RHB Investment Bank's research maintains a 'buy' recommendation on Axis Real Estate Investment Trust (Axis REIT) with unchanged profit projections and a target price of RM2.30.
The brokerage firm explained that with five ongoing acquisitions and a target acquisition value of RM135 million, Axis REIT remains on track to record steady profit growth as well as dividend yields below the justified average.
In fact, the Shariah-compliant Axis REIT status and its strategic exposure to the industrial segment also provide an advantage for the company.
In its research note today, RHB emphasized that Axis REIT has space for purchases, following a large debt space of 33% recorded in the financial year ended 31 December 2020 before reaching the 60% debt limit.
Bernama reported that through the five ongoing acquisitions, one of them was completed on January 12 and Axis REIT now has 53 assets under it.
"The risk of a negative decline in our recommendations is the REIT's exposure to the office segment, which could adversely affect the occupancy rate and rental of its office property," according to RHB.
RHB added that the combined occupancy of Axis REIT remained stable at 91%, as the nature of single-leased industrial assets made up 92% of its portfolio
"About 80% of the leases ending in financial year 2020 have been renewed at + 5.6% return while warehouse and logistics assets contributed to favorable return rates," RHB explained.
In addition, RHB stated that the management of Axis REIT has announced that the lease will expire in the financial year 2021 at 18% of the net leasable area also showing favorable reforms to date and at a positive low one-rate return rate.
