Business Times – 25 Apr 2008
Deal called off as buyer decides to cut losses on investment
By KALPANA RASHIWALA (SINGAPORE) The sale of Pender Court off West Coast Highway to a unit of Bravo Building Construction has been called off. The buyer failed to complete the transaction by paying the remaining $72 million that it owed the sellers on the purchase price.
Owners of the 48 units will keep the $12 million, or an average of $250,000 per unit, they have received so far from the associated Bravo company, Pender Development Pte Ltd.
A Bravo spokeswoman told BT yesterday that the group decided to cut its losses on the investment so far rather than pump in more money as the venture was no longer profitable, given the bad publicity the company had been receiving lately from the rescission of two other en bloc sales to Bravo units – those of Tulip Garden in Holland Road and Makeway View in the Newton area.
Also, a party that was to buy an entire proposed 50-unit cluster housing project to be developed on the Pender Court site pulled out at the end of last month. ‘My breakeven cost would have been about $2.7 million per cluster house. My purchaser withdrew. With the bad publicity that we currently have, I don’t think the project can even fetch $2.3 million to $2.5 million per unit if I were to launch the development now,’ said a Bravo spokeswoman.
‘So we’d lose money. We might as well cut our loss now – I’ve lost $12 million – rather than make a bigger loss by pursuing the redevelopment.’
Even if Bravo had pursued its original plan to build a condo on the Pender Court site, the breakeven cost would be about $1,300 to $1,400 psf today, which would not be viable in the current market, the spokeswoman said.
BT understands that the $12 million that Pender Development has paid Pender Court’s owners comprised two initial deposits of $4 million each – on the $80 million price – and a further $4 million that the buyer paid the owners for the latest extension. The deadline to complete the transaction ended yesterday.
Pender Court’s $80 million en bloc sale was announced in July last year, which is when the Bravo associate paid an initial 5 per cent deposit. When the collective sale was approved by Strata Titles Board on Nov 21 last year, the Bravo associate paid the second 5 per cent deposit.
The completion date, which is when the remaining 90 per cent of the purchase price must be paid up, was to have been in late February. However, when this was not completed, the owners’ lawyer served a notice advising the Bravo associate that if it does not complete the purchase within 14 days, the owners would rescind the deal. Before the 14 days ran out around mid-March, Bravo asked for an extension to April 24 and paid the owners a further $4 million on top of the original $80 million purchase price.
All $12 million have been disbursed to the owners, BT understands.
No further notice of rescission is required under a supplementary agreement signed seeking the extension until yesterday.