Axis Real Estate Investment Trust

Letter to Unitholders from the Chairman & CEO

Dato’ Carl Gunnar Myhre

@ Dato’ Abas Carl Gunnar

Bin Abdullah

Executive Chairman

Leong Kit May

Chief Executive Officer/

Executive Director

Letter to Unitholders from

the Chairman & CEO

Dear Unitholders,

2024 was an excellent year for Axis-REIT on all fronts. We delivered record investments and strong operating results, surpassing our targets. Backed by prudent capital management strategies, these achievements translated into one of our strongest financial results to date.

A year ago, we announced an ambitious target to grow Axis-REIT’s Assets Under Management (AUM) to RM5 billion by the end of 2024. We are pleased to report that we exceeded this target, completing a record 8 acquisitions during the year, raising our portfolio count to 69 properties with 15.15 million sq. ft. of space under management. Our robust investments lifted our AUM to RM5.26 billion as at 31 December 2024, surpassing the RM5 billion mark and extending our position as the leading industrial REIT in Malaysia.

Revenue

RM 0

million

DPU

0 sen

Total Assets Under Management

RM 0

billion

Our

Property Map

Total Properties

Our

Property Map

Central Region

Office

Office/Industrial

Manufacturing Facility

Logistics Warehouse

NORTHERN REGION

Logistics Warehouse

Hypermarket

EAST COAST REGION

Manufacturing Facility

Hypermarket

SOUTHERN REGION

Office/Industrial

Manufacturing Facility

Logistics Warehouse

Hypermarket

Manager’s Discussion and Analysis

CEO’s Review

2024 was a sweet spot for Axis-REIT – amid a convergence of economic tailwinds and strategic opportunities, we achieved record property acquisitions, successfully completed our fifth development project, and delivered solid operating results, which lifted the Fund’s revenue and operating income.

2024 Financial Performance Highlights

Revenue

RM 0

million

Net Property Income

RM 0

million

Net Income Before Tax

RM 0

million

Net Income After Tax

RM 0 .0

million

Portfolio Occupancy Rate

0 %

DPU

sen

Value Creation &

Sustainable Development Goals

OUR BUSINESS CAPITAL

Financial Capital

Axis-REIT’s Unitholders’ capital, Sukuk funds, revolving credit facilities, investments, and rental income that are used to support Axis-REIT’s business and operations

MANUFACTURED Capital

MANUFACTURED CAPITAL

Our structured processes include Axis-REIT’s diverse portfolio of properties and management services which provide the framework of how we do business and create value

SOCIAL & RELATIONSHIP CAPITAL

Stakeholder relationships, including suppliers, regulators, and the communities in which we operate, as we recognise the need for interdependent relationships in building a thriving society

HUMAN Capital

Our culture and people, collective information, skills, and experience that enable innovative and competitive developments and initiatives for our tenants and other stakeholders

INTELLECTUAL Capital

The expertise and knowledge inherent to the Manager that can be reproduced and shared for sustainable growth

Natural Capital

NATURAL CAPITAL

All environmental resources and processes that support current and future prosperity for our business and all our stakeholders through the limitation of negative contributions towards climate change

INPUTS & BUSINESS ACTIVITIES

Financial Capital

Operational cash flows: RM306.6 million (2023: RM198.7 million)
Undertaking capital raising to pare down financing and provide financial headroom for property acquisitions and development projects
Managing financial resources through the implementation of a disciplined investment strategy
Maintaining a proactive portfolio management strategy to preserve and enhance the value of properties
Adopting cost discipline and optimisation of capital structure
Maintaining an optimal balance of short-term and long-term financing through a prudent capital management strategy
Increasing the proportion of single-tenanted properties with triple-net lease tenancies in the portfolio
Obtaining sustainability-linked financing facilities

MANUFACTURED CAPITAL

Total no. of properties: 69 (2023: 62)
Invested RM779.3 million in acquisitions, strategic AEIs, and a development project (2023: RM176.8 million)
Strengthening the property portfolio with yield accretive acquisitions and quality new builds
Preserving the value of the property portfolio through strategic AEIs
Securing credible and reliable tenants
Aligning our property portfolio with green building standards
Incorporating green building designs and features in major AEIs and development projects, in line with our Environmental Policy
Leveraging existing initial due diligence assessments to evaluate annual flood risks from mid-term to long-term horizons of new acquisitions and proposed developments
Focusing on build-to-lease projects with long lease tenures

SOCIAL & RELATIONSHIP CAPITAL

Total community investments: RM201,000 (2023: RM181,000)
Total procurement from local suppliers (by Property Management Division): RM72.7 million (2023: RM196.2 million)
Building strong public awareness and brand association of Axis-REIT’s commitment towards sustainability
Actively providing training sessions for our suppliers
Upholding strong ethical practices throughout our value chain by conducting periodic assessments and audits on our key suppliers and contractors
Forging strong relationships with existing tenants
Continual engagement with tenants to understand their business strategies and needs

INPUTS & BUSINESS ACTIVITIES

HUMAN Capital

Total workforce: 78 employees (2023: 80 employees)
Employee training expenses: RM92,000 (2023: RM39,000)
Providing employee engagement programmes such as ongoing learning opportunities, year-end performance appraisals, annual dinner, and company trip
Providing equal employment benefits to both permanent and contract employees
Upholding strong HSE practices by on-site managers in accordance with our HSE Policy
Conducting periodic HSE audits

INTELLECTUAL Capital

Implementing annual IT disaster recovery exercises to ensure the timely recoverability of business-critical systems
Undertaking an internal audit on IT processes and governance frameworks
Implementing end-to-end email encryption and threat detection
Installing endpoint detection and response software on office computers
Conducting regular training and assessments to educate employees on the risk of cyber threats
Subscribing to an online interactive cybersecurity awareness programme for employees
Maintaining seamless communication with tenants via our Hello Axis online portal to address their service requests, feedback, and complaints

NATURAL CAPITAL

Implementing measures to increase energy and water use efficiency
Upgrading air conditioning systems to environmentally-friendly systems at selected multi-tenanted properties
Facilitating the installation of EV charging stations by our tenants at selected properties
Actively promoting waste reduction efforts through the 5R concept
Prioritising the inclusion of additional green building features in major AEIs and new developments

OUTPUTS AND VALUE CREATED IN 2024

Financial Capital

Improvement in revenue and net property income: RM322.1 million and RM276.6 million respectively (2023: RM288.4 million and RM245.4 million respectively)
Economic value distributed RM286.1 million (2023: RM254.5 million)
DPU: 9.27 sen (2023: 8.65 sen)
Liquidity: RM686.7 million (2023: RM592.7 million)
Value of committed sustainability-linked financing: RM1.64 billion (2023: RM490.0 million)

MANUFACTURED CAPITAL

Total space under management: 15.15 million sq. ft. (2023: 13.35 million sq. ft.)
Number of acquisitions: 8
Key AEIs completed: 8 (2023: 9)
Completion of development projects: 1 (2023: 1)
Achieved portfolio occupancy rate of 95% and a positive rental reversion of 5.3% (2023: 97% occupancy rate and a positive rental reversion of 5.8%)
Secured renewals for 2.06 million sq. ft. of space (representing an 82.8% tenant retention rate) and commenced new tenancies for 231,606 sq. ft. of vacated space during the year
New green building certifications: 1

SOCIAL & RELATIONSHIP CAPITAL

Total amount of beneficiaries from our community investment initiatives: 978 (2023: 85)
100% of qualified suppliers are local entities (2023: 100%)
Total number of suppliers increased by 2.4%
Total procurement value (excluding government-related expenses) decreased by 62.9% to RM72.7 million in total procurement
A total of 32 training programmes were offered to our suppliers (2023: 48)
No. of suppliers and/or contractors de-listed from our panel due to non-compliance with the Supplier Code of Conduct: 2 (2023: 4)
Average annual tenant satisfaction survey score: 7.62 out of 10, which exceeds our target of 7 out of 10 (2023: 7.61 out of 10)
No. of new green leases for the year (i.e., tenancy agreement featuring ESG considerations): 3 (2023: 1)

OUTPUTS AND VALUE CREATED IN 2024

HUMAN Capital

Total employee training hours: 891 hours (2023: 957.5 hours)
Average training hours per employee: 11.4 hours (2023: 12 hours)
Proportion of employees receiving regular performance and career development reviews: 100% (2023: 100%)
New hires rate: 2.5% (2023: 5.1%)
Employee turnover rate: 5.1% (2023: 2.5%)
Gender pay ratio for middle and senior management (male to female): 1.0 : 1.3 (2023: 1.0 : 1.11)
No. of work-related fatalities: 0 cases (2023: 0 cases)
No. of lost time injuries (LTI): 2 cases (2023: 0 cases)
No. of fines or sanctions for non-compliance with OHS-related laws and regulations: 0 (2023: 0)

INTELLECTUAL Capital

Proportion of employees who underwent PDPA-related training: 100%
No. of cases of cybersecurity breaches: 0 cases (2023: 0 cases)
Average Hello Axis Service Request Satisfaction Ratings: 4.25 out of 5, which exceeds our target of 4 out of 5 (2023: 4.31 out of 5)
Responded to 97% of service request tickets raised from multi-tenanted properties and single-tenanted properties within 24 hours (2023: 91% from multi-tenanted properties and 97% from single-tenanted properties)

NATURAL CAPITAL

Total reduction in energy consumption vs. baseline year: 14.56% (2023: 13.50% reduction)
Total reduction in Scope 1 and Scope 2 GHG emissions vs. baseline year: 13.96% (2023: 12.83% reduction)
Increase in water withdrawal vs. baseline year: 9.8% (2023: 6.7%)
Increase in general waste generated vs. baseline year: 16.8% (2023: 22.8%)
Total waste recycled at multi-tenanted properties: 44,920 kg (2023: 42,710 kg)
Recycling rate: 3.8% (2023: 3.5%)