Chuan Park en bloc sale dissenters file objection with Strata Titles Board

DISSENTING owners of the Chuan Park en bloc sale have filed their objections to the Strata Titles Board (STB), alleging that its Collective Sale Committee (CSC) and marketing agent ERA Realty failed to disclose material facts relating to a higher development baseline for the condominium – which translates into a “deep discount” for the buyers – among other issues.

The dissenters, which The Business Times (BT) understands comprise part of 10 dissenting subsidiary proprietors (SPs), say Chuan Park owners were told that the 37,215.6 square metre (sq m) site’s plot ratio is 2.1 under the Urban Redevelopment Authority’s (URA) Master Plan 2019, which translates to a maximum gross floor area of 78,152.76 sq m.

However, a 2017 letter from the URA obtained in an earlier en bloc attempt shows that a development charge (DC) for the site kicks in for development above the maximum gross floor area of 89,824 sq m, that is, a baseline of 2.4.

Information provided from a baseline enquiry is good for 6 months and a fresh enquiry has to be made thereafter.

“It is clear that a higher baseline would be of crucial importance to the value of Chuan Park,” say the dissenters, pointing out that the baseline ratio of 2.4 as opposed to the plot ratio of 2.1 used in the valuation would mean the buyer could build an additional 11,671 sq m of built-up area, which can then be sold for higher profits.

“This would have been material to the owners of Chuan Park, when considering whether or not to support the present transaction at S$890 million.”

In addition, since the DC is only levied when a developer develops beyond the baseline, they calculated that Chuan Park’s buyer would save on almost S$94 million in DC if it builds up to the baseline of 2.4, versus the lower 2.1 plot ratio.

“This is on top of the additional profit that they would get should they obtain approval to redevelop Chuan Park up to the 2.4 baseline,” they say.

The dissenters allege the CSC and ERA did not disclose this material fact to owners, and were dismissive when queries were raised during meetings, as they were after “a quick sale”. Neither did the CSC nor ERA “follow up on the 2017 letter to confirm if the 2.4 baseline was still valid”.

Yet, they claim, this information was used when marketing the site to potential buyers, as the buyer had stated in its offer to purchase (OTP) that the deal was subject to obtaining outline planning permission for developing the land “with a minimum floor area of 89,824 sq m for development baseline as reflected in the reply dated 30 Aug 2017 from the URA”.

It is clear, the dissenters say, that the minimum floor area of 89,824 sq m or 2.4 baseline is “an essential condition of the transaction”.

“In short, the CSC and ERA had hidden this important and material fact (which had a direct bearing on the value of Chuan Park and its eventual selling price) from the owners of Chuan Park,” they say. “This would mean that for most of the owners, who are not well versed in the technicalities of redeveloping properties, this key indicator of value of their homes was overlooked and/or not fully explained to the owners.”

The 99-year leasehold condo was sold for S$890 million on Jul 5 to buyers related to developers Kingsford Group and MCC Singapore. Owners of the 444 homes stand to receive gross proceeds of about S$1.16 million for a 710 square foot (sq ft) unit and up to S$2.53 million for a 2,045 sq ft unit. The 2 commercial units will receive S$1.09 million for a 474 sq ft unit and S$2 million for a 1,238 sq ft unit.

Two other key issues were raised in the objections.

One is the method of apportionment (MOA) of sales proceeds, which they say is disadvantageous to 11 out of 13 unit types, compared to the 2017 en bloc attempt, as it is dominated primarily by valuation, rather than on strata area and share value.

The MOA also resulted in 2 units, at 1,959 and 1,981 sq ft, obtaining lower sales proceeds than the 1,851 sq ft units.

The other issue concerns “irregularities” in obtaining owners’ consent to the en bloc sale.

They pointed out that notices – which must be put up to show the progress in the number and percentage of SPs who signed the Collective Sale Agreement (CSA) – did not indicate the reserve price that owners had agreed to, causing “a great deal of confusion”. This is because there were 3 different reserve prices being floated – an initial price of S$938 million, a reduced price of S$860 million, and the final one at S$890 million.

“This raises serious doubts as to what the actual sign-ups are and at what reserve price,” they say. “These update notices did not serve the purpose of informing owners of the actual sign-up status in relation to the reserve price, at the crucial time when (the) CSC was canvassing to achieve 80 per cent sign-up to accept the buyer’s offer to purchase Chuan Park at S$890 million.”

The dissenters told BT that their concern is not so much with an en bloc sale per se, but that it must be carried out with due diligence and in good faith.

When contacted, the ERA agent involved in the en bloc sale said he had not seen the objections and cannot comment. BT has reached out to the CSC.