KUALA LUMPUR, May 7 — Lembaga Tabung Haji (LTH) has refuted reports that it had purchased two plots of land from 1Malaysia Development Berhad (1MDB), saying today a purchase was made for only one plot at a discount rate of RM188.5 million.

In a statement, LTH chief executive officer Datuk Johan Abdullah said that the investment was in line with LTH’s strategic plan to focus on property development.

He denied reports that the fund had purchased a second plot of land.

“The purchase of property at RM188.5 million is at a discount rate which was based on current market value and it is expected to bring about positive returns to the LTH group in the future,” the statement read.

Quoting sources with direct knowledge on the matter, Reuters reported earlier today that 1MDB is set to sell two plots of land from the Tun Razak Exchange project to the pilgrimage fund for about RM700 million.

The speculation first surfaced in a blog called “The Benchmark” which showed purported documents of the transaction.

Johan, however, denied that LTH had bought the Signature Tower which is to be developed in the second phase of the TRX project as reported by the blog.

“The leakage of information as seen on the proposal papers cannot be made proof of the final decision in the investment,” he said.

According to a statement released by 1MDB in May last year, the Export-Import Bank of China (China Eximbank) and 1MDB will jointly develop the Signature Tower and drive strategic investment opportunities.

“Malaysian Prime Minister Dato’ Sri Mohd Najib Tun Haji Abdul Razak is building upon the strong foundation of friendship laid by his late father Tun Abdul Razak Haji Hussein to create new sources of growth for the long-term economic prosperity of both countries,” the statement read.

Meanwhile Johan said the land purchased by LTH will be used to build a residential building which will be developed by its subsidiary, TH Properties Sdn Bhd, and is expected to yield “positive returns” to the TH Group.

He added that LTH will continue to hunt for similar investments in the local market as outlined by Putrajaya's Strategic Asset Allocation framework.

The sale of the land to LTH would be the first since 1MDB announced in February that it would dispose of assets to help cut its debt — a US$11.6 billion (RM41.658 billion) burden that has weighed on the ringgit and the country’s sovereign credit rating.

1MDB, whose advisory board is chaired by Prime Minister Datuk Seri Najib Razak, has been dogged by years of controversy over its management of funds and its huge debt.

The opposition and Muslim group Abim have already demanded an investigation into the deal.