AMMB Holdings Bhd (AMBANK) has proposed to acquire Menara AmBank on Jalan Yap Kwan Seng for RM331 million cash in a related-party transaction in a move to secure long-term office space and mitigate potential rental increase costs.

The 46-storey freehold office tower has an occupancy rate of 77.8% with AMBANK as the anchor tenant occupying 65.6% of the space. Other tenants incude Summer Healthcare Group Sdn Bhd, Horeb Services Sdn Bhd, Samsung Engineering (M) Sdn Bhd and MBf Protection Services Sdn Bhd.

AMBANK will assume the existing tenancies and licences, which account for about 12.2% of the building’s net lettable area. The remaining vacant space provides flexibility for future expansion or consolidation.

Based on a net lettable area of 453,419 sq ft, the acquisition price works out to be RM730 per square feet. The building was completed in 1997 has 557 car parking bays.

In its statement, the banking group said that “Ownership of Menara AmBank allows AmBank to secure its long-term office tenure and also potentially mitigate increases in costs and expenses incurred in connection with its occupation of Menara AmBank.”

AMBANK is purchasing the property from AmFIRST REIT which had acquired the property in December 2006 for RM230.2 million. The property achieved a Rental Income of RM19.9 million and Net Property Income of RM9.4 million for AmFIRST REIT’s financial year ending 31/3/25. Based on the purchase price of RM331 million, this represents a gross and net yield of 6.0% and 2.8% respectively.