KUALA LUMPUR: Axis Real Estate Investment Trust (Axis-Reit) is exploring the acquisition of assets specifically for data centers in addition to its traditional focus on industrial assets.
CEO and executive director Leong Kit May said the company is looking at the country’s data center market and growth.
“The data center business and operations are separate from our industrial assets, as there are different factors to consider, such as power, utilities, type 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 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 ending Dec 31, 2024 (FY24), Axis-Reit achieved net trust income of RM320.1 million, reflecting a 12% year-on-year growth, while net trust income was RM212.5 million.
This growth was primarily driven by contributions from newly acquired properties, new tenure at Axis Mega Distribution Center (Phase 2) and positive rental upside 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 properties. Profit at fair value in FY24 was RM49.4 million, versus RM81.3 million in FY23.
For Q4’24, Axis-Reit reported 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 ahead to 2025, we remain optimistic and focused on pursuing 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 @ Bukit Raja, Selangor for RM313 million on 8 October. on October 11, and Axis Facility 2 @ Pulau Indah, Selangor, on November 26 for RM48.57 million.
Additionally, the disposal of Axis Steel Center @ SILC, Johor for RM162 million was completed on 12 December.
By December 31, 2024, the portfolio size had expanded by seven properties to a total of 69, with an additional 1.8 million square feet of space under management and a positive rental reversal rate of 5.3%. By the end of 2024, Axis-Reit’s portfolio consisted of 69 properties with a nationwide presence in Malaysia, including 56 properties at full occupancy.
The company had total assets under management of RM5.26 billion, with 15.15 million square feet of space. Its financing ratio was 33.3%. The portfolio has 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 Klang Valley, Johor, Penang, Pahang, Negeri Sembilan and Kedah. Geographic diversification is designed to capitalize 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 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 FY20 will continue to support its FY25 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 property is now experiencing yield compression due to landlords pushing property prices up at a faster rate than the rate of rental reversals, we do not “We are confident that Axis-Reit will continue to acquire assets as aggressively in FY25 as it did in FY24,” it added.
