AMFIRST REAL ESTATE INVESTMENT TRUST ("AmFIRST REIT" or “REIT”)
PROPOSED ACQUISITION BY MAYBAN TRUSTEES BERHAD (ON BEHALF OF AMFIRST REIT) FROM FSBM HOLDINGS BERHAD (“VENDOR”) OF ALL THAT PIECE OF LAND HELD UNDER GERAN 207772, LOT 23570 IN THE MUKIM OF DENGKIL, DISTRICT OF SEPANG AND STATE OF SELANGOR WITH A FIVE STOREY OFFICE BUILDING ERECTED THEREON (“PROPERTY”) FOR A PURCHASE CONSIDERATION OF RM51,500,000 (“PROPOSED ACQUISITION”)
AMFIRST REAL ESTATE INVESTMENT TRUST
Type
Announcement
Subject
AMFIRST REAL ESTATE INVESTMENT TRUST ("AmFIRST REIT" or “REIT”)
PROPOSED ACQUISITION BY MAYBAN TRUSTEES BERHAD (ON BEHALF OF AMFIRST REIT) FROM FSBM HOLDINGS BERHAD (“VENDOR”) OF ALL THAT PIECE OF LAND HELD UNDER GERAN 207772, LOT 23570 IN THE MUKIM OF DENGKIL, DISTRICT OF SEPANG AND STATE OF SELANGOR WITH A FIVE STOREY OFFICE BUILDING ERECTED THEREON (“PROPERTY”) FOR A PURCHASE CONSIDERATION OF RM51,500,000 (“PROPOSED ACQUISITION”)
Contents
1. INTRODUCTION
Am ARA REIT Managers Sdn Bhd ("Manager"), the manager of AmFIRST REIT, wishes to announce that on 2 September 2010, the Vendor had accepted an offer made by the Manager on behalf of Mayban Trustees Berhad (“MTB” or the “Purchaser”), the trustee for AmFIRST REIT by way of an offer letter issued by the Manager dated 26 August 2010 (“Offer Letter”) whereby AmFIRST REIT will be entitled to acquire the Property free from encumbrances and subject to all existing tenancies created over the Property (“Existing Tenancies”) together with all fixtures and fittings belonging to the Vendor found and affixed in the Property subject to the terms and conditions in the Offer Letter and the sale and purchase agreement (“SPA”) and any other agreement or document to be made between the Vendor and MTB.
The Purchaser has given its consent to the Proposed Acquisition, subject to its acceptance of the terms and conditions of the SPA. For this purpose, the Offer Letter is marked “Subject To Contract”.
2. BRIEF INFORMATION ON THE PROPERTY
The Property consists of a five (5) storey office building erected on a piece of land held under Geran 207772, Lot 23570 in Mukim of Dengkil, District of Sepang and State of Selangor Darul Ehsan. The Property was competed on 31 January 2002 with an approximate current lettable area of 112,151 square feet (“sf”), of which 29,008 sf (“Untenanted Area”) is either partly occupied by the Vendor or is vacant
The Property is located at 3539, Jalan Teknokrat 7, 63000 Cyberjaya, Selangor Darul Ehsan.
3. SALIENT TERMS AND CONDITIONS CONTAINED IN THE OFFER LETTER
The salient terms and conditions contained in the Offer Letter are as follows:-
3.1 Purchase Consideration
The total purchase consideration for the Property and its fixtures and fittings is RM51,500,000 (“Purchase Consideration”).
3.2 Mode of Settlement of the Purchase Consideration
The Purchase Consideration shall be paid in cash and shall be paid in the following manner:-
(a) a refundable deposit equivalent to 1% of the Purchase Consideration (“Earnest Deposit”) shall be paid to the Purchaser’s solicitors (“Purchaser’s Solicitors”) as stakeholders within five (5) business days from the Vendor’s acceptance of the Offer Letter;
(b) a further sum equivalent to 9% of the Purchase Consideration payable to the Purchaser’s Solicitors as stakeholders upon the signing of the SPA and all other documents relating to and incidental to the Proposed Acquisition; and
(c) the balance 90% of the Purchase Consideration (“Balance Sum”) less any authorised deductions prescribed in the Offer Letter or subsequently in the SPA, shall be paid by the Purchaser to the Purchaser’s Solicitors as stakeholders on a date (“the Payment Date”) falling within 90 days from the date the last of the Conditions Precedent set out in the paragraph below is fulfilled.
The salient terms of the SPA as well as other documents, deed and agreement, if any, relating to the Proposed Acquisition will be announced after the execution of the SPA and such other documents, deed and agreement, if any.
3.3 Exclusivity Period
In consideration of the Earnest Deposit, the Vendor shall grant to the Purchaser an exclusive right for a period of 20 working days (“Exclusive Period”) to:
(a) carry out and complete a due diligence review on, amongst others, the legal matters relating to the Vendor, the Property and the Existing Tenancies, and on the structure of the Property and the exact size and area of the Property (“Due Diligence Review”); and
(b) allow the Vendor and the Purchaser and their respective advisers to negotiate and conclude the terms and conditions of the SPA, the Deed of Novation and Assignment and all other ancillary and relevant agreements and deeds relating to the acquisition of the Property and the assignment of all rights benefits and interest under the Existing Tenancies (“Definitive Documents”).
The Exclusivity Period shall commence on the date of the Vendor’s acceptance of the Offer Letter or on the date the Vendor confirms in writing that all relevant documents, data and information relevant to the Vendor and the Property (including the Existing Tenancies) are readily complied and available for inspection by the Purchaser or its consultants, advisers and experts, whichever is the later date, subject always to the right of the Purchaser to extend the Exclusivity Period by a period or periods of 30 days each period in the event the Due Diligence Review or the negotiations on the terms and conditions of the Definitive Documents cannot be concluded within the Exclusivity Period or any prior extension thereof.
3.4 Guaranteed Minimum Rental Income
In consideration of the Purchaser’s acquisition of the Property, the Vendor will provide an assurance and guarantee to the Purchaser that the rental income that the Purchaser will actually receive from the Untenanted Area will be RM8,139,600 (“Guaranteed Minimum Rental Income”) for period of 6 years (“Guarantee Period”), commencing on the date the acquisition of the Property is completed in accordance with the Definitive Documents (“Completion Date”). The Guaranteed Minimum Rental Income shall comprise the agreed rates of annual rent of RM1,292,000 for the first 3 years and RM1,421,200 for the remaining 3 years (the rates of annual rent are each and collectively called “Guaranteed Annual Rental Income”).
In furtherance of the assurance and guarantee given by the Vendor over the Guaranteed Minimum Rental Income, the Vendor will promptly pay to the Purchaser the Guaranteed Annual Rental Income for each of the Guarantee Period by monthly instalments, subject to such deductions as may be permitted by the Purchaser from time to time during the Guarantee Period.
3.5 Conditions Precedent
Completion of the Proposed Acquisition shall be subject to, inter-alia the following events:-
(a) due execution of all relevant documents to effectively assign (“Deed of Assignment”) all rights benefits, interest and rights under the agreements made for and under the Existing Tenancies in favour of the Purchaser as trustee for AmFIRST REIT;
(b) the Vendor’s issuance of a notice of the assignment required by the Deed of Assignment in escrow and the deposition of the said notice of assignment with the Purchaser’s Solicitors;
(c) the Vendor’s procurement of the requisite consent to transfer the title to the Property to the Purchaser;
(d) the Vendor’s procurement of approval from its shareholders to the disposal of the Property to the Purchaser on terms and conditions contained in the Definitive Documents, if applicable;
(e) the completion of the Due Diligence Review (including without limitation the survey and valuation over the Property) and the Purchaser’s satisfaction of the results of the Due Diligence Review, which includes structural, engineering and legal due diligence on the Property and all matters relating to the Property and the Proposed Acquisition;
(f) procurement of all relevant approvals, waivers and/or consents from any relevant authorities, regulators, statutory bodies and/or persons in Malaysia, if applicable; and
(g) other conditions precedent as may be advised by the Purchaser’s Solicitors subsequent to the issuance of the Offer Letter and execution of the Definitive Documents, including without limitation, those conditions precedent necessary after completion of the Due Diligence Review or those conditions precedent imposed or required by law, regulation or Governmental policies, regulations and directives or the relevant State by laws, regulation and directives.
4. BASIS OF ARRIVING AT THE PURCHASE CONSIDERATION
The Purchase Consideration was arrived at based on a “willing-buyer willing-seller” basis after taking into consideration the market value of the Property of RM53,000,000 as valued by CH William Talhar & Wong, an independent firm of registered valuers, in its valuation certificate dated 26 August 2010. The material date of valuation is 23 August 2010.
5. SOURCE OF FUNDING
The Proposed Acquisition will be funded by bank borrowings.
6. INFORMATION ON THE VENDOR
FSBM Holdings Berhad was incorporated in 1984 as Talasco Computers Sdn Bhd and later changed its name to Fujitsu Systems Business (Malaysia) Sdn Bhd in 1991. The company was listed on the Second Board of Bursa Malaysia Securities Berhad in 1994 as “Fujitsu”, and assumed its present name in 2001 as its business activities extended outside Malaysia and diversified into non-Fujitsu products and services. The FSBM Group’s business activities are focused on four divisions namely systems and solutions, communication and multimedia, education and training and healthcare.
7. RATIONALE
Am ARA, the manager of AmFIRST REIT, is actively seeking to acquire yield accretive assets or good quality properties with strong recurring rental income and potential for revenue and capital growth. The Proposed Acquisition is consistent with the investment objective and strategy of AmFIRST REIT and is expected to be accretive to the REIT’s distributable income with potential to achieve a long term growth in net asset value of AmFIRST REIT.
8. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
None of the directors and major shareholders of AmFIRST REIT as well as persons connected with them have any interest, direct and/or indirect, in the Proposed Acquisition.
9. APPROVALS REQUIRED
The Proposed Acquisition is subject to the following approvals:-
(a) the approval of MTB in accordance with the provisions of the trust deed constituting AmFIRST REIT dated 15 December 2006;
(b) the approval from shareholders of the Vendor; and
(c) the approval or consent of any relevant third party or any relevant public authority (including without limitation, the requisite consent to transfer the title to the Property).
10. DOCUMENTS AVAILABLE FOR INSPECTION
The Offer Letter, duly accepted by the Vendor, and valuation certificate dated 26 August 2010 are available for inspection at the registered office of Am ARA at Level 22, Bangunan AmBank Group, No. 55 Jalan Raja Chulan, 50450 Kuala Lumpur during normal office hours from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.
11. FURTHER INFORMATION
Further details of the Proposed Acquisition will be made upon finalisation of the terms and conditions of the Proposed Acquisition and signing of the Definitive Agreements.
