SingHaiyi Buys Commercial Condominium Development Project In San Jose, California

Singapore, 18 November 2013 - SingHaiyi Group Ltd. ("SingHaiyi" or the "Company") announced today that it has successfully acquired the full equity stake of Vietnam Town ("VT"), a partially completed commercial condominium development project in San Jose, California, U.S.A., which was placed under receivership, for US$33.05 million.

Acquired via a trustee’s auction conducted on 14 November 2013, VT marks SGX-Catalist listed SingHaiyi’s second acquisition of distressed U.S. real estate following the acquisition of Tri-County Mall ("TCM") in Cincinnati, Ohio, for US$45 million announced on 30 September 2013.

 

SingHaiyi said its acquisition price of US$33.05 million– already settled in full by the Company – includes US$29.8 million to repay an outstanding secured debt, and the balance US$3.25 million for the freehold project, comprising several parcels of land sitting on a total site size of 853,502 square feet.

 

Of the 256 planned condominium units – each about 1,000 square feet – 115 have been built, of which 64 have been sold. Launched in 2005, the project went into difficulties in 2009 and was subsequently placed under 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 sale 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, Mr. 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."

TCM, a major shopping mall in downtown Cincinnati sitting on a total site size of 76.1 acres, was acquired at a court-ordered auction on 19 September 2013. The operational mall was purchased free of debt and encumbrances at US$45 million, a 77% discount to the unaudited net book value as at 30 June 2013.
SingHaiyi on 12 November 2013 announced a net profit of S$8.4 million for the six months ended 30 September 2013, reversing a loss of S$1.0 million a year ago. The profit included a gain on bargain purchase of S$12.8 million from the acquisition of TCM, as well as one month of rental income from the mall.

http://infopub.sgx.com/FileOpen/SHG_Vietnam_Town_Press_Release_E.ashx?App=Announcement&FileID=264806