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Cirrus proposes new purchase solution.

Byline: Dubai

Dubai developer Cirrus Developments has announced a proposal for its purchasers which offers a way forward for projects in which the majority of purchasers run the risk of being forfeited or are in default.

The restructuring proposal, which Cirrus has developed and is now presenting to its purchasers in Aquarius Gate, works on the basis of converting the status of purchasers of units in Aquarius Gate to that of shareholders in a 'new project company' which will develop the project.

The proposal has already been presented to the Real Estate Regulatory Authority (RERA) and was worked on by Wong Partnership, a leading law firm with an extensive experience in real-estate funds.

Behnam Eshragh, chairman and CEO of Cirrus Developments, said: "This proposal is for information only and does not nullify the reservation form, the property purchase and sales agreement and/or any notices which are in place. It provides a way forward for Aquarius Gate and offers a collaborative solution for the purchasers and the developer."

"We have presented the proposal to RERA and they have asked us to discuss it with the purchasers which we are now actively doing. We are confident this proposal will work," he added.

"It requires significant sacrifice from us as the developer as it is an erosion of profit. However, our proposal will allow us to maintain our relationship with our purchasers which is very important for us, and ensures the project will be completed successfully through a collaborative profit scheme for all purchasers involved in the project."

Eshragh said that the projects most affected by the current economic situation are the off plan projects launched in 2008 where prices were at their peak and collections are at or below 30 per cent.

"The purchasers of units in these projects run the greatest risk of default and therefore our proposal is offering a clear solution to be considered," Eshragh said.

The restructuring proposal will be limited to the purchasers who agree to pay (or have paid) the installments up to 30 per cent. The balance amount to reach 30 per cent, which is currently overdue, will be collected over a period of 12 months.

"This is important as it will bring all the purchasers of the project to the same level according to their contractual obligations and will make it fair for the purchasers who are currently not in default of their payments," Eshragh noted.

The benefits for existing customers will be as follows:

* They will become part owners (investors) and so have a say in how and when the project is developed

* The investors will be entitled to a share in the potential profits which will be paid upon completion of the project

* Future commitments will be based on actual cost as opposed to a selling price

The objective of the 'new project company' will be to develop and sell the project at a future date, with the potential profit made from the sale distributed to the investors based on their shareholding. -- TradeArabia News Service

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Publication:TradeArabia (Manama, Bahrain)
Date:Mar 25, 2009
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