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At least two blasts and gunfire were heard at the compound in the Westland district of the city, which houses the Dusit hotel as well as offices.
Police say they are treating it as a terrorist attack. Witnesses saw four armed men entering the complex.
Vehicles are on fire in the car park and people are being evacuated. Police have cordoned off the area and are trying to rescue those trapped inside.
The BBC’s Ferdinand Omondi says the head of Kenya’s Directorate of Criminal Investigations, George Kinoti, is at the scene to lead the operation.
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