The Axiom Properties Ltd (ASX: AXI) share price has spiked today, climbing as high as 14 cents a share in early morning trading.
Axiom shares closed at 6 cents a share yesterday, but opened at 7.4 cents this morning before surging up to 14 cents soon after open (a new 52-week high for the company). Axiom is trading at 6.7 cents a share at the time of writing, a 13.56% rise. This move will no doubt be welcomed by shareholders who have, until today, had to watch the Axiom share price fluctuate between 3 and 6 cents a share over the past 5 years. The stock is now up 70% since 21 August on today's prices.
So what is Axiom? And why did this company have such a dramatic spike in value today (which incidentally saw its market capitalisation double and then halve, all in one day)?
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What is Axiom Properties?
Axiom Properties is a property development and investment business. The company describes itself as "developing and delivering quality property solutions". Axiom was incorporated in Perth back in 1972. According to the company, it has completed more than $1 billion worth of developments across the country since then. These include everything from office buildings, shopping centres and medical centres to hotels, theme parks, warehouses and marinas.
It currently has 6 projects on the go, including a $180 million hotel and office tower in Adelaide, a $200 million apartment and entertainment complex in Sydney's Double Bay and a multi-million dollar refurbishment of The Richmond Club in Richmond, NSW.
In the past, the company has worked on Adelaide's Churchill Centre, the former headquarters for The Age on Spencer St, Melbourne, and the 100 St George Terrace building in Perth. The company had a self-confessed "number of difficult years" focusing on residential land development leading up to 2006. Because of this, Axiom has focused on diversifying its portfolio across different property sectors and across different states ever since.
Why have these shares gone crazy today?
We can likely put today's dramatic share price move in Axiom down to an ASX release the company put out to the markets this morning. In this release, Axiom told investors that it has reached an agreement with ASX REIT (real estate investment trust) Charter Hall Social Infrastructure REIT (ASX: CQE). Charter Hall is a $1.3 billion company with 395 properties to its name, most of which are childcare centres.
This agreement involves Charter Hall purchasing a "new, purpose-built Emergency Services State Command Centre, and adjacent multi‐deck car park currently under construction" from Axiom. The 1.6-hectare site is approximately 2km from the Adelaide CBD. Axiom has owned the site since 2009.
The centre is secured against a multitude of potential calamities. Earthquake resilience, backup power and water facilities, and wastewater storage capacity are all built in. The South Australian government has reportedly already committed to leasing 85% of the new centre on a 15-year lease. This incidentally contains "fixed annual increases" in rent.
The deal with Charter Hall involves "upfront purchase of the land" as well as "completed works to date" for an initial sum of $23 million. It has also committed to "fund the balance of the works on a progressive basis for a total consideration of $80 million". Meanwhile, Axiom will continue to deliver the facility until its expected completion in October 2021.
Axiom's market capitalisation on current prices is approximately $30 million. As such, a deal of this magnitude is obviously a major boon for the company.
