Axis REIT edges up with new assets, analysts flag tenant risk from latest acquisition

• Last Thursday (Sept 4), the trust said it was buying the property, comprising a factory, warehouse and office, with a combined gross floor area of 240,600 sq ft in the Bandar Sultan Suleiman industrial area.

KUALA LUMPUR (Sept 8): Axis REIT (KL:AXREIT) rose on Monday, following news of its latest acquisition, though analysts are flagging tenant risk as the asset is currently unoccupied.

The price tag for the relatively small industrial property in Port Klang would be in line with independent valuation, and the asset could deliver a gross yield of 7% once leased, based on prevailing rental benchmarks, RHB Research said in a note.

“However, the absence of a secured tenant poses a risk of delayed income contributions, unlike [its] recent acquisitions that were structured as sale-and-leaseback transactions,” the research house said.

Axis REIT rose as much as four sen or 2% to RM2.08 on Monday. At 10.30am, the unit price was RM2.06, giving the real estate investment trust a market capitalisation of RM4.16 billion. Year to date, the REIT has risen 19%.

Last Thursday (Sept 4), the trust said it was buying the property, comprising a factory, warehouse and office, with a combined gross floor area of 240,600 sq ft in the Bandar Sultan Suleiman industrial area.

The acquisition will be funded through the REIT’s existing bank financing and is expected to be completed by the first quarter of 2026.

“While the asset acquisition is in line with Axis REIT’s strategy of expanding industrial asset portfolio, we are neutral on the asset acquisition as the property is currently unoccupied, hence acquisition yield is unclear,” said MBSB Research.

RHB Research and MBSB Research believe that Axis REIT would not face much difficulty to secure tenants, though both houses do not expect the acquisition to move the earnings needle much, as the latest asset accounts for just 1% of its total asset size.

After deducting financing costs, the earnings contribution would amount to just RM1 million annually, or less than 1% for 2026, according to MBSB Research’s forecast.

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