TRX project – Mulia seeks govt guidance

Indonesian property group says it will align the objectives of the iconic building with the mandate of new government

PETALING JAYA: Indonesian commercial property developer Mulia Group is seeking guidance from Putrajaya so that the iconic 106-storey building in Tun Razak Exchange (TRX) will be aligned with the mandate of the current government.

Towards this end, Mulia Group which stepped in to take the lead in developing a landmark building in TRX, which is under the Finance Ministry (MoF), is already seeking to engage with the government.

“Mulia is already in the process of seeking engagement with the government,” Mulia said in a statement in response to StarBizWeek’s article over the weekend.

Discussions with potential tenants, including

government-linked companies (GLCs), are also ongoing, Mulia Property Development Sdn Bhd senior marketing manager Christine Yeap said.

“Mulia Group is optimistic that in due course after addressing current priorities, the government will guide this development on the best way forward,” Yeap said.

Exchange 106 is 51% owned by MoF via its unit MKD Signature Sdn Bhd. Mulia Group holds the remaining 49%.

Since the May 9 general election, the new Pakatan government is reviewing all mega projects undertaken by the previous government. The 70-acre TRX, to be developed as Kuala Lumpur’s international financial centre, is one of them.

Yeap said the Mulia Group is confident about the Malaysian property market and in the added value Exchange 106 will bring to its potential tenancies.

She said the project is guided by the objective of being located in Malaysia’s international finance, banking and capital market centre.

Therefore, its leasing focus will be on leading GLCs and multinational corporations. While the Kuala Lumpur city centre (KLCC) office space focuses on the oil and gas sector, Exchange 106 will “complement” KLCC by specialising in the financial services industry.

However, while it is guided by this “goal” of creating a financial hub, the decision to lease ultimately vests with the companies themselves.

She said the “leading edge” of Exchange 106 is its vast column-free floor area of up to 35,000 sq ft per floor.

This optimises business and operational efficiencies and ultimately translates into lower space usage and rental savings of up to 30%, Yeap said.

Exchange 106 is among the first buildings to be completed in TRX which will have a 15-year development time line. It will have a net lettable area of 2.8 million sq ft on completion.

It will also be one of Malaysia’s three iconic skyscrappers, following the Petronas Twin Towers and work-in-progress Permodalan Nasional Bhd’s Menara PNB118, with 118 storeys.

Although it is a premier Grade A building, its final rental will be marked to market and customised based on individual tenant’s needs, floor space requirements and other considerations, said Yeap.

“Each tenancy will be structured on a mutual win-win basis,” she said.

It was previously reported that the trophy asset, or super Grade A office, has an asking rental rate of RM17 per sq ft (psf) versus the RM7RM8 psf for a Grade A office outside TRX.

In January this year, Savills Malaysia executive chairman Christopher Boyd said with the various incentives and favourable tax practices given to the sky scrapper and other projects there equivalent to about RM2 psf, the effective rental is lower than the RM17 psf stated.

Separately, it was reported on June 2 that the development of the iconic structure needed MoF financing not reflective of the 51:49 shareholding structure.

In this respect, Finance Minister Lim Guan Eng had said that although the Mulia Group had invested substantially in the building, the project needed capital injection from MoF to keep it going.

Lim did not reveal the amount MoF had put into the project.

He also said the money forked out by MoF had to be returned after a certain time frame.

“If they can’t do that, the whole building belongs to MoF,” he had said in an interview with a local newspaper.

Lim said while the government wants to honour its contractual agreement to provide capital injection into the project, it is also seeking certain guarantees, safeguards and assurance that the project will be completed.

“While we want to see the project being completed, we also want to see a better deal. That is basically the government’s position,” he had said.

When MoF took up that 51% stake in Mulia Property Development, the ministry in March 2018 had stated that the cost of development of the tower would be borned by the two shareholders based on their respective proportions of shareholdings.

The acquisition by MoF paved the way for HSBC Bank to provide a standby line of credit to complete the building.

To recap, Mulia Property Development bought 3.42 acres of the TRX land at RM665mil from TRX master developer TRX City Sdn Bhd, or RM4,490 psf in May 2015.

At that time, the TRX project was handed by the controversial 1Malaysia Development Bhd (1MDB).

In 2017, 1MDB transferred its assets to MoF after it could not pay off its debts that is now at more than RM35bil and up to RM50bil.

MoF also has a 40% stake in Australia’s Lendlease 17-acre retailled commercial development in TRX.