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PETALING JAYA (Sept 21): AmFIRST Real Estate Investment Trust’s (AmFIRST REIT) proposed RM331 million disposal of Menara AmBank to AmBank (M) Bhd has become unconditional after all conditions precedent were fulfilled.
In a Bursa Malaysia filing on Monday (Sept 21), AmFIRST REIT said the sale and purchase agreement (SPA) became unconditional on the same day.
Earlier on Monday, unitholders approved the related-party transaction at an extraordinary general meeting, with 58.07 million votes, representing 96.14% of the votes cast, in favour of the resolution.
The poll result was validated by Deloitte Malaysia Assurance Sdn Bhd, the independent scrutineer appointed by AmREIT Managers Sdn Bhd, the manager of AmFIRST REIT.
Under the SPA, the disposal is to be completed on or before three months from the date all conditions precedent are fulfilled or waived. The SPA provides for a further one-month extension.
The transaction entails the disposal of the 46-storey Menara AmBank office tower, including seven levels of elevated car park, by Maybank Trustees Bhd, acting solely as trustee for AmFIRST REIT, to AmBank.
The freehold property at No 8, Jalan Yap Kwan Seng, Kuala Lumpur, is held under Geran 52468, Lot No 140, Section 44, Town and District of Kuala Lumpur. It has a net lettable area of 453,419 sq ft and 557 parking bays.
It was 77.8%-occupied as at March 31, 2026, and generated rental income of RM22.22 million and net property income of RM12.13 million for the financial year ended on that date.
Terms and proceeds
The RM331 million disposal consideration represents a 0.61% premium to Menara AmBank’s appraised market value of RM329 million as at March 31, 2026. The property’s audited net book value was RM328.75 million as at the same date.
AmFIRST REIT expects to record an estimated net loss on disposal of RM8.72 million after taking into account about RM10.97 million in estimated expenses.
Of the proceeds, an estimated RM225 million will be used to redeem Menara AmBank and discharge the existing charges and private caveat over the property.
The RM225 million represents the principal outstanding on the relevant Maybank facilities and excludes accrued interest. The final redemption sum will be determined later, with any variation to be adjusted against the amount allocated for partial repayment of bank borrowings.
The circular estimated that settlement of the redemption sum would result in potential annual interest savings of about RM8.99 million, based on interest rates ranging from 3.98% to 4%.
Another RM95.03 million is intended for the partial repayment of revolving credit facilities with AmBank, while RM10.97 million is allocated for disposal-related expenses.
The RM95.03 million repayment is expected to generate further annual interest savings of about RM3.92 million, based on an interest rate of 4.1247%. The revolving credit facilities had an outstanding balance of about RM220.36 million as at the latest practicable date.
On a pro forma basis, the disposal would reduce AmFIRST REIT’s gearing to 33.94% from 46.60% as at March 31, 2026.
The deal is a related-party transaction because AmBank, the purchaser, is a major unitholder of AmFIRST REIT. AmBank and its holding company, AMMB Holdings Bhd, were identified in the circular as interested major unitholders.
The interested directors abstained from board deliberations and voting on the transaction, while interested major unitholders and other interested parties were required to abstain from voting on the resolution.
Portfolio repositioning
AmFIRST REIT said the disposal would allow it to unlock value from a mature, lower-yielding asset, improve portfolio efficiency and strengthen its financial position.
The manager said the exercise would also support the trust’s repositioning towards higher-yielding assets with more resilient income streams.
At a media briefing on Monday, AmFIRST REIT CEO Chong Hong Chuon said Menara AmBank had weighed on the trust’s overall portfolio occupancy, with the building’s occupancy in the high-70% range.
The REIT is targeting an average portfolio occupancy rate of at least 90%, compared with about 88% at end-June, The Edge Malaysia reported.
Chong said about 183,000 sq ft of leases signed progressively during FY2026 are expected to make a full-year contribution in FY2027. Rental reversions, a new co-working space and higher car park income from improved occupancy are also expected to support income growth.
At the same briefing, AmFIRST REIT executives said the Malaysian REIT Managers Association had urged the government to restore the preferential 10% withholding tax on REIT distributions in Budget 2027 and also raise the statutory gearing limit to 60% from 50%, The Edge Malaysia reported.
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