TSR Capital to submit detailed plan for airbase project

KUALA LUMPUR: Property developer and builder TSR Capital Bhd ( Financial Dashboard), which in February this year received approval in principle from the federal government to enter into negotiations with the latter to redevelop the Royal Malaysian Air Force (RMAF) base in Butterworth, Penang via a land swap, will be submitting a detailed plan to the RMAF and the Defence Ministry.

TSR chairman Tan Sri Mohamad Noor Abdul Rahim said the detailed plan will include financial models as well as terms and agreements.

“The next stage is to put up a detailed study with all the models and everything [else], to the government so that they can give the letter of agreement,” he told reporters after the group’s extraordinary general meeting yesterday.

“After that [submission], we will get the approval. Then, we will announce [accordingly],” he added.

Under the proposal, TSR plans to work together with Lembaga Tabung Angkatan Tentera (LTAT) and bumiputera-owned Pembinaan Bukit Timah Sdn Bhd to redevelop the existing 1,007 acre (407.52ha) air force base in Butterworth into an integrated mixed-use project with a potential gross development value of more than RM10 billion. The three companies will also develop a new RM3 billion air force base for the RMAF near mainland Penang.

Mohamad Noor said getting approval for the land-swap deal is not easy as TSR is required to build a new fully operational base for the RMAF, which is capital intensive.

The airbase will be relocated to Ara Kuda in Tasek Gelugor, which the RMAF and the Department of Civil Aviation, Malaysia have agreed to in principle.

He added that the firm also has to get approval from the Penang government. Mohamad Noor declined to provide a timeline for the necessary approvals, saying the process is “now a bit slow”.

TSR group accountant Ng Kim Keong said the group has incorporated joint venture (JV) company LTP Wibawa Sdn Bhd, which it will hold a controlling stake of 51%, to undertake the mixed-use project. LTAT and Pembinaan Bukit Timah will hold 30% and 19% stakes respectively in the JV firm.

Apart from the Butterworth airbase project, TSR is looking to grow its property development segment, via a new RM600 million mixed development on a parcel of land in Bandar Enstek, Negeri Sembilan. Construction on phase 1 of the project is expected to commence next year, with completion in five years.

The group recently submitted its development order (DO) for the 20-acre freehold land and expects to obtain the DO by year-end.

“Moving forward, we are going to develop another parcel of land in Bandar Enstek. We see potential in the land as it is located near an education hub,” said Ng, noting there are currently 10 education institutes there.

He said the area provides an opportunity for TSR to build a commercial hub with residential units to cater to the student population.

The group targets the property segment to contribute 40% to total revenue within two years, with 50% and 10% of revenue contribution coming from its construction and investment holding segments respectively.

This article first appeared in The Edge Financial Daily, on November 25, 2014.