Tender for Laguna Park closes with no winner

The company that had submitted the higher of two bids withdraws, citing funding difficulties

LAGUNA Park, which went up for collective sale last month at $1.2 billion, has failed to attract a buyer so far.

The 528-unit leasehold project at Marine Parade remains unsold after the company that submitted the higher of two bids faced funding problems.

At the close of the tender on Tuesday, two submissions were received for the property, said Credo Real Estate, which is marketing the development.

One submission was from a locally incorporated company that offered $1.728 billion – well above the owners’ reserve price of $1.2 billion. The company’s main shareholders are understood to be based in Indonesia.

The other submission was from a prominent local developer, which expressed an interest in negotiating.

BT understands that the developer was not willing to meet the reserve price.

Credo conducted negotiations on the terms of the sale with the Indonesian-owned company, which was to re-submit the tender deposit in the owners’ prescribed format.

However, on Thursday evening, the offerer’s lawyers wrote to the owners’ lawyers saying that the offer had been withdrawn because the offerer faced ‘difficulty in its bankers processing the funds and remitting them to Singapore’.

Credo is now conducting negotiations with the local developer, said Credo managing director Karamjit Singh.

The majority owners of Laguna Park now have about a month or so to enter into any private treaty deal before the collective sale agreement expires in December 2009.

‘The tender was good in that it showed that developers are still keen on this kind of site,’ said Mr Singh. The problem was with the price, he said.

A banker whom BT spoke to earlier said that even if a developer was willing to pay $1.2 billion for a site, finance for both the land and construction could be hard to come by.

Market watchers were surprised at the amount offered by the Indonesian party.

The reserve price of $1.2 billion works out to $844 per square foot per plot ratio (psf ppr), including an estimated $400 million payable to the state for an increase in intensity of the site to the plot ratio of 2.8 and topping up the lease term to fresh 99 years.

The $1.728 billion offer, on the other hand, worked out to about $1,122 psf. Laguna Park has a land area of about 677,493 sq ft. About 1,500 apartments with an average size of about 1,200 sq ft each can be built on the site.