TRX to get RM2.15bil financing
Developers Lendlease and TRX City get backing for Lifestyle Quarter
KUALA LUMPUR: Australian-listed Lendlease and TRX City Sdn Bhd (TRXC) have secured a RM2.15bil financing facility for its Lifestyle Quarter joint-venture (JV) development at the Tun Razak Exchange (TRX), a project that has come under scrutiny due to its association with scandal-ridden 1Malaysia Development Bhd (1MDB).
Lendlease Asia chief executive officer Tony Lombardo said the TRX project’s link to 1MDB was not a deterrent in attracting financial backers and potential investors.
“From our perspective, our partner has always been the Finance Ministry (MoF). The transaction we signed up was with the MoF and not 1MDB. The ministry did a review when they came into power,” he said at a precinct launch and development financing signing ceremony.
Finance Minister Lim Guan Eng, who was present at the event, said the TRX project was “detoxified” when the Pakatan Harapan government came into power.
“This government believes all of its investments should go through rigorous analysis, in line with the principle of competency, accountability and transparency. That was why upon assuming the role of Finance Minister, I immediately ordered a review of all government-related projects, including TRX.
“After this review, we presented to the Cabinet, which agreed that while we do the necessary detoxification of assets, we must allow these assets to proceed and not allow them to become collateral damage to the past excesses of the previous government.”
Lombardo added that Lendlease undertook its own due diligence before investing in a project.
“For Lendlease, we deal with governments around the world. Corporate governance and driving that right global standard around governance is so critical to us. So when we did our own due diligence on the project, we got very comfortable with the risk that we were taking.
“What you’re seeing is confidence of international investors who believe in this project and with the banks coming on board. Eventually, people will forget about 1MDB,” he said.
The financing facility was secured from the consortium of HSBC, Maybank, Standard Chartered and Sumitomo Mitsui Banking Corp. The Lifestyle Quarter is a mixed integrated development and is a 60:40 JV between Lendlease and TRXC.
The 17-acre development comprises residential, office, entertainment, leisure, a public park, hotel and retail components.
Lombardo said the RM2.15bil loan would cover just the retail, hotel and office components, adding that the JV partners would consider obtaining an additional loan as the development progressed.
“The way the development will work is that it is an eight-to-nine year timeframe. As we put in capital, capital will come back as we complete things and bring in investments.
“Then, we’ll put in new capital to work. The total product that we’re creating is RM9bil worth of real estate. There will be more financing down the future as we launch the residential components.”
Lombardo also said he is optimistic about the Lifestyle Quarter development in spite of the current property glut, especially with the oversupply of retail space in Malaysia.
“The market can be challenging in different parts of the world. Our focus in the last decade has been on big mixed-used urban projects. The reason is, by 2025, we’re going to have 25,000 workers moving into this precinct.
“Over the long term, there’s going to be 80,000 office workers that will be in this location. There will be 3,000 apartments and between 6,000 and 10,000 residents, depending on family size, that are going to be living within TRX.”
The Lifestyle Quarter is expected to be completed in 2021.
TRXC is the master developer of TRX. Because TRXC is a wholly-owned subsidiary of the Finance Ministry, this means the government owns 40% of The Lifestyle Quarter.
With an estimated gross development value of RM40bil, the TRX development will have about 30 buildings located on 70 acres of prime land in Kuala Lumpur.
The entire TRX project is slated for completion by 2024.