[B][SIZE=5]1MDB unit inks deal with Lend Lease to develop KL project[/SIZE][/B]

Published on Mar 20, 2015 1:33 AM

A UNIT of Malaysia's state- owned fund 1MDB yesterday said it has signed an agreement with an international property group to build a mall, several residential towers and a hotel in an upcoming financial district in Kuala Lumpur.

1Malaysia Development Berhad (1MDB), a company owned by the country's Finance Ministry, is developing the 28ha Tun Razak Exchange (TRX) site at the edge of Kuala Lumpur's city centre into a dedicated financial zone along the lines of Wall Street in New York.

The deal signed by 1MDB Real Estate with Australian firm Lend Lease is to build the so-called Lifestyle Quarter of TRX on nearly 7ha of land, 1MDB said in a statement.

The quarter will have a gross development value of RM8 billion (S$3 billion) on completion.

The Lifestyle Quarter joint venture project is 60 per cent owned by Lend Lease and 40 per cent by 1MDB Real Estate.

Property group Lend Lease has managed and developed various projects worldwide, including in Australia's Sydney, London in Britain and Malaysia.

The signing of the joint venture agreement yesterday was witnessed by Malaysian Prime Minister Najib Razak, who heads the advisory board of 1MDB.

The TRX mega-project is named after Malaysia's second prime minister, the late Tun Abdul Razak Hussein, who is also the father of Datuk Seri Najib.

With a development value of about RM26 billion, the TRX was initially launched in 2012 by Mr Najib under its old name of Kuala Lumpur International Financial District.

The project will be served by an underground MRT station, part of the mass rapid transit system now being built for the Greater Kuala Lumpur region.

1MDB, a six-year-old government investment fund that raises its own money for projects, has been in the news in recent months as it struggles to pay off some of its RM42 billion worth of debts.

It has plans to reduce its debts by carrying out an initial public offering of its power plant assets and bringing in partners for its property projects, officials have said.

Meanwhile, ratings company Fitch Ratings yesterday said the Malaysian banking system's exposure to 1MDB is a manageable risk.

It said the country's banks have reasonably prudent lending practices that ought to limit the potential impact of a default by any single borrower.