Dusit D2 hotel owner moves to court to stop auction

The owner of the multi-billion property in Nairobi's 14 Riverside Drive, where the famous Dusit D2 hotel stands, has moved to court seeking to block an intended auction of the prime property.

Cape Holding Limited in its case filed under urgency on Wednesday, claimed that Synergy Industrial Credit Limited had illegally hiked its claim by a whopping 8.3 billion.

Cape’s lawyer, Alln Gichuhi, stated that the principal amount was around Sh700 million. However, he claimed that Synergy is now demanding Sh9 billion.

He argued that the warrants of sale in favour of Synergy have since expired as they had passed a year adding that the sale period had been illegally reduced from 59 days to 21, contrary to the auctioneer’s rules.

“The sale fixed for April 11, 2025, is unlawful and in breach of Order 22, Rule 58 and Rule 15 (d) of the auctioneer's rules by reducing the redemption period to 21 days,” argued Gichuhi.

READ: Court allows auction of Dusit D2 property over Sh5 billion debt

Gichuhi further argued that there is no fresh valuation of the six blocks- Nahover, Arlington, Grosvenor, Cavendish, Belgravia, and Dusit D2 Hotel in order to ascertain the value of each.

According to him, the auctioneers have not set the reserve price, making it the exercise vague and illegal.

“The notification of Sale dated March 18, 2025, did not set out the reserve price of each of the five office blocks and the hotel- Dusit 2. It is legally impossible to proceed with the unlawful sale,” he argued.

Cape’s director, Vinaychandra Sanghrajka, said there have been several attempts to sell of the property but in vain. He said Synergy sought to auction it again next month despite knowing there was a pending case.

According to him, the amount in the contest is around Sh1.5 billion to Sh1.8 billion. He also argued that Synergy had opted to steal a march, adding that the wars have caused potential tenants to grow cold feet.

“The repeated attempts to unlawfully auction the suit property has resulted in several tenants either opting not to renew the leases or effectively discouraged prospective tenants from taking up leased space. This has resulted in low uptake of the commercial letting spaces, which in turn has occasioned losses to the applicant,” said Sanghrajk

Sanghrajk said that Synergy’s interest in the property is limited to a portion, being ‘A’ Wing on the ground floor, on the first, second, third, fourth, fifth and sixth floor and ‘b’ wing on the ground floor on the first, second, third, fourth, fifth and sixth floor of the building/block formerly known as Synergy Square (now Grosvenor).

The property has been subject to a court battle before.

It was set to be auctioned after Synergy demanded Sh5 billion. The debt has been outstanding since 2010.

Synergy is demanding a pound of flesh from Cape Holdings after in a botched sale.

Initially, I&M Bank blocked the sale through a court order, arguing that the building is charged to the lender over a loan of Sh2.82 billion.

Cape Holdings Limited had been put under administration on October 12, 2021, but was terminated on June 9, 2023, due to non-performance by the administrator.I &M Bank, through lawyer William Kabaik,u submitted that from the duly registered debenture, the Bank acquired a legal interest in the subject property.Consequently, a first priority right was created in favour of the Bank over the company’s assets, overriding any other party’s rights, including those of Synergy.

Kaiku addedthat the bank lawfully placed Cape Holdings under administration, and because when the debenture crystallized, the subject property had not been sold, the Bank had priority over the said property and was entitled to prevent it from being sold.

He said that allowing Synergy to continue with execution proceedings defeated the essence of administration and distracted the administrator’s attention from his statutory duties.

On its side, Cape supported the bank’s argument, submitting that as a secured creditor by virtue of the debenture, the Bank had a superseding legal interest in Cape Holdings properties, including the suit property.

ALSO READ: Dusit complex to be auctioned as court battle ends

Synergy Credit opposed the application, saying it was yet another attempt by Cape Holdings to stop the execution.

Abdullahi pointed out that Synergy gave instructions to Moran Auctioneers, who advertised the suit property for sale by public auction on February 8, 2022.He said Cape Holdings filed an appeal in the High Court against the deputy registrar’s action but by then, the execution was complete.

In their decision, the court of appeal judges said a schedule to the debenture does not list the suit property.“The effect is that it has no bearing whatsoever to the suit property over which no legal charge was ever created by the Bank. The said property remained free of encumbrances. Absent such charge, I would think there is substance in Synergy’s contention that it is false and misleading for the Bank to refer to the suit property as the charged property in its submissions,” argued Judge Kiage.

He added that the record was clear that the charge was registered over a different property, Parkside Towers.

The property known as 14 Riverside Drive near University of Nairobi's Chiromo Campus sits on a 5.2-acre land and comprises five office blocks, a five-star hotel (Dusit D2) with a swimming pool, a parking silo, food court and cafeteria.