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The 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 the Proposed Acquisition of the Property on behalf of Axis-REIT:

Axis-REIT proposes to acquire the Property for a total lump sum cash consideration of RM 27,000,000 from A.M.E Construction Sdn Bhd (“Vendor”) (“AMECSB”).

The Property is to be acquired free from encumbrances but subject to the terms and conditions stipulated in the sale and purchase agreement for such acquisition entered into between OSK and AMECSB on 26 July 2007 (“SPA”).

Pursuant to the Deed dated 15 June 2005 and the Supplemental Deed dated 8 December 2006 constituting Axis-REIT, entered into between OSK and ARMB (“Axis Deed”), OSK, as trustee for Axis-REIT, has approved the Proposed Acquisition of the Property, vide their letter dated 19 July 2007.

Johor Port Authority (“JPA”), a body corporate established under the Port Authorities Act, 1963 is the registered owner of all that piece of leasehold land held under HSD 303868 for PTD 2423, Mukim Tanjung Kupang, Daerah Johor Bahru, Negeri Johor, measuring approximately 349.04 hectares (hereinafter called the “said Land”).

JPA entered into an Agreement for Lease dated 24th March 1995 with Pelabuhan Tanjung Pelepas Sdn Bhd (Co. No. 328719-K) (hereinafter called the “Main Lessee”), to lease the said Land for an initial period of thirty (30) years commencing 24th March 1995 and to be automatically renewed upon its expiry for a further thirty (30) years, expiring on 23rd March 2055.

By a sub-lease agreement and supplemental agreements thereto, both dated 1st December 2003 (collectively the “Sub-Lease Agreement”), duly executed between A.M.E Construction Sdn Bhd (“the Vendor”) and the Main Lessee, the Vendor agreed to take on a sub-lease of a portion of the said Land, measuring in aggregate 9.84 acres (hereinafter called the “said Parcel”) with an option to take on an additional 1.0 acre adjacent parcel (hereinafter called the “Additional Parcel”) for a term expiring on 23rd March 2025 with option to extend for a further term of thirty (30) years thereafter.

Pursuant to the Sub-Lease Agreement, a sub-lease was registered at the Land Registry, Johor in respect of the said Parcel and the Additional Parcel in accordance with the provisions of the National Land Code 1965 (hereinafter called the “NLC”) vide sub-lease registration 12641/2004 on 26th February 2004 for the period of 21 years and 5 months (hereinafter called the “Initial Lease Term”) commencing 24th October 2003 and expiring on 23rd March 2025 (hereinafter collectively called the “Registered Sub-Lease”).

The Vendor had, pursuant to a lease of building agreement (“Building Lease Agreement”) dated 1st December 2003, with the Main Lessee, agreed to construct on this said Parcel a single storey warehouse and two (2) storey office building (“Property”) and the certificate of fitness for occupation for this Property was duly issued by the relevant Municipal Authority on 24th May 2004.

Pursuant to the Building Lease Agreement, the Main Lessee has, amongst others, agreed to lease (hereinafter referred to as “Building Lease Term”) the Property for a term of 10 years commencing from 7th June 2004 and upon expiry to be renewed for a further terms of one (1) year each, at a monthly rental of RM 252,000 only for the first five (5) years and RM 284,700 only for the second five (5) years period of the Building Lease Term. Renewal rental after the expiry of the Building Lease Term will be based on prevailing market rates to be negotiated and mutually agreed upon the parties.

The Main Lessee has, subsequent to the Building Lease Agreement, with the consent of the Vendor, pursuant to a sub-lease agreement dated 3rd December 2003 (hereinafter called the “Building Sub-Lease Agreement”) with BMW Asia Technology Centre Sdn Bhd (Co. No. 612932-X) (hereinafter called “BMW”), subleased the said Parcel, Building (the specifications of which are more particularly described in the SPA) and fixture and fittings to BMW, for the consideration and upon the terms and conditions therein contained.

The subject Property is located along the western side of Jalan Tanjung A/3 in the Port of Tanjung Pelepas. It is accessible from the Skudai Highway via Persiaran Perling, the Johor Bahru Parkway, the Second Link Expressway and then exits at the PRT Interchange, followed by a dedicated access road heading to Port of Tanjung Pelepas. The Port of Tanjung Pelepas is located about 40 kilometres to the south-west of Johor Bahru city centre.

Further details are set out below:

The total lump sum cash consideration for the Property of RM 27,000,000 (“Purchase Price”) is payable in the following manner:-
(a) A total sum of RM 270,000 being the equivalent of 1% of the Purchase Price being refundable earnest deposit and towards part payment of the Purchase Price (“Earnest Deposit”) was paid by OSK to OSK’s appointed solicitors as stakeholders prior to the execution of the SPA;

(b) Upon execution of the SPA, RM 2,430,000 being the equivalent to 9% of the Purchase Price (“Balance Deposit’) shall be paid by OSK to OSK’s appointed solicitors as stakeholders; and

OSK’s appointed solicitors shall be authorized to release the Earnest Deposit and Balance Deposit together with all interest earned thereon to the Vendor upon the Unconditional date of the SPA.

(c) Pursuant to the SPA, the balance of the Purchase Price amounting to RM 24,300,000 shall be paid by OSK to Vendor’s appointed solicitors as stakeholders within thirty (30) days from the unconditional date of the SPA (“the Completion Period”) with a further extension of thirty (30) days subject to interest at a rate of 8% per annum calculated on a daily basis (“the Extended Completion Date”).

Upon the execution of the SPA, the Vendor shall execute a valid Memorandum of Transfer and stamping proforma for the purpose of effecting the transfer of the Registered Sub-Lease in favour of OSK free from all encumbrances and deposit the same with OSK’s appointed solicitors as stakeholders, who shall within such time deemed expedient, submit the Memorandum of Transfer for assessment of stamp duty and hold the same as stakeholders to deal with a Memorandum of Transfer on the terms and conditions as set out therein.

The sale and purchase of the Property shall be conditional upon the following being fulfilled within three (3) months from the date of the SPA or such other period that may be extended by OSK (“Conditional Period”):-

(a) the approval and consent for the sale and transfer of the Registered Sub-Lease from the Vendor in favour of OSK, together with the Main Lessee’s and/or JPA’s (if applicable) confirmation to execute or endorse the relevant novation agreement in favour of OSK;

(b) the consent letter from the Main Lessee and/or JPA (if applicable) addressed to the Land Registry, Johor consenting to the registration of the memorandum of transfer of the Registered Sub-Lease in favour of OSK (hereinafter called the “MOT for the Registered Sub-Lease”);

(c) the execution by the Vendor, Main Lessee and duly acknowledged and/or consented by JPA (if necessary), of the novation and assignment of the Sub-Lease Agreement by the Vendor in favour of OSK, in terms and format annexed thereto subject always to further changes that may be mutually agreed between all relevant parties, if any, (hereinafter called the “Novation cum Assignment of Sub-Lease”) and delivery of the same duly executed to OSK’s appointed solicitors, to be held as stakeholders to be dealt with in accordance with the terms of the SPA;

(d) the execution by the Vendor, Main Lessee and OSK, of the novation and assignment of the Building Lease Agreement by the Vendor in favour of OSK, in terms and format annexed thereto subject always to further changes that may be mutually agreed between all relevant parties, if any, (hereinafter called the “Novation cum Assignment of Building Lease”) and delivery of the same duly executed to OSK’s appointed solicitors, to be held as stakeholders to be dealt with in accordance with the terms of the SPA;

(e) the rectification of the particulars of sub-lease registration presentation number 80270/2002 by the Main Lessee in favour of JB Cocoa Sdn. Bhd. (Co. No. 514587-A) (hereinafter called the “JB Cocoa Sub-Lease”) to properly reflect the affected area of the JB Cocoa Sub-Lease to be 9 acres as opposed to 349.04 hectares (hereinafter called the “said Rectification”) as evidenced by a search result conducted by OSK’s appointed solicitors on the said Land; and

(f) the written confirmation from the Vendor, as at the date the last of all the above conditions precedent having been fulfilled, that it has not received any notification from the Main Lessee for the early termination of the Building Lease Agreement and the Vendor is not aware or has any reason to believe that the Main Lessee shall terminate the Building Lease Agreement immediately thereafter;

collectively called the “Conditions Precedent”.

The Purchase Price for the Property is derived on a willing-buyer willing-seller basis after taking into account the total market value of the Property of RM27,100,000 as appraised by M/s C H Williams Talhar & Wong , an independent firm of registered valuers in its valuation report dated 22nd June 2007 . The valuation is derived using a combination of investment and comparison methods of valuation.

Axis-REIT will not assume any liabilities pursuant to the Proposed Acquisition of the Property.

The Proposed Acquisition of the Property will be funded by existing bank borrowings of Axis-REIT.

AMECSB is a private limited company incorporated in Malaysia under the Companies Act, 1965 whose principal activities are in fabrication works and building contractors. Its authorized share capital is RM 5,000,000 divided into 5,000,000 Ordinary Shares of RM 1.00 each and the issued share capital is RM 4,000,000 divided into 4,000,000 Ordinary Shares of RM 1.00 each. The shareholdings in AMECSB are as follows:-

	No. of Ordinary Shares of RM1.00 each
Amsun Industries Sdn Bhd	3,600,000
Lee Sai Boon	400,000

Pelabuhan Tanjung Pelepas Sdn Bhd (Co. No. 328719-K), a company incorporated in Malaysia and having its place of business at Blok A, Wisma PTP, Jalan Pelabuhan Tanjung Pelepas, TST 507, 81560 Gelang Patah, Johor Darul Takzim.

The salient terms and conditions of the Building Lease Agreement which will be novated to OSK simultaneously on completion date, as defined in the SPA, are as follows:-

(a) The duration of the lease shall be for a fixed period of ten (10) years (“Initial Term”) commencing from 7th June 2004 and expiring on 6th June 2014 (the “Building Lease Term”). The monthly rental for the Building Lease shall be RM 252,000 for the first 5 years of the Building Lease Term. The monthly rental for the Building Lease shall be RM 284,700 per month for the second 5 years of the Building Lease Term.

(b) The Main Lessee may renew the tenancy for one (1) year from the expiry of the Building Lease Term provided that six (6) months notice be given at a monthly rental to be negotiated and mutually agreed between the parties.

ARMB’s, the management company of Axis-REIT, objective is to continuously pursue an acquisition strategy that meet the Manager’s investment criteria with a view to provide Unitholders with stable, long-term and sustainable distribution of income and achieve growth in net asset value (“NAV”) per unit of the Fund. The Purchase Price for the Property is fully supported by the independent valuation conducted by C H Williams Talhar & Wong . The Proposed Acquisition of the Property will at the same time diversify and enlarge Axis-REIT’s portfolio of properties and is expected to benefit the Fund in the long term with recurring rental income and potential for revenue and capital growth.

The Proposed Acquisition of the Property will not have any effect on the total units in issue and substantial unitholders’ unitholding of Axis-REIT as the purchase consideration will be paid entirely in cash.

The Proposed Acquisition of the Property will have no impact or changes to the unaudited NAV of Axis-REIT at the time of completion.

The Directors of ARMB expect the Proposed Acquisition of the Property to contribute positively to the earnings of the Fund for the financial year ending 31 December 2007.

ARMB intends to utilize debt facility of approximately RM27,000,000 from Axis-REIT’s existing credit lines. The proposed debt financing will increase Axis-REIT’s gearing ratio to 26.23% of the audited total assets as at 31st December 2006, which is below the gearing limit of 50% prescribed by the Guidelines on Real Estate Investment Trusts issued by the Securities Commission.

Pursuant to the Guidelines on Real Estate Investment Trusts issued by the Securities Commission dated 3 January 2005, the valuation set out in the Proposed Acquisition of the Property is not subject to approval by the Securities Commission.

None of the Directors and/or the sole shareholder of ARMB and substantial unitholders of Axis-REIT as well as persons connected to them have any interest, direct and/or indirect, in the Proposed Acquisition of the Property.

The Board of ARMB having considered all aspects of the Proposed Acquisition of the Property, is of the opinion that the same is in the best interest of Axis-REIT.

The Property may be subject to certain risks inherent in the property market industry. These include but not limited to the following:-

(a) Non-fulfillment of the conditions precedent stipulated in the SPA;
(b) Non registration of the transfer of the Property;
(c) Compulsory acquisition by the Government;
(d) Non-renewal of tenancy after expiry due to change in circumstances of the Tenant;
(e) Adverse changes in national or economic conditions;
(f) Adverse local market conditions;
(g) Changes in environmental laws and regulations, zoning laws and other governmental
rules and fiscal policies;
(h) Changes in relative popularity of property types and locations leading to an oversupply of space or a reduction in tenant(s) demand for a particular type of property in a given market;
(i) Competition among property owners for tenants;
(j) Illiquidity of real estate investments; and
(k) Acts of God, uninsurable losses and other factors.

The Proposed Acquisition of the Property is expected to be completed by the end of October 2007 or latest by the end of November 2007.

The following documents are available for inspection at the registered office of ARMB at Suite 11.1A, Level 11, Menara Weld, 76 Jalan Raja Chulan, 50200 Kuala Lumpur or the place of business of OSK at 6th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur during normal office hours from Monday to Friday (except on public holidays) for a period of three (3) months from the date of this announcement:-

(a) The SPA on the Proposed Acquisition of the Property; and
(b) Valuation report on the Property prepared by M/s C H Williams Talhar & Wong dated
22nd June 2007.

This announcement is dated 26 July 2007.

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