A homeowner’s interest vs his ex-company’s enbloc proposal.. Nicholas Mak

Written by Nicholas Mak - A fellow Teresa Ville Apartment Owner

Sunday, 17 June 2018

  

A homeowner’s interest vs his ex-company’s enbloc proposal

Introduction

I have been asked this question by some of my neighbours in Teresa Ville on why SLP International offered a lower enbloc sale price when it presented its enbloc sale proposal the Collective Sale Committee (CSC) for the job of the enbloc sale agent for Teresa Ville. In August 2017, SLP was one of the property agencies invited to present their enbloc sale proposals to the CSC.

The short answer is that the SLP enbloc sale team was informed that there could be a development charge payable to the Government ranging from $55 million to $75 million. The Development Charge (DC) is a form of tax for intensifying the development, such as building a larger floor area than in the existing development.

The DC amount for the re-development of Teresa Ville was unknown in August 2017 when SLP presented its enbloc sale proposal to the CSC. Hence, the SLP enbloc sale team factored in an enbloc sale price that was net of the estimated development charge, resulting in a lower enbloc sale price.

Secondly, there are about 700 property agents in SLP and there are a few different enbloc sale teams. I do not manage them and cannot influence their business proposals.

I was not involved in any of the enbloc sale proposals of these SLP teams, whether be it for Teresa Ville or any other properties. In addition, I do not have anything to gain if any of the enbloc sale teams are appointed as agents in any condominiums.

Thirdly, I have left the employment of SLP to work in ZACD Group in early 2016. There is a China Wall between SLP and ZACD to prevent communication that could lead to conflicts of interest.

Therefore, I did not influence nor advise the SLP enbloc sale team in their presentation and proposal for the Teresa Ville enbloc sale agency job.

Furthermore, any enbloc sale price proposed by any of the SLP teams does not represent what I think, nor does it present my opinion.

Fourthly, the CSC did not select SLP International as the enbloc sale agent for Teresa Ville because, according to the CSC Chairman, the CSC felt that SLP had marketed more industrial property projects than residential projects.

Unfortunately, members of the CSC and pro-CSC people have time and again tried to link my name to the enbloc sale price suggested by the SLP enbloc sale team.

How it started

In the third Extra-ordinary General Meeting (EOGM) held in January 2018, I asked the Head of the Huttons enbloc sale team and the Teresa Ville Collective Sale Committee: why is the $990 million minimum price stated in our Collective Sale Agreement (CSA) so low?

As one of the owners of Teresa Ville, it is in my interest to get the highest possible price for my home in any sale, enbloc or otherwise.

William Lum, the CSC Chairman, replied that “Your own company, SLP International, which is a subsidiary of ZACD, proposed a lower enbloc sale price.”

Not only did he not answer my question, he was wrong on three accounts.

Firstly, SLP International is not a subsidiary of ZACD.

Secondly, he failed to separate my personal interests as one of the owners in Teresa Ville from the SLP’s enbloc sale proposal. The SLP enbloc sale proposal has nothing to do with my private life as a homeowner. I do not receive any benefit even if SLP was appointed the enbloc sale agent for Teresa Ville.

Thirdly, it is very unbecoming of a CSC chairman, who owes a fiducial duty to all the owners or subsidiary proprietors (SP) in Teresa Ville to mount a personal attack on an SP when that SP asked a legitimate question in an EOGM.

Why I considered the Reserve Price to be low

The Teresa Ville site can be redeveloped to a maximum of Gross Floor Area of 732,905 sq ft, including the 10% bonus GFA for balconies. At the minimum price of $990 million, the land rate is $1,351 per square foot per plot ratio (psf ppr).

This is computed by dividing $990 million by the GFA = $990 million /732,905 sq ft

= $1,351 psf ppr.

I consider that land rate to be low because of the following transacted enbloc sales at that time:

(1) Vacant land at River Valley Road was sold in Aug-2017 at $1,582 psf ppr.

(2) Royalville, at Bukit Timah, was sold in Nov-2017 at $1,960 psf ppr.

(3) Parkway Mansion, at Marine Parade, was sold in Dec-2017 at $1,536 psf ppr.

(4) The Wilshire, at Farrer Road, was sold in Jan-2018 at $1,536 psf ppr.

At that time of the EOGM in January 2018, I expected the Teresa Ville enbloc sale process to take quite some time to complete. I also expected the land prices and the prices of resale homes that we need to buy to replace our homes at Teresa Ville will increase over time in 2018. Therefore, it is necessary to ask for a minimum price that was above the past transacted enbloc sales.

Relationship between SLP and ZACD

SLP and ZACD were related in the sense that the two companies were started by the same family. However, the two companies are in two separate and different businesses. SLP International is a real estate agency and consultancy. ZACD is a property fund and investment management company. ZACD staff do not work as enbloc sale agents.

SLP International is NOT a subsidiary of ZACD. In other words, ZACD is NOT the parent company of SLP International. This is clearly stated in the Initial Public Offer (IPO) Prospectus of ZACD Group, which is available in the ZACD corporate website.

In early 2016, I left the employment of SLP International to work in ZACD Group. Since then, I have not been involved in the daily operations of SLP International. I also do not have any control over the proposals presented by the SLP enbloc sale teams.

Conclusion

I am writing this long explanation because I discovered that many owners in Teresa Ville are not clear about this matter.

I am also very disappointed that there are some pro-CSC people in Teresa Ville who are still trying to link my name to the 2017 enbloc sale proposal presented by SLP, my former employer. Some are even hinting that I am not pro-CSC because SLP was not appointed as the enbloc sale agent. This is total nonsense.

I have no knowledge of what my former colleagues in SLP would present to the CSC beforehand. Furthermore, the enbloc sale proposal that they presented does not present my opinion as a SP of Teresa Ville.

My main interest in the current enbloc sale process of Teresa Ville is to get the best price for the property, which far outweighs whether SLP is appointed as the enbloc sale agent or not.

Written by Nicholas Mak, a fellow homeowner at Teresa Ville.

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