At a Glance
- Naira depreciation slashed Ikeja City Mall’s US dollar rental income in 2024.
- Hyprop exited Nigeria, transferring stakes to Lango Real Estate amid economic volatility.
- Valuation fell to $113 million as forex losses and weak currency pressured returns.
Ikeja City Mall, Nigeria’s premier retail destination, saw its valuation fall by $15 million over the past year, underscoring the severe impact of currency depreciation and macroeconomic volatility on the country’s real estate sector.
The mall, once the crown jewel of Hyprop Investments’ Sub-Saharan African portfolio, was independently valued at $113 million in June 2024, down from $128 million in June 2023, according to company filings. The decline was primarily driven by the steep depreciation of the naira, which offset significant rent increases denominated in local currency.
Currency losses slash distributable income
Net operating income for Ikeja City Mall dropped in US dollar terms, as surging rents in naira were eroded when converted to hard currency.
In addition to the operational pressure, distributable income was hit by realised foreign exchange losses of R60 million ($3.41 million)—comprising R26 million ($1.48 million) from converting naira rental collections into dollars and R34 million ($1.93 million) related to tenant concessions granted for converting leases to hard currency.
Hyprop also reported unrealised foreign exchange losses of R92 million ($5.23 million) as naira-denominated monetary balances were revalued for reporting purposes. These swings underlined how exchange-rate volatility remains a critical threat to investors in Nigerian commercial property.
Hyprop’s exit from Ikeja City Mall
In September 2024, Hyprop announced it had fully exited Ikeja City Mall—along with Accra Mall, Kumasi City Mall, and West Hills Mall in Ghana—by transferring its remaining 75 percent interest to Lango Real Estate, a specialist African property investment platform backed by South Africa’s largest REIT, Growthpoint Properties.
The transaction was structured in exchange for shares in Lango, valued at approximately R441 million ($25.06 million) on Hyprop’s balance sheet at the end of 2024. This exit marked the culmination of Hyprop’s multi-year strategy to retreat from Sub-Saharan Africa, citing persistent currency devaluation, liquidity constraints, and operational headwinds in key markets like Nigeria.
The Group’s accounting policy required investment property classified as held-for-sale to be carried at the lower of independent valuation or the anticipated sale price. As a result, the carrying value of Ikeja City Mall was further reduced to R1.5 billion ($85.24 million) in line with the implied valuation underpinning the sale to Lango—significantly below its previous book value.
Nigeria’s economic headwinds intensify
Ikeja City Mall’s performance decline came against the backdrop of Nigeria’s spiralling inflation, foreign exchange shortages, and multiple currency devaluations in 2023 and 2024. As the naira plunged, retailers faced severe pressure on import costs and purchasing power, even as consumer spending remained resilient in nominal terms.
The mall, developed in 2011 and spanning approximately 22,000m² of gross lettable area, had long been considered the most valuable retail asset in West Africa. However, its valuation trajectory illustrates the challenges of maintaining US dollar-linked returns in Nigeria’s volatile monetary environment.
The disposal of Ikeja City Mall completes Hyprop’s strategic withdrawal from West Africa, enabling the Johannesburg-listed REIT to reallocate capital toward its core South African regional malls and Eastern European investments.
Despite the valuation decline, the company noted that Ikeja City Mall continued to demonstrate robust occupancy and tenant demand, highlighting the resilience of formal retail in Nigeria’s largest city. Still, the combination of currency losses, rising interest rates, and a challenging macroeconomic backdrop ultimately drove Hyprop to cut its exposure and pivot to more stable regions.
