KUALA LUMPUR: Axis Real Estate Investment Trust’s (Axis-REIT) is purchasing leasehold land with warehouse in the Pasir Gudang industrial zone, Johor from Xin Hwa Holdings Bhd for RM75mil.
Axis REIT said on Monday its trustee, RHB Trustees Bhd had entered into a sale and purchase agreement to acquire a property from Xin Hwa Trading & Transport Sdn Bhd and then lease it back to the latter.
The property consists of two contiguous parcels of leasehold industrial land for RM75mil. C H Williams Talhar & Wong Sdn. Bhd., in its valuation report dated Feb 2,2021, valued the property at RM75mil.
Each parcel of land has a single storey detached warehouse, a three-storey office annex and other ancillary buildings with a combined land area of 16.2 acres. The property has a total lettable area of 464,613 square feet.
“Axis-REIT will lease the property back to XHTT upon completion of the acquisition for a fixed period of 10 years with an option to renew for a further five years.
“The 10-year lease will be divided into three terms where the monthly rental will be RM406,579 for the first three years, RM430,974 for the subsequent three years and RM456,832 for the remaining four years. If the option for renewal were to be exercised, the rental rate shall be negotiated and mutually agreed between the two parties, ” it said.
Axis REIT said the acquisition will be funded by bank financing, which will increase Axis-REIT’s gearing ratio to 34.5% of its audited total assets as at Dec 31,2020.
Upon completion, the acquisition is expected to contribute positively to Axis-REIT’s current financial year’s earnings as the acquisition exercise is anticipated to be completed by first half of 2021.
It described the Pasir Gudang industrial zone as one of Johor’s established industrial areas due to its proximity to the Pasir Gudang port and all-round accessibility coupled with good infrastructures in place.
The Pasir Gudang area itself traditionally has been a sought-after industrial locality in this part of Johor by the medium and heavy industries.
Axis REIT Managers Bhd chief executive officer/executive director Leong Kit May said this was the second proposed acquisition for 2021.
“We like the property because of its long lease term of 10 years and this will improve the weighted average lease expiry of Axis-REIT’s portfolio. Furthermore, the property sits on prime industrial land within Kawasan Perindustrian Pasir Gudang and is located within the same row as Axis-REIT’s Kerry Warehouse, ” she said.