Analysts positive on Axis REIT’s near, long-term growth prospects

KUALA LUMPUR: Analysts are reassured about Axis Real Estate Investment Trust’s (REIT) near and long-term growth prospects, following a briefing held by the group.

According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), Axis REIT could achieve full occupancy for its D21 Logistics Warehouse (previously BMW Centre PTP), which was vacant since the third quarter of 2017 (3Q17), starting February.

“On top of that, Crystal Plaza and Quattro West are also expected to see higher occupancy rate going forward,” MIDF Research said.

“Management is embarking on enhancing some of its assets to retain existing tenants and to attract new tenants.”

For financial year 2017 (FY17), occupancy rate stood at 91.7 per cent and the research arm expected for it to improve to 94 per cent to 95 per cent in FY18 with these new tenancy agreements.

MIDF Research highlighted that besides the on-going acquisitions of the Shah Alam, Senawang and Indahpura assets, collectively worth RM150.7 million, Axis REIT is also exploring the acquisition of several other industrial assets amounting to about RM150 million. The research arm believed that the additional assets would be funded via debt as the private placement to raise RM178.8 million had been completed quite recently.

The research arm also estimated that Axis REIT’s gearing would increase to about 38 per cent if the additional acquisition targets were to be funded fully via loans.

MIDF Research noted that Axis REIT would continue to focus on the REIT’s key strength in this segment riding on the strong demand for warehousing and logistics.

The research arm further noted that logistics make up 34 per cent of Axis REIT’s total net lettable area (NLA), followed by engineering/building materials at 22 per cent.

“Meanwhile, warehouse logistic makes up 41 per cent of its NLA, followed by manufacturing facilities at 29 per cent,” Kenanga Research said.

That said, the research arm pointed out that Axis REIT may add more logistic/warehouse related NLA to the REIT’s portfolio through acquisitions and the expansion of phase 2 of the Axis Mega Distribution Centre.

Overall, MIDF Research maintained ‘buy’ with an unchanged target price of RM1.66 per share as the research arm made no changes to its estimates.

“We like Axis for its niche position in the resilient industrial segment and proactive expansion plans,” the research arm said.