1MDB land spurs interest

1Malaysia Development Bhd’s (1MDB) land parcels have generated a lot of interest.

In two separate statements, 1MDB said it had received “a lot of enquiries for its Bandar Malaysia land” and “proposals” for its land in Air Itam in Penang and Pulau Indah near Port Kiang, Selangor.

It plans to appoint a real estate consultant to evaluate several proposals to buy its Penang and Selangor land. As for Bandar Malaysia, it wants to work with equity partners to develop the 486 acres.

These developments follow efforts by the government strategic fund to monetise its various land parcels through joint ventures or outright sales as part of a strategic review to pare down its RM42bil debts as of March 2014.

1MDB president and group executive director Arul Kanda said in a statement: “I am pleased to update that we have received significant expressions of interest in both land parcels. Accordingly, the company intends to appoint an independent real estate consultant to assist in reviewing the various proposals.

“An announcement providing an update on the progress will be made within the next two weeks,” he said.

1MDB has earlier announced its intention to monetise its land parcels in Air Itam and Pulau Indah through joint ventures or by outright sales under a strategic review announced on Feb 18. Subsequently, this was confirmed in the rationalisation plan presented to the Cabinet on May 29, 2015, Arul said.

To recap, the company paid RM1.38bil for some 1,000 acres in Air Itam in 2013. It was reported that the land was planned for affordable housing projects.

For the 310 acres in Pulau Indah that it bought from Tadmax Resources Bhd, it forked out RM294.38mil. Based on Tadmax’s filing to the stock exchange in December 2014, the price was revised from the original RM317.33mil.

As for Bandar Malaysia, work will begin on the 100-acre transport transit district in 2017 after the army, the air force and the police have been relocated, a separate statement from 1MDB Real Estate Sdn Bhd (1MDB RE) said. 1MDB RE is a wholly-owned subsidiary of 1MDB.

The statement said the high speed rail (HSR) alignment is not yet finalised, but the MRT/HSR convergence is where the station, to be completed in 2022, will be located.

The other four key economic drivers – retail, creative enterprises, global business hub and the gastronomy, learning, entertainment and wellness – are “changeable”.

The statement was given after a press briefing by transaction advisor CH Williams Talhar & Wong. Last week, CH Williams sought expressions of interest from local and foreign equity partners. The deadline for these submissions of interest is July 10.

CH Williams deputy managing director Danny Yeo said there had been enquiries but no submissions.

He said they need not “lock in” their consortium partners when they put in their expressions of interest but they “must be agreeable to form a consortium”. Parties will be short listed after a due diligence process.

On the market value of Bandar Malaysia, the statement said the land was valued at RM4.3bil as at financial year ended March 31, 2014.

“We don’t have a current valuation. Basically what we have is recorded in the financial accounts last year,” the statement said.

The land value would have gone up since then but they are “not sure (by) how much,” the statement added.

“... why we valued the land last year and the year before was mainly because of the accounting standards. Earlier, we classified the land as investment property. So, following accounting standards, we need to revalue investment property on a yearly basis, which is why we have revalued the land for the past three years.

“For the current financial year ended March 31, 2015, we have reclassified the Tun Razak Exchange (TRX) land and Bandar Malaysia land as property development-in-progress. So we are no longer required to revalue the land on an annual basis. Basically we’re not going to re-evaluate for 2015,” the statement said. 1MDB RE is also the developer of the upcoming TRX.- By The Star