Discussions with interested parties still in early stages and will extend till end-1Q19
by ALIFAH ZAINUDDIN / pic credit: semarak20.felcraproperties.com
FELCRA Bhd has received several offers to complete the RM1 billion stalled property development in the centre of Kuala Lumpur (KL), despite the project still being probed for possible audit infringements.
The mixed development on a 1.63ha site on Jalan Semarak — which includes Menara Felcra office tower, a 43-storey luxury residential building, a mall and an international convention centre — had come to a standstill after the agency was unable to inject more capital to see it through.
The project is only 42% complete and the state-owned statutory body is seeking ways to revive it.
A spokesperson for the land development agency confirmed talks are ongoing with several parties to revive the botched project.
“There are several parties who are interested in the project. But it is still early days. Discussions are still in the initial stages. The period of discussion will extend until the end of the first quarter of this year (1Q19),” the agency’s spokesperson told The Malaysian Reserve.
Felcra had recently said it was open to work with other parties to develop the premium real estate project, tagged as Semarak 20, located just a few kilometres away from KL’s iconic Petronas Twin Towers.
The project had been included in Felcra’s management audit inquiry. The agency had filed a report to the Malaysian Anti-Corruption Commission in December last year over several discrepancies identified by its management audit.
Details of the discrepancies were not disclosed. But investigation into Felcra, including the mixed development project, would have little bearing on talks to kickstart the project.
“The development on Jalan Semarak is still at the management audit review stage. So, it does not affect negotiations to continue the project,” the spokesperson added.
Works on the site had trickled to a snail pace since 3Q18 due to funding constraints.
Felcra’s new CEO Mohd Nazrul Izam Mansor was reported as saying that the RM1 billion project is 42% complete. He said the delay was due to financial mismanagement of the previous administration.
It was reported that Felcra had invested over RM200 million into the project.
Chairman Datuk Mohd Nageeb Abdul Wahab had said that the agency would need another RM400 million to complete the project, a price tag that the agency cannot afford.
Mohd Nageeb, who was appointed to the role on Oct 1, said the project had diverted from its initial plan, which did not require any capital from Felcra.
It was initially agreed that the project contractor would finance the construction of the project. However, it was later decided that Felcra’s subsidiary, Felcra Properties Sdn Bhd, will foot the bill for the entire development.
Felcra had considered various options including selling the property, but Mohd Nazrul said the slowdown in the real estate market made that option futile.
“The time is not right,” he was reported as saying.
Felcra’s new management team has expressed their intent to realign the company’s priorities and improve its cashflow. It is expected to axe a number of its subsidiaries, dispose of the loss-making football club and increase the yields of the schemes under its management.
Besides Felcra, another land development agency also owned by the government — Federal Land Development Authority or Felda — is also experiencing financial turmoil with debts spiralling to almost RM8 billion. The government is working to repair the damage to Felda, a key component of the Malay heartland with 54 constituencies.