SGHOUSING.COM 新加坡房地产网

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.

Source : Business Times - 29 Sept 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

Source : Straits Times - 29 Sept 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.’

Source : Straits Times - 29 Sept 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)

Source : Straits Times - 29 Sept 2007

Dawson Estate in Queenstown will be the new face of public housing - flats done condo-style by top home-grown architects

GROUND-LEVEL parks extend to the doorsteps of residents’ homes and flats come with ceilings tall enough for lofts to be built.

These perks are not the latest offerings of swanky condo projects but new ideas for public housing in Queenstown.

Conceived by top local architects and unveiled at the Housing Board’s (HDB) ongoing Remaking Our Heartland exhibition, the new concepts also promise to bring high-rise communities closer and promote an environmentally sustainable lifestyle.

At the heart of all this future action is Dawson Estate, a 60ha district in Queenstown bounded by Margaret Drive, Tanglin Road, Alexandra Road, Commonwealth Avenue and Queensway.

This former housing and entertainment hot spot was developed in the 1950s by the HDB’s predecessor, the Singapore Improvement Trust.

It now has just 3,000 flats and tracts of land ripe for redevelopment after blocks of flats were cleared in the 1980s and 1990s.

It is expected to house about 10,000 more apartments in the future.

To bring a fresh spin to public housing, the HDB took the unprecedented step of commissioning Surbana International Consultants, Woha Architects and SCDA Architects earlier this year to conceptualise three separate precincts comprising 3,100 homes.

The brief: to introduce flats with seamless access to greenery, waterscapes and surrounding facilities, and promote closer ties, all on a tight budget.

While the HDB was tight-lipped about the construction budget it gave the architects to work with, SCDA’s design principal Chan Soo Khian estimated that he had to design flats that could be built with roughly half of what it would cost to put up luxury condos fully fitted with items like wardrobes and cabinets.

Most HDB flats do not come with fittings.

The HDB said it will work closely with the private architects to develop a cost-effective design.

Each firm had its own ideas: Surbana extended a future linear park into a winding landscaped path around the blocks; SCDA gave the bigger flats enough vertical space for lofts; and Woha envisioned a block facade reflecting individual home owners’ tastes.

Said Mr Chan: ‘Doing a public-housing project means you have to work within tighter constraints. It means, in a modern way, your design is purer.

‘You don’t depend on embellishments to make it a good project. You’re not worried about the inside, what kind of fitting is going where. In some (private) projects, you spend so much time just worrying about the kitchens and fittings.’

But certain private-housing elements are likely to pop up in the Dawson projects.

Woha, which recently won a prestigious Aga Khan Award for Architecture for its private project 1 Moulmein Rise, wants to offer the monsoon window it introduced there as one of the options for Dawson home buyers.

This contraption is a bay window with a horizontal opening that lets the breeze in but keeps out the rain.

Woha’s founding director Richard Hassell said: ‘It’s not going to be expensive housing, just smarter in design.’

Work on the first of these Dawson flats is expected to begin in the next three to four years.

The upcoming estates will give new families a higher chance of living near the city centre, said head of HDB’s urban design unit Kathleen Goh.

Currently, new flats near the central areas tend to be built only when existing residents in the vicinity are being resettled, leaving a limited number for newcomers.

The upcoming 3,100 homes in Dawson are likely to be fully available to new families.

Ms Goh revealed that families buying separate homes in the same housing estate would be able to buy adjoining units.

These units could also be combined sideways or even vertically to encourage different generations to live together. Their layouts will be flexible so that families can make adjustments if their needs change.

So far, the exhibition has drawn 62,000 visitors. One of them is architect Khoo Peng Beng, who designed the first 50-storey public-housing blocks here, now under construction in Tanjong Pagar.

Back in 2002, when his firm ARC Studio Architecture + Urbanism proposed having high-rise gardens and sky bridges link seven towers for the international design competition for that project, such ideas were still relatively novel.

He said: ‘HDB has come a long way. For a long time, the evolution of HDB design was very functional. This time, I think there is a more emotional and integrated approach to how we look at public housing.’

If the Dawson proposals are well-received, the HDB will consider inviting private architects again to conceptualise future public-housing projects.

The Remaking Our Heartland exhibition is held at various housing districts until Oct 3. Check out http://heartland.hdb.gov.sg/ for details.

‘It’s not going to be expensive housing, just smarter in design’

Woha Architects founding director Richard Hassell. His firm’s concept lets owners customise their homes’ facades

Source : Straits Times - 29 Sept 2007