Sale-and-Leaseback Deal Strengthens Logistics Portfolio
PETALING JAYA (June 26) — Axis Real Estate Investment Trust (Axis REIT) has proposed to acquire a fully occupied distribution centre in Bandar Saujana Putra, Selangor, from City-Link Express (M) Sdn Bhd for RM128 million in cash.
The acquisition is being undertaken by RHB Trustees Bhd, acting as trustee for Axis REIT, following the signing of a Sale and Purchase Agreement (SPA) with City-Link.
The property is located at No. 1, Jalan SP 1, Bandar Saujana Putra, Kuala Langat, and comprises two adjoining leasehold commercial parcels spanning approximately 11.56 acres. The site includes a distribution centre featuring single-storey, one-and-a-half-storey and double-storey buildings, together with two blocks of double-storey office buildings and supporting facilities.
The asset has an estimated gross floor area and net lettable area of approximately 355,023 sq ft. Constructed between nine and twelve years ago, the facility is currently fully occupied and utilised by City-Link for its logistics and distribution operations.
Acquisition Structure and Valuation
The purchase price of RM128 million will be settled entirely in cash and is structured as follows:
Earnest deposit: RM2.56 million (2%)
Balance deposit: RM10.24 million (8%)
Remaining purchase consideration: RM115.2 million upon completion
The agreed acquisition price is broadly in line with the independent market valuation of RM129 million conducted by Raine & Horne International Zaki + Partners Sdn Bhd using the investment approach, with the cost method used as a cross-check.
Axis REIT will acquire the property free from encumbrances, although the asset is presently charged to AmBank (M) Bhd and AmBank Islamic Bhd. The REIT will not assume any liabilities of the vendor under the transaction.
Long-Term Income Visibility Through Leaseback Arrangement
Upon completion, the property will be leased back to City-Link under a 15-year fixed-term tenancy agreement.
The lease provides for an initial monthly rental of RM661,878, with scheduled rental escalations throughout the lease term. This arrangement is expected to provide Axis REIT with a stable and recurring income stream from a well-established logistics operator.
Financing and Financial Impact
Axis REIT intends to fund the acquisition through existing banking facilities.
Based on audited financial figures as at Dec 31, 2025, the REIT's gearing ratio is expected to increase to approximately 33.94% following completion of the acquisition. This remains comfortably below the 50% regulatory limit stipulated under the Securities Commission Malaysia's Listed REIT Guidelines.
The acquisition is not expected to affect the number of units in issue, substantial unitholders' interests, or materially impact net asset value upon completion.
Strategic Fit Within Axis REIT's Growth Plan
The acquisition aligns with Axis REIT's strategy of expanding its portfolio of high-quality industrial and logistics assets that generate sustainable and recurring income.
Management expects the transaction to be earnings-accretive and contribute positively to distributable income for the financial year ending Dec 31, 2026. Completion is targeted by the fourth quarter of 2026.
Strategic Location Supports Logistics Demand
The distribution centre benefits from direct connectivity to several major highways, including:
ELITE Highway
South Klang Valley Expressway (SKVE)
West Coast Expressway (WCE)
Shah Alam Expressway (KESAS)
These transportation links provide efficient access to Shah Alam, Klang, Puchong, Putrajaya, Cyberjaya, Kuala Lumpur International Airport (KLIA) and Port Klang, enhancing the property's attractiveness for logistics, warehousing and distribution activities.
Conditions and Risk Factors
Completion of the acquisition is subject to several conditions, including:
State authority approval for the land transfer
Consent from existing charge holders
These approvals are required within four months from the SPA date or within an agreed extension period.
The SPA contains customary termination provisions. City-Link may terminate the agreement if the trustee fails to complete payment obligations, while Axis REIT may terminate if City-Link commits material breaches or encounters insolvency-related events.
The REIT manager also highlighted several ongoing risks associated with the investment, including:
Failure to satisfy transaction conditions
Property market fluctuations
Economic downturns
Tenant credit risks
Regulatory changes
Competitive market pressures
Non-renewal of tenancy upon lease expiry
Force majeure events
Key Takeaways
High-quality logistics asset acquisition
Axis REIT is acquiring a modern, fully occupied logistics facility with a sizeable 355,023 sq ft lettable area.
Strong recurring income visibility
A 15-year leaseback arrangement with City-Link provides long-term rental certainty and stable cash flow.
Earnings-accretive transaction
Management expects the acquisition to enhance distributable income and support future DPU growth.
Exposure to resilient logistics sector
The deal increases Axis REIT's allocation to industrial and logistics properties, which continue to benefit from e-commerce and supply chain demand.
Manageable gearing impact
Post-acquisition gearing is expected to remain at a conservative 33.94%, leaving room for future acquisitions.
Strategic Bandar Saujana Putra location
Excellent connectivity to major highways, KLIA and Port Klang strengthens the property's long-term logistics appeal.
Acquisition priced near valuation
The RM128 million purchase price represents a slight discount to the independent valuation of RM129 million, supporting value preservation for unitholders.
Malaysia