PETALING JAYA: With 57 assets under its belt, Axis REIT Bhd’s acquisition spree is expected to pick up again with the gradual re-opening of the economy in the second half of the year.
The search to add more properties such as in the warehousing sector, where there is steady demand increase continues.
Axis REIT also has ample debt headroom before breaching the 60% gearing limit, with gearing as at first quarter 2021 standing at 36% to allow for future acquisitions, said RHB Research.
Maybank Investment Bank (Maybank IB) Research added that based on its estimates, this would provide a maximum debt headroom of about RM986mil (up to 0.5 times) for asset purchases.
The research house remained positive on Axis’ active acquisition strategy, namely on industrial assets with resilient rental income.
Axis REIT has an ongoing acquisition of a RM75mil warehouse facility in Johor.
It is also eyeing for a group of assets with a total value of about RM135mil, said Maybank IB.
RHB Research said as it is, the blended occupancy for Axis REIT remains stable at 91%, considering the single-tenanted nature of industrial assets, which makes up 92% of its portfolio.
Out of about 18% of total net lettable area that is due for renewal this year, 76% has been renewed to date at a reversion rate of a healthy low-to-mid single-digit, according to the management, RHB Research said.
It added that leases up for expiry in 2020 were renewed at a +5.6% reversion.
It said the rental reversion rate this year would be just as attractive – owing to the warehouse and logistics assets.
It said currently-vacant D8 Logistics Warehouse and Axis Industrial Facility are expected to be filled up by Q2 and Q4 respectively.
Axis REIT recently released its Q1 financial results which met most analysts consensus.
Most research houses have maintained their “hold” call on the stock as well as the target price.
RHB Research has set a target price for Axis REIT at RM2.30 a share, while Maybank IB at RM2.20 and MIDF Research is at RM2.04.
MIDF Research said the earnings outlook for Axis REIT is expected to be stable as its portfolio of industrial assets are relatively shielded from Covid-19 pandemic.
It said, the financial year 2021 earnings is expected to be driven by contribution from asset acquisitions in Q1.