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Wednesday, August 02, 2006


I bought Axis REIT 2 months ago after reading the cover story from Personal Money magazine and a book "Road to Riches with REITs" by the famous sifu in capital market, Sherilyn Foong. At that time, I got different recommendations from the 2 sources, book and magazine.

Sherilyn recommended REIT investment strongly. As from her point of view, REIT is sort of "optimized" version of property investment, the next big thing in Malaysia (which was true for some times, but the heat faded off quickly, and the book was written in 2005). While on the other side, concerns of hiking interest rate (which renders the yield of REIT less attractive compare to fixed deposit), less than perfect regulation such as high taxation (28%) for foreign investor, too many red tapes for buying and selling property...etc from the magazine discouraged readers to invest in REIT.

Nevertheless, because of my target is to invest into some stable, relatively high yield generating stocks, I've decided to bet a small amount in REIT. Naturally, for one to invest in REIT of Bursa, there is only limited options, which are UOA, Tower, Starhill and Axis REIT. Despite Axis REIT price has appreciated quite a lot from its IPO of RM1.25 (while others are about or even below their IPO), I have decided to invest in Axis, because of the main reasons as below:

a) Most actively managed, constantly acquires new property for yield improvement

b) Commited dividen payout rate of 95%

c) Strategic properties with high tenancy rate, ~99% and long term MNC occupants such as AIA, Tenaga, Fuji Photo, Fuji Xerox..etc

Its share price has remained very stable along these 2 months, despite KLCI has fluctuated in range 885 - 935 points. And yesterday, Axis REIT brought another good news to its investor. With 6.2 sen interim dividen, which is equal to 97.2% dividen payout rate, it is impressive to me.

"Axis Real Estate Investment Trust (Axis REIT) posted a net profit of RM14.79 million for the second quarter ended June 30, 2006.....
Revenue for the quarter ended June 30, 2006 was RM9.64 million while basic earnings per share was 7.18 sen. Axis REIT manager Axis REIT Managers Bhd also declared a 6.2 sen tax exempt interim dividend....."

Quoted from The Edge Daily, 01-Aug-06

If Axis can maintain this earning for 2nd half of the year, it will translate to ~12 sen per year. For the share price of RM1.68 (which I've purchased), this is equal to ~7.1% yield. At this rate, and judging from the stability of its share price (almost non-correlation to KLCI), I have to say that Axis REIT is a very attractive vehicle for me to temporarily place my spare money. Even if I quit before the next dividen payout, I will already received 6.2 sen (i.e. ~3.7%, which is almost equal to 1 year return of fixed deposit in bank). My calculation has also excluded the potential of capital appreciation, in my case, it has already rised ~4.7%.

In addition, I think the overall economy condition now is favouring toward investment of REIT, because:

a) Interest rate hike seem to put on a pause, with economy slowing down globally and locally, easing the concern of inflation

b) Relaxation of regulation / guideline from SC for growth of REIT. Latest change as reported in The Edge Daily as link

c) Potential lower taxation for foriegn investor by government in coming budget. This will attract foreign investment and price appreciation for current REIT.

So, for those who are interested to jump into the boat of REIT investment, make sure you grab some well managed REIT like Axis. The execution date of its current dividen payout is on 17-Aug. For me, I will collect more Axis when its price resides after dividen payout, but before budget. Also, please note that income from REIT dividen is subjected to Malaysian income tax base on individual bracket.

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