Manager's Report
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Manager’s Report First Asset Disposal – Axis North Port LC 1 The Manager announced on the 17 January 2011 that the Trustee for Axis-REIT, had entered into a sale and purchase agreement in relation to the disposal of Axis North Port LC 1 for a total lump sum cash consideration of RM14.5 million to Freight Management (M) Sdn Bhd . Salient points of the disposal are as follows: Proposed Disposal Price = RM14,500,000 Estimated net gain on disposal = RM803,000 Estimated real property gain tax = RM41,000 Estimated net gain available for distribution = RM762,000 Rationale In less than 5 years of ownership , the Manager believes it has optimized the potential of Axis North Port LC 1.The Manager also felt that there was a limited upside to future rental growth and therefore this was an opportune time to sell the asset and re-deploy the capital for more yield accretive properties. The Manager intends to distribute the net gain (estimated to be RM762,000) on the disposal (after 5% real property gains tax) to unitholders in 2011 by way of tax exempt income distribution. The balance will be used to reduce gearing to provide Axis-REIT with headroom for future acquisition. The Proposed Disposal of Axis North Port LC1 will translate to a distribution of approximately 0.20 sen per Unit. This is part of our strategy to optimize the Fund’s portfolio in order to maximize returns to the Unitholders. The disposal is expected to be completed before the end of the 2Q 2011. 34 AXIS-REIT | ANNUAL REPORT 2010 AXIS-REIT | ANNUAL REPORT 2010 35 INVESTOR RELATIONS REPORT (II) The proposed placement of 68,819,800 new Units, and Unitholders' Meetings (III) The proposed increase in Fund size to 375,901,000 Units In 2010, the Board unanimously resolved that the Manager will hold one Unitholders meeting every financial year, The Manager is pleased to report that all resolutions were irrespective if there were resolutions to be tabled for approval passed unanimously. or not. This is in line with the best practice on global REITs where a Unitholders' meeting is held every year. Having said that, since listing the Fund the Manager has met with Analysts’ and Fund Managers’ Briefings their Unitholders every year. Although the Unitholders' Meetings were for specific approvals for certain resolutions, The Manager has always maintained a policy of continuous the Manager always takes the opportunity to provide the disclosure to our participating funds, fund managers Unitholders with a comprehensive briefing of the Fund’s and analysts. We hold regular one-on-one meetings and activities and performance as part of our good corporate conference calls with the fund managers, analysts and governance. Unitholders to disseminate information. This bodes well with our corporate culture of having an effective corporate This year a Unitholders’ meeting was held on the 25 August governance framework. 2010 to approve the following resolutions. In 2010, we held the following fund managers' and analysts' (i) The proposed acquisition of Axis PDI Centre and Axis briefings; Technology Centre , two Related Party Transactions; • 21 January 2010 • 20 July 2010 We are also pleased to report that Axis-REIT is covered by the following research houses • Maybank Investment Bank • RHB Research • Hwang DBS Vickers Research • AmResearch • Kenanga Research • OSK Research • ECM Libra Investment Research Manager’s Report Media Relations Axis-REIT continues to attract excellent year of coverage by the mainstream media. Our press conferences are held immediately prior to the analysts and fund managers briefings are well attended by both the print and multimedia. In addition, the Press have run several feature articles on the REIT industry which has featured Axis-REIT. This helps in keeping our current and future Unitholders well informed about our Fund and its performance. Quattro West wins award QUATTRO West, formerly Nestle House, has won the best redevelopment award for Malaysia at the Asia Pacific Commercial Property Awards 2010 in Hong Kong on April 16. Axis REIT Managers Bhd bought the building for RM39.8 million in 2007 and budgeted RM7 million for its makeover. “Winning this... underscores Axis REIT’s ability to continue to enhance the buildings within its Pendapatan portfolio to a standard that is meningkat recognisedUnit internationally baru as being bestAxis in class,”REIT Stewart LaBrooy, CEO of Axis REIT, Pendapatan Axis Real Pemegang unit Axis REIT Managers Bhd telah meluluskan Estate Investment Trust cadangan penempatan sehingga 68.819 juta unit baru dalam Axis- bagi suku kedua berakhir REIT. 30 Jun 2010 meningkat 21 Dlam satu kenyataan, Axis REIT, Pengurus Amanah Pelaburan peratus kepada RM21.021 hartanah Axis (Axis-REIT), berkata mesyuarat pemegang juta sebelumnya. unit turut meluluskan cadangan meningkatkan saiz dana sedia ada yang diluluskan dan Pendapatan sebelum cukai pengambilalihan dua bidang tanah. pula meningkat 74.5 “Cadangan penempatan saham peratus kepada RM21.879 baru itu akan membolehkan Axis-REIT memperuntukkan juta daripada RM17.362 dan menerbitkan unit baru untuk mendapatkan dana jika pengurusan juta berbanding tempoh menjangka pinjaman akan melebihi 35 peratus daripada aset sama sebelumnya. keseluruhan Axis-REIT berikutan From left: Aprea CEO Peter Mitchell, Axis-REIT Managers cadangan pengambilalihan dan Bhd board chairman Datuk Seri Tunku Shahabuddin Tunku pengambilalihan akan datang,” katanya. Besar Burhanuddin, Axis-REIT Managers Bhd, CFO Leong Kit May and Axis-REIT Managers Bhd CEO Stewart LaBrooy with the Asia Pacific Real Estate Association's Best Practices Awards 2010 award on Sept 15. Website At Axis-REIT, we take pride in maintaining an excellent relationship with all our stakeholders. We provide constant, timely and transparent communication with them through various channels, which include the corporate website www.axis-reit.com. my, announcements, press releases, corporate presentations and annual reports. We have recently enhanced our corporate website to enable visitors to navigate with ease to extract pertinent information. The website includes an email alert function, whereby visitors are able to sign-up and receive timely alerts on updated information on Axis-REIT. 36 AXIS-REIT | ANNUAL REPORT 2010 AXIS-REIT | ANNUAL REPORT 2010 37 INVESTORS OUTREACH PROGRAM Retail Roadshows across Malaysia In 2010, we continued with the Investors Outreach Program which is a series of retail roadshows designed to promote and create more awareness of REITs as an alternative investment class. In total 3 roadshows were conducted - in Melaka, Kuching and Johor. The first two were done in collaboration with AmFirst REIT, AmanahRaya REIT, CBRE and Maybank Investment Bank and CIMB Investment Bank. The last one was sponsored by the Malaysian REIT Managers Association ("MRMA") and for the first time Sunway REIT joined us in presenting. We plan to continue with the Investors Outreach Program in 2011 through MRMA by targeting other major town/cities such as Kota Kinabalu, Penang, Ipoh and Kuantan. Conferences and Speaking Engagements In addition to the above, the Manager actively participated in conferences and speaking engagements throughout 2010. CEO Stewart LaBrooy was invited as a speaker in various conferences and forums on the subject of REITS. For 2009, Axis-REIT produced its second issue of the Annual Report in Mandarin which was made available via our website. We will continue to maintain the availability of a Mandarin version for all our future Annual Reports on our website, as it is important to have the widest possible reach to the general investing community both in and out of the country. Investor Expo 2010 Date Venue Topic 19 March Penang PISA - REITs - An Alternative Investment Tool for your Wealth Creation 20 March Kuala Lumpur KLCC - REITs - An Alternative Investment Tool for your Wealth Creation 21 April Kuala Lumpur APREA - Property Leaders Forum 2010 28 April Kuala Lumpur Bursa - MSWG Seminar on Divided Policy and Practices and Launching of Dividend 8 May Kuching Retail Reit Roadshow 20 May Singapore Cityscape Asia - Maximising returns from the Development and Growth of Asian Real Estate Investment Trusts 9 June Jeddah, Cityscape Saudi Arabia - Assessing the role of Sukuk for raising finance in the Saudi Arabia current economic climate 23 Jun Melaka Retail Reit Roadshow 17 and 18 July Kuala Lumpur Investor Expo 2010 - Why Invest in Reits 28 July Philippines Reit Asia Pacific Philippines Summit 2010 - Strenghtening, Deepening, Sustaining 3 August Kuala Lumpur Asia Business Forum - Expanding and Growing your Reits business 23 October Johor Bahru Retail Reit Roadshow 11 November Hong Kong MIPIM Asia - The World’s Property Market in Asia Pacific Manager’s Report Increase In The Number Of Unitholders 3000 2420 2500 2080 2000 1652 1500 1166 941 1000 No. of Unitholders 500 0 2006 2007 2008 2009 2010 No of Unitholders Number of Unitholders of Axis-REIT Axis-REIT witnessed an increase in the number of Unitholders for year 2010 by 16.3% to 2,420 as compared to 2009. In addition, we have through the September 2010 placements increased the number of Units in circulation. However total transactions in 2010 remained flat over 2009, with a total volume transacted of 47.95 million Units as compared to 48.02 million in 2009. As at end 2010, the largest unitholder (non-related party) is Permodalan Nasional Berhad (PNB) (in aggregate of all funds held by them above 1 million Units) with 63.3 million units or approx 17%. Followed by Employee Provident Fund (EPF) with 39.9