AmFIRST REIT seeks unitholders' nod for RM331m Menara AmBank sale to AmBank

AmFIRST REIT is seeking unitholders' approval to sell Menara AmBank to AmBank (M) Bhd for RM331 million cash. The proposed disposal would lower the REIT's pro forma gearing to 33.94% from 46.60% and is expected to improve distribution per unit to 3.24 sen from 2.87 sen. A unitholders' meeting is sch

PETALING JAYA (Sept 4): AmFIRST Real Estate Investment Trust (AmFIRST REIT) is seeking unitholders’ approval to sell Menara AmBank in Kuala Lumpur to AmBank (M) Bhd for RM331 million cash, a transaction expected to lower its pro forma gearing to 33.94% from 46.60%.

In a Bursa Malaysia filing on Friday (Sept 4), AmFIRST REIT said in a circular to unitholders dated the same day that the proposed disposal is a related-party transaction under Paragraph 10.08 of the Main Market Listing Requirements, given the interests of certain major unitholders, directors and related parties. A meeting of unitholders will be held on Sept 21 at 11am, or immediately after the conclusion of the REIT’s 14th annual general meeting, whichever is later, to consider the proposed disposal. Affin Hwang Investment Bank Bhd was appointed independent adviser to the non-interested directors and unitholders.

The RM331 million disposal consideration, to be satisfied entirely in cash, was arrived at on a willing-buyer, willing-seller basis. It represents a 0.61% premium to the RM329 million market value ascribed to Menara AmBank by independent valuer Rahim & Co International Sdn Bhd as at March 31, 2026. Rahim & Co used the investment method under the income approach as its primary valuation method, while the comparison approach indicated a value of RM330.5 million. Menara AmBank’s audited net book value stood at RM328.75 million as at March 31.

The 46-storey office tower, with seven levels of elevated parking, sits on freehold land at No 8 Jalan Yap Kwan Seng. It has 453,419 sq ft of net lettable area and 557 parking bays, and was 77.8% occupied as at March 31. For FY2026, the property generated RM22.22 million in rental income and RM12.13 million in net property income.

According to Affin Hwang IB’s independent advice letter, Menara AmBank’s occupancy remained below 75% between 2021 and 2025. The adviser also noted that gross rental income and net property income recorded compound annual declines of 1.22% and 2.92%, respectively, over the 10 years through FY2026. AmBank occupied about 66% of the building’s net lettable area as at March 31, representing about 85% of its occupied space, according to the independent adviser.

Of the RM331 million proceeds, about RM225 million is expected to be used to settle the principal amount outstanding under facilities secured against Menara AmBank as at the latest practicable date of Aug 14, excluding accrued interest. Another RM95.03 million is earmarked for partial repayment of bank borrowings, while RM10.97 million has been allocated for estimated transaction expenses. The partial repayment of revolving credit facilities is expected to generate annual interest savings of about RM3.92 million.

On a pro forma basis, AmFIRST REIT’s total borrowings would fall to RM447.59 million from RM767.63 million, while gearing would decline to 33.94% from 46.60%. Its net asset value per unit would ease to RM1.21 from RM1.22. Assuming the disposal had been completed at the beginning of FY2026, realised net income from operations would have improved as savings from interest, management fees and other administrative expenses exceeded the loss of Menara AmBank’s net property income. On the same illustrative pro forma basis, distribution per unit would have risen to 3.24 sen from 2.87 sen.

The proposed disposal is estimated to result in a net loss on disposal of about RM8.72 million, mainly due to estimated transaction expenses. Separately, AmFIRST REIT said the disposal would generate a gain of about RM50.71 million when measured against the property’s total investment cost, including capital expenditure, of RM269.33 million as at March 31.

AmFIRST REIT said the disposal would allow it to unlock value from a mature, low-yielding asset, optimise portfolio efficiency and reposition towards higher-yielding assets with more resilient income streams. The circular identified non-completion of the disposal and the loss of rental income from Menara AmBank as risks. It also cautioned that there is no assurance that benefits from future investments will exceed the income previously derived from the property.

Affin Hwang IB said the proposed disposal is fair and reasonable, on normal commercial terms and not detrimental to the interests of non-interested unitholders, and recommended that they vote in favour of the resolution. The board, excluding interested directors, has also recommended that unitholders vote in favour.