REITS FAQ
 
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  1.
WHAT IS A REAL ESTATE INVESTMENT TRUST ("REIT")?

A REIT is a fund that mainly owns income producing real estate such as shopping centres, offices, warehouses and hotels. The units of many REITs are traded on major stock exchanges. To qualify as a REIT, a fund must have most of its assets and income tied to real estate investment and must distribute at least 90% of its total income to unitholders annually. In Malaysia, REITS are exempted from corporate tax if it distributes at least 90% of its total income.

  
  2.
WHY INVEST IN REITS?

REITs typically provide high income distribution plus the potential for moderate, long-term capital appreciation. Long-term total returns of REIT stocks are likely to be somewhat less than the returns of high risk, high growth stocks and somewhat more than the returns of lower risk bonds. The income distributions are derived primarily from the relatively stable and predictable rental income (less expenses) paid by the tenants of the REITs' properties.

  
  3.
WHAT IS THE DIFFERENCE BETWEEN REITS AND UNIT TRUST?

A REIT unitholder has a direct investment in the underlying assets of a REIT. A Unit Trust unitholder has an indirect investment in the investments held by the Unit Trust.

  
  4.
HOW OFTEN DOES AXIS-REIT MAKES AN INCOME DISTRIBUTION?

Effective 1 January 2009, Axis-REIT has changed its current income distribution policy from semiannual payment to quarterly payment payable within 2 months from the close of the quarter ie income distribution for the 1st quarter will be payable no later than 31 May. However, in certain circumstances such as the issuance of New Units by Axis-REIT during the year, it may be necessary to make a special income distribution at different periods in order to attribute income distribution to existing Unitholders to avoid any income dilution from the enlarged Unitholders' capital.

  
  5.
HOW IS THIS INCOME DISTRIBUTION PAID?

Payments are made via cheques to each Unit holder with an attached Distribution Tax Voucher detailing entitlement and gross/net amount payable.

  
  6.
ARE THERE DIFFERENT TYPES OF INCOME DISTRIBUTION?

Yes. At the Fund level, the source from which income is distributed could be derived from:
  
   
  1. Current year's realized income before taxation;
  2. Current year's tax exempt income, if any;
  3. Portion of 'Accumulated Retained Earnings' that have been taxed;
  4. Portion of 'Accumulated Retained Earnings' that consist of tax exempt income.

  
  7.
WHAT IS THE TAX TREATMENT OF UNITHOLDERS?

Pursuant to the amended Section 109D (2) of the Income Tax Act, 1967 under the Finance Act 2009 which was gazetted on 8 January 2009, the following withholding tax rates would be applicable on distribution of income which is tax exempt at Axis-REIT's level:

Withholding tax will be deducted for distributions made to the following categories of unitholders:
  
 
  Type of Unitholder
Withholding tax rate
2009
2008
2007
  Resident corporate
Nil^
Nil^
Nil^
  Resident non-corporate
10%
15%
15%
  Non-resident individual
10%
15%
15%
  Non-resident corporate
25%
25%
25%
  Non-resident institutional
10%
20%
20%
     
 
   
* Resident corporate unitholder will enjoy tax transparency but will be subject to the prevailing corporate tax rate.

  
  8.
HOW DO I CALCULATE MY DISTRIBUTION?

For the financial year ended 31 December 2008, the total distribution was 15.27 sen per unit.
  
 
  Type of Unitholder
Assumption: 10,000 Axis-REIT units
Gross distribution
Net distribution to unitholders after deduction of withholding tax
  Resident corporate
1,527.00
1,527.00 *
  Resident individual/ institutional
1,527.00
1,337.30   
  Foreign corporate
1,527.00
1,137.85   
  Foreign institution
1,527.00
1,300.30   
  Foreign individual
1,527.00
1,337.30   
     
 
   
* Resident corporate unitholder will enjoy tax transparency but will be subject to the prevailing corporate tax rate.
  
 
  9.
WHAT IS MY NET DISTRIBUTION YIELD FOR 2008?

For the financial year ended 31 December 2008, the total distribution was 15.27 sen per unit.
  
 
  Type of Unitholder
Net Distribution based
on IPO price of RM 1.25
Net distribution based on closing price of RM 1.12 on
31 December 2008
  Resident corporate
12.22%
13.63%
  Resident individual/ institutional
10.70%
11.94%
  Foreign corporate
9.10%
10.16%
  Foreign institution
10.40%
11.61%
  Foreign individual
10.70%
11.94%
     
 
 
  10.
WHERE CAN I VIEW THE TRUST DEED OF AXISREIT?

The Deed is available for inspection at the principal place of business of the Manager and at the principal place of business of the Trustee, OSK Trustee Berhad.
  
 
  11.
WHAT ARE THE TOTAL NUMBERS OF AXIS-REIT UNITS CURRENTLY IN ISSUE?

A total of 255,901,000 Units are in circulation.
  
 
  12.
HOW CAN NEW UNITS BE ISSUED?

The Manager may from time to time recommend an increase in the number of Units by way of A rights or bonus issue to existing Unitholders in proportion to their holding of Units, or by way of placement to any person, as consideration issue for subscription or such other methods as may be governed by the SC's Guidelines on REITs. The issue of Units are to finance acquisitions for Axis-REIT or to balance the debt-equity matrix of the Fund.

The prior approval of the SC and the Trustee are required for any increase in the size of the REIT through the creation of further Units. The prior approval of the Unitholders will also be required for the creation of further Units where stipulated in the Deed or under the applicable laws and requirements.
 
 
  13.
WHAT ARE MY RIGHTS AS A UNITHOLDER?

The key rights of Unitholders include rights to receive income and other distributions attributable to the Units held; received the fund reports of Axis-REIT; and participate in the termination of Axis-REIT by receiving a share of all net cash proceeds derived from the realization of the assets of Axis-REIT less any liabilities, in accordance with their proportionate interests in Axis-REIT.
  
 
  14.
HOW CAN THE TRUST DEED BE AMENDED?

Save where an amendment to the Deed has been approved by a resolution of not less than 2/3 of the Unitholders at a meeting of Unitholders duly convened and held in accordance with the Deed, no amendment may be made to the provisions of the Deed unless the Trustee and the Manager certify, in its opinion, that such amendment does not materially prejudice the interests of Unitholders and does not operate to release to any material extent the Trustee or the Manager from any responsibility to the Unitholders.
  
 
  15.
UNDER WHAT CIRCUMSTANCES CAN A MEETING OF UNITHOLDERS BE CALLED?

Under the applicable law and requirements and the provisions of the Deed, Axis-REIT will not hold any meetings for Unitholders unless the Trustee or the Manager convenes a meeting or unless not less than 50 Unitholders or 1/10th in number of Unitholders (whichever is lesser) request a meeting to be convened.

Any decision to be made by resolution of Unitholder shall be made by ordinary resolution, unless a special resolution is required by the applicable laws and requirements and/or the Deed. At least 14 days' notice of every meeting (other than a meeting convened to pass a special resolution, which requires at least 21 days' notice) shall be given to the Unitholders in the manner provided in the Deed. The quorum at a meeting shall be as follows:
  1. where an ordinary resolution only is to be proposed, at least five persons holding or representing by proxy at least 10% of all the Units and carrying the right to vote at the meeting; and
  2. where a special resolution is to be proposed, at least five persons holding or representing by proxy at least 15% of all the Units and carrying the right to vote at the meeting.
Voting at a meeting shall be by a show of hands provided that a poll shall be taken in any case where:
  1. it is required by the Deed or by law that the question be decided by a majority which is to be measured by a percentage of the votes of those present; or
  2. it is demanded either before or immediately after any question is put to a show of hands by Unitholders present, holding (or representing by proxy) between them not less than 5% of the Units issued.
  
  16.
CAN THE MANAGER VOTE AT UNITHOLDERS' MEETINGS?

No. However related parties (as defined in the Deed) to the Manager may vote provided that they have no interest in the outcome of the voting.
  
 
  17.
WHY WAS AXIS-REIT RECLASSIFIED INTO AN ISLAMIC REIT?
  1. To widen its investor base to include local Shariah-based Funds and also to develop investors interest from Shariah-based foreign funds.
  2. To expedite its asset growth with new strategic partners.
  3. To become the 1st Office Industrial REIT globally to comply with Islamic REIT Guidelines.
  
  18.
WHAT ARE THE SECURITIES COMMISSION'S GUIDELINES FOR ISLAMIC REITS

The salient compliance requirements are:-
  1. Non-Permissible rental activities must not exceed the 20% benchmark based on the total turnover or area occupied;
  2. Not permitted to own real estate in which all the tenants operate non-permissible even if the percentage based on turnover /floor area is less than the 20% benchmark;
  3. All forms of investments, deposits and financing must comply with the Shariah principles;
  4. Must use the Takaful schemes to insure its real estate.