Objections to Thomson View sale

[reporter2]

http://www.straitstimes.com/archive/...-sale-20130105

Objections to Thomson View sale

Published on Jan 05, 2013

By Esther Teo Property Reporter


THE whopping $590 million collective sale of Thomson View Condominium has hit a roadblock after 13 owners lodged objections to the deal.

The Straits Times understands that the Strata Titles Board issued notice of a stop order yesterday. The stop order will take effect on Jan14.

Such orders are made if mediation is unsuccessful. There have been three rounds of mediation for Thomson View.

One of the issues raised by the 13 objectors is believed to centre on the sale price, which they believe undervalues the block.

The Upper Thomson MRT station - part of the upcoming Thomson Line - was announced during the site's tender period.

Objectors believe they should be getting more for the site as the MRT station will be close by.

The majority owners of 255-unit Thomson View will now have to make an application to the High Court for further adjudication.

The stop order raises concerns that the collective sale process for Thomson View may result in a drawn out legal battle due to the large size of the development.

Experts say projects with more units are likely to face more objections. "With more owners, there are likely to be more opinions and more people raising concerns, even if nothing might be wrong with the sale," a property lawyer said.

"We haven't seen as many stop orders recently because there haven't been as many collective sales in the past year as compared with the en-bloc boom in 2006 and 2007," he added.

Mainboard-listed developer Wee Hur Development and private equity investment company Lucrum Capital teamed up to buy the 540,314 sq ft site in Upper Thomson Road for $712 per sq ft (psf) per plot ratio (ppr) in September last year. It was the fifth largest collective sale made, and was seen as a boost to the market, which had seen mostly only smaller en-bloc deals of under $100 million in recent years.

The last big sale to be inked was in June 2007, when the former HUDC estate Farrer Court was sold for $1.34 billion.

Many experts had thought the days of mega collective sales of more than $500 million were over in the wake of the property market cooling measures.

Owners of Thomson View units - ranging from apartments to townhouses and shop space - were expected to receive gross proceeds of $1.62 million to $3.59 million, earlier reports said.

Lucrum Capital director David Batchelor declined to comment on the details of the stop order but said the firm remains "committed to the obligations of the contract".

[email protected]

[adrianmtsg]

The objectors are disillusion. Hoping to cash more out of it?

[mantrix]

They can really forget about selling now. The result of greed.

[adrianmtsg]

yup, but to be fair, blame only those who object for the sake of cashing more.
Don't forget, there are 80+% who agreed and some who truly wants to stay on.

They can really forget about selling now. The result of greed.

[azeoprop]

Haa haa see lah, greedy sellers, end up get nothing.

[Allthepies]

Have to wait for next cycle Liao, 10years, 20years?

[VS]

Wonder if the buyer is still "committed to the obligations of the contract", after the CM?

[kane]

wheelock that plot went for 790psf. this is probably worth more. the CM7 is a real curve ball.

[Ringo33]

WEE Hur Holdings yesterday said the consenting owners of Thomson View condominium have another six months to obtain an Order of Sale approving the collective sale and purchase of the condominium.
The original deadline was yesterday.
Wee Hur's 51 per cent owned subsidiary, Wee Hur-Lucrum Pte Ltd, was awarded the tender for the collective sale in September last year for a purchase price of $590 million.
This works out to $712 per sq ft per plot ratio for the 540,314.4 sq ft, 99-year leasehold estate. It has a remaining term of about 62 years.
However, some owners of Thomson View have filed objections against the collective sale.
The High Court case is set for a five-day hearing from June 24.
Wee Hur said the extension of the deadline gives the consenting owners more time to settle the court case.
Wee Hur had established Wee Hur-Lucrum Pte Ltd last year with private equity investment firm Lucrum Capital Pte Ltd for the primary purpose of acquiring and redeveloping Thomson View.
The joint venture was looking to get a fresh 99-year lease from Singapore Land Authority, and permission from the Urban Redevelopment Authority to redevelop the property into a condominium development with apartment blocks of up to 24 storeys and a gross plot ratio of 2.1.
Wee Hur Construction Pte Ltd was to be the main contractor.
The acquisition of Thomson View condominium will build up the development portfolio of Wee Hur Group and with Wee Hur Construction's appointment as main contractor, serves to boost the group's construction order book.
Wee Hur ended trading down half a cent at 42.5 cents before the extension was announced yesterday

[riverfish]

All other owners eeeagerly awaiting the en-bloc deal to go through will probably be out with their pitchforks, to pounce on the 13 guailan owners, for ruining the deal.

[mygeemeel]

Is it bcos owners are the ones who had to pay SSD? So probably not worth it for them.

[Komo]

aiyah sell and buy the prestigious one across loh

[Ringo33]

[SINGAPORE] The fate of a $590 million collective sale of Thomson View Condominium is being decided at a week-long hearing, which began yesterday in the High Court.

At issue is whether the sale of the 255-unit site to a joint venture between Wee Hur Development and Lucrum Capital was made in good faith and should be approved.

A group of 17 owners of 12 units object to the sale, saying that Wee Hur-Lucrum's offer undervalued the site. To back their case, they cite a report which valued the site at $728 million.

However, the owners of 215 units, comprising more than than 84 per cent of share value, have agreed to the sale of the site for $590 million.

The group that objects to the sale has a new objection - that secret payments were made by marketing agent HSR to owners of four units to get them to sign the collective sale agreement. It alleges that HSR agreed to compensate the owners of the four units about $548,000 and to reimburse the travel expenses of the owner of one other unit as an incentive to get their signatures.

The group said this amounts to bad faith, and that HSR and the Collective Sale Committee (CSC) were in breach of their duties.

But the consenting owners' lawyers said these objections were raised on the back of a court case over the en bloc sale of Harbour View Gardens; in that case, the High Court slammed the Harbour View CSC and its marketing agent for offering a $200,000 inducement to a couple to join a $33 million collective sale of the property.

Justice Belinda Ang refused to allow the Harbour View sale to go through, saying its CSC had acted in breach of its fiduciary duties as it had "knowledge" and had "acquiesced" in the payments by the marketing agent. The case is now under appeal.

Lawyers for Thomson View CSC chairman Philomene Ngui and two other CSC members, who represent the consenting owners, said the CSC did not make any inducement payments, nor was it aware of HSR's payment arrangement with the four units' owners. HSR has confirmed this.

Senior Counsel Molly Lim of Wong Tan & Molly Lim LLC argued that the objecting owners have not made out their case as they "have not shown that the CSC acted dishonestly or in bad faith in the sale process".

Ms Lim also disputed the dissenting owners' allegations that the CSC acted in undue haste in accepting Wee Hur-Lucrum's bid within a day, when it had three days to revert.

Arguing that $590 million was the best price the CSC could get, she said there was no reason to wait another two days and risk the purchaser backing out of the deal.

Ms Lim also said there was no requirement under the terms of the collective sale agreement to convene a vendors' meeting to discuss the amended tender contract, which the dissenting owners say had been altered materially. That is because the amended terms were "not materially adverse to the consenting owners and were in line with market practice".
But Tan Yeow Hiang of Kelvin Chia Partnership, who represents one group of dissenting owners, noted that the amended terms imposed "new onerous financial obligations" on the condo owners.

For instance, the condo owners now could pay up to 16 per cent of the value of their units as sellers' stamp duty depending on when the unit was purchased; the original contract said the stamp duty is to be borne by the purchaser.

"The CSC ought to have carefully deliberated whether the ($590 million) offer, which was only $10 million above the reserve price, was an attractive and acceptable offer, given the materially less favourable nature of the amended terms of sale," Mr Tan said.

Adrian Tan and Joseph Yeo of Drew & Napier LLC, representing another group of dissenting owners, alleged that the CSC failed to create competition between interested buyers (Secure Development Pte Ltd, owned by the UOL Group, and UIC Ltd) and to get independent valuations after the Upper Thomson MRT station, part of the upcoming Thomson Line, was announced during the property's tender period.

The CSC relied on Chesterton's "flawed valuation" of $492 million, which they claimed did not take into account the MRT announcement and other factors.

The dissenting owners also applied for discovery to determine whether the incentives had been offered only to the four units' owners because Goh Hock Seng, HSR's head of investment sales, did not say in court documents if HSR approached others with similar payments, and how much was offered.

HSR made the incentive payments in an effort to get the required 80 per cent majority consent before the expiration of the collective sale agreement on Oct 30, 2011, or it would not be entitled to engagement fees with the CSC, they said.

Even though Mr Goh, in court documents, alleged the CSC was not informed because the payments were made out of HSR's own funds, it does not absolve the CSC from liability, they said.

[Ringo33]

interesting to see property agent get grilled in court.

"People shouldn't be jealous if other people get more money."

[SINGAPORE] The marketing agent of Thomson View Condominium yesterday repeatedly denied that incentive payments for the owners of four units were an inducement to join a $590 million en-bloc sale, flummoxing the judge in the process. Under cross-examination by the defence, Goh Hock Seng, head of investment sales of HSR International Realtors, said that the owners - Sauw Tjiauw Koe; Goh Mia Song and Lim Choe San; Tang Siew Kwong and Julie Tan Bee Leng - had "asked" for the payments and "signed the collective sale agreement voluntarily".
High Court Justice Andrew Ang then interjected: "How could you say that? I don't understand you. How is it not an inducement? . . . Without payment, the (subsidiary proprietors) won't sell. With payment, they agreed to sell. Is that not an inducement?"
Mr Goh said: "I really can't answer that question."
Later he added: "This is a favour to help them sign the collective sale agreement. We are the ones who suffer. Nobody in the entire Thomson View suffered. This is something we felt we had to do for the sake of the people who really need to sell."
Acknowledging that the incentive arrangements were individually negotiated, he maintained that the owners of the four units "all came with their own requests".
"We are not the ones who started all this. It is the owners that came to us, told us their requirements, their demands. That's why they came in all different shapes and sizes."
But Adrian Tan of Drew & Napier LLC, who represents several owners objecting to the sale, asked if other owners would be unfairly treated because of HSR's secret arrangement with the four units' owners.
Mr Goh responded: "I don't need to give an answer."
Mr Tan also cast doubt on Mr Goh's claim that HSR didn't involve the Collective Sale Committee (CSC) or tell the other owners about the incentive payments supposedly because the problem had to be solved quickly in view of the pending expiration of the collective sale agreement and that "too many cooks would spoil the broth".
"What you meant was if too many people knew of your arrangement with Madam Koe, they would be upset and refuse to support the Collective Sale Agreement," he said.
Mr Goh replied: "People shouldn't be jealous if other people get more money."
In Madam Koe's case, HSR agreed to pay her 10 per cent more on top of the final purchase price for her properties.
Mr Goh also denied having agreed to pay Mr Goh Mia Song's legal fees to Seah Ong & Partners LLP, the law firm handling the Thomson View collective sale.
But he later admitted to the incentive arrangement after Judge Ang noted that he was "prevaricating" and Mr Tan said that he was "lying to the court".
Citing HSR lawyers' letter to lawyers for the consenting owners, Mr Tan said that HSR had agreed to procure a waiver of legal fees payable by Mr Goh Mia Song to Seah Ong.
But Seah Ong didn't agree to waive its legal fees and HSR ended up "picking the bad end of the stick", Mr Goh said.
He also said that he didn't check with lawyers if the incentive payments he had given were legal but believed they weren't prohibited by the Strata Titles Board.
But he admitted to keeping the arrangement confidential because he didn't want to be hounded by other owners for similar sweeteners.
In objecting to the sale of the 255-unit site to a joint venture of Wee Hur Development and Lucrum Capital, a group of owners of 12 units cited secret payments of about $548,000 that HSR had made to the owners of the four units and travel expense reimbursements to one other owner to get the required 80 per cent majority consent.
That, they said, amounts to bad faith and a breach of HSR's and the CSC's duties, and thus, the sale shouldn't be approved.
The objecting owners also felt that the $590 million price "grossly undervalued" the site, and allegedly did not take into account the announcement that the Upper Thomson MRT Station would be built next to Thomson View.
But lawyers for Thomson View CSC chairwoman Philomene Ngui and two other CSC members, who represent the consenting owners, argued that the objecting owners have not made out their case as they have not shown that the CSC acted dishonestly or in bad faith in the sale process.

[kane]

this will be an interesting case. no wonder developers don't like to buy en bloc properties.

[VS]

interesting to see property agent get grilled in court.

"People shouldn't be jealous if other people get more money."

Maybe CPIB should step in to investigate HSR? I suppose the under table money were not declared?