AXIS Real Estate Investment Trust Managers Bhd (Axis REIT), which has 30 properties in its trust worth about RM1.52 billion, expects to surpass the RM2 billion mark with the acquisition of five new properties for RM472 million this year.
Axis REIT Managers Bhd (ARMB) chief executive officer Datuk Stewart LaBrooy said based on the projected unit holdings, it expects the five properties to yield an additional 2.1 sen per annum to its income distribution per unit (DPU) for 2015.
The trust’s first quarter core net profit of RM22.3 million improved by 8.5 per cent year-on-year and 3.9 per cent quarter-on-quarter, in line with most analysts’ estimates.
It announced a DPU of 5.3 sen, a 17.8 per cent rise year-on-year, which included a special 80 sen DPU arising from the Axis Plaza disposal on March 25.
For the first half of fiscal year 2014, Axis REIT posted a RM43 million net profit, while total DPU was 10.6 sen.
This was 3.1 per cent and 16.5 per cent more than the same period last year.
“Portfolio growth has always been a core strategy of Axis REIT. We have demonstrated this by increasing our portfolio size from five to 30 assets over the past nine years and this is expected to expand to 35 assets by the end of 2014. However, we do not buy real estate for the sake of growing.
“In 2013, we held back from acquiring any assets because the market was overheated and asset prices were inflated with low yields.
Therefore, we held back from buying anything until this year when we see valuations and yields returning to normalcy.
“In addition, we have been actively been involved with asset enhancement initiatives (AEIs) for our portfolio. This involves the continuous improvement of our assets to attract higher rentals and better returns,” he said.
Recent projects that underwent AEIs include Quattro West, Infinite Centre and Axis Business Park. Axis REIT is currently working on Axis Business Park Block C.
“This drives rental and valuations, providing our unitholders with more valuable real estate and dividend returns in the long term,” LaBrooy said.
On what would be the optimum asset size for Axis REIT to improve investor interest, LaBrooy said Axis REIT has one of the highest free floats of their units in the Malaysian REIT space, whereby only 16 per cent of the units are retained by the promoters.
“However, we are heavily subscribed locally with our international component remaining low at 7.64 per cent. From our experience, the interest from foreign investors is trig gered when a fund size is larger than US$1 billion (RM3.16 billion),” he said.
LaBrooy added that there is growing interest in Axis REIT from foreign funds but the stocks liquidity is still not optimum to attract many international funds.
“So our initial target will be to cross the US$1 billion mark. However, in saying that, there is no optimum asset size for Axis REIT.
We hold a firm belief that we are not in a contest to see how big we can become but rather what assets we can add to the portfolio that will reward our unitholders in the long run.
We will grow but only with quality,” he said.
~ By BUSINESS TIMES
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