Some of the projects financed using Shelter Afrique’s $35 million bond issued three years ago are non-performing.
The bond was priced at between 12.5 per cent and 16 per cent, and was to mature between July 2014 and December 2015.
Rating agency Moody’s warned that the debt issued by the firm had speculative elements and was subject to a substantial credit risk, but this was ignored by investors, who oversubscribed the bond by $15 million.
Documents seen by The EastAfrican show that some of the projects are now listed as non-performing loans running into more than $13.3 million, with the majority being in Kenya.
The list of Shelter Afrique’s current big debtors are Nairobi’s Taj Mall, Translakes Estate in Kisumu, Eden Beach Resort in Shanzu, Mombasa, and Oak Park Properties’ Pine City in Athi River, near Nairobi. Others are Serene Valley Sigona, KPA Housing Scheme in Nairobi, and Chiedo.
Shelter Afrique has seized 11 apartments at Eden Beach, 17 houses and land belonging to Oak Park under an “asset swap programme” and classified these properties as “held for sale.”
Godfrey Waweru, the former finance director turned whistleblower said he opposed the seizure of the assets as it would reflect negatively on the firm’s books.
“We hired a selling agent for the Eden Beach resort to sell those units and after one year, we hadn’t realised sales,” he said.
The lender is also on the spot for allowing diversion of funds by some of the developers on the projects it is funding, which has seen the projects’ loan repayments become doubtful.
For instance, four years ago, Shelter Afrique signed a $6.5 million loan agreement with Ujenge Rwanda Ltd to co-finance the development of Palm Estate in Kigali.
The project comprising three blocks of apartments, including 168 apartments for sale and additional commercial and entertainment facilities for rental, was co-financed by Ecobank Rwanda at a cost of $12.6 million. But the developer received payments from those who bought the units and allegedly diverted the funds to other uses.
Leaked documents show that the lender has impaired $4 million on this project, and there is an ongoing suit.
Shelter Afrique’s compliance, risk and legal director Vipya Harawa confirmed that the lender had already provided an impairment cost of $1 million on the project.
The EastAfrican has also learnt that Ecobank Rwanda has also provided a $1 million impairment cost on the project.
“Under the Rwanda law, we couldn’t take over the assets, and this has been done by the receiver, the Rwanda Development Board. As a board, we decided that instead of writing off the whole loan because we are almost certain we will not recover the amounts from these units, to work with Ecobank Rwanda and RDB to develop the other phase and recover the amounts from that,” Mr Harawa said.