Axis REIT looks to grow portfolio by 20pc this year

By Sharen Kaur

sharen@nstp.com.my

Published in NST on January 4, 2013

KUALA LUMPUR: Axis REIT Managers Bhd (ARMB), the manager of Axis Real Estate Investment Trust (Axis REIT), aims to grow its portfolio by 20 per cent a year, amid global market uncertainties.

The company is negotiating its portfolio for 2013 and the expansion will be financed via a private placement, said its chief executive officer Datuk Steward LaBrooy.

Axis REIT is an Islamic office and industrial property trust.

From an initial portfolio of five properties in 2005, the trust now has 32 properties worth about RM1.53 billion.

"As we move forward, we hope to grow in a managed manner. It is not a race for size but rather building a business that is resilient and profitable for our unitholders. We don't buy yields... we buy real estate!" LaBrooy told Business Times.

LaBrooy said due to worrying explosion of office space in Kuala Lumpur, ARMB will be stepping back from that segment temporarily "until the dust settles".

For now, it will focus on the industrial space, which has vast potential for growth, and increase its presence in Johor.

"The huge investments in Iskandar Malaysia are now bearing fruits with the influx on industrial and housing projects. We see ourselves having an increasing exposure to the Johor markets in the future.

"The office sector is compromised by low yields and fully priced assets with limited capital upside and the retail sector have difficulty accumulating assets for now," LaBrooy said.

He said ARMB has in place a five-year strategy plan to drive growth for Axis REIT, which includes focusing on tenant retention and enhancing returns from the portfolio.

The other key drivers are dividend growth, applying technology and sustainability to the operations and assets equally, carefully engineering enhancements to maximise rent and valuation of the assets, and maintaining the highest corporate governance standards to the operation.

It also entails managing operating expenditure and improving margins, refreshing the portfolio with timely sales of assets that have peaked or are underperforming and returning the capital gain to unitholders, and human resource development.

On the 2013 market outlook for REITS, LaBrooy said rising prices coupled with weak yields will be a hindrance in acquiring new assets.

However, he said the better REIT managers have already planned for these risks and they would be able to ride the storms if it occurs.

"The market for M-REITs will continue to remain in strong demand with tight pricing as investors chase these stocks well into 2013."