1 Form Version 2.0 General Announcement (*) Indicates ... - Axis Reit

Form Version 2.0General Announcement(*) Indicates a mandatory field. Please fill in all the necessary information.New AnnouncementSubmitting Merchant Bank(if applicable)Submitting Secretarial Firm Name(if applicable)::* Company name : AXIS REAL ESTATE INVESTMENT TRUST* Stock name : AXREIT* Stock code : 5106* Contact person :* Designation :* Contact number :E-mail address :* Type : Announcement* Subject :AXIS REAL ESTATE INVESTMENT TRUST (“Axis-REIT” OR THE “FUND”)* Contents:-PROPOSED ACQUISITION BY AXIS-REIT OF A LEASEHOLD INDUSTRIALPROPERTY COMPRISING A SINGLE STOREY DETACHED FACTORY, WITHANCILLARY BUILDINGS WITH AN APPROXIMATE BUILT-UP AREA OF 12,145.24SQ. METRES ERECTED ON LAND HELD UNDER H.S.(D) 437877 FOR PTD 190745 INTHE MUKIM OF PLENTONG, DAERAH OF JOHOR BAHRU, STATE OF JOHORMEASURING APPROXIMATELY 20,240.226 SQ. METRES (THE “PROPERTY”)WHICH 60 YEARS’ LEASEHOLD TENURE WILL BE EXPIRING ON 23 JANUARY2067 FROM ORIENTAL PULSE SDN BHD (NO. 627687-X) FOR A TOTAL LUMP SUMCASH CONSIDERATION OF RM 12.5 MILLION (“PROPOSED ACQUISITION OF THEPROPERTY”)1. INTRODUCTIONThe Board of Directors (“Board”) of Axis REIT Managers Berhad (“ARMB” or “the Manager”),the management company of Axis-REIT, wishes to announce that OSK Trustees Berhad(“OSK”), the trustee for Axis-REIT, has entered into the following agreement in relation to theProposed Acquisition of the Property on behalf of Axis-REIT:1.1 Proposed Acquisition of the PropertyAxis-REIT proposes to acquire the Property for a total lump sum cash considerationof RM 12.5 Million from Oriental Pulse Sdn Bhd (“OPSB”).The Property is to be acquired free from encumbrances but subject to the terms andconditions stipulated in the sale and purchase agreement for such acquisition enteredinto between OSK and OPSB on 31 January 2008 (“SPA”)..Pursuant to the Deed dated 15 June 2005 and the Supplemental Deed dated 8December 2006 constituting Axis-REIT, entered into between OSK and ARMB (“AxisDeed”), OSK, as the trustee for Axis-REIT, has approved the Proposed Acquisition ofthe Property, vide their letter dated 8 January 20081

1.2 Information on the PropertyThe subject Property is situated within the Pasir Gudang Industrial Area developed bythe Johor State Economic Development Corporation and lies about 35 kilometres tothe north-east of the Johor Bahru city centre.The subject Property is currently tenanted to and occupied by Delfi Cocoa (Malaysia)Sdn Bhd (Co. No. 524708-X) “DCMSB” or “Tenant”)) pursuant to a TenancyAgreement dated 23 rd February 2006 and Extension Tenancy Letter dated 12 thDecember 2006 (the “Existing Tenancy”), in which the tenancy was renewed for afurther three (3) years commencing 1 January 2007 and expiring 31 st December 2009at the monthly rental of RM108,864.00.DCMSB is a company whose principal activity is the manufacture and trading inindustrial cocoa ingredients.Further details are set out below:Property’s address : PLO 563 Jalan Keluli 8,Pasir Gudang Industrial Estate,81700 Pasir GudangJohorTenure : Leasehold interest for 60 years expiring on 23January 2067, leaving an unexpired term ofabout 59 yearsTotal Land area : 20,240.226 square metres approximatelyBuilt-Up area : 12,145.24 square metres approximatelyApproximate age of building : 2 yearsOccupancy as at 31 January2008: 100.00%2. DETAILS OF THE PROPOSED ACQUISITION OF THE PROPERTY2.1 Salient terms and conditions of the Proposed Acquisition of the Property(i)The total lump sum cash consideration for the Property of RM 12.5 million(“Purchase Price”) is payable in the following manner:-(a)(b)(c)A total sum of RM 250,000.00 being the equivalent of 2% of thePurchase Price being refundable earnest deposit and towards partpayment of the Purchase Price (“Earnest Deposit”) was paid by OSKto OPSB’s appointed solicitors (“Vendor’s Solicitors”) as stakeholdersprior to the execution of the SPA;Upon execution of the SPA, RM 1,000,000.00 being the equivalentto 8% of the Purchase Price shall be paid by OSK to the Vendor’sSolicitors as stakeholders; andPursuant to the SPA, the balance of the Purchase Price amounting toRM 11,250,000.00 shall be paid by OSK to the Vendor’s Solicitors tobe held as stakeholders, within thirty (30) days from the unconditionaldate of the SPA or the valuation date of the Memorandum of2

Transfer by the Johor land office, whichever date is later (“theCompletion Period”) with a further extension of 30 days subject tointerest at a rate of 8% per annum calculated on a daily basis (the“Extended Completion Period”).(ii)Upon the execution of the SPA, OPSB shall submit the Memorandum ofTransfer to the relevant stamp office for the endorsement of stamp dutyexemption on the Memorandum of Transfer pursuant to Stamp Duty(exemption)(No.4) order 2004 and thereafter to submit the Memorandum ofTransfer or copies thereof to the relevant land office in Johor for valuation ofthe said Property to ascertain the registration fees payable to the relevantland office in Johor to enable the presentation of the Memorandum ofTransfer and hold the same as stakeholders to deal with a Memorandum ofTransfer on the terms and conditions as set out therein.2.2 Conditions Precedent and Novation Agreement (“Novation’)OPSB shall within a period of Six (6) months from the date the SPA (“ ConditionalPeriod”) procure the fulfilment and compliance of the following conditions precedent:-(a) the due execution in escrow of the Novation Agreement between OPSB, OSKand DCMSB and deposit the same with the Vendor’s Solicitors as stakeholderspending completion;(b)(c)the consent to transfer being obtained from the relevant state authority for thetransfer of the Property to OSK; andwritten confirmation from OPSB that it has not received any notification fromDCMSB for the early termination of the Existing Tenancy.2.3 Basis of the Purchase Price for the PropertyThe Purchase Price for the Property is derived on a willing-buyer willing-seller basisafter taking into account the market value of the Property of RM 13.5 million asappraised by Regroup Associates (J) Sdn Bhd, an independent firm of registeredvaluers in its valuation report dated 7 November 2007. The valuation is derived usinga combination of cost and investment methods of valuation.2.4 Liabilities to be assumed by Axis-REITAxis-REIT will not assume any liabilities pursuant to the Proposed Acquisition of theProperty.2.5 Source of fundingThe Proposed Acquisition of the Property will be funded by existing bank borrowingsof Axis-REIT.3. INFORMATION ON THE VENDOR3.1 Oriental Pulse Sdn Bhd (“OPSB”)OPSB is a private limited company incorporated in Malaysia under the CompaniesAct, 1965 on 10 September 2003. OPSB is principally an investment holdingcompany. As at to-date, its authorized capital is RM 500,000.00 divided into 500,000ordinary shares of RM 1.00 each and its issued and paid-up capital is RM 200,100only. The registered office of OPSB is at Bilik 1A, Tingkat 15, Komtar, 80000 JohorBahru.4. RATIONALE FOR THE PROPOSED ACQUISITION OF THE PROPERTY3

ARMB, the management company of Axis-REIT, aims to provide Unitholders with stabledistribution and to achieve growth in net asset value (“NAV”) per unit of the Fund through,inter-alia, selectively acquiring properties that meet the Manager’s investment criteria. ThePurchase Price for the Property is fully supported by the independent valuation conducted onthe same by Regroup Associates (J) Sdn Bhd. The Proposed Acquisition of the Property willbe accretive to Axis-REIT’s distributable income. The Proposed Acquisition of the Propertywill at the same time diversify and enlarge Axis-REIT’s portfolio of properties and is expectedto benefit the Fund in the long term from economies of scale.5. EFFECTS OF THE PROPOSED ACQUSITION OF THE PROPERTY5.1 Unit Capital and Substantial Unitholders’ Unitholding5.2 NAVThe Proposed Acquisition of the Property will not have any effect on the total units inissue and substantial unitholders’ unitholding of Axis-REIT as the purchaseconsideration will be paid entirely in cash.The Proposed Acquisition of the Property will have no impact or changes to theunaudited NAV of Axis-REIT at the time of completion.5.3 EarningsThe Directors of ARMB expect the Proposed Acquisition of the Property to contributepositively to the earnings of the Fund for the financial year ending 31 December2008.5.4 GearingARMB intends to utilise debt facility of approximately RM12.50 million from Axis-REIT’s existing credit lines. The proposed debt financing will increase Axis-REIT’sgearing ratio to 23.71% of audited total assets as at 31st December 2006, which isbelow the gearing limit of 50% prescribed by the Guidelines on Real EstateInvestment Trusts issued by the Securities Commission.6. APPROVALS REQUIRED FOR THE PROPOSED ACQUISITION OF THE PROPERTYPursuant to the Guidelines on Real Estate Investment Trusts issued by the SecuritiesCommission dated 3 January 2005, the valuation set out in the proposed acquisition of theProperty is not subject to approval by the Securities Commission.7. RISK FACTORSThe Property may be subject to certain risks inherent in the property market industry. Theseinclude but not limited to the following:-(a)(b)(c)(d)(e)(f)(g)(h)(i)Non-fulfilment of the conditions precedent stipulated in the SPA;Non registration of the transfer of the subject Property;Compulsory acquisition by the Government;Non-renewal of tenancy after expiry due to change in circumstances of the Tenant;Adverse changes in national or economic conditions;Adverse local market conditions;The financial conditions of tenants, buyers and sellers of properties;Changes in environmental laws and regulations, zoning laws and other governmentalrules and fiscal policies;Changes in relative popularity of property types and locations leading to anoversupply of space or a reduction in tenant demand for a particular type of propertyin a given market;4

(j)(k)(l)Competition among property owners for tenants;Illiquidity of real estate investments; andActs of God, uninsurable losses and other factors.8. ESTIMATED TIMEFRAME FOR COMPLETIONThe Proposed Acquisition of the Property is expected to be completed latest by the end ofAugust 2008. However the same may be completed earlier in the event the conditionsprecedent are fulfilled or complied earlier than the expiry of the Conditional Period.9. DOCUMENTS FOR INSPECTIONThe following documents are available for inspection at the registered office of ARMB at Suite11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur or the place ofbusiness of OSK at 6 th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur during normaloffice hours from Monday to Friday (except on public holidays) for a period of three (3)months from the date of this announcement :-(i)(ii)The SPA on the Proposed Acquisition of the Property; andValuation report on the Property prepared by Regroup Associates (J) Sdn Bhd dated7 November 2007.This announcement is dated 31 January 2008.5