KUALA LUMPUR (April 22): Axis Real Estate Investment Trust (Axis REIT) has proposed to acquire an industrial complex and open storage yard in Klang for RM351.8 million cash from a unit of Lion Industries Corp Bhd.

The REIT's trustee, RHB Trustees Bhd, has entered into agreements to buy the assets located in the Bukit Raja Industrial Park from Amsteel Mills Sdn Bhd, which is 99%-owned by Lion Industries, according to a bourse filing on Monday.

The industrial complex, covering an area of nearly 60 acres and adjoining Axis REIT’s existing property, Axis Facility 2, is being purchased for RM313 million.

Meanwhile, the purchase price of the open storage yard, covering an area of 7.13 acres and located across Axis Facility 2, is RM38.8 million.

Axis REIT said the acquisition will be funded by existing bank financing. According to the REIT's latest financial statement, its cash and bank balances amounted to RM7.79 million, while its bank financing stood at RM1.55 billion at end-2023.

On the rationale for the acquisition, Axis REIT said it views the properties as high quality and earnings-accretive with strong recurring rental income.

“The proposed acquisition of properties will be accretive to Axis REIT’s distributable income and adds to the portfolio of properties that will benefit the fund in the long term,” it said.

The acquisition of the industrial complex, which is slated to be completed by the fourth quarter of 2024, is expected to contribute positively to the REIT’s earnings for the financial year ending Dec 31, 2024.

Meanwhile, the open storage yard is expected to contribute to Axis Reit’s rental income by the end of 2025 after vacant possession delivery kicks off at the end of 2025.

Lion Industries, in a separate filing, said the proceeds from the sale of the two properties will be used to repay bank borrowings and for working capital requirements.

Shares in Axis REIT closed down two sen or 1.08% to RM1.84 on Monday, giving the group a market capitalisation of RM3.22 billion.

Lion Industries, meanwhile, rose 1.75% to 29 sen, valuing the company at RM211.9 million.