No discount given to Indonesian firm for sale of TRX land, says MoF Inc

KUALA LUMPUR (March 8): The Minister of Finance Inc (MoF Inc) said today no discount was accorded to Indonesia's Mulia Group when the latter bought a 3.42-acre land in Tun Razak Exchange (TRX) here for RM665 million back in May 2015.

"The sale of the TRX land to Mulia was done on commercial terms with no discount accorded to Mulia," it said in a statement today.

The land was disposed of by MoF Inc's wholly-owned unit TRX City Sdn Bhd, formerly known as 1MDB Real Estate Sdn Bhd, to Mulia Property Development Sdn Bhd, an indirect unit of Mulia Group.

On March 6, opposition lawmaker Rafizi Ramli had claimed that Mulia had bought the land at a discounted price of RM403.9 million.

Meanwhile, MoF Inc said it has agreed with Mulia Group to jointly develop The Exchange 106 tower at TRX, the construction of which is expected to be completed by the second half of 2018.

This follows MoF Inc's confirmation yesterday that it had taken control of The Exchange 106 skyscraper at TRX, after buying a 51% stake in Mulia Property which is developing the 3.42-acre piece of land. The stake acquisition was done via its wholly-owned subsidiary MKD Signature Sdn Bhd in July 2017.

Mulia Property is a company incorporated in Malaysia and has a paid-up share capital of RM500,000. The Mulia Group holds the remaining 49% equity interest in Mulia Property.

MoF Inc also said its participation on the development of The Exchange 106 was agreed at the onset to only materialise when the project has reached certain development milestone.

"With the entire TRX development area expecting to command a gross development value of RM40 billion, it is therefore vital for the MoF Inc to ensure that it secures another strategic position in the progress and success of TRX development," it said.

"The cost of the development of the TRX Tower will be borne by the two shareholders based on their respective proportions of shareholding in the joint venture (JV) based on the original cost of the development," it added, but did not provide any estimation on the construction cost.

"MKD has made arrangement with the HSBC Bank for a standby line to finance its proportional construction cost of 51% without any added premium by the JV company," said MoF Inc.

Once completed, The Exchange 106 will have a nett lettable area of 2.8 million sq ft.

MoF Inc also noted that The Exchange 106 is not its only strategic partnership in the TRX development area.

"MoF Inc had, in fact, entered into a partnership with Lendlease (Australia) to develop the Lifestyle Quarter — a 17-acre mixed-use development area within the TRX, with an equity structure of 60% owned by Lendlease and MoF Inc owning the remaining the 40%," it said.