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AXIS REAL ESTATE INVESTMENT TRUST ("AXIS-REIT" OR "THE FUND") - PROPOSED PLACEMENT OF UP TO 50,000,000 NEW UNITS ("PLACEMENT UNITS"), REPRESENTING APPROXIMATELY 24.3% OF THE EXISTING UNITS IN AXIS-REIT IN CIRCULATION ("PROPOSED PLACEMENT")

AXIS REAL ESTATE INVESTMENT TRUST

Type

Announcement
SubjectAXIS REAL ESTATE INVESTMENT TRUST ("AXIS-REIT" OR "THE FUND")

- PROPOSED PLACEMENT OF UP TO 50,000,000 NEW UNITS ("PLACEMENT UNITS"), REPRESENTING APPROXIMATELY 24.3% OF THE EXISTING UNITS IN AXIS-REIT IN CIRCULATION ("PROPOSED PLACEMENT")

Contents :

1. INTRODUCTION

      On behalf of the Board of Directors of Axis REIT Managers Berhad, the manager of Axis-REIT (“the Manager”), Aseambankers Malaysia Berhad (“Aseambankers”) is pleased to announce that the Fund proposes to undertake the Proposed Placement, details of which are set out below.

2. DETAILS OF THE PROPOSED PLACEMENT
      2.1 Number of Placement Units
          The Proposed Placement will entail the issuance of up to 50,000,000 new units in Axis-REIT. This represents approximately 24.3% of the existing units in Axis-REIT of 205,901,000.
          The actual number of the Placement Units to be issued pursuant to the Proposed Placement will be determined later by the Manager but it will not exceed 24.3% of the existing units in Axis-REIT at any time. The Proposed Placement will be placed out to placees to be identified later.
      2.2 Issue Price Of The Placement Units
          The issue price of the Placement Units will be determined by the Manager, in consultation with Aseambankers being the placement agent for the Proposed Placement, at a price-fixing date to be determined later after approval of the Securities Commission ("SC").

          The issue price of the Placement Units shall be based on five (5) days volume weighted average market price of Axis-REIT units immediately prior to the price-fixing date, with a discount of up to 3.5%.
        2.3 Status And Ranking Of The Placement Units

            The Placement Units to be issued pursuant to the Proposed Placement shall, upon issue and allotment, rank pari passu with the existing Axis-REIT units except that they will not be entitled to participate in the income distribution that may be declared for the financial year ending 31 December 2006 or any distributable income, rights, allotments and/or any other distributions that may be declared prior to the date of allotment of such Placement Units.

            An application will be made to Bursa Malaysia Securities Berhad ("Bursa Securities") for the listing of and quotation for the Placement Units.
        2.4 Utilisation
            Assuming that the issue price of the Placement Units is fixed at RM1.74 per unit (based on the five (5) days volume weighted average market price of Axis-REIT units immediately prior to 27 October 2006 of RM1.80, with a discount of up to 3.5%), is estimated to be RM87,000,000.
              The proceeds after deducting estimated expenses in relation to the Proposed Placement will be utilised for repayment of bank borrowings and future potential acquisitions.
      3. RATIONALE OF THE PROPOSED PLACEMENT
          The Proposed Placement is to enable Axis-REIT to raise funds to pare down its borrowings should it exceed 40% of the total assets of the Fund as a result of further acquisitions as well as to provide Axis-REIT with sufficient headroom to make future cash acquisitions. In addition, the Proposed Placement will increase the trading liquidity of Axis-REIT units. This is in line with the growth strategy of Axis-REIT.
        4. FINANCIAL EFFECTS OF THE PROPOSED PLACEMENT
            4.1 Unitholders’ Capital
                The proforma effects of the Proposed Placement on the unitholders’ capital of Axis-REIT are shown in Table 1.
              4.2 NAV

                  The proforma effects of the Proposed Placement based on the audited financial statements of Axis-REIT as at 31 December 2005 are set out in Table 2.
                4.3 Earnings
                    The Proposed Placement is not expected to have any material effect on the earnings of the Fund for the financial year ending 31 December 2006 as it is expected to be completed in the first half of 2007.

                    However, earnings per unit is expected to be correspondingly diluted as a result of the increase in the number of Axis-REIT units in issue pursuant to the Proposed Placement.
                  4.4 Substantial Unitholders
                      The proforma effects of the Proposed Placement on the substantial unitholding structure of Axis-REIT are set out in Table 3.
                  4.5 Distributable Income
                      The Proposed Placement is not expected to have any material effect on the distributable income of Axis-REIT for the financial year ending 31 December 2006. The decision to declare and pay distributable income in the future would depend on the financial performance and cash flow position of Axis-REIT, and prevailing economic conditions.
              5. CONDITIONS OF THE PROPOSED PLACEMENT
                  The Proposed Placement is conditional upon the approvals of:-
                  (i) OSK Trustees Berhad, which was obtained on 30 October 2006;

                  (ii) the SC;

                  (iii) Bursa Securities for the approval-in-principle for the listing of and quotation for the Placement Units; and

                  (iv) the unitholders of Axis-REIT at a general meeting of unitholders to be convened.
                6. DIRECTORS OF THE MANAGER AND SUBSTANTIAL UNITHOLDERS’ INTERESTS
                    None of the Directors of the Manager, substantial unitholders or persons connected to the said Directors and/or substantial unitholders have any interest, direct and/or indirect in the Proposed Placement.
                7. MANAGER’S RECOMMENDATION
                    The Manager, having considered the rationale of the Proposed Placement, is of the opinion that the Proposed Placement is in the best interest of the Fund.
                8. APPLICATION TO THE AUTHORITIES
                    The application to the relevant authorities for the Proposed Placement is expected to be submitted within three (3) months from the date of this announcement.
                This announcement is dated 30 October 2006.

                  Tables.doc

                  Attachments

                  Tables.doc
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                  Announcement Info

                  Company NameAXIS REAL ESTATE INVESTMENT TRUST  
                  Stock Name AXREIT    
                  Date Announced30 Oct 2006  
                  CategoryGeneral Announcement
                  Reference NoCU-061030-52553



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