$590 million en bloc deal for Thomson View voided by High Court

The collective sale of Thomson View condominium was transacted at a hefty price tag of $590 million last September. It could have been Singapore’s fifth largest en bloc sale had it not been voided by the High Court on 3rd September 2013 based on inappropriate behaviour by HSR, the marketing agent for the deal which resulted in conflict of interests between buyers.

Thomson View condominium occupies a 540,314 sq ft site along Upper Thomson Road with a 99-year-lease, and has 255 units ranging from apartments to townhouses and shop space.

Last September, everything seemed rosy when mainboard-listed developer Wee Hur Development and private equity investment firm Lucrum Capital teamed up to buy the site for $590 million which equates to $712 psf per plot ratio. This translated into gross proceeds of $1.62 million to $3.59 million for each owner.

However, things started to go awry when 13 owners lodged objections in January this year. Chief among the reasons was the sale price, which some owners said was too low given that an MRT station on the Thomson Line would be built near the condo. Typically, having a MRT station nearby is a prized amenity for any housing project. With this, the case went before the courts in late June.

A thorough investigation revealed that HSR, the collective sales committee’s marketing agent, had paid some owners to consent to the sale and did this without informing the committee or other owners. Specifically, HSR offered sweeteners in the form of more than $548,000 in additional payments to four owners to persuade them to agree to the sale. This included offering a return business class air ticket from Amsterdam or Dusseldorf to Singapore so that one owner’s wife could sign the collective sales agreement.

Despite having HSR forking out the extra payment from its own pocket, Justice Andrew Ang ruled that it was deemed out of line because it benefitted only some owners. Therefore, 4 owners who received the payments could not be counted among the requisite 80% majority needed for the sale to go through, which eventually caused the deal to be voided.

Marketing agents note that monetary incentives are not common in the en bloc process, although it is believed that there have been occasional cases of payments between owners to ensure that the 80% level is reached in smaller en bloc deals.

At present, Thomson View residents are considering whether to appeal against the decision. This also prompted marketing agents and developers to be mindful of inappropriate conduct.