisition. This new acquisition will also see our assets under management (AUM) rise to over RM900 million upon completion,” he said.
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