KUALA LUMPUR: Axis Real Estate Investment Trust (Axis-REIT) is exploring the acquisition of properties specifically for data centers in addition to its traditional focus on industrial properties.
CEO and executive director Leong Kit May said the company is focusing on the country’s data center market and development.
“The data center business and operations are different from our industrial properties, as there are many factors to consider, such as power, utilities, types of data centers such as Tier 1 or Tier 2, and other factors.
“The capitalization rate for data centers, which represents the ratio of net operating income to asset value, is around 6% to 7%. So we have to take the right decision before buying any assets for data centres,” he told reporters and analysts at a briefing on Axis-REIT’s financial results on Friday.
For the financial year ending Dec 31, 2024 (FY24), Axis-REIT achieved total trust income of RM320.1 million, marking a 12% increase year-on-year, while net trust income of RM212.5 million. It was million.
This growth was primarily driven by the contribution of newly acquired properties, new tenancy at Axis Mega Distribution Center (Phase 2), and positive rental changes in its portfolio.
Taking into account fair value adjustments on the portfolio during the year, net income before tax declined to RM212.5 million in FY24 compared to RM221.6 million in FY23. This was due to lower gains in the fair value of investment assets. Fair value profit in FY24 was RM49.4 million, compared to RM81.3 million in FY23.
For Q4’24, Axis-REIT recorded 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 assets reflect our focus on delivering sustainable returns to our unitholders. As we look towards 2025, we remain optimistic and remain focused on pursuing growth opportunities in high-quality assets to ensure continued value creation,” Leong said.
In Q4’24, Axis-REIT achieved significant milestones, including the acquisition of Axis Facility 3 in Bukit Raja, Selangor for RM313 million on 8 October. The company acquired Axis Facility 1 in Pulau Indah, Selangor for RM110.08 million. on October 11, and Axis Facility 2 @ Pulau Indah, Selangor, on November 26 for RM48.57 million.
Additionally, the RM162 million disposal of Axis Steel Center @ SiLC, Johor was completed on Dec 12.
By December 31, 2024, the portfolio size had increased from seven properties to a total of 69, with an additional 1.8 million square feet of space under management and a positive rental return rate of 5.3%. By the end of 2024, Axis-REIT’s portfolio comprised 69 properties with a nationwide presence across Malaysia, with 56 properties operating at full occupancy.
The company’s total assets under management were RM5.26 billion, covering 15.15 million square feet of space. Its funding 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 key industrial areas, including the Klang Valley, Johor, Penang, Pahang, Negeri Sembilan and Kedah. Geographic diversification is designed to take advantage of the rapid growth of existing and emerging regional industrial centres.
Reclassified as an Islamic REIT in 2008, Axis-REIT recorded a year-to-date distribution of 9.27 sen per unit (DPU) in 2024 and a market capitalization of RM3.5 billion.
Kenanga Investment Bank Bhd said in a report that Axis-REIT’s ongoing proposed acquisitions that have been progressively completed in FY24 will continue to support FY2025 earnings growth prospects. It said Axis-REIT acquired more than RM500 million of assets in FY24, which is higher than its average historical acquisition record.
“Having said that, given the fact that industrial properties are now experiencing yield decline due to landlords raising property prices faster than rental return rates, we do not think Axis-REIT Finance Will continue to acquire assets aggressively in 2025. In FY24,” it added.
