TH land deal: Who would pay more when others buy it cheap?

QUICK TAKE: If a news report quoting sources is accurate and reliable, then Lembaga Tabung Haji (TH) appears to have made a blunder in the Tun Razak Exchange (TRX) land deal.

The Star reported on May 11 that a deal between Retirement Fund Inc (KWAP) and 1Malaysia Development Berhad (1MDB) will see the government pension fund paying over 15 per cent less than the deal inked by TH.

KWAP plans to buy a parcel of land and building as its new headquarters at the TRX project in Kuala Lumpur City Centre. KWAP would pay between RM1 billion and RM1.2 billion for both the land and a 40-storey tower in the site.

Quoting sources, it said the land was bought at about RM2,300 per sq ft (psf).

It said the agreement of the purchase had been ironed out between KWAP and 1MDB, which owns TRX.

“The heads of agreement is a prelude to the sale and purchase (S&P) agreement. The terms of agreement are also tight where KWAP will only pay 10 per cent first and the rest upon completion of the building,” it quoted an unnamed source as saying.

TH’s decision to pay 1MDB RM188.5 million, or RM2,774 psf, for the 0.64 ha land for the purpose of building a residential tower has resulted in an uproar among its depositors, some of whom withdrew their savings at its branch in Shah Alam on May 7.

The furore is over TH’s willingness to pay far more psf than what 1MDB had paid – RM64 psf – when it first bought the land from the government.

And what make the deal questionable is the presence of directors who sit on both the RM42 billion debt-laden 1MDB and TH.

The fact that these directors are also Umno members have given rise to allegations that the deal is concocted to help bail 1MDB out of its debts.

The fierce criticisms of the deal from both sides of the political divide and Muslim organisations have forced Prime Minister Najib Razak, who is 1MDB advisory board chairman, to advise TH to dispose of the land as quickly as possible.

Now, here’s the puzzling question for landbuyers.

If KWAP is able to buy a TRX land parcel for more than 15 per cent lower or cheaper than TH did, why should anyone buy it at a higher price from TH?

What can be deduced should TH really manage to sell its TRX land for more than RM188.5 billion?

It truly would be mindboggling if there was a buyer who would pay more for a piece of land when others are buying it at lower prices.

12 May 2015 – theantdaily.com
TH land deal: Who would pay more when others buy it cheap?


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