PETALING JAYA (Aug 4): Axis Real Estate Investment Trust (Axis REIT) is planning to redevelop The Annex at Section 19 here at a cost of RM30 million.

Axis REIT Managers Bhd CEO Datuk Stewart LaBrooy (pictured, right) today announced plans for the enhancement of The Annex building as part of its asset enhancement initiatives for 2Q2015, which will be funded by the income distribution reinvestment plan (IDRP).

“The refurbishment of The Annex will see an expenditure of approximately RM30 million and will see an increase of 104,600 sq ft from the current 45,400 sq ft of office space to 150,000 sq ft,” he told theedgeproperty.com after a press briefing.

The Annex, along with Axis Business Park and The Axis Business Campus, are the three buildings that are involved in the initiative.

The cost of refurbishment of the Axis Business Park is estimated to be at about RM10 million, while that of the Axis Business Campus will cost about RM23 million.

Plans for the redevelopment are being drawn up and Axis REIT expects to start work on the asset after the leases of the tenants at The Annex expire in 2017, said Labrooy.

The group is also working on securing pre-commitments from potential clients to lease the office spaces once the project is completed, he added.

Labrooy said the unaudited total trust revenue for 2Q2015 was RM41.3 million, up 18% from RM35.08 million a year ago.

Meanwhile, occupancy rates inched up to 92.67% from 92.58% last quarter, and the trust will try to raise occupancies by leasing out its newly-refurbished properties.

Going forward, Labrooy said Malaysian REITs are expected to display resilience despite weakness in the economy and stock market volatility as they were backed by assets.

Axis REIT has two ongoing acquisitions for the second half, namely the 15-acre Haisan cold chain logistics facility at Port Klang for RM46 million and a 10-acre electronics manufacturing facility at Indahpura, Johor, for RM61 million.

He said the REIT will focus on shared offices and acquiring more properties in the cold chain logistics.

“It’s a good industry to get involved in as there are very few entry points to actually cater to the cold chain supply. If you think about it, how many cold chain supplies do you know? As people are getting more affluent, they will want their Haagen Daaz (ice cream) and fast food like KFC,” said Labrooy

He added that the trust was looking at opportunities in Johor.

“With the weakening of the Malaysian ringgit, more companies from Singapore will be looking for opportunities in Johor. The Singapore manufacturers will come to Johor and the industrial sector will do well,” he said.