UOA REIT mulls formation of sub-MCs at its properties to avoid disputes

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PETALING JAYA (Sept 4): UOA Real Estate Investment Trust (UOA REIT) is considering forming  sub-management committees (sub-MCs) for properties held under UOA REIT as this will allow the different components in mixed developments to operate independently and avoid potential disputes.

UOA REIT recently came under the spotlight when the minority owners’ representatives in the management committee of one of its properties, Menara UOA Bangsar, retracted their nominations during its annual general meeting (AGM) on Aug 16.

As a result, the AGM failed to form the three-member management committee which was proposed by UOA REIT, against the wishes of the minority owners. The minority owners were not only concerned with the reduced number of committee members but also about the use of a cash surplus of RM16 million in the sinking fund and maintenance charges account, the separate ledgers for its bookkeeping process, the calculation of expenses and the fee collection at the motorcycle parking bays.

As the majority share unit owner of Menara UOA Bangsar (53%), UOA REIT denied that it was not being transparent in its bookkeeping procedures and stressed that by keeping the ledgers separate (three accounts), it could avoid potential disputes.

The 10-year old Menara UOA Bangsar consists of a 31-storey Tower A, a 15-storey Tower B, three-storey retail units and a ten-level carpark.

UOA REIT owned Tower B, the retail units and the car park (categorised as Component B), while the individual owners (47%) owned Tower A.

UOA REIT reiterated that the management of the building has not been taken over by the Commissioner of Buildings (COB).

The previous MC had written to Dewan Bandaraya Kuala Lumpur’s COB for direction after the outcome of the AGM which led to the previous MC being appointed as the interim caretaker until a new MC is elected at a AGM.  Surrendering the building management to the COB will be the last option.

“The current situation does not affect the daily operations of the property as there is a contracted building manager who is currently running the maintenance of the buildings,” said UOA REIT.

Separate ledgers for better clarity

According to the REIT, there was a need for separate ledgers as the different components in the building required different maintenance and expenses — Tower A is purely offices while Component B is a mix of office, retail and car park — hence each has its own set of common areas and facilities.

The three separate accounts comprise the maintenance accounts kept for common areas for Tower A; common areas for Component B and common areas shared by all.

“Each building has its own collection of sinking fund, maintenance fee and expenditure. Hence, neither one utilises the other’s funds, which is the fairest and most transparent way of managing the funds. This was explained to all the committee members during committee meetings,” said the trust in an email to EdgeProp.my.

However, the committee members have proposed and approved the proposal to combine all the ledgers into one, giving rise to disputes on the expenses spent on all the common facilities.

On the maintenance fee, the trust emphasised that the RM8.20 per share unit (psu) contributed by UOA REIT was more than enough to cover the latest expenses for the common area of Component B (including the centralised air conditioning) which totalled RM7.49 psu.

Hence, this resulted in a large surplus in Component B’s account, making the sum in the account much higher than the other two.

“It is also worth noting that the Committee after combining the ledgers, proposed to upgrade the building access system, building CCTVs and replace all hand dryers in the toilets. All these upgrades are solely for Tower A. This is a disturbing sign of more disputes to come if the ledgers are not kept separate,” said UOA REIT.

Accumulated surplus of RM13.7 million

Meanwhile, UOA RET also noted the previous property manager Dats Management Sdn Bhd is not owned by UOA REIT — it is a subsidiary of UOA Holdings Sdn Bhd.

Dats Management, which was appointed by the then Joint Management Body and now MC, reports directly to the committee which oversees the decision making process. Methodology, views and opinions were always shared by DATS Management, said the trust.

On the RM16 million cash surplus in the sinking fund and maintenance charges account, UOA REIT explained that the numbers claimed by the individual owners were incorrect as the total surplus is actually RM13.7 million.

According to an audited report provided by UOA REIT, Tower A has an accumulated surplus of RM3.25 million; Tower B has RM6.95 million while the shared common facilities account has an accumulated surplus of RM3.49 million.

UOA REIT explained that the higher surplus in Tower B’s account is because UOA REIT has continued to pay extra into the maintenance fund.

“Had UOA REIT not paid the additional amount into the Maintenance Fund for the past nine years, the surplus in Component B’s fund will be about  the same as Tower A’s,” said the trust.
 
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