Wednesday, 30 May 2018

Bank Negara believed to have overpaid for land bought from MoF when it forked out RM2.066bil for the 67.41 acres

Bank Negara said to have overpaid for land bought from MoF

Wednesday, 30 May 2018
by thean lee cheng

Although the transaction was concluded at RM703.44 per sq ft (psf), a source said the special-purpose vehicle (SPV) created by the MoF to undertake the transaction had initially wanted “a four-figure on a psf basis”, but the price was eventually negotiated down.

PETALING JAYA: Bank Negara is believed to have overpaid for the land it had bought from the Finance Ministry (MoF) when it forked out RM2.066bil for the 67.41 acres, proceeds which subsequently went to service 1Malaysia Development Bhd’s (1MDB) debt obligations.

Although the transaction was concluded at RM703.44 per sq ft (psf), a source said the special-purpose vehicle (SPV) created by the MoF to undertake the transaction had initially wanted “a four-figure on a psf basis”, but the price was eventually negotiated down.

Sources said although Bank Negara may have wanted that piece of land for its own training purposes due to its location next to the bank’s Sasana Kijang complex, there was “no need” to pay RM703.44 psf for it.

In another MoF transaction in 2016/2017, the price psf for a 19.14-acre plot near the current palace was beaten down from RM1,000 to RM775, sources said.

A May 24 MoF release said the RM2.066bil proceeds from the sale of Lot 41 and Khazanah’s redemption of investments amounting to RM1.199bil were used to service 1MDB’s debt obligations. The MoF paid RM6.98bil on behalf of 1MDB between April 19, 2017 and May 11, 2018, a May 22 statement said this year.

On Bank Negara’s purchase, StarBiz spoke to five valuers and four of them compared that parcel with the MoF’s sale of 19.14 acres to Jakel Land Sdn Bhd located near the palace in 2016/17. That plot was put up for tender at a reserve price of RM833.3mil, or RM1,000 psf in the first quarter of 2016.

The MoF dropped the price in a subsequent second open tender later that year. The sale was concluded at RM774.90 psf, or RM646mil, 22% below the original advertised reserve price.

Sources used the Jakel land sale as “the market benchmark” although it is about one-third the size of Bank Negara’s 67.14 acres.

“We have two pieces of land sold at about RM700 psf around the same time, in the same area. Because Bank Negara’s land is bigger, on a psf basis, Bank Negara’s psf should be a lot lower than Jakel’s RM775 psf. So, let’s drop that to RM500 psf, although I am not saying the price should be that,” a source said.

“Jakel’s parcel comes with a commercial title, with a plot ratio of 1:5 versus Bank Negara’s unconverted plot. So, the Bank Negara plot must be adjusted lower again, from RM500 psf to RM300 psf.

“In terms of location, Lot 41 is pretty good but it is not the city centre, neither is Jakel’s parcel. Jakel’s parcel has a height restriction of 400 ft or eight storeys because it is near the palace.

“So, let’s move that RM300 psf up back to RM450-RM500 psf. So, it is not RM700 psf,” the source said. He stressed that this does not mean that Bank Negara’s land is worth RM500 psf.

Property consultancy Suleiman & Co is said to have done the valuation for Lot 41. The director and son of company founder Azlan Harris said: “I don’t know anything about it.”

Bank Negara governor Tan Sri Muhammad Ibrahim said the transaction was done at arm’s length and concluded after “several months of discussion”.

The SPV Hartanah Mampan Sdn Bhd, which sold the land to Bank Negara, was incorporated on Oct 19, 2017.

Two months later, on Dec 14, the Federal Land Commission transferred Lot 41 into the SPV. On Dec 29, the SPV transferred the land to Bank Negara.

At about the same time the MoF advertised the land which was later sold to Jakel, it also put up for tender a smaller 9.74-acre plot in Jalan Bukit Ledang, Kuala Lumpur, for RM700 psf. It is not known if this was sold.

According to a company search, SPV Hartanah Mampan had four directors. Tan Sri Mohd Irwan Serigar Abdullah, the former Treasury secretary-general, was among them. Irwan was also on Bank Negara’s board, by virtue of his Treasury position.

Other directors include the MoF’s under secretary of the strategic investment division and deputy secretary Datuk Yusof Ismail, and the MoF’s government investment companies division secretary Datuk Asri Hamidin@ Hamidon.

Asri is also MKD Signature Sdn Bhd director, the MoF unit which bought 51% of Indonesia’s Exchange 106 in the Tun Razak Exchange international financial centre. The MoF issued a statement on May 8, a day before the 14th general election on May 9.

Exchange 106 is expected to be completed in September this year and government-linked corporations are supposed to take up most of the space in that 106-storey building.

Asri is also director of Bina Darulaman Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png, Syarikat Perumah-an Negara Bhd, SME Bank Bhd and DanaInfra Nasional Bhd, according to Bloomberg. He is also a member of Telekom Malaysia Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png
’s investment and tender committees.

The other director in the SPV is Ahmad Suhaimi Endut, division secretary of the public asset management division in the MoF.

Read more at https://www.thestar.com.my/business/business-news/2018/05/30/bank-negara-said-to-have-overpaid-for-land-bought-from-mof/#uh5rbWsBuy0cYteB.99

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