Was Bravo Too Ambitious?

Source : TODAY, Wednesday, April 9, 2008

Analysts point to bad timing for developer in 3 en bloc attempts

ONE construction and property development firm, troubled by the cooling property market and credit crisis, has left three en bloc sellers’ hopes of a cash windfall in shambles - and some analysts wondering if it is a victim of circumstances, or a player that bit off more than it could chew.

Since April 1, Bravo Building Construction has made the news for rescinding the sale of Makeway View, and for delaying payments for the purchase of Tulip Garden (picture) and Pender Court.

Pender Court’s 48-unit owners are now waiting until April 29 to see if payment is made. If they do not see their cheques of over $1 million each by then, most would “take it that the sale is off”, a resident told Today.

Tulip Garden’s 164 unit owners also look certain to call off the sale, as they voted in a show of hands over the weekend not to give Bravo a longer time to pay.

Bravo has problems raising funds and is seeking an unconditional extension of time.

The company is likely to forfeit its first payment of $25 million, and owners would receive their share of about $125,000 each by this month, a Tulip Garden resident said.

Some market-watchers are sympathetic of Bravo’s plight - going ahead with en bloc purchases last year, seeking partners to come on board since November, and now facing trouble raising funds to pay the sellers.

“It’s unfortunate things didn’t work out. It was because of the timing and all the bad news in the financial markets,” said Mr Eugene Lim, assistant vice-president of ERA Singapore.

Noting that the property market has been relatively quiet since September after the boom earlier, analysts said Bravo may have “just missed the cycle”.

They said the company’s woes showed that dabbling in en bloc was not for everyone - especially not smaller, less experienced players.

Bravo, whose office is in Geylang Lorong 23, was set up in 2002. It ranked fourth in collective sale purchases last year, outbuying City Developments and Hotel Properties.

A lawyer dealing in collective sales found Bravo’s performance “very strange”, because compared to the big players such as United Overseas Land, CapitaLand and Guocoland, it was “nobody at all”.

Smaller companies would have problems securing funds from banks in the current credit crisis, he said.

While it is common for developers to make purchases before roping partners into the project, small players should secure partners before buying sites, said Mr Colin Tan, head of consultancy and research at Chesterton International.

For example, CapitaLand bought Gillman Heights last February, but later sold half its stake to Hotel Properties (HPL) and two private funds.

“It is common for one party to go in first, but for less experienced parties, they might over-reach,” said Mr Tan.

Meanwhile, residents at the Makeway View, Tulip Garden and Pender Court seem quite happy to stay put.

One Tulip Garden owner said the money forfeited by Bravo was some consolation for the “hassle we had to go through”.

Another owner said she gave up her car after moving to Tulip Garden seven years ago, and found its location hard to beat.

A Pender Court resident said she was happy to remain in her home of 22 years “where my children grew up”.

Makeway View resident Mark Devilliers, 31, who has been living there for over a year, did not know that its en bloc had fallen through.

Rejoicing when told of it by Today, he said it would be “sad if a nice building such as Makeway View went en bloc”.