"I am a BLOGGER NOT an expert. This is a BLOG not a 'go-to' website for official information. I represent no one's view save my own. I have neither legal nor financial training, nor do I have anything to do with the real estate industry. My understanding of the Collective Sale Process is from a layman's position only. My calculations, computations and tables are homespun and may contain errors. Please note that nothing in this blog constitutes any legal or financial advice to anyone reading it. You should refer to your lawyer, CSC or financial adviser for expert advice before making any decision. This disclaimer is applicable to every post and comment on the blog. Read at your own risk."
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There is one thing worse than an Enbloc ----- and that is an Enbloc done badly. Since the majority have the necessary mandate to sell, then they owe it to all SPs to make a success of it. Minority SPs can only watch and wait, if they sell then lets pray it's at a price we can move on with, if they don't sell, then we are happy to stay for a few more years.

Public Tender Vs Private Treaty

I have to admit to being highly suspicious of private treaties - especially those from buyer-developers who don't put in a bid at the public tender.  After the shenanigans that went on in round 1 who would ever trust that particular route ever again. In round 1, the sale was thrown out because it was not done in good faith with regard to sale price - and what went on out of owners' view was totally shocking.

The question is, do you want real transparency or just lip-service to transparency?

In government land sales, there are no private treaties, their policy is public tender only. The GLS sets out it's conditions beforehand on the URA website and the minimum price is unpublished. The Government might choose not to sell if the bids come in too low. A public tender is totally transparent and developer-buyers are pitched against one another.  There is no chance of a shady backroom deal sealed at midnight.

As a result, these tenders attract a lot more bidders from land hungry developers. The moment you allow private treaties after a public tender then you automatically REDUCE the number of tender bids. Allowing developer-buyers the option of holding back and putting in a bid AFTER the tender closes (private route) just increases the chance of an empty tender exercise.

Why would an interested developer decide not to participate in the tender exercise?

  • With few or no bids, the owners might feel their estate has drawn little interest, while in reality, the interested party is waiting on the sidelines to come in to 'save the day' with a near RP price.
  • With few or no public bids, the owners will feel their SC is justified in taking what they can get from a private offer.
  • In a tender, it is the SC who call the shots; set the dates and deadlines. In a private offer. the shoe is on the other foot and it is the developer who calls the shots and deadlines  eg 'sign by midnight or the deal is off'.
  • Perhaps the developer wants to see the public bids first (if any) before delivering their counter offer.
  • They avoid having their offer scrutinised by the majority who might feel other bids have more favourable conditions. If the EOGM is held after the public tender then the private offer isn't even on the table yet.
  • The SC can sign the private treaty unilaterally (if the CSA mandates them to do so, which is usually the case) and if the majority are subsequently unhappy, they can do nothing about it. It is only the minority who can bring the matter up to the STB and High Court.
  • Perhaps the estate has been 'promised' to the said developer beforehand and the SC are just going through the formalities by holding a public tender, rejecting the bids/ counter offers, lamenting the poor response, proclaiming that all is lost etc...before suddenly introducing the saving private party with the RP (or possibly even lower) offer.
  • Perhaps the developer has come to some informal side-agreement with the SC to buy the estate at near the RP at the beginning- who knows, framed from the outset... as I say, it's all very fishy to me.
The owners should request that the estate be sold through public tender only.
Public tenders - without the possibility of private treaty - would attract the most interest. Owners have nothing to lose by this and everything to gain.

How many Tenders can be held?
Depending on how fast the MA acts, they could fit at least 2 tenders into the timeframe of 1 yr.
SHUNFUVILLE managed to squeeze in 2 tenders using the original 80% mandate, whilst at the same time garnering fresh signatures for a lower RP. Since there wasn't enough time to seal the deal with a private buyer after the first tender, a second tender was held to add a second 10 week window to finish the job. The LTSA states that a private deal can only be entered into after a public tender and within 10 weeks from close of tender. 

There are lots of ways to skin a cat, apparently. 

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