The Ambitious Expansion Plan
By 2010, PCEA’s leadership had grown confident in the hotel’s potential. Determined to maximize returns, the church’s management decided to expand the property significantly by developing modern luxury apartments .
A loan of Sh650 million was taken specifically to construct 85 housing units, each expected to sell for between Sh20 million and Sh25 million . The plan was ambitious and, on paper, sound: sell the units off-plan to generate cash flow, complete construction, and use profits to clear the NBK facility .
The Strategy:
- 85 luxury apartments to be built on the property
- Off-plan sales to raise construction capital
- 20 buyers paid deposits for units
- Profits to repay the entire loan
PCEA Secretary General Robert Waihenya would later explain: “They took a loan of Sh650 million and those apartments were to be sold off plan to enable the hotel establish itself better. And it was a good plan” .
The Terrorism Factor
The expansion project ran into immediate and devastating trouble. Kenya’s Coast region experienced a series of terrorism attacks that severely disrupted the tourism industry and construction activity .
The Impact:
- Hotels across the region struggled as foreign bookings plummeted
- Security fears gripped investors and potential buyers
- Construction stalled while the loan continued accruing interest and penalties
- About 20 buyers had already paid deposits for off-plan units
“So when terrorism happened, there was not enough funds,” Waihenya explained. “Those saying money was spent badly, I wasn’t there at that time. I was in school” .
The Financial Fallout:
- Construction halted for extended periods
- Loan continued accruing interest and penalties
- Despite the church paying about Sh13 million every month, the outstanding amount did not reduce significantly because of interest and penalties
- By the time security improved, the hotel was operating just 10 rooms out of about 80 rooms
- “So the hotel was not self-sustaining,” Waihenya admitted
Costly Construction Delays
When the security situation eventually improved, the church faced another challenge: completing the apartments was quoted at Sh70-80 million by contractors .
The Decision: The church instead opted to use local masons, completing the work at a cost of about Sh5 million . This decision would later raise serious questions about quality and oversight.
Waihenya defended the decision, noting that the church was cash-strapped and needed to complete the project within limited resources. However, critics would later question whether the low-cost construction compromised the quality of the luxury apartments that were supposed to sell for up to Sh25 million each.
The COVID-19 Disaster
The project was subsequently hit by another global shock when the COVID-19 pandemic ravaged businesses, particularly in the hospitality and tourism sectors .
The pandemic dealt a devastating blow to the already struggling property:
- International tourism effectively halted
- Domestic travel severely restricted
- Hotel revenues collapsed completely
- The remaining construction work ground to a halt
A committee was formed to assess the viability of the hotel in light of the new challenges. Waihenya said an audit found that the business was still viable . The committee recommended that buyers who had pledged to purchase the housing units complete their payments. The money combined with contributions by church members would then be used to finish two apartment blocks, sell the units, and use the proceeds to repay the loan .
The Sh125 Million That Wasn’t Used
Waihenya said the church managed to raise Sh125 million of the Sh130 million required to complete the project .
“But we didn’t build, we started huggling over what we should do. Eventually we took the money to the bank and it said since we had shown commitment and seriousness to pay off the debt, we should be paying Sh5 million instead of the Sh13 million monthly deposit” .
The Leadership Transition Problem: Waihenya said the period of indecision coincided with a change in church leadership. By the time the new team assumed office, the loan had grown substantially .
The Court Battles
The new leadership initially sought to complete the apartments but faced another legal setback when buyers who had paid deposits for the off-plan units went to court and were awarded damages .
The Court Awards:
- “They were given big awards, someone who had paid Sh3 million was awarded Sh7 million”
- “The one who had paid the most was Sh8 million but because of loss of income the court awarded them a very hefty award”
- Some buyers received more than double their initial deposits
Part of the Sh125 million raised by the church was subsequently used to settle the court awards .
The Interest Snowball
By the time the 24th General Assembly leadership settled into office, the loan had grown to more than Sh1 billion .
The Numbers:
- Original loan: Sh650 million for expansion
- Monthly payments: Sh13 million for many years
- Total payments over time: The church claims to have paid over Sh900 million towards the loan
- Outstanding debt by 2024: Sh1.07 billion
The mathematics are staggering: despite paying at least Sh13 million monthly for years, the debt increased due to accumulated interest, penalties, and legal costs. The church would later argue in court that it had paid over Sh2.3 billion yet the loan was not fully paid back .
The NBK Lawsuit
In 2025, the Presbyterian Foundation sued the National Bank of Kenya challenging the issuance of a statutory notice to sell its properties over the Sh811 million loan .
The Foundation’s Arguments:
- While no money was released to it directly, it was required to maintain loan accounts with the bank
- It has consistently been paying an average of Sh13 million per month for the last 14 years
- It claims to have paid over Sh2.3 billion yet the loan is not fully paid back
- The statutory notice is defective in substance, form, and text
- The bank is being dishonest and unconscionable by making a blanket demand for the entire aggregate principal loan
NBK’s Response:
- Shortly after disbursement of the loan, the plaintiff loan account fell into serious arrears
- After a long period of indulgence and fruitless negotiations, NBK commenced the process of realizing its securities
- The construction of the apartments at Milele Beach Hotel has completely stalled
- “The so-called luxury apartments have remained a sore sight wasting away along the Mombasa-Malindi road which have not been completed for the last 12 years,” stated NBK’s Moris Tiema
High Court Judge Jairus Ngaah directed the case file to be transferred to the High Court Commercial Division in Nairobi .
→ Previous Article: How PCEA’s Divine Investment Dream Became a Two-Decade Financial Nightmare: The 2007 Acquisition of Milele Beach Hotel
→ Continue reading: The Great Disappearance: Where Did PCEA’s Sh430 Million Milele Hotel Rescue Funds Go?
