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Axis REIT expects to fully lease out Quattro West by April 2010

KUALA LUMPUR: Main board listed Axis REIT Managers Bhd. expects to secure 100% occupancy for its Quattro West (previously known as Nestle House) office building in Persiaran Barat, Petaling Jaya by April 2010.

According to its Chief Executive Officer Stewart LaBrooy, the location of the office space currently undergoing refurbishment and the competitive rental rate will give Axis an edge over its competitors. The refurbishment is expected to be completed by this quarter.

“When you have a competitive environment, you have to be on the right side of the pricing curve and we’ve always been there. That’s why we’ve managed to keep our buildings at very healthy occupancy levels,” LaBrooy said in a media briefing today (Jan 21).

A tenancy agreement for a duration of 15 years for Quattro West has already been secured for 50% of the while there are ongoing talks with a multinational company for another 25% of the office space, said its General Manager for Asset & Lease Management, David Aboud.

The total net lettable space is 106,000 sq ft while the leasing rate is between RM3.90 and RM4.10 per sq ft.

Maybank Investment Bank in a report today said it the rental rate may be 15% higher than the previous rate paid by its ex-tenant – Nestle Bhd.

Axis is also confident Quattro West currently valued at about RM38 million will increase to RM48 million -- RM50 million in value. “It should be [happening], around RM500 per sq ft because that’s what people are selling shop offices for in Petaling Jaya,” LaBrooy explained.

It is expecting the value of properties in its stable to breach RM1 billion by the end of this year with aims to acquire more office space. “We think we could probably do [acquire] three to four this year, I think so, maybe five,” LaBrooy said adding that these will be situated in Selangor, Cyberjaya and Johor.

The company’s total property valuations amounted to RM884.65 million as at the end of last year.

The company which builds and buys office buildings and earns income by renting these spaces out is targeting to raise more capital early this year by placing out another 61.4 million units (20% of current fund size) and raise RM113 million for future acquisitions. It said it is currently in consultations with the Securities Commission on the matter.

The REIT manager is cautious on the outlook for the office property market as there may an oversupply of office real estate this year.

“Everyone is building like crazy and there will be a lot of empty [office] buildings. However, not to worry as we have the best located buildings in town,” LaBrooy said.

By book value, the company has 80% of its office space located in Selangor, 16% in Johor and another 4% in Kedah.

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