Laguna Park en bloc sale called off

Over at Meyer Place, owners to start inking deal soon to lower reserve price

The en bloc sale of Laguna Park has been called off for now as the sales committee found it a race against time to get the minimum consent level from owners at a proposed lower price – said to be $967 million or $704 psf per plot ratio, down from the original $1.2 billion or $844 psf ppr reserve price – before the Collective Sale Agreement (CSA) expires next month.

But over at Meyer Place, owners will soon begin signing a supplemental agreement to their original CSA at a lower price of $59 million, down from the original $65 million. BT understands the sales committee is expected to sign an agreement soon for the freehold property’s sale to a joint venture involving property and construction companies – subject to securing at least 80 per cent consent from owners at the lower price.

Meyer Place’s CSA expires around mid-March 2010.

‘The tender for Meyer Place closed on Oct 28 with four expressions of interest received and we are now negotiating with one of these parties,’ says Christina Sim, director, investment, capital markets at Cushman and Wakefield, the marketing agent for the property.

The lower proposed reserve price of $59 million works out to $1,048 psf ppr including an estimated $3 million development charge (DC), down about 9 per cent from the $1,150 psf ppr based on the original $65 million reserve price.

Based on the revised price, the breakeven cost for a new development on the site could be $1,550 to $1,600 psf.

Laguna Park’s sales committee decided to call off the estate’s en bloc sale last week. ‘While it did begin the process of getting owners to sign a supplemental agreement to lower the reserve price, the committee felt it was a race against time as the existing CSA expires next month,’ said Karamjit Singh, managing director of Credo Real Estate, the marketing agent for the property.

Laguna Park comprises 528 units.

‘It would probably be better if owners begin a fresh en bloc initiative next year and sign a fresh CSA which will give them a new 12-month period to find buyers,’ Mr Singh said.

Laguna Park, which has a land area of 677,463 sq ft, failed to find a buyer after its tender closed last month. Although two bids were submitted, no buyer made the downpayment to seal the $1.2 billion deal at the time. Mr Singh said yesterday that although signing of a supplemental agreement at the lower price had started last month, so far no conditional agreement had been inked with any potential buyer for a sale at the lower price.

The unit land price of $704 psf ppr based on the revised $967 million price tag includes payment to the state to intensify the site’s use and top up its lease to a fresh 99-year term.

Meyer Place has a freehold land area of 28,167 sq ft and was completed in the early 1990s, comprising 28 apartments – 24 units in a 13-storey block and four in a conservation house.

The property is zoned for residential use with a 2.1 plot ratio – the ratio of maximum potential gross floor area to land area.

Although Meyer Place is a relatively new development, it has redevelopment potential as its plot ratio in the 2008 Master Plan has not been fully utilised. ‘The apartment block could be torn down and rebuilt into smaller units,’ said Cushman’s Ms Sim.

Market watchers point out that the buyer of Meyer Place could also seek to enlarge the plot by purchasing surrounding properties. Just in front of Meyer Place, at No. 40 Meyer Road, is a small apartment block with a site area of about 6,000 sq ft. There is also another plot behind Meyer Place housing two old bungalows at 18D and 18E Fort Road – adding up to more than 20,000 sq ft of land – that could potentially be purchased and amalgamated.

Last month, Roxy-Pacific signed an agreement to buy Dragon Mansion for $100.8 million or $863 psf ppr including DC – lower than the owners’ previous asking price of $120 million or $1,020 psf ppr. Signing by owners of a supplemental agreement to the original CSA at the revised price is still in progress. The majority owners have up to January next year to make an application for a collective sale to the Strata Titles Board.