Friday 19 Jul 2024
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KUALA LUMPUR (May 8): Axis Real Estate Investment Trust (Axis REIT) said a tenant at its property in Nusajaya, Johor, which contributed about 5% of its total revenue last year, has defaulted on its rental payments.

Axis REIT said it has issued a notice to terminate its lease agreement with Yongnam Engineering Sdn Bhd (YESB), which is a major tenant at the Axis Steel Centre @ SiLC, following the default.

The REIT has made a provision of RM7.31 million in impairment for outstanding rental payments, it said. YESB signed a lease agreement with Axis REIT back in November 2014, its filing showed.

“YESB is a tenant of Axis-REIT contributing 5% of the total revenue of the fund for the financial year ended Dec 31, 2022 (FY2022),” Axis REIT said.

“Further to the termination notice, the trustee (RHB Trustees Bhd) shall, on behalf of Axis-REIT, undertake the necessary actions to recover the outstanding rental payments from YESB including rentals for the unexpired period of the lease agreement, compelling action to be taken to withdraw encumbrances and deliver vacant possession of the demised premises back to Axis-REIT,” it said.

“The manager (Axis REIT Managers Bhd) will be marketing the demised premises to prospective tenant(s) upon delivery of vacant possession by YESB back to Axis-REIT,” it added.

Axis acquired the property in 2014 for RM153.5 million from YESB through a sale-and-leaseback exercise. The agreement included a 15-year fixed rental lease term, according to reports.

YESB is part of Yongnam Holdings Ltd, which is involved in steel fabrication for buildings and has another production facility in Singapore.  

In FY2022, Axis REIT’s total trust income stood at RM281.63 million, up 16.18% from FY2021's RM242.41 million. Net property income rose 15.13% to RM245.08 million from RM212.88 million, while net income slipped 5.12% to RM190.11 million, from RM200.36 million.

Axis REIT units slipped one sen or 0.53% to settle at RM1.88 on Monday (May 8), giving the REIT a market capitalisation of RM3.27 billion. 

Edited ByKamarul Azhar Azmi
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