Regional insurer Old Mutual Holdings booked a Sh2.1 billion depreciation of its properties in Uganda and South Sudan, which was attributed to the shilling’s appreciation against the US dollar.
The insurer valued properties held in Uganda and South Sudan at a cumulative Sh9.2 billion at the end of 2024, an 18.7 percent drop from Sh11.3 billion a year earlier.
The depreciation saw the value of Old Mutual’s total property portfolio drop to Sh21.3 billion in December 2024, from Sh23.4 billion in 2023.
Old Mutual attributed the drop to the shilling's gain against the dollar, which is the currency the properties are held in.
“It is mostly because the properties in South Sudan and Uganda are valued in US dollars. As Kenya shilling strengthened against the dollar in 2024 compared to 2023, it gave the impression that those properties lost value; but not quite,” said Old Mutual chief financial officer, David Muchai.
The shilling gained 17.5 percent against the dollar last year, supported by repayment of a Eurobond, the Central Bank of Kenya's move to raise interest rates and strong inflows into the bond market.
Old Mutual owns Nakawa Business Park in Uganda, which was valued at Sh4.36 billion in December 2024, lower than the Sh5.34 billion previous year, representing an 18.3 percent depreciation.
The value of Nakawa House, which is also located in Kampala was cited 16.6 percent lower at Sh420 million compared to the previous year.
Equatoria Tower in South Sudan was valued at Sh3.6 billion compared to Sh4.47 billion in 2023 while Juba Apartments were valued 17.5 percent lower in 2024 at Sh513 million.
Old Mutual used dollar denominated loans to invest in the properties, informing its decision to hold the properties in the same currency.
Appreciation of Kenyan properties owned by the insurer eased the currency impact on Old Mutual’s books to 8.6 percent depreciation. Its signature building, Old Mutual Tower in Nairobi's Upper Hill, was valued at Sh5.57 billion in December 2024, a marginal appreciation from Sh5.56 billion at the end of 2023.
Kimathi House, in the Central Business District, recorded the highest appreciation of 11.3 percent to Sh1.46 billion.
Other properties belonging to Old Mutual include Equity Centre, valued at Sh1.7 billion, Telkom Place (Sh1.39 billion), NCBA Annex (Sh882 million) and Union House at Sh867 million.
Old Mutual reported a rental income of Sh1.34 billion from its investment properties for the year ended 2024, up from Sh1.24 billion in 2023. Direct operating expenses related to the investment properties amounted to Sh224 million in 2024, up from Sh191 million in 2023.
This implies a 6.8 percent growth in net rental income –after expenses— to Sh1.12 billion.
However, high holding of capital in property investment by the insurer has been previously cited by a rating agency as a constraint to it getting a higher creditworthiness rating.
GCR Ratings noted the insurer’s property investments accounted for 98 percent of its capital in 2024.
