Noor Islamic Bank says developers of the Pentominium in Dubai Marina, designed as the world's tallest residential building, are in default on a Dh75m loan.
Tower developer in default on Dh75m loan
The developer of the world's tallest residential building under construction in Dubai Marina is in default on a Dh75 million (US$20.4m) loan.
Trident International Holdings, which is building the Pentominium tower, is more than 200 days overdue on profit payments on the overdraft facility, according to Noor Islamic Bank.
Construction on the Pentominium, planned to rise to 516 metres, has been stalled since March, the bank said.
"Despite the bank's best efforts, it has not been possible to make any contact with Trident's directors," a bank spokesman said.
Calls and emails from The National to Trident's Dubai offices in recent weeks have not been returned.
But work is continuing on the Pentominium project, which has risen to 30 storeys, a spokesman for Trident told the Dow Jones News Service.
"In keeping with its past track record of delivering and handing over four out of the five launched projects in Dubai, Trident is fully committed to the Pentominium project and is working on a comprehensive solution which ensures it completes the entire Pentominium project even if at the expense of diluting its own profits," the spokesman said.
Noor's relationship with Trident dates to 2008, when the bank issued the company a Dh200m overdraft facility to "meet the mismatch between milestone payments from investors" and the outflow of cash to build the Pentominium.
"The facility was not envisioned to finance the project which was to be funded by payments from the existing buyers and Trident being able to sell additional units to the market," the Noor spokesman said.
In August 2009, the facility was reduced to Dh75m "due to the downturn in the real estate market", according to Noor. The 54-month facility was linked to company milestones and required Trident to make profit payments.
Trident used the entire Dh75m overdraft and then asked the bank for additional funds.
"Trident was asked to provide a credible financial plan before the bank would agree to increase its support," the Noor spokesman said. "This they failed to do."
But Trident told Dow Jones the company was "actively seeking to raise money from international sources".
About 30 per cent of the buyers in Pentominium defaulted on their payments, the company said. Construction was also hampered by "onerous late demands for additional collateral" from the main contractor on the project, Arabian Construction Company (ACC).
ACC was awarded a Dh1.46bn contract to build the tower in 2009. A representative of ACC did not respond to a request for comment.
The Pentominium is planned to include 120 four-bedroom apartments, each covering more than 6,400 square feet. The top 16 floors would be designed by Salvatore Ferragamo.
At 516 metres, the Pentominium would surpass the 414-metre Princess Tower, another Dubai Marina residential project, which is scheduled for completion in the spring.
The current tallest residential building in the world is The Torch, the 337-metre tower located a few blocks away from the Pentominium. The Burj Khalifa, the tallest building in the world, is 828 metres.
Trident told Dow Jones the contractor on the Pentominium site is "operational, not demobilised and in amicable dialogue with us for a viable long-term solution along with other parties".
Meanwhile, Noor Investment Group, the parent company of Noor Islamic Bank, is dealing with its own issues. Yesterday the Standard & Poor's ratings service placed Noor Takaful General and Noor Takaful Family, the Islamic insurance companies, on credit watch, citing concerns about the company's capital strength and liquidity.