Beating out other bidders Kenneth T. Jones Jr. president and chief executive officer of Jones & Guerrero Co. secured 73 units at Apusento Garden Condominiums in Chalan Pago with a bid of $3.64 million.
The auction in the Bankruptcy Court of Guam on Sept. 10 at the District Court of Guam was the result of a foreclosure by GE Capital of Hawaii on the property owned by Chatsworth Private Ltd. of Singapore.
Joyce C.H. Tang partner at Civille and Tang PLLC and attorney for GE Capital of Hawaii contested the ability of certain bidders to bid.
Jones was a late entrant in the process to secure the units. Returning to Guam on Sept. 9 he decided to bid despite not meeting initial conditions set for bidding. Conditions were set based on the offer of the original bidder — David Su vice president of Manhattan Inc. which does business as the Royal Orchid Guam Hotel. The conditions included a requirement of a minimum bid of $2.7 million and a deposit of $20 000 with Robert J. Steffy accountant and bankruptcy trustee who set a deadline of three days before the bid for entrants in the sale. Su eventually did not bid on the units.
The minimum price was set by GE Capital and Steffy. The Captain Co. appraised the property in July 2003.
Other bidders were Mark Chamberlin president of GuamCell Communications partnering with H. “C.J.” Sachdev chief executive officer of CS Retailing and Management Group; Peter Wilkinson owner of Gift Marketing and Ellen J. Wilkinson principal broker at Ellen’s Realty; and Jason Park reportedly an investor from California brother-in-law to Hee Cho purchaser of the Agana Beach Tower the Airport Mai Ana Hotel and several Tumon Horizon apartments.
Jones did not bring a deposit to the auction but did arrive with bank documents attesting to his worth. Noli Cadag executive vice president of J&G accompanied Jones to the sale.
Judge Charles G. Case II presided over the Bankruptcy Court of Guam through teleconference from Arizona also part of the 9th Circuit Court of Appeals. In answer to the judge’s questions Steffy told Case in his opinion all bidders should be allowed to bid and the judge accepted that recommendation.
Case asked Jones how quickly he could render the deposit to the trustee and was given until before noon on Sept. 10 which he met. Jones told the Journal “We provided evidence to the court that we are quite capable of paying. We were the successful bidder. We would think that they would be awarded to us in the next two weeks.”
Bidding rose in increments of $20 000 from the minimum bid.
Jones has 12 working days from the date that the order is docketed in the District Court of Guam to produce the bid money. The order is likely to be docketed in October.
In the unlikely event that Jones does not produce the money by that deadline Park has two days to produce $3.62 million — a bid $20 000 lower than that of Jones. Should those monies not be forthcoming the next bidder in line will also have two days to produce the equivalent of that bid.
The bid by Jones equates to a unit price of about $50 000. W. Nicholas Captain president of the Captain Co. said the appraisal had been made when the market was at its absolute bottom. “There has been a noticeable recovery since then. The market has tightened up quite a bit.”
Interest in the real estate market was causing an increase in prices he said. “It’s a function of the current market conditions where supply of quality properties has significantly declined and demand has significantly increased over the last 12 months.” Captain said a large combined sale such as the Apusento units would commonly involve a discount. “We would normally expect a bulk discount of 30% to 50% because there are a lot of costs associated with the sellout. Unless cash flow offsets the discount that’s what we would expect. The price really reflects the change in the real estate market. Even if you pay what may be considered a premium price today in three to five years it will be considered a great buy.”
Jones has viewed the units again. He said “I will first paint the units and get them cleaned up in accordance with our requirements and then lease them out to the public. They look quite nice inside. We’re pleased to have them. We think they are needed in the community and the only change we contemplate is sprucing the place up.”
The purchase was a sign of his confidence in Guam’s economic recovery Jones said.
“We think that we’ve seen the worst of it. We have reason to believe it’s on the way back and we’d like to do everything we can to bring it back to good health. I think we’ve shown our faith in the economy by expanding our operations and we’ll continue to do so. All you need to do is keep the faith and move forward.”
Under the terms of the sale 100% of the first $2.6 million were to be returned to GE Capital as a secured debtor; and a percentage thereafter to all debtors.
Between December 2002 and June 2004 sixteen units at Apusento Garden have changed hands. Prices ranged from a low of $35 000 each for four two-bedroom units sold at foreclosure to a high of $91 000 for a three-bedroom unit purchased for $78 000 renovated and resold. The median sales price at Apusento Garden was $54 500.
The apartments barring one unit comprise two buildings at Apusento Garden. Chatworth purchased the units from Guam Saipan Investments Inc. in June 1997 for $5.09 million or about $70 667 per unit. Apusento Garden was built in 1991. MBJ