Friday, February 01, 2008

Axis-REIT buys warehouses for RM27m

By The Edge

Axis Real Estate Investment Trust (Axis REIT) is acquiring two warehousing properties in Pasir Gudang industrial area for RM27 million in Johor, said its manager Axis REIT Managers Bhd (ARMB).

It is acquiring a single-storey detached factory with ancillary buildings from Oriental Pulse Sdn Bhd for RM12.5 million, and a single-storey warehouse building with a three-storey office plus guard house and ancillary buildings from Niro Ceramic (M) Sdn Bhd for RM14.5 million. Both properties are developed by the Johor State Economic Development Corp.

ARMB said the factory acquired from Oriental Pulse was for Delfi Cocoa (M) Sdn Bhd. Delfi Cocoa, a leading exporter of cocoa related products, had renewed its tenancy for three years from Jan 1 last year at a monthly rental of RM108,864 with an option to renew for two further terms of three years each.

The property has a gross yield of 10.26% and a triple net yield projected at 9.1%. The acquisition is yield accretive at 23 sen per unit.

The second property is a sale and leaseback arrangement with Niro Ceramic (M) Sdn Bhd, which has agreed to lease it for six years at a monthly rental of RM130,000 for the first three years with a step-up in rental on the second three years. It has an option to renew the lease for an additional six years. The property has a gross yield of 10.55% and a triple net yield projected at 9.77%. The yield is 345 sen per unit.

ARMB said it intended to use the funds from the recent fundraising exercise with the placement of the Axis REIT 50 million new units to finance the acquisitions. The proposed debt financing will increase Axis REIT’s gearing ratio but it will still be below 50%.