Problems with a Lower Reserve Price

Here's another letter sent to the CSC with regards to the draft revised CSA. Names have been anonymised at the request of the authors.

31 Dec 2009

To the Collective Sale Committee and Credo Real Estate:

Dear Sirs/Madams,

I am writing on behalf of owner of Blk 1 of Botanic Gardens View, who has appointed me as representative on the matter of the collective sale of Botanic Gardens View (BGV).

During the Extra-ordinary General Meeting (EGM) dated 23 August 2008, I and others, have raised a number of critical issues that are seen to be highly problematic both in the collective sale process, and in the Collective Sale Agreement (CSA). Since then, an amended CSA had been sent out to all owners dated 18 October 2009. In the letter from the Mr John Lee, Chairman of the Collective Sale Committee (CSC), it was stated that:

"After deliberations and taking into account the various proposals raised by a few owners at the EGM, the Collective Sale Committee (CSC) agreed with the amendments as proposed by Mr. Norman Ho. A set of the amended pages of the CSA is enclosed for your reference."

I note that the amended CSA included several changes made to Clause 4.1.4 (on the matter of the lower reserve price), with minor changes elsewhere. While this appears to indicate that the CSC may have taken into consideration the “various proposals”, upon closer reading of the amended Clause 4.1.4, I am very disappointed that majority of the issues raised on the 23 August 2008 EGM were not addressed. In fact, my reading of Clause 4.1.4 is that the revision serves to tighten a possible loophole to prevent Sellers who withdraws from the CSA because of the lower sale price from seeking legal action against the CSC and other Sellers.

I wish to reiterate the issues that I raised during the 23 August 2008 EGM, and which is still relevant now, on the following points of the apportionment method and the CSA:

Proposed Apportionment Method

1. I am unclear on how some of the figures were obtained in the powerpoint slides printout provided by Credo. For example, on the slide titled “Apportionment Method – A Comparison” which compares between the 70/30 method (Credo) and the 1/3+1/3+1/3 method offered by CBRE, the values for the latter method are dissimilar to my own calculations. Using CBRE’s apportionment method (which is stated at 1/3 Valuation, 1/3 Strata Area, 1/3 Share Value), these should be:

[Table inserted here has been removed due to its sensitive content.]

Firstly, the values on the powerpoint slides for the 1/3 CBRE method shows deceptively similar values to the 70/30 Credo method. Owners might think that there is not much of a difference between the two methods when for owners of 117sqm units, the difference is substantial at over -$114,405 if we compared CBRE values against Credo values (see pdf file with calculations). I would like to know how Credo derived their 1/3 method apportionment of proceeds, which is quite different from those calculated using CBRE’s apportionment values.
Secondly, using the argument of narrowing the variation between upper and lower bands of premium over valuation is incorrect. In the example of 1/2SA+1/2SV used in the letter dated 12 Sep 2008, a 1% premium increase for a 117sqm unit size amounts to $29,756, whereas a 1% premium increase for a 163sqm unit size is $46,097. In other words, a 2% increase in the smallest unit is almost equivalent to a 1% increase for the largest unit. So, saying that the smallest unit gains 135% premium compared to the largest unit’s 103% premium is deceptive when looking purely at the percentage increases, as it might look to the reader that the smallest units gain proportionately more relative to the biggest units, when that simply isn’t accurate.
The better approach is to look at the apportioned amounts offered by Credo (70/30) and by CBRE (1/3 method) and consider the differences between the two methods. When viewed this way, the 38 units that are 150sqm and above have a positive difference, whereas over 108 units have a negative difference ranging from from -$82,231 to -$114,405. In other words, 108 units will stand to lose the equivalent cost of buying a car if they go with the Credo method. This is untenable and unfair. Given that the argument of using variation is questionable, I would like to see further justification of why the 70/30 method is a ‘fairer’ option for all owners. I would like to see evidence that other estates of similar configuration as BGV have adopted the 70/30 method, or failing that, why this estate is more suited to the 70/30 method over all other methods, without using the variation argument.

Lower Reserve Price Amendments

2. What are the detailed procedures on the dissemination of information on the lower reserve price and the process of the “signing of a supplemental agreement”?
a. This is not clearly defined and stated in the CSA, and needs to be done in as explicit a manner. I fail to see why such procedures are not explicitly described in a legal document such as the CSA when procedural matters are clearly explicated in the Land Titles (Strata) Act’s First to Third Schedules. For example, the LTSA requires that a general meeting be held “to provide information on the number of offers received for the collective sale and the respective amounts” (Third Schedule, 7.1.f, LTSA). By law, therefore, the CSC is required to hold at least one EGM to inform all owners of offers received, and subsequently, if they wish to accept a lower sale price. It is unclear, however, how and when will owners be notified of the opportunity to sign any supplemental agreement. Neither does it provide any information on how long will this process of signing the agreement take.
b. The revised Clause 4.1.4.a where “if the proposed sale price is lower than the Reserve Price, the Seller’s Approval shall be required (by way of signing of a supplemental agreement) before accepting such lower sale price” must be taken to read that not less than 80% share values in the Management Corporation and with not less than 80% of the total strata title area of all Units (excluding area of any accessory lot), ie the “Seller’s Approval”, must sign the supplemental agreement. Is this the case – that should a lower sale price be proposed, the CSC must obtain the signatures of owners that would constitute the Seller’s Approval in the supplemental agreement, before such a sale price can be accepted?
c. If (b) above is correct, then it should be included within the CSA, that the signing of the supplemental agreement must begin at the same EGM to inform owners of the offers received. A deadline must also be stipulated on how long could this collection of signatures for the supplemental agreement take. Otherwise, this supplemental signature collection can in theory last a year from the first signature on it. A reasonable length of time to collect the required Seller’s Approval signatures for a lower sale price, should be not more than 1 month, given that all owners would be aware and the CSC is able to keep everyone informed. This will set owners at ease that there is a reasonable and tangible outcome to this round of collective sale at a lower sale price, whether it is successful or not. Likewise, developers will also be assured that their offer will be taken seriously and not be dragged out for a lengthy period of time while the CSC collects the required signatures. A short and practical deadline will ensure that any change in market circumstances will not affect the proposed lower sale price. Any lengthier period of time will only complicate matters and any argument not to include a deadline needs to be justified to all owners.

3. Does the supplemental agreement required for a lower sale price supercede the signatures on the original CSA, as signed by Sellers? How does this have bearing on the Notice of Rescission fully entitled to Sellers by law which states that all Sellers are only allowed to rescind once from the CSA (also in Clause 6.1.37). So, if a Seller rescind once in the original CSA, signs back on the CSA, finds out the sale price is lower than the RP, can he rescind again? It should be clearly specified in the CSA that in such a situation, the Seller is entitled to his right of rescission.

4. Why is there Clause 4.1.4.b that effectively prevents any owner who previously agreed to the sale (at the expected RP) but decides against accepting a lower sale price, from taking action against any of the Sellers who signed on the supplemental agreement? By law, if a subsidiary proprietor (SP) has not agreed in writing to the sale, he or she may file an objection with the STB. Is a SP who has decided against a lower sale price still entitled to file an objection with the STB? It should certainly be the case, at the very least. I fail to see why such SPs are not entitled to any action against any Sellers who have agreed to the lower sale price, and I would like to know the rationale for this.

5. Again, I fail to see why the clause for lower sale price (4.1.4) is included in the amended CSA by Credo/Rodyk when it was clearly absent in the CBRE CSA. As Mr John Lee’s letter dated 18 October has clearly cited “positive outlook” where the “high-end market (which is where we are) will likewise improve”, and given the recent push again for the collective sale, the CSC must be seen to be confident enough in achieving the reserve price that there should be no need for clauses for a lower sale price. This clause reflects a certain lack of confidence in achieving what is maximally possible for the estate, and an ambivalence in the collective sale. Given its highly problematic nature and the lack of procedural explicitness, I would strongly argue for the complete removal of Clause 4.1.4 from the CSA. This was also the view of others who spoke up at the EGM.

Seller’s Approval

6. Clause 11.2 allows for sellers to “appoint a representative to attend and vote at a Sellers’ meeting and in respect of His Unit, that representative shall attend and vote at the Sellers’ meetings for and on behalf of that Seller”. I note that the second mention of meeting is in the plural. I hope this is a typographical error and would like to point out that the appointment of a representative is valid for only one meeting and not for any subsequent meetings thereafter. This is to prevent any representative from continuing to exercise their voting power beyond the meeting that they are explicitly entitled to do so.

I thank the CSC for allowing me the opportunity to provide further written feedback, although I must admit that most of these are already voiced to the CSC during the 23 August 2008 EGM. I had assumed, given that the EGM was completely audio recorded and minuted, that issues raised then would be addressed in any future revisions to the CSA or apportionment method. I am disappointed that this was not the case. I can only hope that this formal written feedback will make the CSC consider, very seriously, what has been said both at the EGM and now in this letter. Repeating these objections again will only serve to reflect poorly on the CSC’s claims that they seek to be a reasonable and fair group of owners to represent the estate.

Yours sincerely,
Owner
Blk 1 Taman Serasi
Botanic Gardens View

Tags: bgv, botanic garden, botanic gardens, botanic gardens view, en bloc, en-bloc, enbloc, real estate, singapore, csa, collective sale agreement, csc, collective sale committee, feedback, apportionment, RP, Reserve Price

Restarting Enbloc - By NOT Being Fair to Owners?

I recently received the CSC Enbloc letter (see below) and the revised CSA that is an attempt to restart the enbloc process at BGV after more than a year long hiatus.

While I cannot stop the CSC from doing so, I want to point out several points that seems to have been ignored from the period of the last EOGM in August 2008 until now which pertains to the fair treatment of all owners, including those staying overseas or off-site and the continued lack of transparent process in the enbloc attempt of BGV.

Upon receiving the enbloc letter, I am, in particular, appalled that an extremely short deadline is imposed on all owners to request for written feedback on the most important document of all - the CSA and the apportionment method. Does this mean, if by this short deadline, no response is provided (which is likely), then the CSC will ASSUME that everyone is happy?

Surely that can't be how a group that is charged with taking care of the collective sale of the estate attempts to get a sense of the sentiments on the ground?

For the sake of fairness and transparency, I have reproduced my email to the CSC for all to see.

"From: enbloc_bgv@hotmail.com
Sent: 26 October 2009 02: 01AM
To:
Cc: enbloc_bgv@hotmail.com

Dear Botanic Garden View CSC,

Your Enbloc letter dated 18 October Sunday and the revised draft CSA were received by hand on 20 October 2009 Tuesday. It can only be assumed that owners who stay off-site or overseas will receive their documents anyday from 21 to 29 October.

There are several points which I wish to raise with the CSC and Credo:

1. The deadline of 30 October 2009 for written feedback is too soon. It is also unclear what is the nature of the feedback that you are requesting to comply by the 30 October 2009 – only the apportionment method, or with regards to the revised draft CSA as well. Given that the revised draft CSA was delivered in this letter, I can only assume that the deadline of 30 October 2009 applies for written feedback for both apportionment method and the CSA.

2. You have therefore effectively given owners only TEN days (and for many, less) to provide their written feedback on important matters such as the CSA of which the apportionment method is a part of. This does not give enough time for owners who reside overseas and also owners who are currently overseas to mull over, consider and respond. Neither does it give time for owners to get in touch with legal counsel with regards to the revised terms of the CSA. Also, it need not be pointed out that it has been more than a year since any formal correspondence was made on this matter, and many owners may have forgotten the exact discussions on pertinent issues by now.

3. At the very least, since the CSC has taken over a year to revise the CSA, the CSC should allow all owners at least 2 months, until the end of December 2009, to consider and respond to these revisions of the CSA (including apportionment method). Anything less will reflect negatively on the way the CSC seems to be giving owners insufficient time to examine the revisions. I can only assume that after this ‘deadline’ whichever date it may be, there will be no further discussion on the matter of the CSA so it is imperative that time be given for all owners to read through the legal document carefully, and under advisement by legal counsel.

4. At the 23 August 2008 EOGM, there were complaints by owners on the apportionment method and yet these issues did not change the apportionment method in the revised draft CSA in any way. It would appear that these complaints were ignored, despite the assurance at the EOGM that all feedback will be reviewed and taken into consideration, written OR verbal.

5. In order for owners to make an informed decision about the apportionment method, I find that the justification provided by Credo in the letter dated 12 September to be insufficient as it does not provide detailed accounts of all 6 different methods described. It is not the responsibility of owners, many of whom are not familiar with proper calculations for apportionment methods, to calculate alternatives as requested by the letter dated 18 October. Instead, it is incumbent upon the CSC and Credo to show to all owners what each owner will be getting from the en-b! loc sale, for each of the 6 methods, and then and only then, can each owner make a decision on which alternatives are more suitable for them.

6. Therefore, I would suggest reprinting the slides from the Credo presentation (included with the 12 September letter) which detailed the apportionment calculations for the 6 methods, and explain in greater detail why you felt that the 70/30 method is far superior to the other 5 methods.

7. Also, on what criteria will you be considering individual owners’ feedbacks? Currently, it would appear that the CSC and Credo is firmly committed to the 70/30 method since it has remained the same despite the EOGM discussions. Likewise, the changes to the CSA appear superficial rather than in response to the numerous concerns over the lower reserve price matter (although I will consult a lawyer on this point). In other words, how will you revert to all owners on the feedback received (ie the exact nature of said feedback), your responses to them, why you made the decisions you chose to make, including why you felt that any feedback is unacceptable.

8. Finally, to be clear and fair to all owners, I believe the CSC should make it explicit that you are requesting for written feedback on the revised CSA in your 18 October letter (it is implied, but not explicitly stated). Otherwise, there needs to be an EOGM to discuss the revised draft CSA, to be fair to all owners. At the very least, as mentioned, the deadline for feedback needs to be pushed by at least 2 months, and the protocols, processes and decisions whereby the CSC will consider such feedback should be made transparent to all owners.

Response from the CSC and Credo to the above points raised would be appreciated. Thank you.

Wong Hwei Ming
Blk 9, #09-17"

Tags: botanic garden, bgv, botanic gardens, botanic gardens view, en bloc, en-bloc, enbloc, real estate, singapore, collective sale agreement, csa, collective sales committee, sales committee, csc, letter to owners, apportionment

Letters, Truths, ACTION!

After Mr Tan L. H.'s letter (dated 15 August), Mr John Lee sent out via email his rebuttal of the points mentioned in Mr Tan's letter on 20 August. For the benefit of all, we have put up Mr Lee's email on scribd. Below is Mr Tan's letter in response to Mr Lee's email of 20 August. Mr Tan's letter has been sent to all owners and residents of BGV on 21 August.

"21 August 2008
Dear fellow subsidiary proprietor,

In response to my letter dated 15 Aug 2008, John Lee has sent an e-mail dated 20 Aug 2008 to various parties. In his e-mail, he makes certain statements which are clearly incorrect and misleading, and which I feel I need to set the record straight on. My comments are set out in italics below John Lee's statements:

1. He says that my "letter contain (sic) misleading information which needs to be corrected. He is writing like he is protecting the interest of the owners, but he is in fact trying to create doubts in your mind about the integrity and rectitude of the Collective Sale Committee."
My comments: My letter makes it very clear that it states my own concerns and suggestions in relation to the formula for allocation of sale proceeds and the terms of the Collective Sale Agreement. As I emphasised several times in my letter, each owner should consider his own circumstances and take independent advice. I certainly did not claim to be protecting the interests of the owners. And I certainly did not say anything at all about the "integrity and rectitude" of the Collective Sale Committee anywhere in my letter, which touches solely on the issues involved.

2. John Lee says that "*The formula for apportionment of the sale proceed has been changed.* This is true. The Sale Committee found the previous method of apportionment (of 1/3 area, 1/3 share value and 1/3 valuation) to be cumbersome and complex. It raises more questions than answers. The valuation component can be challenged - e.g. why this valuer and not that valuer or why not 2 valuers instead of 1 valuer or will valuation done at the beginning of the en bloc still be applicable at the end of the en bloc (a period of 12 - 24 months)? The Sale Committee decided to use a straight ratio of area vs share value to avoid controversy and overcome complications. The ratio of 70% area and 30% share value was chosen because 1) it is the closest to the previous method under current valuation 2) as advised by the Consultant, it will pass the equity test of the Strata Title Board 3) it is used by other condos with the same configurations, i.e. 1 share value for differing sizes of the units and 4) this formula has been upheld by the High Courts in the case of Holland Hill Mansion."
My comments: is it true that the ratio of 70/30% is "the closest to the previous method under current valuation", and what exactly does that mean? The critical question is why was this new ratio chosen, when the previous sale committee - which John Lee chaired - applied the previous formula which is now lightly dismissed as "cumbersome and complex"? Which formula is in the best interests of subsidiary proprietors? And why 70/30% instead of 50/50%? John Lee should explain what has changed since the previous attempted en bloc sale to justify such a change.

Further, is John Lee saying that the Consultant has guaranteed that the 70/30% formula will be approved by the Strata Titles Board? If so, this should be obtained in writing from the Consultant, and incorporated in the terms of the agreement with the Consultant.

He should also let us know which successful en bloc sales "with the same configurations" applied the 70/30% formula.

And speaking of being misleading, in fact, in the Holland Hill Mansion en bloc sale that he mentions, the statra area/share value formula was indeed upheld by the Strata Titles Board, the High Court and the Court of Appeal - but the ratio applied was 50/50%, and not 70/30%!

3. John Lee said: "He says: "*There is no protection in the CSA for you as a subsidiary proprietor*.... and the case of Horizon Towers is again mentioned. It is true that the owners of Horizon Towers who signed the CSA were sued by the Purchaser to honour the Sale and Purchase Agreement. If you recall, the consenting owners at Horizon Towers changed their minds about selling their property after they have entered into a contract with the Purchaser, when they realised that a neighbouring property was sold for twice what they got for their property. Of course, the purchaser has the right to enforce their contractual rights under the terms of the Sale and Purchase Agreement. Will this be repeated in BGV? Not likely if consenting owners do not change their mind after entering into a contract."
My comments: Another misleading statement on John Lee's part. The majority owners in Horizon Towers were not sued because they "changed their minds". They failed to comply with certain legal requirements in their submission to the Strata Title Board, and the buyer sued on the basis that the sellers had failed to perform their contractual duty to make a proper application. Whether or not this was based on a change of the majority sellers' minds is an inference from the facts.

So the real question to be asked is, if the CSC makes a faulty application or some other mistake in the sale process, leading to the owners being sued, what recourse would the owners have against the CSC? As the CSA is currently drafted, none. Not only that, the CSA provides that the owners indemnify the CSC - in 2 clauses, no less (clause 6.1.38 and clause 10.3)! Why should the CSC not be held liable for their actions, when they are acting as agents and fiduciaries in relation to valuable properties? Why should the owners indemnify the CSC?

As an aside, it is unclear why there should be 2 indemnity clauses. And it should be noted that though the indemnity in clause 6.1.38 is at least limited to acts of the CSC "in connection with" the CSA, the Collective Sale and applications to the Strata Title Board, there is no such limitation in clause 10.3. So theoretically under clause 10.3 the owners indemnify the CSC against "all actions, costs, expenses, damages and claims" whether or not related to the CSA or the Collective Sale. How can this be acceptable to owners?

4. John Lee says: "*There is no provision for a performance bond from a bank to guarantee that the buyer will complete the sale and make full payment of the sale proceeds*. If Mr Tan is correct, then he should show us a Sale & Purchase Agreement with such a preposterous provision. No Developer will accede to this demand. It has not been done before and it will never be done ever. Our protection is in the 5 - 10% deposit placed with our solicitor, which will accrue to the owners in case of a default, and the advice of our Consultants on the bona fide status of the purchaser.
My comments: I have said in my letter that we are likely to be told it is not market practice. But that is no reason why we should not have a performance bond if the purchaser is really keen to buy our estate. Market practice has to start somewhere, doesn't it? And should we not learn from the lessons of other estates whose purchasers pulled out of their enbloc sales, to begin a market practice that protects us? The deposit is insufficient protection, as the potential damages for an owner who has contracted to buy another property may be much larger than his share of the deposit. I believe this is what happened in the aborted en bloc sales earlier this year.

In any event, if the purchaser is bona fide and does not intend to default, then it should have no problem giving the bond. But my point is that no one can say for certain that a seemingly strong company will not collapse - look at Bear Stearns and Enron, just to name 2 of the largest, most successful corporations that have collapsed without warning. The CSC should in fact be the party insisting on this in order to protect all owners' interests, and not say that "it has not been done before and will never be done ever". Is this indicative of how the CSC will be negotiating to protect owners' interests?

5. *He says: "The power of the CSC to enter into a sale below the reserve price, and other important terms of the sale, should be subject to approval of the subsidiary proprietors. *It is misleading and mischievous to suggest that the CSC can enter into a sale below the reserve price without the approval of the subsidiary proprietors. Clause 4 - Sale Terms Reserve Price: $630,000,000/ Higher if increased with the Sale Committee's approval and Sellers are deemed to agree to such increase. If the proposed sale price is less than the Reserve Price, the Sellers' Approval is required before accepting such lower sale price. Sellers' Approval is defined in Clause 11 of the CSA as "the approval of sellers constituting at least 80% of share value and at least 80% of the strata title area of all units". Similarly the terms and conditions of the CSA cannot be changed willy nilly without the approval of the owners.
My comments: if John Lee had read the letter carefully, he would have seen that I was referring to changes in the terms of the sale and purchase agreement to be entered into with the buyer, not the CSA. Under the CSA, the committee is empowered to change the terms of the sale and purchase agreement. And what is wrong with saying that if the CSC wants to enter into a sale below the reserve price, it should get the owners' approval? In fact, this should be done before any such sale is entered into, with clear explanations why the CSC recommends such action, and why the reserve price cannot be achieved.

Further, it is unclear how and when each owner's decision whether to agree to the sale below the reserve price is to be ascertained, and what time period an owner is given to make such a decision. In all, the mechanism for a sale below the reserve price is unclear, and owners would do well to ensure that it is clearly specified if they agree at all to such a provision. It could be said to look like advance preparation for a sale below the reserve price. Is there something owners should know about now?

In fact, having taken a closer look at the CSA, clause 5.6 does purport to give the CSC the power to change both the CSA and the sale and purchase contract willy-nilly, subject only to what is stated in the CSA and the law requiring Sellers' Approval!

6. John Lee says: “He is also trying to collect as many proxies as possible to influence the outcome of the EGM in his favour. Do not be misled and confused by him.”
My comments: In fact, it is John Lee and his CSC members who have been collecting proxies all along, making it appear like there is a majority in favour of the en bloc sale, when actually it is a minority. It just looks like a majority because this group of en bloc sale supporters attends and votes at the EOGMs, usually through proxies held by John Lee and his CSC members. So the end result is that resolutions passed at the EOGMs appear to be overwhelmingly supported, while in reality, the majority have not attended or voted.

Thus, I would urge all owners to attend the EOGM this Saturday, and all future EOGMs, so you can hear for yourself and make up your own mind about how the various issues raised above, and other issues that other owners raise at the meeting itself, will affect your own circumstances. Otherwise you leave your fate in the hands of a vocal, persistent minority who act with their own interests at heart.

Yours sincerely,
Tan Lai Huat
Blk x Taman Serasi #xx-xx
Singapore xxxxxx "


Below is a letter sent to our BGV email by an owner and the owner asked for the letter to be put on the BGV blog. We have reproduced it here for the benefit of all.

"21/08/2008
Dear Vanessa and Hwei Ming,

I’ve held back on making comments, but the latest email from John Lee about Tan Lai Huat has really infuriated me. Just as John Lee has answered point by point, I want to bring to the attention of readers and owners these points he made:

1. “His letter contain misleading information which needs to be corrected”.

In fact, I believe the information he provided is not misleading, but enlightening. The points raised by John Lee in his rebuttal is incorrect, and I’m sure they will be brought up at the EOGM, which I encourage as many of you to attend. For example, he suggested comparing ‘two documents’. I suggest you compare the CBRE CSA and the Credo CSA to see the ‘great disparity’. When compared in terms of sale proceeds, owners from Blk 1 stand to loose over $100k under the new CSA! I guess it is purely coincidental that none of the CSC members own units in Blk 1 so will not face this loss.

2. “He is writing like he is protecting the interest of the owners, but he is in fact trying to create doubts in your mind about the integrity and rectitude of the Collective Sale Committee”.

This couldn’t be more obvious than the misinformation from the CSC’s own blog. For example, they stated clearly on their blog in response to the question: Can the reserve price be lowered after owners sign the CSA? Their answer was: “No. The reserve price is the minimum that owners agree to sell at. If the reserve price is not achieved, a sale does not take place”. I urge you to read clause 4.1.4 carefully to see if “a sale does not take place”. Such a clause about a lower sale price is not present in the CBRE CSA, but this just points out that the CSC is clearly preparing for a lower offer and is preparing to accept such a lower offer. Why else have this clause?

Some more “true facts” from their blog. In their “Timeline of Events”, they stated that in Jan 2008, “Owners present vote overwhelmingly in favour of formation of Collective Sale Committee”. Sounds like the entire estate is “overwhelmingly” for the sale, right? But actually, only 61 units out of 146 total attended and could vote. A total of ONLY 37% of the ENTIRE estate voted for the new CSC. That, my dear neighbours, is the “true fact”. A MINORITY GROUP has decided to push THEIR OWN AGENDA with no regard for the MAJORITY who are not keen on the sale.

And the most insulting, which many of you who received John Lee’s correspondence will remember, is now put up under “Alternative Places to Stay”. He has omitted certain sentences that were in his original letter, which I’ll now include, IN BOLD:

… It will not make much sense for us to sell our precious home and then splurge on a super luxurious home at 8Napier, Grange Residences, St Regis, etc. It will be plain stupid!

…Here are some estates where you can find homes with market value from $1-1.8 million: Normanton, Ridgewood, Pandan Valley, Pine Grove, Central Green, and many more in the east, west and central. Or, how about Punggol 21, the idyllic new town with shopping, nature, stream and MRT?

Some of the above estates are attempting to go en block, but they are not likely to succeed because they are huge estates, they have development charge issues, and most of them will not make it in time before the new Amendments become law.

Why did he omit these sentences? Because he called owners “stupid” just because we have a right to decide what kind of home we’d want to buy, luxurious or not. And how many of us were insulted that he would even suggest Punggol 21? I certainly do not see him moving out of his super luxurious home to this “idyllic new town”! And to add insult to injury, he suggests that we downgrade, downsize and move out of a perfect, central and beautiful location at BGV!!

3. “He is also trying to collect as many proxies as possible to influence the outcome of the EGM in his favour. Do not be misled and confused by him.”

Isn’t this the pot calling the kettle black? Isn’t he just as aggressively collecting proxies to influence the outcome of a general meeting? Didn’t he already achieve that, to great effect and to possible detriment of our estate, during our AGM when he steamrolled his pro-sale team into the management committee, courtesy of proxies?

I’m sorry but I’m quite disgusted by John Lee’s high and mighty attitude. Given his attitude, his bullish behaviour, his misinformation, I’m now greatly concerned that it is only one step away from our estate becoming like that of Laguna Park – with people living in fear of enbloc vandals who will not hesitate to bully the rest into signing the CSA.

At the end of the day, the only *TRUE FACT* is this – now is NOT the right time to sell. And unless we get rid of the CSC, our estate will be sold for less than what it’s truly worth.

A very disgusted owner
Name withheld for fear of vandalism. Not everyone parks near the guard house daily."

Dear Owner,
We thank you for your letter. We can understand your reason for withholding your name for fear of vandalism but we hope you can contact us as soon as you see this blog post. Thank you.

Tags: Botanic Gardens View, Taman Serasi, collective sale, collective sales, en bloc, en-bloc, enbloc, collective sale agreement, apportionment, proxy, EOGM, Letters to Owners, sale agent, sales committee

Be Wary, Be VERY Wary

Dear fellow owners and residents,

Some of us have now heard from the Sale Committee. We reproduce the e-mail in full, for the benefit of those who may for whatever reason not have received this information:

"Dear friends,

Just a quick update on the status of the above (BGV En Bloc).

CBRE has indicated that they are declining reappointment as Consultant for our en bloc. The reason offered is that the market has changed, and the previous reserve price is not feasible in today's market. If the reserve price is lowered to match market expectation, they believe that it is not possible to garner the 80% support required.

The CSC invited five other consultants to give us their proposals. Two declined. The other three have submitted their proposals to the CSC. A second EOGM will be called very soon to allow subsidiary proprietors to vote on the three proposals."

You will note that even the Sale Committee's own property consultant now no longer thinks it worthwhile to carry on with the en-bloc disposal of Botanic Gardens View. One would think that the Sale Committee would have taken the hint and abandoned this worthless endeavour. Unfortunately, in its blindness, it continues to solicit customers for its dubious wares. Two of them have had the sense to decline. We strongly urge our fellow owners and residents to look with great care at what is eventually offered by the others. We know and understand the long-term value of what we have.

The Committee is already hinting in its e-mail above that it may propose a lower reserve price than before (and if we recall correctly, the original reserve price was itself never clearly established). If the original price was not worth selling for, we cannot see that any sensible person would think it worth while to sell their home for less. So it appears to us that our ongoing advice now gains even greater relevance: whatever document is presented to us, we urge everyone not to vote for it, still less sign it, before having taken independent legal advice on its implications for our rights. For example, we have heard from other estates how their Collective Sales Agreements include clauses that give the Sale Committee full control over the reserve price, including changing it without any voting or consent from the owners. This has direct consequences for those who sign the CSA: they may realize, months later, that they are not getting the deal they were initially promised but something much lower, just so that the en-bloc sale can be secured and forced through. We urge you to look through the CSA very carefully for loopholes that give the Sale Committee carte blanche to do anything they want with our estate without the consent even of their own supporters. The fact that the Sale Committee seems so insistent, even desperate, to sell the estate despite unfavourable market conditions should be a major warning sign for everyone tempted to sign their documents.

As for the next EOGM that is promised: we leave it up to you to decide whether to attend or not. The low attendance (of fewer than half of the owners) at the last EOGM in our view clearly indicates the majority's lack of interest in selling their homes. We will of course also be checking with the MC of Botanic Gardens View about the cost to estate funds of these pointless meetings. Whatever the EOGM's antics, always remember that the decisions of a minority have no moral or legal authority to force the majority ie all of us, to sell against our will. Dear fellow owners and residents, we are just going to say no, and we hope that you will too.

Vanessa Chan
c/o Ms Sim Bock Eng, Wong Partnership, One George Street
Blk 9, #10-09, Botanic Gardens View

Wong Hwei Ming
things.unfair@gmail.com
Blk 9, #09-17, Botanic Gardens View

or BGV blog email: enbloc_bgv@hotmail.com

Tags: Botanic Gardens View, collective sale, collective sales, en bloc, en-bloc, enbloc, collective sales agreement, EOGM, CSA

Is Collective Exchange a Good Deal?

For those of you who missed out on the meeting on Friday evening (and there are lots of you, from what I gathered from the upset crowd), here's some information from the Huttons presentation on collective exchange for BGV. Information provided here is based on what I've heard in the presentation and is provided as is, for the sake of transparency in the ongoing en bloc of BGV.

First, about Huttons :-

• They are 'affiliated' with Savills, but in terms of en bloc experience, it is unclear what they have done. They claimed to have completed one project (Tulip Gardens) but that's by Savills. They said they have 2 ongoing en bloc projects.
• What annoyed me and many others who felt they'd just wasted our time, was this - they were NOT invited by any owners to give the presentation at BGV on Friday!! In fact, if you checked the letter sent out by them, addressed to Mr Tan Chew of the Management Committee, as 2 members of the MC (including the chairperson) pointed out at the meeting, (1) there is no such person as Tan Chew, (2) while Huttons did speak to the chairperson, the latter did not give any greenlight for Huttons to use his name, neither did he give permission to Huttons to do the presentation.
• In fact, when someone asked if they have a protem sales committee formed to represent the collective exchange deal, the agent said they're in the process of forming one. When asked further, no names were provided and no owner from the crowd stood up to represent BGV in any way. This makes it very suspect if the agent even has any owner in BGV who is willing to represent all owners in the deal.
  
• It is not known where they obtained the namelist of owners from, since a number of them did not receive their letters in their registered addresses.
  
• They were apparently not aware that an existing protem sales committee had been set up with CBRE as the agent.
• They have a lawyer who will help draft the CSA, but that lawyer is not Phang & Co who is the only company that really specialises in collective exchanges, and has done the only successful exchange thus far (Paterson Lodge).
  

Now about the collective exchange proposal:

• The agent is in talks with 2 developers who have expressed interest in our super prime land. The sale will not be done by tender, but by private treaty between the owners and the developer.
• Prices in the letter are indicative only, and not confirmed. In fact, the figures in the two tables are more similar now so whether you do an exchange or opt out, you'll be getting the equivalent value.
• Huttons claim that while there are height restrictions due to proximity to Botanic Gardens, the developer can use a staggered design, so that it's only 4 storeys from the sides closest to the gardens, and then building up to 1.8 plot ratio further back into the estate, possibly higher storeys.
• While the exchange units are 30% smaller, owners can opt to 'top up' to their original size according to the formula : for the first 10% of the existing area = $2000psf, thereafter it's $2700psf. In other words, to retain the same size unit that you currently have in the new estate, you must pay the developers (upwards of $150-200k approximately)! To retain the 'same size'! We're not even talking about same facing, same floor yet.
• The most ironical part of the collective exchange proposal is that not everyone can obtain an exchange unit. It is subject to balloting. Like HDB flats. The exact number of exchange units are not known (can be anything from 1 to ?? depending on the developer and the deal). It is also not known how the balloting will be done (eg if you sign up earlier, will you get preferential treatment) and if you only want an exchange unit and not opt out, if you're unsuccessful in the ballot, can you pull out of the CSA (unlikely).
  

Some owners were very upset that this is happening in BGV - an agent coming in to give a presentation without permission from any owner at all. Some asked why is there a need to even consider selling the estate since it's in a prime location (as the agent willingly pointed out). Some questioned the integrity of the agent and their track record in pulling off what may well be a half-billion dollar deal. One owner suggests that since there is a crowd interested in collective exchange, that perhaps like-minded owners should get together to discuss this idea further, solicit from other agents (including Huttons) with the understanding that Huttons might not be the finalised company to handle an exchange deal.

I left very disturbed - how can an agent appear on our doorsteps without even the management committee's permission and attempt to sell themselves? I noticed that a good number of owners are in their late 40s and older; for these people a collective exchange is certainly ideal if they can stay in the same place again. But questions about collective exchanges remain:

1. Out of hundreds of en bloc deals that happened this year and last, only one was successful in a collective exchange (Paterson Lodge). Why is that so? I understand that for them, a 100% consensus was obtained and the logistics and legalities surrounding exchanges are not easy at all. Partly because it is not legislated (unlike Australia as mentioned by Dr Minority here) and partly because there's always different interests involved in the sale of an estate.
2. Because we won't really see the final product (our units) until the developer's built the whole place up, how will we know what we'll end up getting? Will we even have any say in the matter (will the architect give us plans/designs), will they let us know what floor, facing, size we'll be getting? Are they getting in a Feng Shui geomancer to ensure the place has good flow?
   
3. Given that next door's going to be a superluxury condo (Napier 8), will there be anything stopping a developer from giving exchange units that are nearest the road (for example), leaving the units they will sell at exclusive spots further in?
   
4. Also, even though a new development might have new units, it'll also have higher maintenance fees and an influx of tenants, possibly more than what we currently experience on the small roads and estate (since a developer will want to have more units in the estate than currently). Can we handle that?
5. If an exchange is done by private treaty, we won't know what's the maximum value of the land (since no bidding is done). We won't know what's the best value we can get when we sell our homes (if we do). If done by tender, on the other hand, we won't know what developer will we end up with, and what design/structure we'll get. There might be all sorts of unused spaces (corners, balconies) that make up to the size allotted, after all. Look at some of the new developments nowadays with wasted spaces in the units.
6. Ultimately the question is this - given that we're sitting on super prime land (it will always be a land in demand), and given that our place is still nice, big, spacious and well-maintained, does it make sense for us to sell BGV off now?
   

Can we ever find a place like BGV that we can call home? Our family, for one, won't.

Tags: collective sale, collective sales, en bloc, en-bloc, en-bloc sale, enbloc, enbloc sale, botanic gardens, botanic gardens view, napier 8, napier road, singapore