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The transaction risks becoming a simple transfer of a quality asset from a yield focused vehicle to an operating group seeking cost certainty.
Better deal for Ambank, lesser for AmFIRST.
theedge Article was misleading. Menara Ambank is considered as negative NPI (Net Property Income) yield asset. You can refer to AmFIRST announcement.
in fact, occupancy rate for the building in past 6 years was hovering around 70-78%. With that NPI yield of about 2.9% FY2025, it is much lower than 4.x% finance cost.
Even with better occupancy rate FY2026, the NPI yield would just improve to ~3%.
While selling that building will directly increasing dividend yield and lowering gearing ratio
Thank you for sharing your perspective. No matter what, shareholders only want either capital appreciation or higher dividend payments or both. For the time being, share price has retracted. The rest, time will tell.
Let say I have 2 properties market price at RM150 each. I have only RM100 equity and remaining was financed with debt cost 4%.
Rental yield (Prop A: 6%, Prop B: 8%)
NPI yield (Prop A: 3%, Prop B: 5%)
Annual NPI would be 150×(3+5)%=RM12
Finance cost = 200 x 4% = RM8
Net dividend = 12 - 8= RM4
If without Prop A, I lose RM9 rental (NPI RM4.5). But net dividend = 150x5% - 50x4% = RM5.5
hope everyone can understand this simplified example. losing low NPI yield could mean better dividend
