RM1.6b for Sg Besi relocation works

PETALING JAYA: 1Malaysia Development Bhd’s (1MDB) cost to relocate the existing occupants in Sungei Besi Airport is RM1.6bil, according to the annual report.

According to the annual report for the financial year ended March 31, 2014, Bandar Malaysia Sdn Bhd, a unit of 1MDB Real Estate Sdn Bhd (1MDB RE), partially issued RM1.5bil out of the total nominal value of RM2.4bil under a sukuk murabahah programme to help finance the relocation cost.

The maturity for the debt papers ranges from seven to 10 years, with bullet repayments of RM500mil and RM1bil in 2021 and 2024, respectively. Interest is charged on a half-yearly basis at 0.35% per annum.

1MDB had in 2013 awarded an RM2.1bil contract to a unit of the Malaysian Armed Forces Fund Board or Lembaga Tabung Angkatan Tentera to develop eight sites for the relocation of the former Royal Malaysian Air Force (RMAF) base in Sungai Besi.

1MDB acquired the prime parcel of land from the Government almost two years ago for only RM1.6bil, something that the property development industry has often described as a rather attractive price. The land is currently an air base for the Malaysian Air Force, among others, and has long been eyed by private developers.

The relocation is to facilitate the construction of the 200.32ha Bandar Malaysia, for which 1MDB is the master developer.

1MDB is also the master developer of the Tun Razak Exchange (TRX). The projects – Bandar Malaysia and TRX – are supposed to attract foreign investors.

1MDB’s contractual obligation to relocate the occupants from RMAF Sungai Besi at the cost of RM1.6bil is double the paper gains the company made in the just concluded financiall year.

The 2014 annual report showed that 1MDB RE had registered an RM896.8mil fair value gain on properties held for investment. This amount, however, is lower than the previous year’s RM2.73bil which is for both the Bandar Malaysia and TRX developments.

The properties were valued by CH William Talhar & Wong Sdn Bhd.

These properties include 34 plots of freehold land in TRX, which were transferred by the fund to 1MDB RE in 2013.

1MDB RE also completed the acquisition of 15 plots of land in Sungai Besi in 2013, which are being developed into the Bandar Malaysia project.