KCB Takes Over English Point Marina

KCB Group has taken English Point Marina in Mombasa and placed Pearl Beach Hotels, the property’s owner, under statutory management due to an Sh5.2 billion debt. 

Over the years, Pearl Beach Hotels has struggled to satisfy its bank obligations. 

The lender took over the property on Tuesday, according to a person with firsthand knowledge of the situation at the Business Registration Services (BRS). 

“I can confirm that KCB bank took over English Point today,” the source said, adding that the lender has assigned a receiver-manager to oversee the asset. 

English Point Marina is the latest high-value property to fall into the hands of lenders after the developers failed to pay their debts.

“The administrative receiver is tasked with the duty to realise enough of the company’s assets to pay the debenture holder and where possible, other creditors too. The appointment of an administrative receiver automatically ends at the end of 12 months from and including the date on which it took effect,” BRS says on its website.

I&M Bank is presently claiming ownership of Nairobi’s DusitD2, with other creditors attempting to seize the property complex. 

According to the source, KCB’s decision to take over English Point Marina occurred after the bank attempted multiple times to modify the loan but the owners were still unable to make payments. 

The receiver-manager is expected to sell a portion or all of the property in order to raise enough money to pay KCB the money owing. Once the bank’s claims are paid, other creditors may be owed money. 

Lenders can still appoint receiver managers in loan contracts signed before the Insolvency Act of 2015 went into effect.

To deal with growing bad debts, banks have been forced to put companies into receivership. In April 2022, the ratio of gross non-performing loans (NPLs) to gross loans was 14.1 percent, up from 14 percent in February. 

The Central Bank of Kenya (CBK) reported that increases in nonperforming loans (NPLs) have been observed in the building and construction, manufacturing, trade, and transportation and communication sectors. These increases were due to specific issues in the different sectors, and banks have continued to set aside funds for nonperforming loans. 

The spike in defaults has been traced back to a few significant clients, including the developers of English Point Marina.

Because the large clients borrow billions of shillings, a few of them defaulting can cause a significant increase in NPLs. 

English Point Marina was taken over by KCB after the developer had a falling out with customers who claimed they had not received ownership of the Sh600 million homes they had purchased.