As part of the review of its assets portfolio globally, Hyprop Investment has sold its 75 percent stake in Ikeja City Mall, one of Nigeria’s most thriving formal retail facility built by Actis, a private equity firm.
The sale of the stake for $115 million to an undisclosed local investor is, according to Ayo Ibaru, Director, Real Estate at Northcourt, who confirmed the transaction to BusinessDay, “good news overshadowed only by the fact that it bought the said stake for $155 million in 2015.”
The agreement to sell the stake, BusdinessDay learnt, was concluded with two new property funds that form part of the Actis Group and is still conditional on a number of conditions.
Ibaru explained that the sale of the stake had nothing to do with the performance of Ikeja City Mall which, unlike other malls and despite the impact of the Covid-19 pandemic and EndSARS protest, has maintained zero vacancy rate over time.
Before this transaction, which was done towards the end of 2020, the Mall was owned 75 percent by Hyprop and 25 percent by Attacq Limited.
This remarkable development is not only a pointer to the undying investor-confidence in the Nigerian economy, but also a demonstration of the resilience of the country’s retail market.
“The sale is in line with the Group’s revised strategy, comprising a number of key priorities, which include the exit of its African investments and the strengthening of its balance sheet. After the disposal of Ikeja City Mall, the exposure to Africa (ex-South Africa) would have reduced by more than 70 percent over the last two years.
Morné Wilken, CEO of Hyprop, informed that the proceeds from the sale their stake in the mall would be used to settle all remaining US Dollar-debt, as well as other debt within the Group. “We have made a lot of progress with the implementation of the revised strategy and I commend my team for the excellent work over the last few months,” he enthused
Thoug Wilken said the sale is stake, even at a substantial loss has nothing to do with the mall nor the Nigerian retail market, it should be pointed, nonetheless, that the retail mall story in Nigeria is dismal.
Retail generally follows consumer purchasing power which, in turn, reflects the economy. Retail market in Nigeria, like others elsewhere, was badly hurt by the Covid-19 pandemic with its social distancing rules and other safety protocols that led to their closure at the peak of the pandemic.
“At the start of the period under review, activity in the retail market began to pick up following some relaxation on federal government coronavirus response policies. However, the disruption caused by the aftermath of the “End SARS” protests, which led to the destruction of certain malls and other high street retailers stifled trading activity in many locations, Amaka Asiegbu, a research analyst at Broll Properties, confirmed to BusinessDay.
Asiegbu pointed out that existing tenants (retailers) that have struggled in the malls in the past continue to find the environment especially challenging with some retailers in this category exiting the malls;
“The rate of rent collections has improved in some malls following landlords’ policies to accommodate existing tenants and, once again, asking rentals have remained unchanged. However, landlords and tenants are negotiating deals governed by a range of factors particular to each mall and tenant,” she said.