Axis REIT to buy property from DHL for RM48.5m

Axis Real Estate Investment Trust has proposed to buy a three-storey office and warehouse in Penang from DHL Properties (Malaysia) Sdn Bhd for RM48.5 million to expand its business.

At the same time, Axis will lease the property back to DHL for five years. It will have an option to renew the lease for another five years.

"The acquisition is accretive with an unleveraged triple net yield of 8 per cent which will have a long term benefit to the Fund.

"Furthermore the lease has annual built in rental growth which will enhance earnings," Stewart LaBrooy, chief executive officer of Axis REIT Managers Bhd, said in a statement.

The property, located in Bayan Lepas, has a gross built up of some 231,940 sq ft and comes with a 60 year leasehold title which will expire in 2062.

Axis-REIT will use existing bank loans to fund the deal. This will raise its gearing level to 40 per cent.

The latest purchase will boost the fund's asset under management to over RM1.39 billion, upon completion by December 31, 2011.

By Business Times