Khoie Properties denies insolvency rumours

Struggling La Hoya Bay developer Khoie Properties on Wednesday denied it was insolvent and said it would build the $800m waterfront project.

Earlier in the month, Rakeen, the government-owned real estate company in Ras Al Khaimah, was named judicial custodian of the developer after reports Khoie had become insolvent and defaulted on land payments.

“Khoie Properties, a member of the Khoie Group of Companies, has denied allegations of insolvency, and instead reiterated its control over AED1bn ($272m) assets in land and AED700m receivables on account of its ownership of the AED5bn La Hoya Bay project in Ras Al Khaimah,” the company said in an emailed statement on Wednesday.
 
“In light of recent reports highlighting the financial disarray within Khoie Properties, company officials are positive of completing construction of the project, given that piling and foundation works have been completed for several buildings,“ the developer added.

In addition, Khoie provided a detailed breakdown of what the AED288m so far collected from investors has been spent on.

In the last three years the company said it has allocated AED81m towards construction, architecture, design and engineering costs and paid the RAK (Ras Al Khaimah) government AED72m for land purchases.

Some AED61m has covered global real estate brokers’ fees, while AED56m has been spent on staff salaries, advertising, promotions and administration expenses.

Finally, AED18m was invested in the Ras Al-Khaimah American School, the first American international expatriate school in the northern emirates.

Shedding light on its land payment default, the developer explained it ran into trouble in December last year when it failed to pay a AED57m installment to the Ras Al Khaimah Investment Authority (RAKIA).

“With the exception of the outstanding land payments, the developer maintains a healthy, asset-rich balance sheet with zero debt to banks,” Khoie added.

Rakeen is the master developer of Ras Al Khaimah's Al Marjan Island, the site of the planned development.
Around 800 investors, out of which half were from the UK, had already made a 30 percent down payment to Khoie.

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