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Developer defends use of Jevanjee Gardens' land as collateral for Sh1.9b loan

Real Estate

By Graham Kajilwa | Nov 06, 2024

Real estate developer Jabavu Village Ltd has explained why it used public land to obtain a Sh1.9 billion loan.

While he did not deny that a facility was taken to necessitate the development of the affordable housing project, the developer says everything was done according to the book as required under the special purpose vehicle formed to deliver the project.

The land in question involves the Jevanjee Housing Estate Project in Ngara, Nairobi, that had reportedly stalled.

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Jevanjee Gardens Project managing director Abdulkadir Hussein, in a statement, insisted that the project was still ongoing and is 50 per cent complete.

Mr Hussein said the Jevanjee land was originally owned by the Nairobi City Council but was legally transferred to the Special Purpose Vehicle (SPV) created for the project.

This was done on July 25, 2019. The special purpose vehicle is Nairobi Bachelors Jevanjee Estate Ltd. This SPV gives Jabavu Village Ltd the largest shareholding, at 80 per cent shares, while the NCCG is 20 per cent. “The higher shareholding of Jabavu Village Ltd in the SPV is because we have invested funds in the development,” he explained.

He said according to the agreement, the county was to provide land while the firms were to source funds to invest in the project as part of the joint venture.

“Consequently, the firm approached a bank for a Sh1.9 billion facility to fund part of the project,” he said in statement. “Jabavu Village has so far drawn Sh450 million against work certificates issued by the contractor and supporting consultants.”

The Jeevanjee project is part of Nairobi City County Urban Renewal Projects that seek to bring down old estates - lagerly detached and semi-detached houses and replace them with highrise apartments to cater for the increasing population pressure in the city.

Questions about how the title was transferred have roped in former governor Mike Sonko as the Nairobi City County Assembly seeks answers about how the document was used to facilitate the loan without their input.

But as the debate rages among the ward representatives, Mr Hussein blamed stalling of the project on increased cost of materials among other issues.

“We would like to clarify to the general public that construction of the project is still on course despite initial delays caused by the acquisition of the land for construction, Covid-19 and the sharp increase in steel prices following the Ukraine war,” he said.

He said the project’s progress is currently at 50 per cent with affordable housing units set to be complete by September 2025 and market units by September 2026.

“There will be two towers of 400 units each rising to 14 floors. The construction of the structures for towers three and four is complete with the roofing for tower three almost finalised. Towers one and two have been constructed up to 9th floor,” the statement said.