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Pensioners' reprieve as Sh26b suit withdrawn

REAL ESTATE
By Wainaina Wambu | July 9th 2020

Kenya Railways pensioners have got a reprieve after a private developer withdrew a Sh26 billion suit over a failed tender agreement.

This is after Edermann Property signed a consent with trustees of Kenya Railways Staff Retirement Benefits Scheme (KRSRBS) and Kenya Railways Corporation to solve a row that has now spanned over a decade.

The property developer said it had opted for an out-of-court-settlement.

“The plaintiff hereby withdraws its suit against the first and second respondents unconditionally,” read the consent document recorded at the Commercial Division of the High Court in Nairobi.

The High Court had barred Kenya Railways from interfering with its property including Railways Club along Uhuru Highway pending the suit.

Erdermann wanted the Kenya Railways and KRSRBS to compensate it after failing to agree on a tender to develop some of its properties including the Railways Club.

Prime land

In 2012, the property developer moved to court upon learning that Kenya Railways had sold one of the properties that was to be leased for development. It feared that other prime land too might be sold.

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This signed consents now means the temporary injunction placed by the High Court on some of the Kenya Railways properties have been lifted.

These include Mowbry Court along Kindaruma Road, Makongeni and Muthurwa land.

Erdemann had said it was ready to put an investment of over Sh40 billion for the said properties before the dispute.

The firm had planned to develop 24 apartment blocks, office suites and a five-star hotel.

KRSRBS, with assets valued at over Sh20 billion, has been over the years struggled with liquidity issues.

More than 90 per cent of its assets are in the property.

By last year, it had begun a process of property disposal to pay pensioners and also comply with investment guidelines set out by the regulator, the Retirement Benefits Authority.

KRSRBS Chief Executive Victoria Mulwa said the scheme plans to bring the property exposure down to 70 per cent to raise cash for member payments and administrative costs.

“90 per cent of our assets are property, we are having liquidity issues and will have to sell most of them,” she said.  

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