REITS a solid form of investment

PETALING JAYA: Veteran real-estate investment trust (REIT) executive Datuk George Stewart LaBrooy, who will be retiring at the end of the year from Axis REIT Managers Bhd, describes REITs as steady investments when markets fall during volatile times.

“Over the last six months, REITs have a been a rock of calm in a turbulent sea. Share prices have been steady. Their resilience shines when markets turn this way. They are a solid form of investment,” LaBrooy, 63, said, adding that they have grown to become a significant and sound investment option for many investors.

“A lot of people are looking at the REIT market as a mechanism to invest. A lot of companies are also looking to list their REITs although the local REIT market may not be as liquid as Singapore’s.

“The REIT market in Singapore started about three years before us. Also, if they buy one property we have to buy five, to get the same value, because it’s so expensive. They’ve also been successful in attracting cross-border listing.

“Singapore’s REITs are very liquid but also very heavily foreign-owned. So when there’s a change in the market situation, they tend to get very volatile and foreigners exit the share prices that have tanked.”

LaBrooy, who has been a member of the board since October 2005 and chief executive officer since August 2008, said that the Malaysian market had a low foreign shareholding, and instead, a large local institutional base for investors. AXIS REIT Managers manages AXIS REIT, which was listed in August 2005.

“The institutional investors here don’t sell down like the foreign ones do, They hang on to the stocks and earn dividends every three to six months – and it’s great for insurance companies and pension funds.

“Compared with other countries that have REITs, in Malaysia we’ve listed practically most of the crown jewels, such as the twin towers, Pavilion, Midvalley and Sunway Pyramid. The asset quality is amazing.”

According to its website, AXIS REIT has some RM2.04bil in assets under management comprising 35 properties with space under management totalling 7.02 million sq ft. “We want to grow our asset size to RM3bil, and in the next 10 years, we want to cross the RM5bil mark,” said LaBrooy, who would continue to serve as a non-independent non-executive director from Jan 1, 2016.

Axis REIT chief operating officer and finance director Leong Kit May had been appointed LaBrooy’s successor.

“It’s been a great 10 years and when the team below you is ready, it’s time to move on. When you have a successful company, succession is a very important component to that,” LaBrooy told StarBiz.

He added that starting off the business a decade earlier was not easy, adding that Leong has been “part of the company’s fractured journey” for nine of the 10 years.

“We went through everything that happened in the market. When we listed, we had so many issues because the rules were not suitable or ready. We had to pull our prospectus back three times.

“I think we were lucky that we went into a space that was an industrial office mix and that had the highest growth rate in terms of acquisitions and capabilities. There were a lot of products in the market especially in early 2005, and we did a lot of great deals.”

The first property that Axis REIT acquired was Wisma Kemajuan in Petaling Jaya.

“We acquired Wisma Kemajuan immediately after we were listed and if we did that today, I think the analysts would’ve punished me. But we buy assets from a real estate perspective. We look at value, location and opportunity. Today, it’s yielding at 17% from 6% initially,” he said, adding that Axis REIT’s whole portfolio yields about 9% on a net basis.

Leong, who was present at the interview, said that she had big shoes to fill. However, she pointed out that she had been working with LaBrooy for almost 10 years.

“I have been fortunate to work with LaBrooy all this while, so it will actually be business as usual. We’re here to carry on the success and deliver good returns.”

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