Axis Real Estate Investment Trust has entered into a conditional agreement to acquire a build-and-lease industrial property in Senai, Johor for RM34.6 million. The deal involves RHB Trustees Bhd, acting for the trust, and the vendor Banyan Estate Malaysia Sdn Bhd. This forward acquisition consists of a double-storey detached factory featuring an annexed office on approximately two acres of leasehold land. The property is currently under construction and is expected to be finished by the fourth quarter of 2027.

The facility will be fully occupied by FCI Connectors Malaysia Sdn Bhd under a five-year fixed lease with an option to renew for a further five years. BIMB Research has noted that this move represents a strategic expansion as the tenant already has a relationship with Axis-REIT. The research house estimated that the asset will generate a gross rental income of roughly RM2.49 million per year before any step-ups. This is based on an initial monthly rent of RM207,653.

BIMB Research stated: “Using a net property income margin of 87% and a 4% cost of debt (anchored to the trust’s 10-year senior sukuk coupon), net incremental distributable income is estimated at about RM0.78mil per year, translating to roughly 0.039 sen distribution per unit (DPU) if fully debt funded.”

The acquisition aligns with a broader shift in the Malaysian property market where industrial and logistics assets are increasingly outperforming retail and office sectors. Analysts suggest that Johor is a key growth corridor due to its proximity to Singapore and established transport links like the Senai Desaru Expressway. While the first report suggests the use of existing credit lines, additional market observations indicate that the trust aims to maintain balance sheet flexibility. Management data shows that the financing ratio is expected to rise slightly from 32.95% to 33.72% on a pro forma basis.

Axis-REIT recently reported a rise in net profit for the nine-month period ending September 2025, reaching RM148.20 million compared to RM118.99 million the previous year. Revenue for the third quarter of 2025 also grew to RM92.77 million. The trust remains optimistic about maintaining its financial performance for the full year. BIMB Research has maintained a “buy” call on the stock with a target price of RM2.17. Experts believe that securing long-term industrial leases provides more predictable cash flows than discretionary commercial real estate in the current economic climate.