Tulip Garden sale off? How the deal went

Posted by lushhomeonline on April 8, 2008

Condo owners likely to call off $516m en bloc deal after developer misses payment deadline

THE $516 million collective sale of Tulip Garden condominium near Holland Road seems to be dead in the water after the developer missed a payment deadline yesterday.

The condo owners appear poised to formally call off the deal and pocket a cool $25.8 million - the original 5 per cent deposit paid by developer Bravo Building Construction.

LOSS AND GAIN: Bravo will forfeit its $25.8 million deposit if the Tulip Garden sale is axed. Each owner could pocket over $100,000.

Bravo would forfeit the sum if the deal is scrapped. That would mean each of the 164 unit owners could pocket more than $100,000 on average.

The cancellation of a collective sale because of a cash crunch is a rare event. Bravo and its partners say they have had trouble raising the necessary funds.

Earlier this year, the $162.8 million collective sale of Makeway View in the Newton area was ditched by an associate of Bravo. The firm said a higher-than-expected development charge was the reason for backing out. A deposit of $1.63 million was reportedly forfeited.

Last Saturday, Tulip Garden owners held a meeting and indicated in an informal show of hands that they wanted to cancel the sale if Bravo missed the latest payment, also $25.8 million. This payment had already been delayed at Bravo’s request from the middle of March.

By late yesterday, no payment had been made. Bravo was putting on a brave face but it was, in effect, accepting that the deal appeared to have been lost.

The developer had asked for more payment extensions - to make the next 5 per cent payment by June 7 and then complete the deal by Aug 7.

But based on last Saturday’s meeting, the owners appear unlikely to agree.

Almost all the owners at the meeting indicated that they wished to call off the sale and keep the deposit if Bravo did not pay up by yesterday, according to the people present.

A Bravo spokesman said yesterday that the firm is now seeking an ‘unconditional’ extension of time.

‘If these extensions are not obtained, the consortium will accept this costly missed opportunity to develop a stunning 350-unit condo with unmatched features in a prominent Holland Road corner,’ she said. The condo is on the corner of Holland Road and Farrer Road.

Bravo inked a deal to buy the freehold site in July last year. It was due to have been completed late next month.

The Bravo spokesman said the firm has been seeking partners since November last year.

‘The current turmoil in the financial and stock markets matched with sporadic bad news have caused unforeseen delays in securing ultimate approvals to commit funds,’ said Bravo. It added that the Tulip Garden owners had consented to the sale earlier than anticipated.

‘Coupled with the consortium’s strategic decision to significantly increase equity to balance the current cautious lending by banks, the current deadlines for next payments have become too constricted and no longer practical,’ it said.

Bravo added that it has tied up with two local and two foreign parties to buy Tulip Garden. But unless an extension is given, they will not be offering more money, said the spokesman.

She said that if Tulip Garden owners still want to attempt to sell en bloc, they may face an ‘unwelcome lower bid price’ given weaker market conditions.

Tulip Garden sold for about $1,018 per sq ft (psf), more than its earlier guide price of $900 psf in January last year. The development has 164 units comprising 96 flats, 66 maisonettes and two shophouses.

If the sale works out, flat owners stand to reap $2.5 million to $4.2 million while maisonette owners would receive about $3.4 million each. The shop units would get about $1.1 million each.

Amid last year’s booming market, Bravo also made two other fairly large collective sale deals: Pender Court, off Telok Blangah Road, at $80 million in July last year, and Makeway View.

Bravo has postponed the completion of Pender Court’s sale until late this month.

Given the slower market, more sellers are now open to lower prices. Yesterday, Royalville, a freehold mixed development off Sixth Avenue, was relaunched for sale en bloc at a lower indicative price of around $305 million.

It was offered for sale in a Nov 9 tender, which failed to attract bidders at its earlier guide price of $330 million to $350 million.

How the deal went

July 2007: Bravo Building Construction decides to buy Tulip Garden en bloc for $516 million. It later pays a 5 per cent deposit of $25.8 million.

February 2008: The Strata Titles Board approves the sale. The sale completion date is set for May 28.

March 13: Bravo is due to pay another $25.8 million, but asks for - and is granted - an extension of time until yesterday.

March 18: Bravo asks to extend the payment deadline from yesterday until May 5. It also asks to set back the sale completion date from May 28 to July 23.

March 24: Before agreement for its earlier requests can be given, Bravo asks for further extensions of time to pay by June 7, instead of yesterday, and to complete the sale by Aug 7, instead of May 28.

April 5: Owners indicate in an informal show of hands to cancel the sale and take the $25.8 million deposit if Bravo misses the payment deadline yesterday.