AmBank to buy Menara AmBank for RM331m from AmFIRST REIT in related-party deal

PETALING JAYA (June 9): AmBank (M) Bhd, a wholly-owned subsidiary of AMMB Holdings Bhd, has signed a conditional sale and purchase agreement (SPA) to acquire Menara AmBank from AmFIRST Real Estate Investment Trust (AmFIRST REIT) for RM331 million cash. The transaction is classified as a related-party transaction under Paragraph 10.08 of Bursa Malaysia’s Main Market Listing Requirements.

Asset and tenant profile

According to AMMB’s filing with Bursa Malaysia yesterday, the acquisition from Maybank Trustees Bhd, acting as trustee for AmFIRST REIT, covers Menara AmBank together with related assets and rights, including existing tenancies, licences, operational assets, and essential contracts. 

The freehold property at No. 8, Jalan Yap Kwan Seng in Kuala Lumpur comprises a 46-storey purpose-built office building with seven levels of elevated car park, a net lettable area of 453,419 sq ft and an occupancy rate of 77.8%, or 352,693 sq ft, based on the latest tenancy schedule disclosed in the filing. AmBank is currently the anchor tenant, occupying about 65.6% of the total net lettable area.

For the financial year ended March 31, 2025, Menara AmBank generated approximately RM19.9 million in rental income and RM9.4 million in net property income, with an audited net book value of about RM326.2 million in AmFIRST REIT’s books. The tower was originally acquired by AmFIRST REIT on Dec 21, 2006, for RM230.17 million.

Two valuations, one price

On AmBank’s side, AMMB said the RM331 million purchase consideration was arrived at on a willing buyer-willing seller basis after taking into account an independent market value of RM333 million ascribed by PPC International Sdn Bhd, appointed as AmBank’s valuer. 

The valuer adopted an income capitalisation approach as the primary method, cross-checked against a comparison approach, in arriving at its assessment of Menara AmBank’s market value.

Separately, AmFIRST REIT said the disposal consideration of RM331 million was determined on a willing-buyer, willing-seller basis after taking into account the property’s market value of RM329 million as appraised by Rahim & Co International Sdn Bhd as at March 31, noting that the price represents a 0.61% premium to that valuation.

Payment terms

Under the SPA, AmBank will pay a 7% deposit of RM23.17 million to the trustee upon signing, and a 3% real property gains tax retention sum of RM9.93 million to the Inland Revenue Board’s director general within 60 days of the SPA or within 60 days of the Ministry of Economy’s written approval, if required. 

The remaining 90% balance of RM297.9 million will be settled in cash by redeeming existing charges in favour of Malayan Banking Bhd and paying the balance directly to the trustee within three months of all conditions precedent being met, or within a one-month extended completion period subject to late interest.

AmFIRST: loss on disposal, capital gain on cost

From AmFIRST REIT’s perspective, the proposed disposal is expected to result in an estimated net loss on disposal of approximately RM4.74 million, after taking into account estimated expenses of about RM9.54 million related to the transaction. 

The REIT said that notwithstanding this, the disposal will crystallise a net capital gain of approximately RM62.8 million based on the property’s total investment cost, including capital expenditure, of RM268.2 million as at March 31, 2025. 

It plans to utilise the RM331 million proceeds to settle the redemption sum to discharge existing charges over Menara AmBank, partially repay bank borrowings, and defray expenses associated with the disposal. It expects its gearing to improve to 34.13% from 47.08% on a pro forma basis.

AmBank’s rationale as owner-occupier

AMMB said AmBank will acquire all existing licences and tenancies relating to the occupation of space in Menara AmBank, which currently account for about 12.2% of total net lettable area, while the remaining vacant space provides flexibility for future space expansion or consolidation according to the group’s strategy and needs. 

The group said owning the freehold building in which its offices are located will secure AmBank’s long-term office tenure and may help mitigate increases in costs and expenses incurred in connection with its occupation of Menara AmBank.

Related-party structure and interested parties

The related-party classification reflects AmBank’s 26.73% unitholding in AmFIRST REIT, as well as the broader corporate relationships involving AmREIT Managers Sdn Bhd, AmInvestment Group Bhd, and Amcorp Group Bhd, together with Clear Goal Sdn Bhd, Tan Sri Azman Hashim and Soo Kim Wai, all of whom are identified as interested parties in the filings. 

AmFIRST REIT said the proposed disposal forms part of its ongoing portfolio rationalisation and diversification strategy, involving divestment of lower-yielding assets and recycling capital into asset enhancement initiatives and higher-yielding assets across diversified classes. 

The REIT noted that Menara AmBank has delivered relatively low net property income over the past decade amid prolonged low occupancy and a challenging office market, resulting in a negative yield spread versus its borrowing cost.

Financial impact and approvals

On AMMB’s side, the group said the highest percentage ratio applicable to the proposed acquisition is approximately 1.53%. When aggregated with other transactions involving the same related parties over the past 12 months, the ratio increases to 1.75%, remaining below the threshold that would require AMMB shareholder approval. 

AMMB added that the proposed acquisition is not expected to have any material effect on its share capital, net assets per share, earnings per share or gearing for the financial year ending March 31, 2027, as it will be funded entirely from internally generated funds.

Given that AmBank is a major unitholder and several parties connected to AmFIRST REIT and its manager are interested in the transaction, the REIT has appointed Affin Hwang Investment Bank Bhd as independent adviser to its non-interested directors and non-interested unitholders. 

The filing said the board, save for interested directors who have abstained, is of the opinion that the proposed disposal is in the best interest of AmFIRST REIT, while the audit committee, save for its interested member, views the deal as in the best interest of the REIT, fair, reasonable, on normal commercial terms and not detrimental to non-interested unitholders.

On the buyer’s side, AMMB said the joint audit and examination committee, after considering the basis and justification of the purchase consideration, the rationale, benefits and risk factors of the proposed acquisition, the salient terms of the SPA and the financial effects, is of the opinion that the transaction is in the best interest of the company, fair and reasonable, on normal commercial terms and not detrimental to the interests of non-interested shareholders. 

The board, save for director Soo Kim Wai — who is deemed interested and has abstained from all deliberations and voting on the proposed acquisition — has concurred that the transaction is in the best interest of AMMB.

The proposed disposal and acquisition are subject to approval from the unitholders of AmFIRST REIT at an extraordinary general meeting, and to AmBank obtaining either written confirmation from the Ministry of Economy that its approval is not required or written approval for the transaction. 

Barring unforeseen circumstances and subject to the necessary approvals being obtained, both AMMB and AmFIRST REIT expect the deal to be completed in the fourth quarter of 2026.

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