Solid third quarter seen for Axis REIT
KUCHING: Axis Real Estate Investment Trust (Axis REIT) registered a realised net income (RNI) for its first nine months of financial year 2021 (9MFY21) of RM100.4 million which came in within market expectations at 72 per cent.
Year to date, topline was up by 5.8 per cent year on year (y-o-y) rentals from four newly acquired properties, while operating cost decreased slightly by 2.1 per cent.
All in, core net profit was up by 7.7 per cent despite higher financing cost and expenditure. Net gearing moved up to 0.36 times versus 0.32 times in 2QFY21.
“On a quarterly basis, top-line was up slightly by 1.7 per cent on stable portfolio occupancy of 94 per cent and low single digit reversions,” commented analysts at Kenanga Investment Bank Bhd (Kenanga Research).
“However, RNI was up by 21 per cent on a reversal on a provision for doubtful debts from a tenant.
“FY21 is expected to see minimal leases expiring at 18 per cent of portfolio net lettable assets (NLA), of which the group has already secured renewals for 87 per cent of these leases on positive reversions, while FY22 will see 21 per cent of leases up for expiry.”
Public Investment Bank Bhd (PublicInvest Research) recapped that Axis REIT’s group portfolio size increased by four to a total of 57 properties to date with the completion of the acquisition of Indahpura Facility 2, Johor for RM8.5 million on January 12, 2021, Indahpura Facility 3 in Johor for RM6.7 million on February 26, 2021, Beyonics i-Park Campus Block F in Johor for RM13 million on March 3, 2021 and Bukit Raja Distribution Centre 2 in Shah Alam for RM120 million on March 31, 2021.
All in, it has 57 assets comprising 10.9 million square feet and 152 tenants with average occupancy of 94 per cent.
The group proposes to undertake a placement of up to 188,042,597 units or up to 13 per cent of the total number of units issued of 1.446 billion units, to be used primarily to pare down its debt.
As at September 30, 2021, the financing ratio of Axis-REIT stood at 36.6%; and the proposed placement is expected to lower its financing ratio to 27.3 per cent.
“This would provide the Group with sufficient headroom to pursue opportunistic acquisitions of new properties and development projects,” PublicInvest Research said. “As for earnings dilution, the quantum would depend on the number of placement units to be issued and hence we keep our valuation unchanged for now.”