Axis REIT’s 4Q20 to remain resilient — Analysts
KUCHING: Axis Real Estate Investment Trust’s (Axis REIT) fourth quarter of 2020 ( 4Q20) will remain resilient, analysts project, contributed by its newly acquired properties.
According to the research arm of Hong Leong Investment Bank Bhd (HLIB Research), Axis REIT’s growth prospect remains promising as the company continues to aggressively source and evaluate potential acquisition targets that are deemed investable.
“The selection of properties will continue to focus on Grade A logistics facilities and manufacturing facilities with long leases from tenants with strong covenants as well as well-located retail warehousing in locations ideal for last-mile distribution,” HLIB Research said.
Meanwhile, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) gathered that financial year 2020 (FY20) and FY21 are expected to see minimal leases expiring at 17 per cent and 19 per cent, respectively, of portfolio net lettable area
(NLA).
Kenanga Research highlighted that the group is eyeing industrial assets worth a total of RM195 million, focusing on Grade A logistics (similar to One Total Logistics warehouse) and
well-located retail warehousing suitable for last mile delivery.
The group will continue to target acquisitions with net yield of over six per cent, while the research arm expected positive low single-digit reversions going
forward.
“Additionally, Axis REIT has accepted the LO for 1.5-storey detached factories within Kawasan Perindustrian i-Park, Kulai, Johor for RM28.2 million, pending the due diligence which may result in a sales and purchase agreement (SPA),” Kenanga Research said.
In its outlook on Axis REIT, AllianceDBS Research Sdn Bhd (AllianceDBS Research) also noted that the group has a number of on-going asset acquisitions with a total estimated value of RM135 million.
“This includes Bayan Lepas Industrial Facility 1 (RM20.5 million), One Total Logistics Warehouse (RM95 million), a manufacturing facility in Shah Alam (RM11.9 million) and manufacturing facilities in Indahpura (RM28.19 million),” the research firm said.
“In terms of lease expiry, 16.76 per cent of total NLA is due for renewal in FY20 and 19.1 per cent in FY21. For FY20, 76 per cent of space due for renewal has been renewed.”
AllianceDBS Research gathered that for Phase 2 of Axis Mega DC, the group is still in talks with a few parties to commit to the next build-to-suit development.
The research firm believed this will contribute positively to Axis REIT’s future earnings as there is demand for logistics and warehousing facilities.