Khoie Properties denies insolvency allegations

In light of recent reports highlighting the financial disarray within Khoie Propertieis, company officials are positive of completing construction of the project, given that piling and foundation works have been completed for several buildings.

The developer had recently agreed to the appointment of Rakeen as Project Managers of the high profile waterfront development and is looking forward to working closely with Rakeen.

In response to negative publicity that has been surrounding the developer in the recent months, Khoie Properties seeks to shed light on the issue regarding its investment of the Dhs288m, which it has collected from investors. Within a span of three years, the developer has strategically allocated its funds across the project's main expenses, with Dhs81m allocated for constructions works, and the architecture, design and engineering consultants; and Dhs72m paid to the RAK Government for the land. In addition, Dhs61m has been given to global agents as commission, while Dhs56m was given as salaries, advertising, promotions and administration expenses, and Interim Dividend over the course of three years. Finally, Dhs18m was invested towards the 'Ras Al-Khaimah American School', the first American international expatriate curriculum school in the northern emirates, which was launched to further enhance the repute of RAK.

The real estate market as a whole has been affected by the financial crisis, and Khoie Properties has not been exempt from its economic repercussions. In line with this, the developer seeks to clarify that accusations pertaining to insolvency are baseless, and that Khoie Properties still has the capacity to deliver 'La Hoya Bay' project to investors. An examination of figures from the company statement, which can be found in the official website, will reflect that its investors have not lost any of their investments, as there are no profits or losses to absorb until the project is completed and delivered. The developer also reiterated that it has given its conditional consent for Rakeen's involvement in order to boost its credibility and build confidence among investors.

Shedding further light on the financial standing of the 'La Hoya Bay' project, the developer revealed that it had procured six plots of land with a total value of Dhs302m from RAKIA, for which the developer had issued six cheques of different amounts. The developer was able to fund the first cheque for Dhs72m for a plot on which it launched the project and subsequently started construction. Controversies arose when the developer was not able to meet the December 2008 land payment of Dhs57m. With the exception of the outstanding land payments, the developer maintains a healthy, asset-rich balance sheet with zero debt to banks. In addition, global auditors Ernst and Young are currently working on the Khoie Properties 2008 books, following similar audits conducted in 2006 and 2007.

In lieu of Khoie Properties' failure to meet its most recent land payment due to the effects of the crisis, plans have been put in place to secure additional funds that will enable the developer to meet its obligations. Rakeen's involvement as the project manager and custodian of the escrow account, which was made possible by Khoie Properties conditional consent to the court, is a strong indication of more positive developments in the construction of the 'La Hoya Bay' project. In addition, company officials remain steadfast in its commitment towards the completion and delivery of 'La Hoya Bay' to investors amidst the challenges it is currently facing.