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S&P for RM37m industrial property entered by Axis-REIT

25 Dec 2019 / 16:05 H.

PETALING JAYA: Axis Real Estate Investment Trust’s (Axis-REIT) trustee RHB Trustees Bhd has entered into a sale and purchase agreement to acquire a property located within the Bukit Raja Industrial Area from Lion Steelworks Sdn Bhd for RM37 million.

The Bukit Raja Industrial Area is an established industrial zone which is easily accessible via major highways.

The property, located close to Shah Alam, comprises of a leasehold industrial land, measuring 22,528 square metres, with two blocks of detached factory and a double-storey office building annexed plus other ancillary structures. The gross floor area/net lettable area is 149,605 square feet. The land’s 99-year leasehold will only expire in 2088.

As at today, the property is fully occupied where the factory is being used by Lion Steelworks to manufacture and distribute office equipment, security equipment and steel related products. Upon the completion of the acquisition, the property will be leased by Lion Steelworks.

The tenancy is for a fixed period of two years and five months from the tenancy agreement’s commencement date with an option to renew for another two terms of a year each. Upon commencement of the tenancy, Lion Steelworks will pay the rental for the first 24 months of the initial term amounting to RM5.4 million (RM225,000 per month) to Axis-REIT.

The acquisition will be funded via Axis-REIT’s existing bank financing. The proposed debt financing will increase Axis-REIT’s gearing ratio to 38.1% of the audited total assets as at Dec 31, 2018 which is below the gearing limit of 50%, as prescribed by the Guidelines on Listed Real Estate Investment Trusts issued by the Securities Commission Malaysia.

The proposed acquisition is expected to contribute positively to Axis-REIT’s earnings for the financial year ending Dec 31, 2020 as the acquisition is expected to be completed by the first quarter of 2020.

The property’s market value is RM39.0 million, as appraised by PA International Property Consultants Sdn Bhd, an independent firm of registered valuers, in its valuation report dated Oct 28, 2019.

On the proposed acquisition, Axis REIT Managers Bhd CEO and executive director Leong Kit May said the acquisition is in line with Axis-REIT’s strategy to acquire yield accretive assets which are located strategically and served by good amenities. — Bernama

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