PETALING JAYA: Axis Real Estate Investment Trust
(Axis-REIT) is expected to accelerate its acquisition momentum in the coming quarters, as macro headwinds, including US tariffs on Malaysian exports, coupled with expanded sales and services tax (SST), gradually ease.
CGS International (CGSI) Research said it remains upbeat on Axis-REIT’s financial year 2025 (FY25) to FY27 outlook following a virtual call with the management.
The research house said management highlighted that most existing and prospective tenants have been able to absorb the SST impacts, underscoring the continued strength of demand for industrial space in the near term.
“As of Oct 25, Axis-REIT has announced two acquisitions, collectively worth RM130mil, which appears modest compared with eight acquisitions totalling RM719mil in FY24.
“With RM300mil worth of potential acquisitions in the pipeline as of the end of the third quarter of FY25 (3Q25), we believe Axis-REIT is well positioned to maintain inorganic growth and on track to expand its asset under management to RM10bil by FY30,” the research house said in a report yesterday.
CGSI Research said Axis-REIT continues to deliver resilient operational performance, supported by stable portfolio occupancy and rental reversions, while remaining focused on inorganic growth.
“While several assets saw a quarter-on-quarter dip in occupancy in 3Q25, including Axis Industrial Facility 1 @ Shah Alam from 76% in 2Q25 to 71%, Axis Business Park from 89% to 82%, and Seberang Prai Logistics Warehouse 2 from 100% to 0%, management remains confident in securing replacement tenants to restore occupancy levels,” the research house said.
It expected FY25 to FY26 occupancy to recover to 97% (from 95% in FY24), edging up further to 98% in FY27.
Notably, Seberang Prai Logistics Warehouse 2 is slated to be fully re-leased by next month, with an 19% rental uplift, according to management.
“Amid the healthy demand for industrial spaces, management expects FY25 rental reversion to remain broadly in line with FY24’s 5.3%. We see potential upside from re-tenanted assets, as incoming tenants are likely to commit at higher rental rates, supporting further rental growth ahead,” CGSI Research said.
It reiterated its “add” call on Axis-REIT with a slightly higher target price of RM2.29 from RM2.28 previously.
The research house remained optimistic on Axis-REIT’s outlook, premised on a resilient three-year distribution per unit compound annual growth rate of 7.7% over FY24 to FY27, driven by active acquisitions and strategic asset expansion.
Moreover, there was further upside potential from the group’s active acquisition pipeline, it added.
