KUALA LUMPUR: Axis REIT Managers Bhd (ARMB), the manager of office/industrial Islamic REIT Axis Real Estate Investment Trust (Axis-REIT), is offering their unit holders the opportunity to reinvest their income distribution in new units as part of the trust's plan to allot an issue up to 75,180,200 new units, which is up to 20% of the current fund size of Axis-REIT of 375,901,000, increasing the fund size of Axis-REIT to a maximum of 451,081,200 units.
In a issued statement on Wednesday, Feb 9, ARMB said that the proposed income Distribution Reinvestment Plan (DRIP) will apply to the whole or a portion of the Income Distribution (Electable Portion) and where applicable, and any remaining portion of the Income Distribution will be paid in cash.
ARMB CEO Stewart LaBrooy said that the DRIP is an initiative to provide an opportunity to all unitholders (including retail investors) to invest in the new units — at a discount of not more than 10% — of the five-day VWAMP of the units immediately prior to the Price-Fixing Date. This will afford unitholders the chance to enhance and maximise the value of their unitholdings in Axis-REIT through the subscription of the new units under the DRIP.
"Furthermore, the DRI will provide the Unitholders with greater flexibility in meeting their investment objectives where they have the choice of receiving cash and/or reinvesting into Axis-REIT through the subscription of additional new Units without having to incur material transaction or other related costs; all of which will be conducted upon receipt of all relevant regulatory approvals for the DRIP," he said.
He added that the unitholder could also choose to receive the part of the Electable Portion in cash, and to reinvest the remaining part of the Electable Portion in new Units credited as fully paid-up.
Labrooy is confident that the raising of capital by issuing new units either through placements or the DRIP in the future will continue to have positive effect on the results of the performance of Axis-REIT as it increases ARMB's flexibility in raising capital efficiently in the capital markets.
Axis-REIT said that the proceeds from DRIP will be utilised to refurbish and/or renovate the properties and/or any other purpose in the best interest of the unitholders. The refurbishment/renovation of the properties is expected to enhance the future income generated from Axis-REIT's stable of properties.
The issuing of new units will enable Axis-REIT to raise funds to pare down its bank borrowings in the event that the Manager anticipates that the bank borrowings of the Trust will exceed 35% of the total assets as a result of future acquisitions of new properties. This will provide Axis-REIT with sufficient headroom to make future cash acquisitions, which is in line with its capital management and growth strategy.
Axis-REIT is the first REIT to be listed on Bursa Securities Berhad and currently owns a portfolio of 24 commercial, office and office/industrial real estate in Malaysia.