Troubled Suraya Property Group has received a lifeline. The real estate company has gotten a Sh. 1.6 billion loan from local banks to enable it complete its stalled real estate projects.
The financing has been facilitated by four local banks which include Diamond Trust Bank , Cooperative Bank , National Bank of Kenya and Equity Bank.
Suraya Property had attributed its failure to honour construction timelines to the effects of the capped interest rates which came into effect in September 2016.
The housing developer targets middle and high-end buyers. It was at the risk of ending up in shambles and leaving its customers with millions of losses. Multiple real estate companies in Kenya have been struggling to stay in operation. Others have turned the real estate sector into a goldmine of fraud.
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Suraya Property Group chief executive Peter Muraya said the funding negotiated separately with various lenders and at different times over the last nine months has seen the banks agree to the additional finance, creating a defined exit for buyers who can now take possession of their units.
“We are now fully back on track to finish five out of the nine pending developments with the new funds,” added Mr Muraya. He said the firm was still keen to raise addition capital.
The announcement by the developer comes as a dip in prices and the slow uptake of newly-built units has raised fears of renewed pressure on developers, who borrowed to fund for-sale projects as obligations mature.
The firm, which was founded in 2006 by Peter and Sue Muraya, had its operations adversely affected by the interest rate capping, which was introduced in 2016, prolonged political crisis in 2017 and macroeconomic factors such as increased inflation that has eroded the purchasing powers of home buyers.
“Despite these challenges, Suraya remains committed to complete all the remaining projects and our promise to all our clients is that we are working tirelessly to raise funds both locally and internationally for Lynx@ Muchai drive, Lynx @ Royal, Classix @ Fourways and The falls @ Riverside,” said Mr Muraya in the statement.
The funding, Mr Muraya said, has been secured for its Lavington project dubbed Terraces at a total cost of Sh. 700 million from Diamond Trust Bank (DTB Bank). The proposed development has a total of 133 units consisting of four, three and two-bedroom apartments arranged around a court.
Its Ngong Road-based Lynx project comprising one and two-bedroom apartments has secured Sh. 600 million from the National Bank of Kenya, Mr Muraya said.
The developer’s phase two development dubbed Encasa along Mombasa Road behind Mlolongo has secured Sh. 130 million from Co-operative Bank of Kenya.
The project occupies a total of 12.5 acres and is proposed to have a total of 625 apartments.
He said its Lynx West project based in Nairobi West and comprising two bedroom en suite apartments has secured Sh. 40 million from DTB while its Fourways project along Kiambu Road has secured Sh. 130 million from Equity Bank.