Axis REIT purchase of building brings it closer to asset target
Thursday, October 18th, 2007The Star, 18, 2007
PETALING JAYA: Axis REIT Managers Bhd’s proposed acquisition of a five-storey building for RM37mil will boost its asset size to RM618mil, bringing it closer to its target size of RM800mil by year’s end, Aseambankers Malaysia Bhd said.
In an announcement on Friday, Axis REIT proposed the buy of its 16th property, an office and factory in Petaling Jaya, from Wah Seong Industrial Holdings Sdn Bhd.
“The acquisition price appears fair at RM353 per sq ft with rising capital values,” said Aseambankers analyst C.T. Ong in a report. “The price compares well with recent office property transactions in the vicinity, like Nestle House at RM375 per sq ft and Menara Merais at RM358 per sq ft.”
The acquisition was expected to record a net property income of about RM2.6mil a year, or a net property yield of about 7%, he said, noting that it would increase Axis REIT’s net profit by 3.3% for the financial year ending Dec 31, 2008.
The acquisition, expected to be completed by February next year, was anticipated to generate income of some RM960,000 a year for the trust, Ong said.
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Real estate investment trust typically in the form of a trust fund which pools money from investors and uses the pooled capital to buy, manage and sell real estate assets, such as residential or commercial buildings, retail or industrial lots, or other real estate-related assets. It is a passive investment vehicle which acquires and holds income generating real estates. REITs are driven entirely by recurrent rental income from real estates and with the present tax structure governing REITs, distribute at least 90% of its income to unit holders, thus providing stable and consistent income to unit holders.
