This article first appeared in The Edge Malaysia Weekly on December 16, 2024 - December 22, 2024

TALKS about Australian real estate group Lendlease looking to sell part of its stake in the Tun Razak Exchange (TRX) development in Kuala Lumpur have been going on since early this year, according to industry sources.

The Edge understands that Lendlease is looking for co-investors for The Exchange TRX mall, as well as for the remaining three undeveloped parcels (see Plot 1B, 1A and Plot 2 on map) at TRX. Its total gross development value is estimated to be around RM11 billion upon completion, according to a source familiar with the project.

Lendlease holds a 60% stake in the 18.2-acre TRX Lifestyle Quarter (LQ), while the remaining 40% is held by Ministry of Finance Inc’s wholly-owned unit TRX City Sdn Bhd. TRX City is the master developer of the 70-acre TRX development.

The Exchange TRX mall was valued at approximately A$1.5 billion (RM4.3 billion), according to Australia-listed Lendlease’s 2024 annual report. 

In an email reply to The Edge’s questions on the stake sale in TRX, Lendlease Malaysia chairman Dinesh Nambiar confirms that it is in discussion with interested parties.

“The plan for TRX has always been to reduce our majority interest by securing co-investment. This is in line with our strategy on other projects globally. With the retail mall being fully leased, we are running a process to bring in a suitable co-investor and similar [approach] is afoot for TRX Residence parcels that have yet to be developed,” Dinesh adds. 

Sources tell The Edge that the corporate exercise could be concluded by next year.

Lendlease’s move is in line with its announcement in May this year of its refreshed strategy along with plans to divest its construction businesses overseas and focus on Australia, as part of the group’s asset recycling programme that could free up as much as A$4.5 billion of capital.

“Following a successful opening and supported by strong operating metrics as the asset becomes established, our 60% ownership stake is being marketed for sale and forms part of the group’s asset recycling programme,” it says in the annual report. TRX is Lendlease’s largest integrated development in Asia.

Lendlease recorded a widened loss after tax of A$1.5 billion for the year ended June 30, 2024, compared with A$232 million for the year before, mainly due to A$1.38 billion of impairments and charges required to implement the revised strategy announced in May 2024.

Apart from The Exchange TRX mixed-use development, Lendlease has said its flagship senior living community called Ardor Gardens in Shanghai, China, is also up for sale.

In 2014, Lendlease, through LQ Retail Sdn Bhd, won the tender for the 17-acre LQ at TRX on a 60:40 joint venture (JV) basis with TRX City.

The JV later also purchased another 1.2-acre parcel (see Plot 2 on map) to extend the LQ development. 

While the 10-year journey since the project started in 2014 would have been pretty bumpy with the 1Malaysia Development Bhd (1MDB) scandal a few years after and therefore “not so favourable links” to the project, as well as the Covid-19 pandemic in 2020, TRX has come a long way.

From the 10-acre rooftop TRX City Park, you will see the master plan coming to life — there is TRX City’s first office tower Menara Prudential, Mulia Group’s Exchange 106, the HSBC office or Menara IQ, Menara Affin, as well as Lendlease’s 200,000 sq ft Campus Office, its first TRX Residences completed and the almost completed Kimpton Hotel Kuala Lumpur, a brand under InterContinental Hotels Group (IHG).

“The global pandemic is not an event anyone could have predicted or prepared for, but there are lessons to be learnt by business, government and industry, particularly in managing impacts of global supply chains,” Dinesh, Lendlease Malaysia chairman since 2018, says.

Today, The Exchange TRX mall is fully leased with over 400 retailers across a net lettable (NLA) of 1.3 million sq ft. Well-known retailers include Louis Vuitton, Chanel, Matiere Premiere and Acqua di Parma. New brand debuts in the mall include Malaysia’s first Apple store, Gentle Monster and Alo Yoga, as well as Japan’s luxury department store Seibu taking up 250,000 sq ft across four levels. Recently celebrating its first year of operations, The Exchange TRX mall has welcomed about 45 million shoppers.

The almost sold-out first residential parcel of TRX Residences, comprising 850 units, was completed in May this year. The units in the first parcel of TRX Residences were sold for above RM2,000 per sq ft with half of the buyers being foreigners.

The 471-room luxury boutique Kimpton Hotel Kuala Lumpur is expected to open its doors in 2H2025. 

According to sources, of the 18.2-acre LQ, about four acres are undeveloped. The Edge understands that the two residential parcels (Plot 1A and 1B) have plans for four residential towers with some 1,650 units in total, while the other 1.2-acre parcel (Plot 2) will comprise a mixed-use development that would include a hotel and branded residences.

Meanwhile, The Edge understands that Lendlease Malaysia will announce its new head of country soon, following the departure of Yong Su-Lin, who will assume the role of CapitaLand Malaysia Trust (KL:CLMT) CEO-designate from Jan 2, 2025. Yong had been Lendlease Malaysia’s managing director since March 1, 2022.  

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