Centum’s Two Rivers Gamble Turns Sour as Mounting Losses Test Investor Patience

Investment giant’s flagship development bleeds cash as ambitious SEZ project drains resources, raising questions about strategic direction

Centum Investment Company finds itself in an increasingly uncomfortable position as losses at its crown jewel property development continue to spiral, threatening to undermine confidence in what was once hailed as East Africa’s most ambitious mixed-use project.

The investment firm’s latest financial results paint a troubling picture of Two Rivers Development, with the subsidiary’s losses widening to Sh90.68 million in the six months to September 2025, up from Sh67.7 million in the comparable period.

More alarming still, the Two Rivers Special Economic Zone saw its losses more than double to a staggering Sh584.5 million from Sh288.04 million, casting a long shadow over Centum’s entire portfolio.

For investors who have watched Centum’s share price languish in recent years, the persistent red ink at Two Rivers represents a bitter pill.

The development, which sprawls across prime land in Nairobi’s Ruaka area and was supposed to generate steady returns from its mall, residential units, and now the SEZ, has instead become a cash furnace that shows little sign of turning profitable.

The scale of the SEZ’s losses is particularly striking.

At more than half a billion shillings for just six months, the project is burning through capital at an alarming rate, with Centum attributing the hemorrhaging to finance costs on the development loan for the first office tower, along with setup and establishment expenses that accounting rules require be recognized immediately.

Chief Executive James Mworia and his team find themselves caught between the demands of international financial reporting standards and the harsh reality of investor expectations.

While IFRS may dictate that all operating expenses be recognized upfront even as revenue remains deferred until projects complete, investors are growing restless watching quarter after quarter of losses pile up.

The utility subsidiaries under Two Rivers Development add another layer of concern.

Power and water operations that were meant to serve the development and generate additional income streams are operating well below the utilization levels needed to break even.

This raises uncomfortable questions about the original feasibility studies and whether projections for tenant uptake and residential occupation were overly optimistic.

Centum insists there is light at the end of the tunnel, claiming the SEZ is at an advanced stage of concluding the sale of its office tower to a US dollar denominated Real Estate Investment Trust.

Such a transaction, the firm says, would settle the development loan, recover setup costs, eliminate finance costs, and release capital for the next tower.

Yet investors have heard promises before.

The real estate subsidiary Centum Re also posted losses of Sh88.33 million, albeit narrowed from the prior period, with the company blaming a revenue expense mismatch caused by accounting treatment.

The explanation that current sales will only be recognized in future periods when completion and payment occur offers cold comfort to shareholders watching their equity erode.

The broader Centum group managed to narrow its overall net loss to Sh326.14 million from Sh346.64 million, but this modest improvement came largely from a Sh296.71 million tax credit rather than operational excellence.

Strip away the accounting benefits, and the picture is considerably bleaker, with pre-tax losses widening more than threefold to Sh622.85 million.

Four of Centum’s six business units posted losses in the period, underscoring how deeply the malaise runs.

Even the profitable segments saw declining performance, with financial services earnings dropping a third to Sh53.74 million and investment operations falling 31.6 percent to Sh388.9 million.

For a company that once commanded a premium valuation as the Berkshire Hathaway of East Africa, the sustained underperformance is humbling.

Two Rivers was supposed to be transformative, creating a new urban hub that would generate returns for decades.

Instead, it has become an albatross, with the SEZ losses alone threatening to overwhelm profits from other divisions.

The central question facing Centum now is whether management can execute the promised tower sale and stem the bleeding before investor patience runs out entirely.

With the company owning 60 percent of Two Rivers Development, any continued deterioration flows directly to the parent’s bottom line.

Market watchers note that while property development inherently involves upfront losses before projects mature and generate returns, the scale and duration of Two Rivers’ red ink suggests something more fundamental may be amiss.

Either the business model needs rethinking, the assets need to be monetized more aggressively, or management needs to level with shareholders about realistic timelines for profitability.

As Centum navigates these choppy waters, one thing is clear: the Two Rivers dream that promised to reshape Nairobi’s property landscape has turned into a nightmare for investors who are still waiting for their ship to come in.

Until the losses reverse course, questions about strategic direction and capital allocation will only grow louder.​​​​​​​​​​​​​​​​