Property News

Axis REIT in hot pursuit of industrial deals

KUALA LUMPUR (Jan 24): After spending RM719.4 million to acquire eight new assets in 2024, Axis Real Estate Investment Trust (Axis REIT) (KL:AXREIT) said it will continue to aggressively source potential acquisition targets, particularly industrial properties.

Axis REIT Managers Bhd chief executive officer and executive director Leong Kit May (pictured) shared that the REIT is currently in closed talks with potential acquisition targets valued at RM300 million with heavy inclination towards industrial. Those deals are likely to be finalised in the next two months.

“Currently, whatever that we talk with, [are] that we see that it’s likely going to happen in [the next] two months,” Leong said during the investor briefing on Friday.

Leong also foresees the REIT’s exposure to the office segment, which has been decreasing and is currently at 3%, to drop further. “We believe that will continue to be the case, and we may reach a point where even the 3% could potentially drop lower,” she stated.

Currently, logistic warehouses make up the bulk of its properties at 56%, followed by manufacturing facilities at 26%, office cum industrial buildings at 12%, hypermarket at 3% and pure offices at 3%.

Leong added that the trust is considering data centre (DC) assets as potential acquisition targets. However, due to a lack of transactions, with most DCs still in the construction phase, there is limited reference on the price range.

She noted that the cap rate for DCs is around 6 to 7%. Additionally, prices depend on specifications such as power supply and tier levels.

Currently, Axis REIT owns one data centre, a purpose-built facility named Strateq Data Centre located in Petaling Jaya. The property was purchased for RM37 million in 2008, and its latest appraised value is RM68 million, according to its website.

Its total assets under management has now crossed the RM5 billion mark, reaching RM5.26 billion. Nevertheless, its gearing ratio stands at 33%, providing ample headroom for further acquisitions, said Leong.

Leong also shared that insurance costs and quit rent assessments are the biggest cost components of the trust, and it is not so much affected by the electricity tariff and wage hikes. Its portfolio efficiency ratio, which measures property expenses over income, stood at 14.3% in 2024.

Despite the rising cost environment, Leong said that the REIT was able to adjust its rental rates to reflect the booming demand for its facilities, largely hinged on desired location, amenity and accessibility.

The blended net yield generated by its properties stood at 7.7% in 2024, and the trust managed to achieve 5.3% rental reversion last year.

At Friday’s midday break, shares of Axis REIT rose one or 0.6% to RM1.75, valuing the REIT at RM3.52 billion.

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Source: EdgeProp.my