Last-Minute Hitch Threatens Sale Of Gillman Heights

Source : The Straits Times, May 16, 2009

Buyers raised issues relating to condo's management fund

THE troubled $548 million Gillman Heights collective sale that was due to be settled yesterday was stalled by a last-minute hitch.

The sale, which has dragged on for two controversy-wracked years, was supposed to have been signed off by last night but the owners' lawyers told The Straits Times that the buyers did not complete the deal.

The sale - first inked in early 2007 - was thought to be a done deal in February after the Court of Appeal dismissed a last-ditch plea by minority owners to overturn the transaction.

The buyers - a group called Ankerite and led by property giant CapitaLand - raised some issues out of the blue on April 30 relating to routine funds held by the condominium's management.

Now, some owners at the 607-unit estate in Alexandra Road fear that the buyers have got cold feet and are using the funds issue to back out.

Earlier reports indicated that owners stood to receive between $870,000 and $950,000 for their units.

The sale - first inked in early 2007 - was thought to be a done deal in February after the Court of Appeal dismissed a last-ditch plea by minority owners to overturn the transaction.

But Ankerite's lawyers Rajah and Tann wrote to the sales committee on April 30 about money left in the management corporation's (MCST) management fund. These funds go to the buyers on completion of the sale.

Rajah and Tann wanted $750,000 transferred back into the management fund from the sinking fund and the move approved by residents at an extraordinary general meeting (EGM) before the completion date.

An MCST member who declined to be named said it was 'ridiculous' to request an EGM at such short notice. Residents are usually notified weeks ahead.

He also noted that Rajah and Tann did not raise the issues until April 30 - just two weeks before the May 15 completion date and two months after the appeals court gave the green light.

Ankerite's April 30 letter also raised another contentious point - a separate on-going suit by a local contractor against the MCST.

The MCST had set aside almost $700,000 in the management fund to settle the case but Rajah and Tann requested that $2.3 million be allocated.

The MCST has since settled the suit for around $400,000. This meant it had no need to allocate the $2.3 million but it did transfer $750,000 into the management fund. This was done so that there would be 'no excuses' for the buyers not to complete the sale, said the MCST member.

Law firm Lee and Lee, which is acting for the sales committee, notified Rajah and Tann in a letter seen by The Straits Times that the issues raised had been resolved even though there was 'no legal basis to claim the disputed sums'.

It also warned against delaying or deferring completing the sale of the 99-year leasehold estate.

A CapitaLand spokesman confirmed yesterday that during the 'due diligence process', it had 'raised queries relating to a number of issues'. 'With the view to...the completion of the acquisition soon, CapitaLand has been in constant discussion with the sales committee.'

Ankerite initially comprised CapitaLand, Hotel Properties and two private funds, but CapitaLand will buy up the 10 per cent holding of one private fund for $21.7 million. This will make Ankerite an indirect unit of CapitaLand.

Resident G. Kaur said some neighbours were anxious to see the deal done as they had committed to other properties, 'but for some residents...it means that they can get to enjoy living in their homes a while longer than expected', she added.