KUALA LUMPUR: Axis Real Estate Investment Trust (Axis-REIT) is exploring the acquisition of assets specifically for data centres in addition to its traditional focus on industrial assets.
CEO and executive director Leong Kit May said the company has been looking into the country’s data centre market and development.
“The data centre business and operations are different from our industrial assets, as there are various factors to be considered, such as electricity, utilities, type of data centres like Tier 1 or Tier 2, and other factors.
“The capitalisation rate for data centres, which represents the ratio of net operating income to asset value, stands at approximately 6% to 7%. So we have to make the right decision before acquiring any assets for data centres,” she told reporters and analysts at a briefing on Axis-REIT’s financial results on Friday.
For the financial year ended Dec 31, 2024 (FY24), Axis-REIT achieved a total trust income of RM320.1 million, reflecting a 12% year-on-year growth, while net trust income amounted to RM212.5 million.
This growth was primarily driven by contributions from newly acquired properties, new tenancies at Axis Mega Distribution Centre (Phase 2), and positive rental reversion across its portfolio.
Considering the fair value adjustment on the portfolio during the year, net income before tax decreased to RM212.5 million in FY24 compared to RM221.6 million in FY23. This was due to a lower gain in fair value of investment properties. The gain in fair value in FY24 was RM49.4 million, in contrast to RM81.3 million in FY23.
For Q4’24, Axis-REIT reported a total trust income of RM87.8 million, representing a 16% increase from RM75.6 million in the same quarter last year. Net trust income was RM93.5 million, reflecting a resilient portfolio performance.
“We closed FY24 on a strong note. The strategic acquisitions completed during the year and the stable performance of our existing properties reflect our focus on delivering sustainable returns to our unitholders. As we look ahead to 2025, we remain optimistic and focused on pursuing accretive opportunities in high-quality assets to ensure consistent value creation,” Leong said.
In Q4’24, Axis-REIT achieved significant milestones, including the acquisition of Axis Facility 3 @ Bukit Raja, Selangor, for RM313 million on Oct 8. The company acquired Axis Facility 1 @ Pulau Indah, Selangor, for RM110.08 million on Oct 11, and Axis Facility 2 @ Pulau Indah, Selangor, for RM48.57 million on Nov 26.
Additionally, Axis Steel Centre @ SiLC, Johor’s disposal for RM162 million was completed on Dec 12.
By Dec 31, 2024, the portfolio size had expanded by seven properties to a total of 69, with an additional 1.8 million sq ft of space under management and a positive rental reversion rate of 5.3%. As of the end of 2024, Axis-REIT’s portfolio comprised 69 properties with a nationwide presence across Malaysia, including 56 properties operating at full occupancy.
The company’s total assets under management stood at RM5.26 billion, covering 15.15 million sq ft of space. Its financing ratio was 33.3%. The portfolio boasts a solid industrial space segment with an overall occupancy rate of 95% and a weighted average lease expiry of 4.9 years.
Axis-REIT’s 69 properties are strategically located in prime industrial areas, including the Klang Valley, Johor, Penang, Pahang, Negeri Sembilan and Kedah. The geographical diversification is designed to capitalise on the rapid growth of existing and emerging regional industrial hubs.
Reclassified as an Islamic REIT in 2008, Axis-REIT recorded a year-to-date distribution per unit (DPU) of 9.27 sen in 2024 and achieved a market capitalisation of RM3.5 billion.
Kenanga Investment Bank Bhd, in a report, said Axis-REIT’s ongoing proposed acquisitions that have been progressively completed in FY24 will continue to support its FY25 earnings growth prospects. It said Axis-REIT acquired more than RM500 million worth of assets in FY24, which is higher than its average historical acquisition record.
“Having said that, given the fact that industrial assets are now experiencing yield compression due to landlords raising asset prices at a pace faster than the rate of rental reversions, we do not foresee Axis-REIT continue acquiring assets in FY25 as aggressively as it did in FY24,” it added.
