Michael Chu'di Ejekam delivered a presentation on the Broll event titled “Retail Industry: 10 Years from Now”. Michael's presentation focuses on Nigeria's retail development and is aptly named "The next generation of malls in Nigeria - the same? or Adapt?”. Check this slideshare for more information.

1. 1
Michael Chu’di Ejekam
Table of Contents
1
1) History of evolution of Malls – USA case study
2) Design advancements
3) Five Key Considerations

2. 2
Michael Chu’di Ejekam
Evolution of Malls in the USA
In 60 years, 12 types of malls60 h i d h d 12 fIn 60 years, the industry has created 12 types of centers
1. Strip
2. Neighbourhood
3. Community
4 Regional4. Regional
5. Super Regional
6. Power Center
7. Urban Entertainment Center
8. Factory Outlets Center
9. Lifestyle Center
10. The Mills
11 S C i C t11. Super Convenience Center
12. New Urbanism
2
Net Rents: $USD per SF per annum (2010)
2

3. 3
Michael Chu’di Ejekam

4. 4
Michael Chu’di Ejekam

5. 5
Michael Chu’di Ejekam

6. 6
Michael Chu’di Ejekam

7. 7
Michael Chu’di Ejekam

8. 8
Michael Chu’di Ejekam
Transform from mall into “Urban Space” – a place of excitement,
family, laughter

9. 9
Michael Chu’di Ejekam
Design Enhancements:
“De-Malled” Lifestyle Entrance
Before

10. 10
Michael Chu’di Ejekam
Infusing Lifestyle Elements
Before

11. 11
Michael Chu’di Ejekam
More attractive – Food Court
Before

12. 12
Michael Chu’di Ejekam
Emphasize Entertainment – e.g. Children’s Play Area
CAROUSEL REMOVED FROM CENTER COURT

13. 13
Michael Chu’di Ejekam
Five Key Considerations
(1) Investors and Returns
13
It’s about Returns,
Returns, Returns
• Return requirements depend on the type of investor.
• Type of Investor Drives Mall type and business plan
• Typical PE returns proven achieveable - 25+% IRR, 2.5x - Ikeja
City Mall, Palms, Accra Mall
• Non PE funds can handle lower initial yelds, longer hold periods
• Will more "Longer Life" Investors emerge?
• Will local investors play greater role?
• Retailer developers (dual strategy) combine retail sales plus real
estate returns
Equity and debt
are not widely
available.
• 20K+ m2 mall costs $80-$180m each, requiring minimum $40-
$90m equity per mall.
Dollar debt at 9+%
rate, local
currency debt at
17+% rate
• Is Naira debt feasible. Negative Leverage!
• Will leases be quoted in Naira or Dollar

14. 14
Michael Chu’di Ejekam
Five Key Considerations
(2) Size & Type
14
Maybe Size
Doesn’t Matter?
• For PE firms, there is flexibility on size, subject to minimum of
c. 12-14K m2 GBA
• Anchor constraint: Below certain size not feasible, unless
anchors agree to occupy space less than 2,800-3,200m2
minimums.
Scarce Land • Destination malls require 5+ hectares of land
• Smaller malls could work with far less
Configuration • Value/Strip Malls cheaper
• Structured Parking raises costs constricting options
• Partially open air malls? Superior returns - assuming same
rentals. Untested!
Development
Expertise/Risks
• Large projects more complex
• Mixed use more complex than standalone
• Higher delivery risk if build smaller malls with 2nd tier teams

15. 15
Michael Chu’di Ejekam
Five Key Considerations
(3) Demographics & Consumer Traits
15
Nuanced
Feasibility
Analysis
• Closer attention to trade area overlap, inflow
• No longer the only game in town!
Geography • Destination malls more likely to struggle in secondary markets
• Tradeoff of lower land costs vs lower buying power and lower
rentals
• Riskier demographics in secondary locations
Cater to Consumer
behaviour
• Typical Nigerian consumer purchase only 40-50 SKUs
• Malls would need to cater to smaller basket sizes, narrow SKUs
and frequent shopping trips.
• Convenience/Value is critical to access mass consumer
Decide Target
Market
• Upscale, Value or both??
• In USA, need to decide
• Ecommerce eating away value shopping

16. 16
Michael Chu’di Ejekam
Five Key Considerations
(4) Retailers
16
High
Developments
Cost, High Rents
• Grocery anchors perform very well. Are rents sustainable for
line stores?
Paucity of Viable
Tenants
• Certain tenants would not look at strip malls for example
• Could Super Regional Work (Over 75,000 m2)

17. 17
Michael Chu’di Ejekam
Five Key Considerations
(5) Exit
17
Investors go in
with eyes on Exit
Door
• Returns Important Again
• Type of mall driven by attractiveness to mall buyers
• Major mall buyers have minimum mall size requirements
• Small malls often below investment grade
• Exit Yields unproven in secondary markets
• More investors for bite-sized transaction sizes vs large
• Typical PE 5 yr hold period realistic?
• Will local pension funds become major buyers

18. 18
Michael Chu’di Ejekam
Conclusion
18
1) Perhaps Nigeria malls would evolve like the USA
2) Introduce Design advancements
3) Five Key Considerations
i) Investors
ii) Size/Type
iii) Demographics & Consumer Traits
iv) Retailers
v) Exit
Returns, Returns, Returns

19. 19
Michael Chu’di Ejekam 19
Thank You