Source : The Straits Times, Saturday, September 29, 2007
MY LATE grandfather, who was the sole owner and occupier of a three-room HDB flat, had been paying $38 a month in conservancy fees to the town council. His estate now has to pay $55 a month (a 45 per cent increase) for the vacant flat, the reason being that the $38 concessionary charge no longer applies as it is now unoccupied.
This explanation seems to be counter-intuitive: an unoccupied flat produces little or no detritus, compared to an occupied one.
As the flat cannot be sold or rented out during the period of extraction of the grant of probate, which takes about nine months at the earliest, this may cause undue difficulties for some estates which face a liquidity problem.
Maria Loh Mun Foong (Ms)
Saturday, September 29, 2007
More Parties Fight To Get In On Horizon Towers’ Appeal
Source : The Straits Times, Saturday, September 29, 2007
Hearing delayed as judge has to decide if HPL, fresh group of owners can take part
IT HAD all the elements of a classic courtroom drama - big bucks at stake, anxious owners and more lawyers than you could poke a stick at - but yesterday’s Horizon Towers hearing was far from a stirring showdown.
The owners had gone to the High Court in a bid to overturn a Strata Titles Board (STB) ruling that aborted the collective sale of their Leonie Hill estate.
But lengthy argument involving a scrum of legal eagles - at least four senior counsel and six law firms turned up - over who could actually be involved in the proceedings threw a hefty spanner in the works.
Two groups wanted to be included but four other parties protested.
After about three hours of legal to and fro, Justice Choo Han Teck is expected to rule on Monday whether these groups can take part, which will mean the actual appeal hearing can start.
It centres on the STB’s Aug 3 ruling that the sale application for the 210-unit condo was defective due to procedural errors.
The majority owners who signed the sale deal, represented by senior counsel Chelva Rajah from Tan, Rajah & Cheah, want that decision overturned.
But two other parties said they wanted to have their say as well.
One is a group of individuals - including pop star Ho Yeow Sun and her husband, Kong Hee - who own 13 units. All signed the sale deal and said they wanted to participate in the hearing to ensure the sale goes through.
The other is the consortium led by Hotel Properties (HPL) that signed the $500 million deal in February to buy the estate.
It maintains that the appeal outcome could affect the breach of contract suit it filed against the majority owners last month claiming lost profits of $800 million to $1 billion from the botched deal.
It had that suit adjourned on Thursday after the owners extended the sale deadline to Dec 11 but it is still ‘alive’.
Its lawyer, Mr K. Shanmugam from Allen & Gledhill, argued that if the court ruled that the STB was wrong, it could be used by majority owners to ‘white-wash’ their alleged breach of contract.
‘We, the purchaser, are the only real parties interested in seeing this contract through,’ he said.
This rankled Mr Rajah, who argued that the majority owners were trying to get an appeal against the STB decision in order to fulfil the contract.
The consortium’s application irked the group of more than 30 owners at court. At one point, murmurs of discontent rose from the gallery when Mr Shanmugam rose to speak.
Meanwhile, three separate lawyers for the minority owners who did not sign the sale agreement argued against the two groups joining the proceedings. They said it was unnecessary and would raise costs for everyone.
An owner, 53-year-old real estate developer Victor Ow, said later that he had not expected things to get so complicated.
‘All of us like to be treated fairly…We shouldn’t, as owners, be known in the market as greedy and as villains.’
Hearing delayed as judge has to decide if HPL, fresh group of owners can take part
IT HAD all the elements of a classic courtroom drama - big bucks at stake, anxious owners and more lawyers than you could poke a stick at - but yesterday’s Horizon Towers hearing was far from a stirring showdown.
The owners had gone to the High Court in a bid to overturn a Strata Titles Board (STB) ruling that aborted the collective sale of their Leonie Hill estate.
But lengthy argument involving a scrum of legal eagles - at least four senior counsel and six law firms turned up - over who could actually be involved in the proceedings threw a hefty spanner in the works.
Two groups wanted to be included but four other parties protested.
After about three hours of legal to and fro, Justice Choo Han Teck is expected to rule on Monday whether these groups can take part, which will mean the actual appeal hearing can start.
It centres on the STB’s Aug 3 ruling that the sale application for the 210-unit condo was defective due to procedural errors.
The majority owners who signed the sale deal, represented by senior counsel Chelva Rajah from Tan, Rajah & Cheah, want that decision overturned.
But two other parties said they wanted to have their say as well.
One is a group of individuals - including pop star Ho Yeow Sun and her husband, Kong Hee - who own 13 units. All signed the sale deal and said they wanted to participate in the hearing to ensure the sale goes through.
The other is the consortium led by Hotel Properties (HPL) that signed the $500 million deal in February to buy the estate.
It maintains that the appeal outcome could affect the breach of contract suit it filed against the majority owners last month claiming lost profits of $800 million to $1 billion from the botched deal.
It had that suit adjourned on Thursday after the owners extended the sale deadline to Dec 11 but it is still ‘alive’.
Its lawyer, Mr K. Shanmugam from Allen & Gledhill, argued that if the court ruled that the STB was wrong, it could be used by majority owners to ‘white-wash’ their alleged breach of contract.
‘We, the purchaser, are the only real parties interested in seeing this contract through,’ he said.
This rankled Mr Rajah, who argued that the majority owners were trying to get an appeal against the STB decision in order to fulfil the contract.
The consortium’s application irked the group of more than 30 owners at court. At one point, murmurs of discontent rose from the gallery when Mr Shanmugam rose to speak.
Meanwhile, three separate lawyers for the minority owners who did not sign the sale agreement argued against the two groups joining the proceedings. They said it was unnecessary and would raise costs for everyone.
An owner, 53-year-old real estate developer Victor Ow, said later that he had not expected things to get so complicated.
‘All of us like to be treated fairly…We shouldn’t, as owners, be known in the market as greedy and as villains.’
Why Did IRAS Up Property Valuation One Year Later?
Source : The Straits Times, Saturday, September 29, 2007
IN MARCH last year, my brother and I bought a private apartment valued at $420,000 by an external valuer, who had made an on-site inspection of the property.
All legal fees, bank loan, and government taxes were settled then.
However, more than one year later, we received a call from our lawyer in July, informing us that the Inland Revenue Authority of Singapore (Iras) had sent us a letter dated June 18, 2007, telling us that its Chief Valuer is of the opinion that the market value of our property as at Jan 23, 2006 should be $470,000 instead and that we should pay up the difference in the stamp duty of $2,100 by July 10.
The letter also mentioned that penalties would be imposed for late payment.
I have three questions for Iras:
* Why was Iras’ letter, dated June 18, 2007, received by our lawyer only on July 17?
* Why did it take more than a year for Iras to tell us that the valuation price should have been higher, and not at the time when we paid the stamp duty in March last year?
* How did the Chief Valuer make an assessment of the value of the property without making an on-site inspection to ascertain the physical condition of the property, which is an important factor in determining its valuation?
We have written to Iras on this issue but have yet to receive a satisfactory answer.
Ng Zhong Ren
IN MARCH last year, my brother and I bought a private apartment valued at $420,000 by an external valuer, who had made an on-site inspection of the property.
All legal fees, bank loan, and government taxes were settled then.
However, more than one year later, we received a call from our lawyer in July, informing us that the Inland Revenue Authority of Singapore (Iras) had sent us a letter dated June 18, 2007, telling us that its Chief Valuer is of the opinion that the market value of our property as at Jan 23, 2006 should be $470,000 instead and that we should pay up the difference in the stamp duty of $2,100 by July 10.
The letter also mentioned that penalties would be imposed for late payment.
I have three questions for Iras:
* Why was Iras’ letter, dated June 18, 2007, received by our lawyer only on July 17?
* Why did it take more than a year for Iras to tell us that the valuation price should have been higher, and not at the time when we paid the stamp duty in March last year?
* How did the Chief Valuer make an assessment of the value of the property without making an on-site inspection to ascertain the physical condition of the property, which is an important factor in determining its valuation?
We have written to Iras on this issue but have yet to receive a satisfactory answer.
Ng Zhong Ren
MAS Tightens Rules For Reits To Protect Retail Investors
Source : The Business Times, 29 Sept 2007
No more discounts for institutional investors at listing time
The Monetary Authority of Singapore (MAS) has tightened up the rules for property funds to improve the odds for retail investors.
Institutional investors or the big boys will no longer have discounts for subscriptions made at the time of the listing of a real estate investment trust (Reit) under new guidelines for Reits issued by MAS yesterday.
Another change limits what’s allowed under fixed-term management contracts to five years.
These fixed-term management contracts have been used by fund managers as a poison pill to entrench their positions and to provide an obstacle to takeovers, as it makes it expensive to fire them.
In a statement, MAS said the revised rules ‘are intended to improve safeguards for investors and to provide greater clarity and flexibility for commercial transactions’.
MAS said a majority of the respondents to its public consultation exercise in March raised objections to disallowing discounts to institutional investors.
They felt that the discounts are justifiable because such investors enter into binding subscription agreements prior to the launch of the initial public offering (IPO); institutional investors were also said to have helped ensure the success of a Reit offering, particularly in difficult markets, by providing a useful signal to the retail market about the quality of the Reit.
Those who wanted to retain the discounts suggested full disclosure, putting a cap on discounts and/or a moratorium or the sale of the Reit units.
But MAS said: ‘As a matter of policy, there does not seem to be any good reason why different groups of investors should be permitted to pay different amounts for the same interests in these assets at the time of the IPO.’
MAS said it is prepared to allow discounts that are given to investors who assume equity risks different from those of IPO investors, for example if they are willing to underwrite the listing.
On management contracts which have been a contentious issue, the new guideline said the term of a compensation provision should not be more than five years and the compensation amount payable to the Reit manager should not exceed the sum of the fixed component of unearned management fees (excluding variable or performance fees) over the remaining term of the provision.
Industry players had argued that entrenchment clauses in management contracts were to help professional Reit managers who do not hold large stakes in a Reit and ‘would be discouraged from establishing Reits in Singapore if there is no flexibility to implement measures to obtain appropriate compensation if they are removed as managers’.
But MAS said: ‘We continue to be concerned with entrenchment arrangements that impede the market for corporate control and place significant restrictions on the ability of unit-holders to terminate management contracts.’
Ronnie Tan, chief executive of Bowsprit Capital, the manager of First Reit, said he supported not giving discounts to institutional investors.
‘It’s not fair for the small investors,’ he said.
He added that if demand is an issue, ‘Reit issuers should look at pricing rather than use discounts as a (sales) mechanism’.
‘Removal of the poison pill (means) the takeover rules would be similar to other listed companies,’ he said on the new rule which makes it easier to fire the Reit manager.
No more discounts for institutional investors at listing time
The Monetary Authority of Singapore (MAS) has tightened up the rules for property funds to improve the odds for retail investors.
Institutional investors or the big boys will no longer have discounts for subscriptions made at the time of the listing of a real estate investment trust (Reit) under new guidelines for Reits issued by MAS yesterday.
Another change limits what’s allowed under fixed-term management contracts to five years.
These fixed-term management contracts have been used by fund managers as a poison pill to entrench their positions and to provide an obstacle to takeovers, as it makes it expensive to fire them.
In a statement, MAS said the revised rules ‘are intended to improve safeguards for investors and to provide greater clarity and flexibility for commercial transactions’.
MAS said a majority of the respondents to its public consultation exercise in March raised objections to disallowing discounts to institutional investors.
They felt that the discounts are justifiable because such investors enter into binding subscription agreements prior to the launch of the initial public offering (IPO); institutional investors were also said to have helped ensure the success of a Reit offering, particularly in difficult markets, by providing a useful signal to the retail market about the quality of the Reit.
Those who wanted to retain the discounts suggested full disclosure, putting a cap on discounts and/or a moratorium or the sale of the Reit units.
But MAS said: ‘As a matter of policy, there does not seem to be any good reason why different groups of investors should be permitted to pay different amounts for the same interests in these assets at the time of the IPO.’
MAS said it is prepared to allow discounts that are given to investors who assume equity risks different from those of IPO investors, for example if they are willing to underwrite the listing.
On management contracts which have been a contentious issue, the new guideline said the term of a compensation provision should not be more than five years and the compensation amount payable to the Reit manager should not exceed the sum of the fixed component of unearned management fees (excluding variable or performance fees) over the remaining term of the provision.
Industry players had argued that entrenchment clauses in management contracts were to help professional Reit managers who do not hold large stakes in a Reit and ‘would be discouraged from establishing Reits in Singapore if there is no flexibility to implement measures to obtain appropriate compensation if they are removed as managers’.
But MAS said: ‘We continue to be concerned with entrenchment arrangements that impede the market for corporate control and place significant restrictions on the ability of unit-holders to terminate management contracts.’
Ronnie Tan, chief executive of Bowsprit Capital, the manager of First Reit, said he supported not giving discounts to institutional investors.
‘It’s not fair for the small investors,’ he said.
He added that if demand is an issue, ‘Reit issuers should look at pricing rather than use discounts as a (sales) mechanism’.
‘Removal of the poison pill (means) the takeover rules would be similar to other listed companies,’ he said on the new rule which makes it easier to fire the Reit manager.
Q3 Rents For High-Tech Industrial Space Up 15%
Source : The Business Times, 29 Sept 2007
THE average monthly rent for high-tech industrial space has increased by 15 per cent in this quarter to $3.45 per square foot per month, real estate consultant DTZ Debenham Tie Leung reported.
High-tech industrial space includes business park and science park space such as Changi Business Park and International Business Park, and rents there now range from $3 to $4.50 psf per month. The monthly asking rent for the newly completed Eightrium @ Changi Business Park is also in the vicinity of $4 psf.
DTZ executive director (consultancy and research) Ong Choon Fah attributed the increasing rents to the continuing spillover demand for conventional office space.
The latest figures showed that business parks experienced a 5 per cent drop in occupancy in the second quarter of this year due to the completion of Eightrium @ Changi Business Park and Xinlinx Asia Pacific’s business park development at Changi Business Park Vista.
Mrs Ong added: ‘Notwithstanding the dip in occupancy rate, demand for business parks remains strong.’
HSBC will take up 10,000 square feet of space at the Comtech, she noted.
Islandwide, private industrial stock, which includes factory and warehouse space, rose one per cent to 295 million sq ft in the second quarter. The average occupancy rate of private factory space rose marginally by 0.1 of a percentage point quarter-on-quarter to 90.7 per cent in the second quarter while islandwide occupancy rate of warehouse space stood at 89 per cent.
Separately, JTC Corporation launched a 20,867 square metre land parcel at Jalan Tepong for sale yesterday. Industry executives expect this site, which is the second of the two industrial sites for the year to be launched under the Government Land Sales Confirmed List, to go for between $380 and $400 per sq m per plot ratio. The site has a plot ratio of 1.4 and can be used for light industry, general industry, warehousing, utilities or telecommunications.
Demand for high-tech space could see new entrants into the market building their own facilities.
Jones Lang LaSalle (JLL) associate director (industrial markets) Tahlil Khan said that his firm is working with a number of organisations and is looking at public tenders and direct allocation of sites ‘depending on the preferences, accommodation needs and objectives of the occupier’.
David Wilton, JLL regional director and head of industrial (Asia) said that users were unlikely to find space at what he called ‘the existing business park or high-tech inventory’.
He said that these users were left with three options: purchase land to occupy; commission a leased facility; or negotiate with owners/developers on facilities under development or construction.
THE average monthly rent for high-tech industrial space has increased by 15 per cent in this quarter to $3.45 per square foot per month, real estate consultant DTZ Debenham Tie Leung reported.
High-tech industrial space includes business park and science park space such as Changi Business Park and International Business Park, and rents there now range from $3 to $4.50 psf per month. The monthly asking rent for the newly completed Eightrium @ Changi Business Park is also in the vicinity of $4 psf.
DTZ executive director (consultancy and research) Ong Choon Fah attributed the increasing rents to the continuing spillover demand for conventional office space.
The latest figures showed that business parks experienced a 5 per cent drop in occupancy in the second quarter of this year due to the completion of Eightrium @ Changi Business Park and Xinlinx Asia Pacific’s business park development at Changi Business Park Vista.
Mrs Ong added: ‘Notwithstanding the dip in occupancy rate, demand for business parks remains strong.’
HSBC will take up 10,000 square feet of space at the Comtech, she noted.
Islandwide, private industrial stock, which includes factory and warehouse space, rose one per cent to 295 million sq ft in the second quarter. The average occupancy rate of private factory space rose marginally by 0.1 of a percentage point quarter-on-quarter to 90.7 per cent in the second quarter while islandwide occupancy rate of warehouse space stood at 89 per cent.
Separately, JTC Corporation launched a 20,867 square metre land parcel at Jalan Tepong for sale yesterday. Industry executives expect this site, which is the second of the two industrial sites for the year to be launched under the Government Land Sales Confirmed List, to go for between $380 and $400 per sq m per plot ratio. The site has a plot ratio of 1.4 and can be used for light industry, general industry, warehousing, utilities or telecommunications.
Demand for high-tech space could see new entrants into the market building their own facilities.
Jones Lang LaSalle (JLL) associate director (industrial markets) Tahlil Khan said that his firm is working with a number of organisations and is looking at public tenders and direct allocation of sites ‘depending on the preferences, accommodation needs and objectives of the occupier’.
David Wilton, JLL regional director and head of industrial (Asia) said that users were unlikely to find space at what he called ‘the existing business park or high-tech inventory’.
He said that these users were left with three options: purchase land to occupy; commission a leased facility; or negotiate with owners/developers on facilities under development or construction.
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