Singapore property developer SingHaiyi Group has acquired Vietnam Town (pictured), a partially completed commercial condominium development project in San Jose, California, which was placed under receivership, for US$33.05 million.
Acquired via a trustee’s auction conducted on November 14, the purchase is the company’s second acquisition of distressed U.S. real estate following the acquisition of Tri-County Mall in Cincinnati, Ohio, for US$45 million in September.
SingHaiyi said its acquisition price for Vietnam Town of US$33.05 million includes US$29.8 million to repay an outstanding secured debt, and the balance US$3.25 million for the freehold project, which comprises several parcels of land on a total site size of 853,502 sq ft.
Of the 256 planned condominium units – each about 1,000 sq ft – 115 have been built and 64 have been sold. Launched in 2005, the project started to experience difficulties in 2009, and was subsequently placed in receivership when its developer lost funding for the project.
Strategically located in a mixed-use neighbourhood, the project has nine blocks including a parking structure. It lies close to transportation networks, retail and commercial facilities.
SingHaiyi intends to sell the 51 unsold units in the next one- to two-years, and use the proceeds to construct and sell the remaining 141 units within the next three- to five-years.
The total project outlay of US$33.05 million has been funded by proceeds raised from a recent rights issue and share placement exercise that was undertaken as part of the Group’s strategy to expand its real estate investment activities to the United States.
SingHaiyi’s Non-Executive Chairman, Neil Bush, said: “Vietnam Town is the second U.S. real estate project which SingHaiyi has acquired since shareholders approved its strategy to diversify investment to the United States. We believe both projects are significantly undervalued and will certainly enhance shareholder value.”
“While acquisitions at auctions require cash and quick execution, we will be looking to tap bank financing. Our investment strategy combines rental income, capital gains and development profits so as to enhance returns,” he said. “We are looking out for other projects which can offer exceptional returns.”
On November 12 SingHaiyi announced a net profit of S$8.4 million for the six months ended 30 September 2013, reversing a loss of S$1million a year ago. The profit included a gain on bargain purchase of S$12.8 million from the acquisition of Tri-County Mall, as well as one month of rental income from the mall.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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