The collective sale of Goodluck Garden in Toh Tuck Road, agreed on in March for $610 million, has hit a road block after seven minority owners objected, saying that information was withheld which could have allowed them to sell the property for a higher price.
Owners of the 210-unit freehold residential development will go to court after the Strata Titles Board (STB) issued a stop order yesterday, with two failed rounds of mediation this month.
This means the board is unable to approve the en bloc application and the collective sale committee (CSC) will have 14 days to apply to the High Court to seek approval for the sale. The Straits Times understands this is what it will do, and a hearing of the court application could occur in early September.
Goodluck Garden was sold to Qingjian Group above the reserve price of $550 million, the fifth largest collective sale this year and the property's first collective sale attempt. The $610 million price also represented a 12.5 per cent premium over what ST understands was a $542 million valuation at the close of tender as well.
When the tender closed on March 7, owners making up 81.93 per cent of the total strata area and 81.35 per cent of the total share value had consented to the sale.
Perennial Real Estate Holdings announced a 40-60 joint venture in April with Qingjian to redevelop the site.
Objectors to the sale made their grievances known in a blog post yesterday afternoon. They claimed the CSC and marketing agent Knight Frank had told residents there would be a development charge (DC) for the site, but it turned out near the end of the tender period that there would be no such charge.
"If the owners had known that there was no DC, it is likely that the owners would have wanted a higher reserve price," the post said.
It also argued that the CSC should have stopped the tender process to seek a fresh mandate on the reserve price, held a re-tender, or extended the tender period.
Knight Frank said it was unable to comment.
Present at the STB hearing yesterday was the collective sale chairman of Goodluck Garden, who declined to be named, and said the matter was up to the High Court to decide. None of the other owners, including the objectors, turned up at the hearing.
After a buyer is found in a collective sale process, an application is made to the STB, which will decide if the sale can go through. However, dissenting owners can still raise their objections.
The STB also mediates matters in dispute for a maximum 60-day period. If the dispute cannot be resolved and objections are not withdrawn, the stop order is issued and the matter is turned over to the High Court.
Rajah & Tann represents the CSC, while TSMP Law Corporation represents the objectors.
According to the sale and purchase agreement with Qingjian, the CSC must apply to the High Court to overturn the stop order and obtain a sale order within five months from the date of the stop order.
The Straits Times understands that in the event the timeline is breached, Qingjian has the option to extend it, or abort the sale. In the event that there is no sale order, Qingjian will take back its deposit.
This not the first en bloc sale dispute to involve the Qingjian Group. Qingjian Realty bought the former 358-unit Shunfu Ville in its first collective sale purchase for $638 million in May 2016, but five unit owners objected to the sale.
The High Court gave the sale the green light in January last year, and an appeal by objectors was dismissed in May that year. Owners have vacated the property and the launch of the new development JadeScape is expected this year.
Qingjian did not reply to requests for comment.
Other past high-profile collective sale disputes include those involving Horizon Towers, Thomson View and Gilstead Court.
Mr Nicholas Mak, executive director of ZACD Group, said: "On a big picture level, this won't dampen developers' appetite." But it does mean a "wake-up call" for developers, property agents and CSCs that the path to getting proceeds after a buyer is found is not straightforward, he said.
Mr Ku Swee Yong, chief executive of International Property Advisor, said developers may become "more cautious in their due diligence of the en bloc sites offered to them for consideration".
