Sunset Boulevard Limited, the developer of Sunset Boulevard Estate in Athi River, has cleared a key hurdle in its bid to stop a planned auction of a section of the estate to recover more than Sh400 million in unpaid debts.
Leaky’s Auctioneers, acting for the I&M Bank, had on Monday advertised for auction 204 houses at the 390-unit estate, sparking panic and confusion among individuals who have already bought the houses from the developer. The auction was planned for Wednesday July 31.
But in a quick rejoinder on Monday, Ogola Okello & Company LLP, acting for Sunset Boulevard wrote to I&M Bank lawyers Walker Kontos Advocates demanding the suspension of the notice – citing a court ruling that had stopped the auction of the property.
“We have noted that, despite the status quo order made by Justice Maureen Odero, your clients have proceeded to advertise the 204 apartments again in today’s Daily Nation.
“We demand the immediate publication in tomorrow’s daily, an advert cancelling the said contemptuous advertisement, failing which we will be moving to court immediately to cite your clients for contempt of court,” the letter stated.
Justice Odero had on June 13 stopped auctioneers from selling off the houses until she determines an application by Sunset Boulevard.
On Wednesday, Leaky’s Auctioneers said the principals — I&M Bank and Sunset Boulevard Limited — had agreed to cancel the auction, without going into details.
“(The planned auction) has been cancelled by our principals,” Leaky’s Auctioneers said.
Sunset Boulevard, which built and sold the houses, is embroiled in a year-long tussle with the bank over non-payment of a loan that is secured by the multi-billion shilling estate.
The gated community that sits on a 20.2-acre piece of land features a mix of one, two and three bedroom apartments on 23 blocks with a market price of between Sh8 million and Sh12 million.
It is valued at more than Sh2 billion.
The cancelled auction comes at a time when many property developers are struggling to repay their debts amid a real estate slowdown after more than a decade of robust growth.
According to the Central Bank of Kenya’s Quarterly Economic Review released last December, the real estate sector recorded the highest growth in non-performing loans in three months ended June 2018, a situation that has seen a spike in asset seizures by aggressive lenders.
Non-performing loans in the sector rose by Sh6.1 billion, or 15.8 per cent in April-June 2018 to Sh44.4 billion compared to the previous quarter as developers outpaced manufacturers (11.7 per cent) and traders (7.3 per cent) in growth of default on loans, the CBK said.
As a result of financial difficulties, many investors have lost their properties to creditors – leading to a glut of repossessed homes that are being sold off cheaply countrywide.