Management of a luxury residential development in Bahrain is in talks with local banks to rescue the stalled BD283.5m ($750) million project.

Homeowners at Marina West, whose properties are now 20 months overdue, have welcomed news of a potential deal to finally finish the project. People who bought property at the development have been outraged by delays and even submitted a petition to the National Dialogue last month.

However, a spokesman for the owners said the latest development had been welcomed. "It is great that we have finally received some substantial information from Marina West, but there are still a lot of unknowns," he said.

Arrangement

He added that despite the latest letter, a number of property owners were still considering legal action against the developer for allegedly breaching the purchase agreement.

The spokesman said another portion still wanted their properties, but under revised terms that could guarantee delivery dates and quality.

Meanwhile, expatriate owners who planned to retire in Bahrain have been forced to return to their countries because they never got residence permits and are unsure of what to do next, he added.

Marina West chief executive officer Mahmood Janahi revealed in a letter sent to home buyers that Marina West had been instructed to start working on a potential finance structure in the form of syndication arrangement with local banks.

He said a financial advisory and consultancy firm had been appointed and Marina West's auditors had completed a financial review that was to be delivered to government officials in the coming weeks.

"Marina West confirms its commitment and involvement with more than one party engaging in serious discussions about possible financing arrangements," said Janahi in the letter.

"During the National Dialogue, the economic session that was completed last month discussed the stalled developments in the kingdom, including Marina West.

"Along with our current bankers, the management of Marina West approached and met top government officials and we shared our concerns openly.

"At the end of the meeting, it was agreed by all parties to look for a solution and instructions were given by the government officials to start working on a possible financing structure in the form of syndication arrangement with local banks. This instruction was implemented with immediate effect as the bank appointed a well-known financial advisory and consultancy firm to review all the numbers and financials of Marina West.”

"Marina West's appointed auditors have already completed a financial review that will be presented to our banker and the government officials in the coming weeks to commence the syndication arrangement."

He also revealed a more immediate goal of arranging finance through the selling of sponsors' equity to new regional partners at an advanced stage.

Evaluation

"Marina West is also engaged with parties in the international financial market and regional investors," he wrote. "It is working with several parties from the region in parallel to arrange possible financing through selling sponsors' equity to new potential partners. These discussions are at a very advanced stage compared with the syndication arrangement, which may take longer to execute.”

"The parties were engaged in detailed evaluation of the construction status on site by their own appointed technical advisers, hence, they were pleased and their feedback has thus far been very positive."

He added that extra funding for the project was also being sought in the form of debt.

Janahi concluded by dismissing allegations by Marina West property owners that finances received for the project had been mismanaged.

He included a brief financial summary in which he claimed the amount of sales revenue received by Marina West was slightly less than the value of the work carried out at the site by the main contractor.

The project should have been finished by the end of 2009, but work came to a standstill in March last year after it missed its original deadline.

Some owners say they paid up to 90 per cent of the value of their new property in advance.

Janahi has previously blamed a 'real estate meltdown' across the Middle East due to the global financial crisis for making the situation worse. He later admitted there was not enough financing to finish the project.

In his latest letter, Mr Janahi said 52 per cent of the 1,000 residential flats had been sold - representing 37 per cent of the total sellable area, which also includes retail and commercial outlets and a five-star hotel.

He was unavailable for comment yesterday (August 15). – TradeArabia News Service