Hotel Properties Ltd’s (HPL) $500 million purchase of Horizon Towers condominium in an en bloc sale now hangs in the balance as the Strata Titles Board (STB) has pencilled in an appearance of objectors to the sale in September, which passes a crucial Aug 11 deadline.
Under the agreement, if STB approval is not given by Aug 11, which is six months after the signing of the agreement on Feb 12, 2007, there is a provision for an extension of another four months which can be given by the sellers at their discretion.
If the sellers, who are represented by Horizon Towers’ sales committee, refuse to grant an extension, the deal could be off.
HPL has hired legal heavyweight K Shanmugam of Allen & Gledhill to protect its interests.
At stake is HPL’s paper profit of another $500 million - a result of the relentless climb in property prices.
HPL group executive director Chris Lim confirmed that the company has taken on Mr Shanmugam. ‘We have appointed Allen & Gledhill to protect our rights . . . we took a risk,’ said Mr Lim.
‘If the price dropped, we would be legally bound to honour the agreement,’ he said. ‘We take our commitment seriously. It’s not just HPL which is involved; there’s also our partners, Morgan Stanley and the Qatari government,’ said Mr Lim.
In January, almost 84 per cent of owners of units in Horizon Towers signed the agreement to sell en bloc to Hotel Properties, Morgan Stanley Real Estate and the Qatar Investment Authority, the investment arm of the Emirate of Qatar, for $500 million.
That meets the legal requirement of more than 80 per cent of owners assenting to a sale in the case of properties more than 10 years old.
Those who didn’t sign, the objectors, can appeal to the STB.
At the time the agreement was signed, the $500 million price tag at $800 per square foot (psf) was the largest en bloc deal. However, neighbouring Grangeford Apartments, which is five years older, is currently asking for more than $2,000 psf.
‘Of course, now the market has appreciated and we are rewarded,’ said Mr Lim.
Last Friday, the STB registrar set the September date for the tribunal to hear the objectors to the sale with their battery of lawyers.
The date was moved from initial tentative dates of July 25-29.
It is understood that Philip Fong, senior partner at Harry Elias, hired by one of the objectors only last week, together with Tan Kok Quan Partnership, retained by other objectors, had told the registrar they needed more time for discovery and preparation.
With so many senior lawyers getting into the fray, Horizon Towers is turning out to be the collective sale with the highest number of Singapore’s top counsel involved.
Senior Counsel Chelva Rajah of Tan, Rajah and Cheah is acting for a group seeking to oust the sales committee at an extraordinary general meeting, which was held last night.
The meeting was adjourned with the owners agreeing to go to court to find out if the EGM has the power to remove the sales committee.
This group had said they were not satisfied with the sales committee’s performance, and complained about the committee not canvassing the views of the rest of the owners prior to the sale, despite the improved market conditions.
The unhappy group members pointed out that nine months had passed from the time the sales committee had been elected to negotiate the sale and its eventual agreement.
Jimmy Yim, Senior Counsel at Drew & Napier, which is handling the collective sale, had previously told BT that the EGM does not have the power to remove the sales committee.
There have also been rumours that HPL is exploring paying more to the objectors, so that no more STB hearings would be needed - though that would likely kill off future en bloc sales in Singapore.
‘No developer would offer minorities extra money. If one does it, where does it end?’ said a property broker.
HPL’s Mr Lim said: ‘We’re not in a position to offer more. We are committed to what we’ve signed.’
Source: The Business Times, 19 June 2007
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