The Mirror Hotel Kigali
Development Bank of Rwanda(BRD) has given more details on the foreclosure and auctioning of two locally owned hotels that are currently on a public auction in Kigali city.
An earlier story published this morning, KTPress indicated that the two hotels- Hotel Villa Portofino Kigali located in Nyarutarama and The Mirror Hotel in Remera, were under auction from August 9-16, 2021 following the hospitality sector having been hit hard by the COVID19 Pandemic.
However, in an exclusive press statement to KTPress, BRD said that the cause of the foreclosure and auction was related to bad loan refinancing which had been in the records of both hotels from two years ago, before the pandemic.
Case of The Mirror Hotel:
BRD said that prior to this auction, both parties had a very lengthy process of recovery; including but not limited to a restructuring of the loan, but it all ended in vain.
“We paid for a team of 4 members of the senior management of the hotel to attend a hospitality training in Nairobi, we also provided them with a 6-month period to try to secure a buyer, unfortunately, none of this led to the recovery,” BRD stated.
Starting value for bidding for the Mirror Hotel is over Rwf 3.9 billion.
The Case of Hotel Villa Portofino Kigali
This one too had a non-performing loan prior to the pandemic and according to BRD, their loan also was restructured, and they had identified a potential buyer but the table turned on the last minute- two years ago.
“We had collectively negotiated and come to an agreement with the buyer, but unfortunately due to circumstances beyond our control, the buyer was unable to make the purchase. Due to this, we had no other option but to put the property up for auction,” BRD said in part.
Starting value for bidding for Villa Portofino is Rwf 5.3 billion.
After some time, BRD said that they decided to go for the last resort- auction, in the interest of all sides as an amicable solution.
With this statement and move, KTPress dug into the BRD Annual report 2020, and found out that the bank had followed standing government procedure to ease loan recovery during the first year of the pandemic.
According to the report BRD said “Due to the impact of COVID-19 measures, Net impairment on loans has increased by 77% as a result of uncertainties in Customer’s business which resulted in loan restructuring.”
The report further acknowledged that its customer’s businesses have been affected and some downgraded hence an increase in provisions.
“In addition to this, the recovery process has been halted by the suspension of the auction process by the Registrar General office. This has not enabled the Bank to recover some of the files that were supposed to be recovered during the year,” read part of the report.
