Ring of money around TRX
Developer ring-fences RM2.4bil to ensure project is completed
KUALA LUMPUR: TRX City Sdn Bhd (TRXC), the master developer of the Tun Razak Exchange (TRX) development, has ringfenced RM2.4bil worth of funds to ensure that the project will be completed as planned.
The TRX project has come under scrutiny due to its association with scandal-ridden 1Malaysia Development Bhd (1MDB), of which TRXC was a subsidiary.
The alleged misappropriation of money surrounding TRXC involves some RM3bil that was transferred from TRXC to 1MDB between mid-2012 and early 2017 on the understanding that it would be subsequently repaid to TRXC. TRXC never got that money back.
TRXC, which is now under the Finance Ministry (MoF), is in better hands now and is more vigilant to avoid any more misappropriation, said TRXC chief executive officer Datuk Azmar Talib.
“We were under 1MDB, so all financial matters were under them and they were supposed to give the money to us. It is beyond TRXC where the funds went,” he said at a briefing yesterday. “At the same time, I’ve done my level best. “I’ve ring-fenced about RM2.4bil for TRX. “That money is still available.” According to Azmar, TRX’s total land value is worth about RM7.6bil, while the development cost is estimated to be around RM6bil.
The entire project is slated for completion by 2024. Last week, the Government announced that it was pumping in RM2.8bil to keep the project going.
“The RM2.8bil won’t be given in one lump sum. We will be given the money in stages as the project gets completed by 2024.
“That’s how we will avoid any misappropriation.”
To date, seven plots of land on TRX totalling RM2.88bil have been sold to Lendlease, Lembaga Tabung Haji, Mulia Group, Affin Bank Bhd, WCT Holdings Bhd, IJM Corp Bhd and HSBC.
Mulia’s Exchange 106 and IJM’s Prudential building are expected to be ready by next year.
Azmar said TRX will be developed in three phases.
“Phase 1 comprises Exchange 106 and Menara Prudential, both of which are slated for occupancy early next year. To date, 80% of the first phase is completed.”
The second phase, which will consist of a public plaza, streetscapes and a 10-acre central park, will be completed in 2020, in line with the opening of a mall and new headquarters for HSBC and Affin Bank.
“The final phase, which is the south-side parcel, will be completed by 2024,” said Azmar.
Azmar said he is confident of attracting investors to TRX despite the sluggish office property market.
“The buildings at TRX will be of high quality, either Grade A or super Grade A.
“The project has already attracted a high level of foreign direct investment and we look forward to more.”
Azmar said he was not worried about the landlords filling up their buildings.
“Prudential and Affin, for instance, it’s for their own use.
“The only building for rental is Exchange 106 and they are making their own effort to fill up the space,” he said.
Based on reports, a super Grade A office can command an asking rental rate of RM17 per sq ft versus RM7 to RM8 per sq ft for a Grade A building.
“The outlook for TRX remains strong, what more following the boost in confidence following the recent election. We’ve had numerous inquiries from local and foreign parties
“We’re talking to a few of them to invest in TRX.
“However, we can’t reveal who they are as we’re still in negotiations with them,” Azmar said.
1MDB acquired the TRX land from the federal government for RM302.38mil in 2010.
In March 2013, Abu Dhabi Malaysia Investment Co Ltd (a 50%-50% joint venture between 1MDB and Aabar Investments PJS) became the first major multinational anchor investor in TRX.
A month later, US$3bil (RM11.94bil) was raised overseas for the TRX development. However, no money was channelled to the development.
Last year, TRXC, then a subsidiary of 1MDB, was transferred to the MoF because 1MDB was unable to service its debts.
TRXC lodged a police report last week on the RM3bil transfers of TRXC’s funds to 1MDB.
In a statement, TRXC said the transfers were made based on instructions from 1MDB and were diverted from their intended use, which was for the TRX and Bandar Malaysia projects.
The police report was lodged following the announcement by Finance Minister Lim Guan Eng during a press conference in Putrajaya last week. TRXC said it would give its full cooperation to the police.
The entire TRX project came under the spotlight recently when the Pakatan Harapan government, following its general election victory on May 9, started evaluating the financial viability of mega projects initiated by the previous administration to save the country billions of ringgit.
The new government announced last week that it did not intend to scrap TRX, given that the project was quite far advanced in its development stage and a lot of money had already been pumped in.
To date, the Malaysian government has injected RM3.69bil into TRXC.