Mr Edwin H Dande, Cytonn CEO

In an investigative article published by KahawaTungu last week, it was indicated that Cytonn Investments Company is sinking in losses with most of its projects only on paper.

The company went ahead to publish what they call ‘a comprehensive’ response to the article. However, their response has exposed them further. The company tried to show how they made profits in 2017, contrary to what is in their own financial report which is available online. Kahawa Tungu categorically stated that the company(Cytonn Company and not group) made a total loss of Ksh562,727,389 in 2017, while the Cytonn Group made a profit of Ksh398,004,511.

The focus of the article was not on the group but the company.

The article by Kahawa Tungu also stated that mot of its projects were either incomplete or on paper. Their response has confirmed this through the projects they listed. Only one out of ten of the projects is complete and sold out.

According to them, in Amara Ridge project of 10 exclusive villas, each sitting on a half-acre is the only complete project.

The Alma project in Ruaka featuring 453 units of 1, 2 & 3-bedroom apartments, as well as a retail, commercial & lifestyle facility is 64% complete and 55% sold out.

Another project, the Newtown project in Athiriver encompassing housing clusters, high
density residential, an office precinct, educational centre and trade centre is only on paper despite having a 5% buyout.

The company says that an integrated lifestyle development featuring 250 units of 2 and 3-bedroom apartments, as well as lifestyle facilities in Ruaka is 33% complete with 14% buyout.

Other projects are either on paper (design stage), or ‘ground broken’ despite having a significant buyout from investors. They include the Ridge project (36.7% of phase one bought), Situ Village (26% bought), Project Westlands, RiverRun Estates (11% bought), Cytonn Towers (20% of phase one bought) and Applewood.

The projects cost Ksh82.1 billion. With less than a billion in profits of three years combined, it will be hard for the company to actualise the projects unless a multi-billion investor intervenes.

Conspicuously, the company did not mention the commencement date and expected date of completion of their projects, creating suspicion that most projects could have been delayed.

Read: Cytonn Sinking In losses, Using PR Stunts To Remain Afloat

“Our Project Management team has progressed commendably with the other projects, which are at different levels of development such as design, approvals and concept development, with all the projects within the stipulated timelines,” states the response.

Information shared on different forums shows that the company operates like a Ponzi Scheme, where they use new investor’s money to pay older investors.

“By now, you’ve learned from Cytonn’s just released financials that the company works like a Ponzi scheme. It borrows money from clients in the CMS fund at 12-18% p.a to reinvest them in its real estate projects as loans at 21% p.a. The funds are borrowed at short tenures (1-12 months) to be reinvested in longer tenure real estate for at least 2 years,” reads an article published by a local blogger.

Seeing dark days ahead, Cytonn decided to buy Seriani Asset Managers, a client-focused fund manager. Cytonn CEO Edwin Dande said the move was meant to fast-track entry into the Ksh57 billion unit trust fund market.

However, according to the article by the blogger, Seriani was started by Cytonn in a bid to enter the fund management market in order to increase their cash inflows.

“You will notice, from investigating Seriani, that: Seriani’s chairman, Kenneth Ndura, was on the board of Cytonn, leaving in 2016 when the company was founded,” reads the article

On the issue of delayed refunds, the company says that the statement that clients who withdraw money have to wait about a week for their money is only correct for those clients who make premature withdrawals.

On other issues raised on the article, Cytonn referred readers to subsequent meetings and open days that would “shed more light”.

Cytonn accused Kahawa Tungu of writing articles meant to seek compensation to stop their
attacks. However, they did not provide any proof of extortion as they claimed.

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