PETALING JAYA: Australian-listed Lendlease, which is participating in a RM9bil mixed integrated development at the Tun Razak Exchange (TRX) project in Kuala Lumpur, is in talks with several developers to jointly develop other large-scale projects in the country.
Lendlease Malaysia chairman Dinesh Nambiar said with financing for the TRX project now secured, the group could focus on other developments.
“We’ve had a number of approaches from developers with sites which we are evaluating,” he said at a recent precinct launch and development financing signing ceremony.
“The plan is for Lendlease to secure new projects which will be of scale and continue to grow the business in Malaysia.”
Last Tuesday, joint-venture (JV) partners Lendlease and TRX City Sdn Bhd (TRXC) secured a RM2.15bil financing facility for The Exchange TRX.
The financing facility was secured from the consortium of HSBC, Maybank, Standard Chartered and Sumitomo Mitsui Banking Corp. The Exchange TRX is a mixed integrated development and is a 60:40 JV between Lendlease and TRXC.
The 17-acre development comprises residential, office, entertainment and leisure, a public park, hotel and retail components.
Dinesh said Lendlease was attracted to the prime location of the development.
“Lendlease has been investing in Malaysia since 2009. TRX, with its location, has been a terrific site for us to acquire and develop.
“Now that we have secured financing and work is underway, we’re exploring other opportunities,” he said.
Lendlease’s previous projects in Malaysia include Petronas Twin Towers, Platinum Park development and Bank Negara’s Sasana Kijang and Lanai Kijang buildings in Kuala Lumpur; Alamanda Shopping Centre in Putrajaya; Setia City Mall in Shah Alam; and Pinewood Iskandar Malaysia Studios in Johor.
Lendlease Asia chief executive officer Tony Lombardo said the group saw good growth opportunities in Malaysia.
“This (TRX) is a project that Lendlease has been focusing on since 2013. We’ve had a strong interest in Malaysia and Kuala Lumpur is one of the key cities that we want to grow our platform. Our investment in TRX is one of the largest on our group’s balance sheet today.
“We’re investing RM2.1bil over the project’s life and it’s great to have the backing of the banks. The government, meanwhile, is committing RM1.2bil.
“We were attracted to it because of the connectivity. The infrastructure that’s gone in were some of the critical things, but the defining thing for us is the 10-acre park,” he said.
Lombardo is optimistic that the retail component of The Exchange TRX will do well in spite of the current retail market glut.
“When you look at Malaysia, there are some malls that are struggling. But retail’s changing. People come for the experience and our mall will offer the latest generation in products.”
According to the Malaysian Shopping Malls Association’s (PPK Malaysia) recent Malaysia Shopping Mall Industry Survey 2018, there are currently 671 malls with a net lettable area ranging from a minimum of 50,000 sq ft to 2.2 million sq ft.
The survey, which comprised 47 respondent malls, revealed that the average occupancy rate stood at 92%, with an average monthly gross rental rate of RM7.87 per sq ft.
Retail Group Malaysia in its recent report said it expected a 4.5% growth in retail sales for 2019.
The Exchange TRX’s retail component will 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 Exchange TRX.
The TRX project has come under heavy scrutiny due to its association with scandal-ridden 1Malaysia Development Bhd (1MDB).
Finance Minister Lim Guan Eng said the willingness of the four financial institutions to provide financing facilities for the project demonstrated how far TRX had progressed since the new government came into power.
“We are slowly, but surely, exorcising the ghosts of 1MDB, which has tainted Malaysia and allowed us, once again, to be touted as the destination for both business and investment,” he said.
When the Pakatan Harapan government came into power in May last year, among the ongoing mega projects that came under scrutiny was the TRX. Not only was it linked to 1MDB, the ongoing property glut also raised concerns on whether the development was even viable.
Given how the project was already quite advanced in its development stage and a lot of money had already been pumped in, the government chose not to scrap it.
To date, seven plots of land in TRX totalling RM2.88bil have been sold. 1MDB acquired the TRX land from the federal government for RM302.38mil in 2010.
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.