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Lafe Corp calls off Fairhaven deal, forfeiting deposit in aborted collective sale

DEVELOPER Lafe Corp has backed out of efforts to buy the Fairhaven condominium, on factors such as property cooling measures and expectations of interest rate hikes.

The group expects to post a loss of some S$8.5 million from the abortion of the deal, including the stamp duties that were already paid, for the three months to Dec 31, said the board on Tuesday.

Lafe Corp, which picked up the 15-unit freehold project in Sophia Road in a S$57 million collective sale in March, is forfeiting its deposit. The sellers have already been informed of the company's decision.

In deciding not to go ahead with the purchase, the board weighed factors such as how any potential interest rate increases would bump up acquisition-related borrowing costs, it said. The directors also considered the impact of ongoing uncertainty in the global economy, amid trade tensions between the United States and China, as well as the overnight cooling measures introduced in Singapore in July.

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The board added that Lafe Corp will seek further legal advice if material developments arise from the deal being called off, "with a view to protecting the interests of its shareholders".

Lafe Corp is not the first buyer to drop out of a collective sale after the cooling measures kicked in.

Tee Land decided in July that it would not exercise its option to purchase Teck Guan Ville for S$60 million, and instead cut its losses with the forfeiture of a one per cent deposit. The company cited the "impact on market sentiments and purchasers' interest" from the cooling measures, which include a non-remissible 5 per cent additional buyer's stamp duty for developers.

Still, some private housing projects have not given up on collective sales.

The freehold La Ville, in Tanjong Rhu Road, went back on the market on Tuesday morning after owners agreed to slash the reserve price from S$152 million to S$140.6 million.

The previous tender closed in June without a deal, and interested parties later pulled out of negotiations in a development that marketing agent JLL attributed to the announcement of the cooling measures.