Axis-REIT proposes unit split, private placement

KUALA LUMPUR (March 2): Logistics and office property trust Axis Real Estate Investment Trust (Axis-REIT) has proposed to split each of its existing units into two, do a 20% placement of the enlarged base, and issue new units via a unit reinvestment plan.

In a filing with Bursa Malaysia today, Axis-REIT (fundamental: 0.9; valuation: 0) said it is proposing to split its 547.76 million units, to enlarge its unit base to 1.1 billion to attract a wider group of investors, as the unit price will be more affordable.

Regardless of whether the unit split will go through or not, Axis-REIT plans to do a placement to raise funds for debt repayment. If the unit split happens, Axis-REIT will issue up to 219.103 million placement shares, while 109.55 million placement shares will be issued if there is no unit split exercise.

These exercises will require Axis-REIT’s unitholders’ approval and are expected to be completed in the second half of this year, said the trust.

Next, Axis REIT manager wishes to obtain unitholders’ approval to issue up to 155.19 million units for the trust’s income distribution reinvestment plan (IDRP). Should the unit split not go through, the IDRP could see up to 77.6 million Axis-REIT units issued.

There will also be 3.04 million new subdivided Axis-REIT units to be issued for the payment of management fee authority, said the trust. The number of units for the payment will be reduced by half, if no unit split occurs.

All in, Axis-REIT’s units could balloon by up to 1.47 billion if the unit split happens, or 736.43 million with no unit split. The IDRP and payment of management fee authority will be completed by the end of the year, said Axis-REIT.

Axis-REIT shares closed four sen or 1.11% lower at RM3.55 today, giving it a market capitalisation of RM1.97 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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