Paladin forces bank to rethink Peak sales

PUBLISHED : Wednesday, 30 July, 2003, 12:00am
UPDATED : Wednesday, 30 July, 2003, 12:00am

BOC Hong Kong (Holdings) has been forced to review the tendering procedures of the real-estate collateral secured by the bank from its debtor Paladin.

The request was prompted by the debtor's claims that the disposal process was unfair.

Paladin said it planned to seek a court injunction stopping the bank from selling the property.

Jones Lang LaSalle yesterday said it was working with the receivers of 10-12 Peak Road to review the tendering process.

The property consultant on Friday said it had been appointed as the sole sales agent by the receivers of the 10-12 Peak Road project to conduct a public tender for the luxury development. The tender will close on August 15.

The spokesperson at Jones Lang yesterday gave no explanation but said the proposed tender closing date could be rescheduled.

The review of the tendering process came shortly after Paladin said it would apply for a court injunction stopping the bank from selling the property.

'We totally oppose the sale of our property,' Lilian Oung, director of wholly owned Paladin subsidiary Holyrood, said yesterday.

The residential project at 10-12 Peak Road was developed by Holyrood, which in June was seized by creditor BOC Hong Kong (Holdings) after failing to repay loans for the project by the deadline.

Ernst & Young was appointed receivers for Holyrood.

BOCHK lent Holyrood nearly HK$500 million to develop the Peak project, but with interest the loan now amounted to about HK$700 million, according to Ms Oung.

Earlier, Paladin said it planned to apply for a court injunction stopping BOCHK from selling the company's Peak property as the proposed sale price did not reflect the property's value.

'We are in the legal procedure now,' she said.

The company said the creditor had intended to sell to a third party the luxury residential development at 10-12 Peak Road for nearly HK$700 million.

This was substantially lower than the project's value, which was put at HK$1.2 billion by property consultant FPDSavills, appointed by Holyrood.

Paladin also said Holyrood had been unfairly treated.

Instead of selling the entire project to one buyer, Ms Oung said Holyrood preferred to offer the project for sale to retail buyers when the sales permit was obtained by the end of this year.

'The sales price would be higher,' she said.

BOCHK was unavailable for comment, but sources close to the bank said that what it had done was in accordance with the law.

Property agents said the sale was likely to be delayed because of the legal disputes.

But they said the residential development itself, capturing a view of Victoria Harbour, would draw strong bidding interest from developers and investors.

It had been reported that Cheung Kong (Holdings) and New World Development had expressed interest.

The residential project, covering an area of 66,000 square feet, comprises two 10-storey buildings and one detached house, offering a total gross area of close to 100,000 sq ft.

Tony Lo, head of the investment department at Jones Lang LaSalle, said: 'Properties on The Peak have always been the focus of the luxury residential investment market and, with the buoyant demand, it has gathered further momentum in recent months as evidenced by recent transactions.'

Gary Ng, assistant district manager of Centaline Property Agency, said the sale would add to the supply of new luxury properties on The Peak.

According to Colliers International, 11 projects, including detached houses and apartments, would come on the market this year.

The upcoming sale is the three-house development at 56 Peak Road by National Electronics and AIG.

Agents said the developer had invited potential buyers to view the property on Sunday. The expected asking price is about HK$14,000 to HK$15,000 per square foot.

As of July 29, eight apartments and 17 houses on The Peak and in Island South had been sold this month.

This compared to 16 apartments and four houses sold in June, and 15 apartments and nine houses sold in May, Mr Ng said.

Graphic: LUX30gsp