Lafe Corp aborts en bloc purchase of Fairhaven
By Cecilia Chow
/ EdgeProp Singapore |
Singapore-listed property development and investment holding company Lafe Corp, announced on Oct 9 that its wholly-owned subsidiary Gioia Fund Pte Ltd, “will not complete” the proposed acquisition of Fairhaven, a 15-unit apartment block on Sophia Road.
The $57 million acquisition of Fairhaven was announced on March 23 by JLL, a day after the close of the tender. Located in prime District 9, Fairhaven sits on a 16,660 sq ft, freehold site zoned residential, with a plot ratio of 2.1. Given the high development baseline, the site could potentially be built up to a gross floor area of 34,986 sq ft and the developer would not incur a development charge, according to the property consultant.
The 15-unit Fairhaven on Sophia Road in prime District 9 was sold to Lafe Corp in March for $57 million (Credit: JLL)
Based on the sale price, the land rate worked out to $1,629 psf per plot ratio (psf ppr). Had the sale gone through, the owners would have received gross sales proceeds between $3.5 and $6.9 million per unit.
According to Lafe Corp, based on the terms and conditions of the contract, failure to complete the purchase will result in the deposit and a further deposit already paid totaling $5.7 million being forefeited by the vendors.
In aborting the deal, the company will also recognise a loss of about $8.5 million in the current quarter ending December 31, 2018. This includes related transaction expenses and taxes such as the $2.3 million in stamp duties already paid, says the announcement.
The board of directors at Lafe Corp had considered various factors before deciding to abort the deal, according to the announcement. These include rising interest rate forecast, which could increase the cost of borrowing for the buyer; the impact of the ongoing uncertainty on the global economy, partly caused by the trade war between US and China; and the recent property cooling measures imposed by the Singapore government in July.
This marks the latest aborted en bloc sale in the wake of the property cooling measures. On July 25, TEE Land announced that it was backing out of the $60 million purchase of Teck Guan Ville on Upper East Coast Road. In doing so, TEE Land only forfeited a deposit of 1% or $600,000.
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