PETALING JAYA: Axis Real Estate Investment Trust
(Axis-REIT) is likely to see a new fund raising exercise following its recent acquisition.
According to Maybank Investment Bank Research, its management typically considers a potential private placement once gearing approaches 0.40 time to preserve balance sheet headroom for future growth.
This followed Axis-REIT’s proposal to acquire a freehold industrial property in Seberang Perai Tengah, Penang from a listed steel company on Bursa Malaysia for RM800mil cash.
“We raise our financial year 2025 (FY25) to FY27 forward earnings by 3.2%, 3.7% and 5.8% respectively to reflect lower borrowing costs of 4.1% and new rental income from the Telok Gong property.
“Incorporating these revisions, our dividend discounted model target price is lifted to RM2.30 from RM2.24,” the research house said with a “buy” rating on the counter.
The 135.5-acre property acquisition would be leased back to the steel company for eight years at an initial monthly rent of RM4.2mil, which implied an initial gross yield of 6.2%, it said.
“We incorporate lower borrowing costs and Telok Gong’s rental income into our forecasts while we exclude the Bandar Sultan Suleiman and Penang acquisitions pending sales and purchase agreement execution and confirmed tenancy.
“With the enlarged RM1.27bil pipeline funded entirely by debt, we estimate gearing to increase from 0.33 times to 0.46 times,” it noted.
The research house added that the lease includes partial space surrenders in the fifth to seventh years, allowing the steel company to progressively reduce its occupied area, which could open other opportunities.
“The acquisition strengthens Axis-REIT’s presence in the northern industrial corridor anchored by Penang Port and export-oriented manufacturing activity,” it added.
Axis-REIT’s net income in the third quarter ended Sept 30, 2025, rose to RM52.12mil from RM37.77mil in the year-ago quarter, supported by new tenancies and positive rental reversion across its portfolio.
