KCB Allowed to Take Over Kilimani Apartments in Sh2bn Loan Row

KCB Bank has been allowed to place apartment blocks owned by Northcote Business Centre under administration to recover defaulted $16 million (Sh2 billion) loans. Northcote borrowed the sums from National Bank of Kenya, part of the loan portfolio KCB inherited after acquiring the bank in October 2019. KCB appointed an administrator on December 4, 2025, who took possession of the apartments on December 16, 2025.

In court papers, KCB said it placed Northcote under administration after establishing that the real estate firm violated an agreement to deposit rent and sale proceeds in an escrow account held by the two parties, instead diverting proceeds for several units to an account the firm operates at Absa Bank. Northcote insisted the rental and sales proceeds were all channelled to construction and project-related obligations which benefited the lender, and did not deny defaulting on the loan. KCB's lawyer told the court Northcote had defaulted several times and had an existing overdraft of $3.314 million (Sh427 million) in its National Bank of Kenya account when KCB came into the picture.

On July 25, 2022, the two parties signed a deed of assignment agreeing that rental and sales proceeds would be deposited in an escrow account in the joint names of KCB and Northcote, intended to facilitate a revenue-sharing formula allowing KCB to recover the loan while leaving Northcote enough funds for business continuity. In 2025, Northcote also provided KCB with an all-assets debenture, making substantially all of the firm's present and future assets security for the Sh2 billion loans.

The High Court ruled that KCB acted within its rights as a lender, and that it would be risky to block the administration and return control of the apartment blocks to the same directors and management who triggered the lender's takeover of the Kilimani property. "The balance of convenience also favours preserving the statutory administration process rather than returning control to the very management whose conduct gave rise to the lender's decision to invoke its security rights," the court ruled in dismissing Northcote's application for an injunction.

The court also held that the Sh2 billion debt is undisputed and that losses Northcote listed can be calculated, meaning the firm could be compensated through a financial award if KCB is later found at fault. It dismissed Northcote's argument that it is not insolvent, noting that "the administration regime exists precisely to address situations where a company is experiencing financial distress while efforts are made to preserve value for creditors and stakeholders."

With the injunction refused, the statutory administration of the Kilimani apartments continues, allowing KCB to pursue recovery of the defaulted loans through the appointed administrator.