It said on Thursday Axis REIT believes this segment will be supported by stable and resilient industrial rental rates with upside risks to rental and capital values due, to an extent, to the shortage of warehouses.
“We keep our FY19-21F EPS. Our Hold call stays as the 9% rise in its share price year-to-date has largely priced in the potential growth from new acquisitions, in our view,” it said.
The research house retained its target price of RM1.72 versus the last traded price of RM1.70.
Axis REIT’s post-4Q18 results briefing focused on its earnings performance in FY18, portfolio of investment assets, completed acquisitions in 2018, market outlook, and strategies for growth in 2019.
“Management reiterated that in terms of overall positioning in the REIT space, Axis REIT remains in the sweet spot of the industrial and warehousing segment where the demand and supply dynamics are more robust relative to the competitive and oversupplied state of the commercial/retail and office REIT segments.
“A positive surprise from the briefing was a combined potential acquisition target value of RM200mil for 2019, up 25% from the RM160mil guided in 3Q18.
“It still sees growing pockets of opportunity in the industrial and warehousing space. Geographically, the prospects in Johor, Penang, and Greater Klang Valley look more promising, supported by rising FDIs.
“The RM200mil target is about 7% of the group’s RM2.8bil total asset value as at end-2018. It may consider debt or equity fund raising in 2H19,” it said.
Axis REIT successfully executed and completed five asset acquisition deals in 2018 with a total value of RM180mil, raising its total value of investment assets to RM2.8bil across 45 assets.
Axis REIT estimates RM2.9m combined monthly revenue from the five new assets or RM34.8mil rental revenue accretion per annum.
For 2018, average portfolio reversion stood at +5%, supported by an average occupancy rate of 94%. It achieved 74% tenant retention rate for the year.
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