The entrance of Pinewood Beach Resort and Spa in Galu Diani, Kwale County on August 3, 2023. PHOTO | SIAGO CECE | NMG
KCB Group has seized a second hotel belonging to the embattled owners of the
Mombasa luxury property English Point Marina over non-payment of a Sh5.2 billion loan.The bank on Wednesday appointed Kamal Anatroy Bhatt as the receiver manager for the Diani-based Pinewood Beach Resort and Spa, which is owned by the Kanji family.
Read: KCB seizes English Point Marina over Sh5bn debt, again
Pinewood was part of the security to the loan taken for the construction of the fully serviced five-star English Point Marina.
KCB, whose non-performing loans (NPLs) hovered above the industry levels, was allowed by the Court of Appeal in October last year to take over the mixed-use development.
“The lender has extended various facilities to the company and/or the borrower, which said facilities were granted on the basis of various securities held in favour of the lender including charges over various parcels of land registered in the name of Pearl Beach Hotels Limited,” said KCB in a deed of appointment of a receiver.
“The company and/or the borrower have defaulted in their payment obligations to the lender under the terms of the debenture.”
The court allowed KCB to auction English Point Marina, and in case the assets were insufficient to recover the full amount, go after the assets owned by the directors.
The bank had seized English Point Marina and placed Pearl Beach Hotels, the real estate firm that owns it, under statutory management in June last year.
The loan taken by the Pearl Beach Hotel was disbursed between 2010 and 2016.
The English Point Marina, which was designated as a Vision 2030 project, Kenya’s long-term development blue-print, included some 96 luxurious apartments for sale.
However, after the completion of the Mombasa-based mixed-used development in 2017, Pearl Beach was unable to repay the loan despite numerous accommodations by KCB.
The directors also issued personal guarantees for the loan.
English Point Marina is owned by Amyn Kanji, his wife Leila, brother Alnoor, sister-in-law Nafisa and Nazir Jinnah.
Pinewood, which Amyn Kanji said he and his wife Leila stumbled upon 33 years ago while building for themselves “a little hut on the Kenyan coast”, has 20 private two-storey accommodation units.
Each unit has a suite on the ground floor and deluxe rooms upstairs.
KCB said despite numerous restructuring agreements, moratoriums and other accommodations provided to Pearl Beach Hotel, the owners continued to default on the loan.
KCB reckons that the directors of Pearl Beach Hotel were dishonest, opening an account at Diamond Trust Bank to which they channelled the proceeds from the sale of the apartments.
The bank said in court documents that the directors of troubled English Point Marina diverted funds earned from the sale of apartments at the luxurious hotel instead of offsetting the Sh5.2 billion loan they had accumulated.
For their part, the directors accuse KCB of overcharging them by more than Sh893 million on loans advanced to the firm. They say the firm has been engaging the lender to address the loan repayment.
Forensic audit
KCB conducted a forensic audit of those who had bought units. Those who had paid up would get their houses while those who had yet to complete payments would process the remainder under the bank.
Read: KCB seizes English Point Marina over Sh5bn debt
Banks have been compelled to place companies under receivership to deal with mounting bad loans. The ratio of gross NPLs to gross loans stood at 14.9 percent in May 2023, data from the CBK show.
In February, KCB Group set up a special team reporting directly to chief executive Paul Russo to recover billions of shillings in bad loans.
The lender is grappling with mounting concerns over its default rates, which are among the highest in the banking sector.
→ dakure@ke.nationmedia.com
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