Axis REIT earnings growth projected at 10% for this year


Maybank IB Research said Axis achieved a positive rental reversion rate of 5.6% for 2020.

PETALING JAYA: Despite the Covid-19 pandemic, Axis Real Estate Investment Trust (REIT) has a high tenant retention rate and this poses lower risk of non-renewals.

Currently, there are five ongoing acquisitions which are expected to be completed in the first half of this year at a total purchase price of RM235mil.

Most research houses have retained their earnings forecast for the stock, although some had adjusted them after Axis turned in a positive set of financial results for the financial year (FY) ended Dec 31,2020.

“We expect 2021 earnings growth of 10%, driven by completed and pending completion acquisitions in the pipeline, ’’’ said UOB Kay Hian Research.

It noted that the majority of tenants are in the manufacturing and logistics industries, comprising 33% and 44% of total net lettable area (NLA), respectively.

It said lease expiry is spread out with 19% and 16% of total NLA expiring in 2021 and 2022, respectively.

Maybank IB Research said Axis achieved a positive rental reversion rate of 5.6% for 2020.

Following this, it has adjusted its FY 2021/22 earnings higher by 2%/1% post the FY20 results.

“Our double-digit growth estimates for FY21-22 distribution per unit are largely attributed to new asset assumptions of about five properties, including phase two of Axis mega distribution centre in FY21, ’’ the research house said.

Meanwhile, CGS-CIMB said, during the conference call with Axis management, that it had targeted a 2% to 3% rental reversion in FY21.

“It concurred with our view that the movement control order-induced risk would come from its office tenants in terms of potential space reconfiguration and rental rebates but this remains manageable as office tenants make up a minimal 5% of its total portfolio NLA, ’’ the research house pointed out.

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