Business Times – 01 Apr 2008
Development charge higher than expected, says buyer
By KALPANA RASHIWALA
(SINGAPORE) The $162.8 million collective sale of Makeway View in the Newton area to an associate of Bravo Building Construction has been rescinded.
BT understands that the one per cent of purchase price paid by Bravo so far has been forfeited.
A Bravo spokeswoman told BT yesterday that it had earlier sought payment extensions to ascertain the quantum of development charge (DC) payable.
Confirming the move to rescind the sale, she added: ‘We decided not to proceed with the Makeway deal as the actual DC turned out to be higher than what we had been told. So the breakeven price would end up being much higher than what we expected. That’s why my partner (in the proposed acquisition) decided not to proceed further.’ She confirmed that the initial information about the DC did not come from Knight Frank, which was the marketing agent representing the owners of Makeway View.
The $162.8 million deal for Makeway View announced in early November last year, reflected a unit land price of about $1,583 psf ppr including an estimated $21.5 million DC at the time.
Bravo group was one of the biggest buyers of collective sale sites last year, with deals like Tulip Garden for $516 million. Bravo formed separate associate companies for the acquisitions of the various collective sales sites, as the plan was to have different partners for each project.
A Bravo associate has so far paid the initial 5 per cent deposit on Tulip Garden, amounting to about $25 million.
Tulip Garden’s collective sale was approved by STB in late February and the Bravo associate was supposed to have made the second 5 per cent payment shortly after that. However, it requested for an extension on this till early April.
Bravo’s spokeswoman said her company is seeking a further extension to early June to pay this sum and to also extend the completion deadline for the deal from late May currently to early August.
‘We need time to sort out an agreement with our partner and at the same time, sort out the financing arrangement.’
Tulip Garden’s owners are expected to meet this weekend to decide whether to give the payment extensions. Tulip Garden’s price works out to $1,018 psf per plot ratio price (no DC is payable).