AmFIRST REIT proposes selling AmBank Tower for RM331 million

AmFIRST Real Estate Investment Trust has proposed selling AmBank Tower on Jalan Yap Kwan Seng to AmBank (M) Berhad for RM331 million, as it seeks to reshape its property portfolio.

The proposal, disclosed to Bursa Malaysia, involves Maybank Trustees Berhad selling the asset on behalf of AmFIRST REIT. The trust said the sale forms part of a continuing strategy to dispose of lower-yielding properties and recycle capital into asset upgrades and acquisitions offering higher returns.

AmBank Tower is a 46-storey office building with seven levels of structured parking in Kuala Lumpur’s Golden Triangle. AmFIRST said the property had consistently produced low net property income over the past decade, mainly because occupancy remained weak and rents stayed moderate. Average occupancy over that period stood at 76.09 percent.

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The proposal forms part of an ongoing strategy to rationalize and diversify its asset portfolio, including disposing of lower-yielding assets and recycling capital into asset enhancement initiatives and the acquisition of higher-yielding assets.

The trust said the outlook for a substantial improvement in revenue remained limited because of excess office supply in Kuala Lumpur and stronger competition from newer buildings with better specifications. The asset’s net property income has remained below AmFIRST’s average borrowing cost, creating a continuing negative yield spread.

Acquired on Dec. 21, 2006, the tower had an original investment cost of RM230.17 million. The proposed sale is expected to produce an estimated net disposal loss of RM8.72 million, while gross capital gain is estimated at RM61.67 million based on total investment costs of RM269.33 million. After estimated disposal expenses of RM10.97 million, net capital gain is expected to reach RM50.71 million. The related-party transaction remains subject to unit-holder approval and is expected to close in the first quarter of 2027 if all required approvals are obtained.

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As a result, the asset’s NPI yield remained below AmFIRST REIT’s average cost of borrowing, resulting in a persistent negative yield gap.