Long-Term Lease and Strategic Logistics Asset Expected to Support Earnings Growth
KUALA LUMPUR (June 26) — Analysts have responded positively to Axis Real Estate Investment Trust’s (Axis REIT) proposed acquisition of a distribution centre occupied by courier and logistics company City-Link Express (M) Sdn Bhd, citing its earnings-accretive nature, attractive acquisition pricing and stable long-term income profile.
The proposed acquisition involves a fully occupied distribution centre valued at RM128 million. The property consists of distribution facilities and supporting buildings situated on more than 46,000 sq m of land and currently serves as one of City-Link’s key logistics hubs.
Attractive Rental Yield and Stable Cash Flow
Research houses estimate that the acquisition will generate an initial property yield of between 5.8% and 6.2%, based on the agreed monthly rental payment of RM661,878 under the lease arrangement.
A key feature of the transaction is the 15-year sale-and-leaseback agreement with City-Link, which will remain as the sole tenant after the acquisition is completed.
According to analysts, the long-term tenancy agreement significantly reduces vacancy risk while providing Axis REIT with predictable and recurring rental income over an extended period.
The arrangement also offers visibility on future cash flows, which is particularly valuable for REIT investors seeking stable distributions.
Acquisition Price Considered Reasonable
Although the estimated yield from the new asset is lower than Axis REIT’s projected portfolio gross yields of 7.1% for 2026 and 7.3% for 2027, analysts believe the acquisition remains financially attractive.
One factor supporting the transaction is its debt-funded structure, which allows the acquisition to be completed without issuing new units. As a result, existing unitholders avoid dilution of their ownership interests.
The purchase consideration of RM128 million is also slightly below the property's independent valuation of RM129 million, providing Axis REIT with a favourable entry point into the asset.
Strategic Logistics Location
The distribution centre is located within the Klang Valley logistics corridor, one of Malaysia’s most important industrial and distribution regions.
Its strategic positioning supports efficient logistics operations and enhances the asset’s long-term attractiveness to tenants involved in warehousing, transportation and supply chain activities.
Analysts noted that demand for well-located logistics facilities continues to remain resilient, supported by e-commerce growth, supply chain expansion and increasing logistics requirements from businesses.
Supports Axis REIT’s Industrial Expansion Strategy
The acquisition aligns closely with Axis REIT’s ongoing strategy of increasing its exposure to industrial and logistics assets.
Over recent years, Axis REIT has progressively expanded its portfolio of warehouses, manufacturing facilities and logistics properties to benefit from structural growth trends in the industrial sector.
The addition of the City-Link distribution centre further strengthens the REIT’s logistics segment while enhancing portfolio diversification and income stability.
Analysts believe the property should remain competitive over the long term due to its location, tenant profile and the continued growth of Malaysia’s logistics industry.
Key Takeaways
Earnings-Accretive Acquisition
Analysts expect the acquisition to contribute positively to Axis REIT’s earnings and distributable income.
Long-Term Rental Security
The 15-year sale-and-leaseback arrangement with City-Link provides stable and predictable rental income with minimal vacancy risk.
Reasonable Purchase Price
The RM128 million acquisition price is slightly below the independent valuation of RM129 million, offering a favourable entry point.
Non-Dilutive Financing Structure
The acquisition will be funded through debt facilities, avoiding equity issuance and preserving existing unitholders’ ownership stakes.
Exposure to Growing Logistics Sector
The transaction strengthens Axis REIT’s position in the logistics and industrial property segment, which continues to benefit from long-term demand drivers.
Strategic Klang Valley Location
The asset is located within a key logistics corridor, supporting its long-term occupancy and rental prospects.
Stable Yield Profile
The property is expected to generate an estimated yield of between 5.8% and 6.2%, supported by a committed tenant and long lease tenure.
Positive Portfolio Enhancement
The acquisition reinforces Axis REIT’s strategy of building a resilient portfolio of income-generating industrial and logistics assets capable of delivering sustainable returns.
Yao Mu Realty, based in Kuala Lumpur, Malaysia, specializes in industrial real estate for factories and land, delivering professional and efficient solutions.
Posted by Yao Mu Realty Sdn Bhd on 26 Jun 26
Malaysia