KUALA LUMPUR: Axis Real Estate Investment Trust (Axis REIT) is acquiring a property in Bayan Lepas, Penang from Ire-Tex Corp Bhd for RM20.5 million cash.

Axis REIT said its trustee, RHB Trustee Bhd, has signed an agreement with Zoomic Technology (M) Sdn Bhd, a wholly-owned subsidiary of Ire-Tex, in relation to the acquisition.

The acquisition of the property is in line with the REIT’s investment objectives, it added in a filing with Bursa Malaysia.

“Furthermore, the proposed acquisition of the property would enable Axis REIT to strengthen its portfolio of industrial properties and is expected to benefit the fund in the long-term as a result of economies of scale,” said Axis REIT.

The property, sitting on a leasehold land measuring 90,040 sq ft, comes with a double-storey factory cum office building. The occupancy rate of the factory is 100%.

The REIT said Bayan Lepas is Penang’s prime industrial area sought after by local and multinational operators and investors.

“Penang also continues to attract strong demand from both local and foreign manufacturers due to its high-quality supply chain for the electronics industry, logistics, sustainable manufacturing infrastructure, access to talent and strong government support,” it added.

The acquisition will be funded by Axis REIT’s existing bank financing.

Axis REIT also said it expects the acquisition to contribute positively to its future earnings after the completion of the transaction, which is projected to be completed by end-2019.

In a separate filing with Bursa, Ire-Tex said the company decided to dispose of the property after taking into consideration the challenges of upkeeping the premises.

“The proceeds from the proposed disposal shall be utilised to settle the banking facilities and the balance will be utilised for working capital purposes,” said Ire-Tex.

The property recorded a book value of RM22.6 million, and Ire-Tex has estimated a loss of RM2.1 million on disposal based on the disposal price of RM20.5 million.

Axis REIT’s unit price closed three sen or 1.68% higher at RM1.82 yesterday, with a market capitalisation of RM2.25 billion.

Ire-Tex share price settled half a sen or 5.26% higher at 10 sen, with a market capitalisation of RM18.48 million.