NextGen mall developers, owners entangled in row

NextGen Mall in Nairobi is an architectural icon but for about 100 owners, who bought commercial space in the mall, the setting is far from rosy after a series of disagreements with the developer over the sharing of facilities such as parking and common areas. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • For about 100 owners, who bought commercial space in the mall, the setting is far from rosy after a series of disagreements with the developer.
  • The disagreements played out last Saturday when a meeting called by the developers was disrupted by grievances from the owners.
  • The owners are laying claim to all interests on the basis of their investments.

To outsiders, NextGen Mall in Nairobi is an architectural icon that many would aspire to run a business from going by its prime location on a busy highway - Mombasa Road - in a growing middle-class neighbourhood.

For about 100 owners, who bought commercial space in the mall, the setting is far from rosy after a series of disagreements with the developer over the sharing of facilities such as parking and common areas. The dispute is threatening to spill over to the courts.

The disagreements played out last Saturday when a meeting called by the developers to discuss the “revival and growth” of the mall was disrupted by grievances from the owners.

SUB-LEASE CONTRACTS

“The issues affecting this mall, from parking, common areas to management and others, must be addressed first because we are not tenants, we are owners,” said Mr Michael Wanyoike, the chairman of a committee representing the owners.

At the heart of the dispute pitting the developer – Office Suites Development Ltd – against the owners is the ownership and management of the mall. The owners are laying claim to all interests on the basis of their investments.

Office Suites, which is associated with Mr Navin Shah and Mr Ramesh Amlani, however, contends the dispute arises from failure by the owners to embrace the sale and sub-lease contracts they signed.

NEW PROJECTS

“These people’s rights are controlled by written agreements and the legal reference point is the contract they signed,” said Mr Shah through his lawyer Mr Kelvin Mogeni.

The complex has eight floors with 200 retail units over three floors, four floors of office space and one floor occupied by restaurants, lounges, a food court and other amenities. The mall stands on about two acres of land and is part of a 12.5 acre mixed use development that includes residential apartments.

Trading as NextGen Office Suites Ltd, Mr Shah and Mr Amlani opted for the less travelled path of selling the various outlets to potential investors instead of leasing them out as is the norm in a majority of malls in the country. This strategy allows release of capital for development of new projects.

RETAIN CONTROL

Mr Shah said even after selling some units, Office Suites retains control of the mall until all the units are sold. At that point, the developer will transfer ownership to NextGen Mall Management Company Ltd, a special purpose vehicle where all buyers will have a stake and say.

The owners, on the other hand, have been exploiting some clauses in the agreements to back their position. A copy of the sub-lease seen by the Nation, for instance, describes parking as a common area, but Mr Shah insists this is the property of Office Suites.

AD HOC COMMITTEE

The disputes started last year when owners demanded a say in the running of the mall, accusing the developer of levying service charge without ploughing the money back to the mall.

In February Mr Shah and Mr Amlani, who are the only directors of the management company, agreed to the formation of an ad hoc committee to resolve the dispute. The owners, however, still want the two to account for money collected before the committee was formed.

They have blocked Kaps Ltd, a parking management company, from installing metres in the premises.

“It is inconceivable that you expect owners to be captive payers of parking/accessing fees in perpetuity,” said the letter by the owners.

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