The Star, 27th February 2016

AS the international media spotlight on beleaguered 1 Malaysia Development Bhd (1MDB), TRX City Sdn Bhd CEO Datuk Azmar Talib (pic) is finding himself in a hot seat.

Azmar, a valuer, would have preferred a sanguine and peaceful start to a new year. But the former CEO of several Permodalan Nasional Bhd property companies discovered that he has traded the relatively peaceful life in a government-linked corporation (GLC) for a high profile position at another.

To be sure, there have been a lot of twists and turns at 1MDB, the parent company level. At the subsidiary level, TRX City (formerly 1MDB Real Estate Sdn Bhd), has been affected although Azmar is shying away from a direct answer.

“View TRX from a broader perspective. It is not just any other project but a government economic enabler.

“It is not about me, nor TRX City Sdn Bhd nor 1MDB but Kuala Lumpur as a financial centre,” he says.

Not withstanding the noise and din around him, Azmar has decided that TRX has to move on.

Historical perspective

TRX has been government land from the start. 1MDB was created to go into energy and real estate business with TRX City Sdn Bhd, being the owner of two of Kuala Lumpur’s most high-profile, strategic and largest real estate gems.

Before it came under 1MDB, a Finance Ministry (MoF) entity, the 70 acres was parked under another MoF entity, namely Pelaburan Hartanah Bumiputra Bhd, which was established to increase bumiputra participation and ownership in major urban business locations.

According to its website, it has accumulated prime commercial real estates in major cities around Malaysia to the tune of more than RM3.5bil. 1MDB bought the land, then known as Dataran Perdana, at less than RM70 per sq ft, or for RM194.1mil in 2010 and renamed it Kuala Lumpur International Financial District.

The plan was to build a financial district much like London’s Square Mile where financial companies and banks were located, but with an Islamic financing slant with Middle Eastern funding.

On March 19, 2013, a subsidiary of 1MDB, 1MDB Global Investments Limited, issued private debt securities amounting to US$3bil, according to the company’s 2014 financial statement.

The net proceeds from the private debt securities were intended as seed capital for investment in Abu Dhabi Malaysia Investment Company Ltd, a proposed 50:50 joint venture between 1MDB and Aabar Investments PJS.

The aim was to develop TRX, according to the financial statement.

In a series of questions given to TRX City Sdn Bhd after the interview, Azmar declined comment and instead referred StarBizWeek to the parent company level. 1MDB’S corporate communications department did not respond to text or phone calls.

Azmar’s point of view

Azmar avoided a direct “yes” answer or no when asked if TRX City Sdn Bhd has been impacted by the different issues swirling above it.

Instead, he says he is “very clear” about his mandate.

He says: “We have overcome a lot of challenges.”

“We did not have anything to show at the start but people (the investors) believed in the vision and the promise and they were willing to pay that sort of price (for the different parcels),” he says, referring to land prices forked out by some investors which sometimes exceeded Kuala Lumpur City Centre (KLCC) land prices.

“Now I have to deliver the infrastructure,” he says.

Azmar says more than 70% of its developable land under its first phase have been commercialised or are under negotiation. “Whatever we have commercialised/under negotiations so far will give us the critical mass needed for the operational sustainability and development of the overall phase 1,” says Azmar. Hence, his focus on the infrastructure, an investment of RM3bil.

“I have already set aside the money (for that),” he says.

When completed, TRX will have a total built-up space of 21 million sq ft. The breakdown includes two million sq ft of retail, one million sq ft of hotel space, 10 million sq ft of offices. The rest will be residential and open space.

It will one of the best addresses in the city without taking away the status enjoyed by KLCC. TRX will leverage on the proximity, he says.

“If we can complete the critical elements, attract the right businesses and tenants, TRX will be able to generate 40,000 knowledge-based workers. This is important for Kuala Lumpur,” he says. This is the third of the 15- to 20-year project.

“We need long-term investors, not speculators. We need to work with global brand names.” He debunks criticisms that the company is selling land for quick gains.

“Although the land was gazetted for acquisition for the mass rail transit (MRT) project, we did not sell the land. MRT Corp (Mass Rapid Transit Corp Sdn Bhd) and TRX City Sdn Bhd are government-owned. We came to an agreement to co-exist. I want to facilitate them and to take a long-term perspective on TRX.

“MRT Corp can build the station and at some time in the future, TRX City Sdn Bhd may undertake further development on the land the station sits on. We have an additional five acres near the MRT station for the next guy who sits in my chair.

“If I am a private developer, I will want payment for the land. But TRX City Sdn Bhd is not a private developer.”

No speculators

Although TRX has reached its critical mass, Azmar says he is open to interested parties. “No speculators. We are careful who will be coming to help us develop TRX,” he says.

“The challenge is to bring in the tenants,” says Azmar.

Despite the different issues, he says there are merits and value to TRX as a property proposition. It will be markedly different from other multi-year developments in and around the Klang Valley.

“Ultimately, the objective of TRX is to add to the liveability of Kuala Lumpur,” he says.

It will set new benchmark in connectivity, facilities, amenities and infrastructure. Four highways will be connected to it – MEX Highway, the smart tunnel, Duke 3 and Jalan Tun Razak.

TRX road systems will be underground tunnels as the aim is to promote pedestrian traffic at ground level. Based on the vision they have for TRX, investors would require higher than ordinary investments, this being a financial centre.

Among the first investors to be unveiled was Australia-based Lendlease group. Other names came later. However, after about a year, other than who purchased what, there was a scarcity of information.

Azmar says: “Things are being done in phases, some of which are not visible. But we are working on TRX.”

He says Australia-based Lendlease group started work on the land in late 2015. So has Indonesia’s Mulia group, who bought its 3.4acre Signature Tower. The MRT station will be the project’s entrance statement, Azmar says. Both MRT line 1 (which connects Sungai Buloh to Kajang) and MRT line 2 (Sungai Buloh-Serdang-Putrajaya) will intersect there and more than half TRX’s daily arrivals are expected to be via MRT. He expects this transport element and Landlease work on the retail portion to lift interest and progress going forward.

Winning a tender

Lendlease won a tender over other contenders for the 17acre Lifestyle Quarter, a mixed integrated retail portion.

French company Veolia will design and implement solutions for water, waste and energy management. Veolia Water Technologies Southeast Asia has a 20-year renewable wastewater treatment and recycling concessionaire.

Says Azmar: “We don’t want to just buy a technology but we want the (vendor) to partake in the risk as well. People will believe them more than me,” says Azmar.

So it is not true that nothing is happening on the physical ground TRX level, he says.

Although there are many things swirling above and around them, the crux of the matter is, at the subsidiary level, they do not want to be distracted nor hobbled by the noise – that seems the crux of the message.

Therefore, when 486acre Bandar Malaysia was sold, it changed its name to TRX City Sdn Bhd in December in order to focus solely on TRX.

Azmar put paid to comments that they wanted to distant themselves from 1MDB. The rationale for the change was they wanted to focus on TRX post-Bandar Malaysia sale.

Azmar says they are working closely with City Hall to improve pedestrian traffic and to link TRX to Bukit Bintang’s larger shopping scene. Public park and open space will make up about 20 acres with a 12acre park above the Lendlease retail mall space. The idea is to build a tourist destination. The park, another central feature, will be surrendered to City Hall.

There will be some changes to the road system and Jalan Kampung Pandan to be extended to Jalan Sultan Ismail, he says.

Security and hygiene are part of the other liveability factors to differentiate TRX from other multi-fascaded long-gestation developments.

On the current over supply of office space and with 10.68 million sq ft of being added in TRX, Azmar says there is a demand for better facilities.

“Land lords will be forced to upgrade if they want to stay relevant,” he says, adding that TRX and its investors are not just building office space, but a financial centre.