PETALING JAYA: Analysts are optimistic about Axis Real Estate Investment Trust’s (Axis-REIT) portfolio following the acquisition deal of a logistics warehouse underneath a 10-year sublease settlement for RM390mil, its largest acquisition to date.
The analysis homes mentioned the newest inexperienced constructing acquisition would contribute actively to the corporate’s property earnings and monetary 12 months earnings whereas enlarging its asset portfolio.
In CGS-CIMB Research’s view, the group continued to ship on its asset portfolio progress technique specializing in the area of interest logistics warehouse house whereas enhancing its environmental, social and governance (ESG) visibility with inexperienced constructing belongings.
It famous the entire variety of belongings underneath Axis-REIT’s portfolio at 58 with a mean occupancy fee of 96% on the finish of monetary 12 months 2021 (FY21).
The analysis home estimated the online property earnings (NPI) at RM22.9mil each year for the acquisition and there’s progress by way of a ramp-up in asset acquisition in FY22.
The estimated NPI works out to 7.1% of FY22 earnings-per-share (EPS) due to the half 12 months’s contribution and 13.1% of FY23 to FY24 EPS on a full-year foundation, in accordance to the analysis home.
Axis-REIT is among the many two most well-liked REIT sector picks for the analysis home based mostly on the estimated dividend yield of 5.2% to 5.9% within the coming years.
The analysis home retained its “add” name with a goal worth of RM2.34 per share whereas noting the draw back danger to be the detrimental rental reversions for the renewal of expiring leases in FY22.
Meanwhile, Hong Leong Investment Bank (HLIB) Research mentioned the brand new asset would enhance Axis-REIT’s coming monetary 12 months earnings by 2% to 2.8%.
“We are positive on the acquisition as it is accretive at NPI yield of 6.7%, comparable with its current NPI portfolio yield,” mentioned HLIB Research.
The analysis home mentioned the acquisition worth of RM339 per sq ft is affordable due to its strategic location.
HLIB Research maintained its “buy” name with a goal worth of RM2.10 per share based mostly on a focused yield of 4.6% on FY23 distribution per unit (DPU).
Maybank Investment Bank (Maybank IB) Research is mildly constructive on the proposed acquisition. Axis-REIT remained as its high choose due to its resilient rental earnings from industrial belongings and energetic acquisition methods.
“Assuming a 95% net property margin, we have derived net property yields of 6.3% to 6.8%, based on lease term of 10 years. These are higher than our estimated weighted average cost of capital of 5.3% (debt:equity 40:60),” it mentioned in a analysis report.
“To recap, year to date (y-t-d) for FY22, Axis-REIT has completed two industrial properties purchases in Johor in March,” it identified.
The analysis home maintained its “buy” name with a goal worth of RM2.30 per share whereas noting the dangers to be modifications in rental charges, occupancy charges, working bills and rates of interest which will lead to decrease earnings for Axis-REIT.
Axis-REIT has entered into a sale and buy settlement with Equalbase PTP Sdn Bhd to purchase a logistics warehouse facility with a whole internet lettable space of about 1.15 million sq ft.
