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LHN to acquire Cambodian condominium block for US$12.5m
LHN is acquiring 108 freehold apartment units in Cambodia for US$12.5 million, the property developer said on Thursday.
The units comprise all the condominium units in Block 1A of Axis Residences, which is to be developed by the seller, Spring CJW Development. LHN intends to nominate its indirect wholly-owned subsidiary, LHN Cambodia to hold the target units.
Situated in Phnom Penh City, Axis Residences will have a total area of 5,748.37 square metres of net private area, and 8,047.72 sq m of gross area including common facilities, which LHN Cambodia has the rights to use.
The acquisition will be financed from the group's internal resources and bank borrowings. LHN has paid US$500,000, or 4 per cent of the consideration, upon signing of the booking slip, while US$1 million will be paid within a week upon signing of the sale and purchase agreement. The rest of the purchase consideration will be paid progressively as different storeys of the structure are completed. The final 30 per cent of the consideration, or US$3.75 million, is to be paid within 30 days of the handover notice from the seller.
This deal also marks the group's first attempt to expand its space optimisation business in the Cambodia market. LHN plans to operate the units as serviced residences under the 85SOHO brand, the company said.
LHN's board said that it was of the view that the acquisition will broaden the firm's property portfolio, increase the company's profile and the brand value of 85SOHO, and provide additional opportunities to generate revenue.
The deal is subject to the group obtaining sufficient bank financing, and approval from the firm's board and its shareholders.
In the event that the title deeds of the target units cannot be furnished and handed over to LHN within 12 months from the completion of block 1A of Axis Residences, LHN will have the right to rescind the agreement, and be entitled to claim for the return of all monies paid to the seller to date, along with damages.
According to the agreement, the seller shall also complete construction of the property by December this year, with a grace period of an additional six months for any delay due to unforeseen circumstances, LHN said. Spring CJW Development will have to compensate LHN a sum of US$7,560 per day of delay from July 1, 2019 as liquidated damages if it is unable to complete handover of the target units.