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KUALA LUMPUR: Axis Real Estate Investment Trust Managers Bhd (Axis REIT) has proposed to acquire three properties for RM280.5 million cash from three separate parties — Great Avenue (M) Sdn Bhd, Exceptional Landmark Sdn Bhd and Able Heights (M) Sdn Bhd.
The REIT said in an announcement to Bursa Malaysia yesterday that through RHB Trustees Bhd, it had entered into three conditional sale and purchase agreements with each of the parties.
“The proposed acquisitions are in line with the manager’s investment objectives and the growth strategy of Axis-REIT to provide the unitholders with stable income distribution,” it said.
Axis REIT said the proposed acquisitions would enable it to diversify and enlarge its portfolio of properties, and that they are expected to benefit the fund in the long term as a result of economies of scale.
The proposed acquisitions are slated to be completed by the fourth quarter of this year and the REIT intends to fund the acquisition entirely through financing.
Great Avenue’s property is a piece of freehold land with three single-storey detached warehouses as well as miscellaneous structures priced at RM183 million, a discount of about 0.13% to its market value of RM183.24 million, it said.
It has a net land area of approximately 94,022 sq m with a total net lettable area (NLA) of 64,414 sq m.
The total monthly rental for this piece of land is approximately RM1.2 million with net yield before an Islamic financing cost of 7% per annum and net book value of RM70.7 million based on the audited financial statement of Great Avenue as at Dec 31, 2013, said the REIT.
Exceptional Landmark’s property is a piece of 99-year leasehold land in Shah Alam, Selangor, which comes with a three-storey office-cum-warehouse. It is priced at RM52.5 million, a discount of about 0.94% to its market value of RM53 million.
It has a gross floor area of 15,997 sq m and NLA of 14,983 sq m.
Based on the audited financial statement of Exceptional Landmark as at Dec 31, 2013, its net book value was at RM43 million, with a net yield before Islamic financing cost of 7% per annum.
Able Heights’ property is a piece of 99-year leasehold land in Shah Alam that comes with a single-storey warehouse-cum-single- and double-storey office buildings. It is priced at RM45 million, a discount of approximately 2.17% to its market value of RM46 million.
The proposed acquisition of Able Heights’ land involves a leaseback arrangement whereby Able Heights would lease the property from the trustee for three years, said the REIT.
The net yield for the property before Islamic financing cost was at 7% per annum, with a net book value of RM9.3 million based on the audited financial statement of Able Heights as at Dec 31, 2013.
In a separate filing yesterday, the REIT announced its profit before tax for the second quarter ended June 30, 2014 (2Q14) was RM21.885 million, a 10.22% drop from the RM24.375 million it recorded in the previous corresponding period. Revenue was largely flat in 2Q14 at RM35.085 million, compared with 2Q13’s RM35.475 million.
That brings its total revenue for the first half of 2014 (1H14) to RM70.681 million, compared with RM70.48 million in 1H13. The REIT announced a second interim income distribution of 5.3 sen per unit for 2Q14, to be paid on Sept 5.
This article first appeared in The Edge Financial Daily, on August 5, 2014.
