Axis REIT set to dispose Kayangan Depot

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KUCHING: Axis Real Estate Investment Trust (Axis REIT) is all set for another disposal in the pipeline as the public tender for Kayangan Depot was confirmed to realise the value of the asset under the REIT’s value enhancement efforts once the asset reached its optimal value.

“Currently, the market value of the property is RM22.1 million versus its cost of RM17.1 million. If the public tender is successful, it will be the second asset disposal by Axis REIT,” according to a research report by Kenanga Investment Bank Bhd (Kenanga Research).

The research house noted that the announcement came as no surprise as it had anticipated it.

“The intentional to dispose is very much within the company’s strategy of a property trading portfolio.

“Axis REIT now has sufficient size and number of properties to trade them without significantly affecting its income, particularly if they are timed property with new acquisitions,” Kenanga Research added.

It believed that the icing on the cake was that unit holders would be given special dividends from the gain on disposal, as seen with its first asset disposal last year.

This would offer investors potential excitements. With the assumption that the asset was sold at the indicative market value of RM22.1 million, the research house predicted the net gain could amount to RM4.8 million.

Kenanga Research noted that this would increase financial year 2012 expected gross dividend per unit (GDPU) by one sen to 19 sen which is a seven per cent yield.

“Upon disposal, annualised financial year 2012 to 2013 expected core earnings would fall by three per cent each, although we believe this will likely be neutralised even as well by its aggressive acquisition pipeline,” the report added.

The research house was anticipating other possible disposals and expected financial year 2012 to see acquisitions of up to RM300 million. It went on to maintain financial year 2012 to 2013 realised net income of RM81.3 million to RM87.6 million, implying GDPU of 17.9 sen to 19.3 sen or 6.6 to 7.1 per cent yield.

“We will only factor in the disposal upon the actual sale announcement. New earnings drivers for financial year 2012 onwards include Seberang Prai and Bayan Lepas industrial warehouses as well as the proposed acquisition of industrial properties in Nilai,” explain Kenanga Research.