1. INTRODUCTION

The Board of Directors (“Board”) of Am ARA REIT Managers Sdn Bhd (“AARMSB” or “the Manager”), the management company of AmFIRST REIT, wishes to announce that Mayban Trustees Berhad (“MTB”), the trustees for AmFIRST REIT, based on the recommendations by AARMSB, has entered into the following agreement in relation to the Proposed Acquisition of the Property on behalf of AmFIRST REIT:

Proposed Acquisition of the Property

AmFIRST REIT proposes to acquire the Property for a total lump sum cash consideration of RM 7,500,000.00 from Salcon Resources Sdn Bhd (“Vendor” or “Salcon”). The Proposed Acquisition of the Property was made on:-

(a) the representation and assurance given by Salcon and a supporting written corporate guarantee given by Salcon Bhd (Company No. 593796-T) (“Guarantor”) that for a period of 2 ½ years from the Completion Date, MTB will actually receive from the Property (“Guaranteed Minimum Gross Income”) the following sums as gross rental income (“Guaranteed Minimum Gross Income”):

(i) Ringgit Malaysia Four Hundred Fifty Two Thousand and Five Hundred (RM905,000.00) only for the first year;

(ii) Ringgit Malaysia Four Hundred Sixty Seven Thousand and Five Hundred (RM935,000.00) only for the second year; and

(iii) Ringgit Malaysia Two Hundred and Forty One Thousand (RM482,000.00) only for the first six months in the third year;

(b) the agreement that Salcon’s related company, Salcon Engineering Bhd (Company No. 18161-H) (“Tenant”), takes and enters into a tenancy over the Property for a period of two (2) years commencing on the Completion Date; and

(c) the right of MTB to retain from the Purchase Price a sum of RM500,000.00 to set off against nonpayment of rent by the Tenant and non receipt of rent by MTB under the tenancy taken over the Property.

The Property is to be acquired free from encumbrances but subject to the terms and conditions stipulated in the sale and purchase agreement for such acquisition entered into between MTB and Salcon on 19 January 2009 (“SPA”).


Simultaneously with execution of the SPA, the Vendor will cause:

(aa) the Tenant to execute in escrow the Tenancy Agreement that will commence or be deemed to have commenced on the Completion Date (as defined in the SPA) at a monthly rental of RM 75,468.00 for the first year and RM 77,880.00 per month for the second year and with an option to renew for a further three years at a rental to be based on the then prevailing market rent.; and

(bb) the Guarantor to execute in escrow the instrument containing the corporate guarantee over the Guaranteed Minimum Gross Income (“Guarantee and Indemnity Agreement”).

Pursuant to the trust deed dated 28 September 2006 and which said trust deed was reconstituted pursuant to a trust deed dated 15 December 2006 (hereinafter called the “Trust Deed”) constituting AmFIRST REIT, entered into between MTB and AARMSB, MTB, as the trustee for AmFIRST REIT, has approved the Proposed Acquisition of the Property, vide their letter dated 22 July 2008.

Information on the Property

The Property is an entire office unit located on the 15th and 16th Floors of Menara Summit, Persiaran Kewajipan, USJ 1, 47600 UEP Subang Jaya, Selangor Darul Ehsan, which is within an integrated commercial complex known as The Summit Subang USJ.

The Summit Subang USJ complex is situated about 35 kilometres south west of Kuala Lumpur city centre and is accessible either via Jalan Syed Putra and thence continues onto the Federal Highway or onto the New Pantai Expressway (NPE) which eventually intersect with Persiaran Kewajipan. Alternatively it is also accessible from the Lebuhraya Shah Alam via the Kewajipan Interchange.

The strata titles (collectively“Title”) to the Property have been issued by the relevant authority and is currently held under Geran 43528/M1-A/15/549 and Geran 43528/M1-A/16/550, Town of Subang Jaya, District of Petaling and State of Selangor Darul Ehsan. The Developer, Meda Development Sdn Bhd (Company No. 276563-A), is currently the registered proprietor of the Title and the Vendor will undertake at its own costs and expense use its best endeavour to apply for a direct transfer of the Title from the Developer in favour of MTB and cause the Developer to execute a valid and registrable Memorandum of Transfer in favour of MTB as outlined in the terms and conditions of this SPA.




2. DETAILS OF THE PROPOSED ACQUISITION OF THE PROPERTY

Salient terms and conditions of the Proposed Acquisition of the Property

(i) The total lump sum cash consideration for the Property of RM 7,500,000.00 (“Purchase Price”) is payable in the following manner:-

(a) A total sum of RM75,000.00 being the equivalent of 1% of the Purchase Price being refundable earnest deposit and towards part payment of the Purchase Price (“Earnest Deposit”) was paid by MTB to MTB’s solicitors as stakeholders prior to the execution of the SPA;

(b) Upon execution of the SPA, RM 675,000.00 being the equivalent to 9% of the Purchase Price shall be paid by MTB to MTB’s solicitors as stakeholders; and

(c) Pursuant to the SPA, the balance of the Purchase Price amounting to RM6,750,000.00 shall be paid by MTB to MTB’s solicitors named in the SPA, to be held as stakeholders, within ninety (90) days from the unconditional date of the SPA (“the Completion Period”) with a further extension of 30 days subject to interest at a rate of 8% per annum calculated on a daily basis (the “Extended Completion Period”).

(ii) Upon the execution of the SPA, Salcon shall execute a valid and a registrable Memorandum of Transfer and stamping proforma for the purpose of effecting the transfer of the Property in favour of MTB free from all encumbrances and deposit the same with MTB’s solicitors as stakeholders, who shall submit the Memorandum of Transfer for assessment of stamp duty and to deal as stakeholders the Memorandum of Transfer on the terms and conditions as set out in the SPA.

Conditions Precedent

Completion of the SPA is conditional upon the occurrence of the following events within 30 days from the date of the SPA subject to an extension of a further 30 days:

(a) the Tenant executing in escrow and depositing with MTB’s solicitors as stakeholders the Tenancy Agreement.

(b) the Guarantor executing in escrow and depositing with MTB’s solicitors as stakeholders the Guarantee and Indemnity Agreement;

(c) Salcon procuring and securing, at its own costs and expenses, a written consent from the Developer to directly transfer the Title from the Developer to MTB (hereinafter called the “Direct Transfer”) and the Developer’s execution of the Memorandum of Transfer in favour of MTB and thereafter delivery together with original of the Title to MTB’s solicitors as stakeholders;

(d) In the event the written consent to transfer directly to MTB is not obtained from the Developer, Salcon shall deliver to MTB’s solicitors as stakeholders two sets of Memorandum of Transfer (collectively “MOT”), with one being a MOT duly executed, adjudicated and stamped that effectively transfers, when registered, the Title from the Developer to Salcon and the other being a MOT duly executed by Salcon in favour of MTB together with the rest of the transfer documents;

(e) Salcon’s due observance and performance to the satisfaction of the Developer all conditions imposed by the Developer in executing and releasing the MOT, the original Title and all other documents to MTB’s solicitors, conditions of which may include without limitation to the full settlement of all the Developer’s administration fee payable, full settlement of current and arrears of service charges, contribution towards sinking fund and insurance premium contributions and all outgoings, including without limitation, sewerage charges (if any) payable in respect of the Property; and

(f) MTB’s solicitors’ receipt from Salcon, the Tenant and the Guarantor, all corporate documents evidencing the corporate approvals relating to the disposal of the Property, the taking of tenancy over the Property and the provision of the corporate guarantee.


Basis of the Purchase Price for the Property

The Purchase Price for the Property is derived on a willing-buyer willing-seller basis after taking into account the market value of the Property of RM 7,500,000.00 as appraised by Rahim & Co, an independent firm of registered valuers approved by the Securities Commission, in its valuation report dated 7 October 2008. The valuation is derived using a combination of comparison method/cost approach and investment methods of valuation.


Liabilities to be assumed by AmFIRST REIT

AmFIRST REIT will not assume any liabilities pursuant to the Proposed Acquisition of the Property.

Source of funding

The Proposed Acquisition of the Property will be funded by bank borrowings.


3. INFORMATION ON THE VENDOR

Salcon Resources Sdn Bhd

Salcon is a private limited company incorporated in Malaysia under the Companies Act, 1965 on 12 September 1975. Salcon is a wholly owned subsidiary of Salcon Engineering Bhd (Company No. 18161-H) incorporated in Malaysia under the Companies Act, 1965. Salcon is principally a property investment holding company. As at to-date, its authorized capital is RM 5,000,000 divided into 5,000,000 ordinary shares of RM1.00 each and its issued and paid-up capital is RM 2,500,001 only. The registered office of Salcon is at 15th Floor, Menara Summit, Persiaran Kewajipan USJ 1, 47600 UEP Subang Jaya, Selangor Darul Ehsan.


4. RATIONALE FOR THE PROPOSED ACQUISITION OF THE PROPERTY

AmFirst REIT had on 31 March 2008 announced the completion of the acquisition of “The Summit Subang USJ”, which consists of a mixed development comprising Office Lots, Retail Lots, Hotel and Car Parks bays. This Proposed Acquisition of the Property will enlarge the overall ownership of the Office Lots at The Summit Subang USJ and enable AmFirst REIT to have a strategic control over it as well as effective marketing of all the office spaces owned. The Proposed Acquisition of the Property is consistent with the investment objective and strategy of AmFIRST REIT and it will be accretive to AmFIRST REIT’s distributable income.






5. EFFECTS OF THE PROPOSED ACQUISITION OF THE PROPERTY

Unit Capital and Substantial Unitholders’ Unitholding

The Proposed Acquisition of the Property will not have any effect on the total units in issue and substantial unitholders’ unitholding of AmFIRST REIT as the purchase consideration will be paid entirely in cash.

NAV

The Proposed Acquisition will have no impact or changes to the unaudited NAV of AmFIRST REIT at the time of completion.

Earnings

The Directors of AARMSB expect the Proposed Acquisition of the Property to contribute positively to the earnings of the Fund for the financial year ending 31 March 2010.

Gearing

AARMSB intends to utilize debt facility of approximately RM 3,750,000 from AmFIRST REIT’s existing credit lines. The proposed debt financing will increase AmFIRST REIT’s gearing ratio to 46.66% of the audited total assets as at 31 March 2008, which is below the gearing limit of 50% prescribed by the REIT Guidelines.


6. APPROVALS REQUIRED FOR THE PROPOSED ACQUISITION OF THE PROPERTY

Pursuant to the REIT Guidelines, the valuation set out in the Proposed Acquisition of the Property is not subject to approval by the Securities Commission nor the prior approval of the unitholders of AmFIRST REIT.


7. INTEREST OF DIRECTORS AND SUBSTANTIAL UNITHOLDERS OF AMFIRST REIT

None of the Directors of AARMSB and substantial unitholders of AmFIRST REIT or persons connected to them, has interest, direct or indirect, in the Proposed Acquisition of the Property.


8. RISK FACTORS

The Property may be subject to certain risks inherent in the property market industry. These include but not limited to the following:-

(a) Non-fulfilment of the conditions precedent stipulated in the SPA;
(b) Non registration of the transfer of the Title to the Property;
(c) The financial conditions of the Tenant, the Guarantor and the Vendor;
(d) Acts of God, uninsurable losses and other factors.




9. ESTIMATED TIMEFRAME FOR COMPLETION

The Proposed Acquisition of the Property is expected to be completed by the end of July 2009.


10. DOCUMENTS FOR INSPECTION

The following documents are available for inspection at the registered office of AARMSB at Level 22, Bangunan AmBank Group, 55 Jalan Raja Chulan, 50250 Kuala Lumpur or the place of business of MTB at 34th Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur during normal office hours from Monday to Friday (except on public holidays) for a period of three (3) months from the date of this announcement:-

(i) The SPA on the Proposed Acquisition of the Property;

(ii) Valuation report on the Property prepared by Rahim & Co dated 7 October 2008; and

(iii) Letter of Confirmation from the trustees for AmFIRST REIT dated 22 July 2008.


This announcement is dated 19 January 2009.