Capital Structure Optimisation and Firm Value in Nigerian Real Estate Companies

The real estate sector in Nigeria has experienced rapid growth driven by urbanisation, demographic pressures, and increasing demand for housing and commercial space, yet financing structures within the sector remain heavily reliant on equity and short-term commercial bank debt. This study examines capital structure optimisation and its relationship with firm value among real estate development companies operating in Nigeria. Primary and secondary data are gathered from 30 real estate firms across Lagos, Abuja, and Port Harcourt, covering financial statements for the period 2018 to 2022 and questionnaire responses from finance directors. The study analyses leverage ratios, maturity structure of debt, use of mortgage-backed financing, and capital market participation in relation to Tobin's Q and market capitalisation as firm value proxies. Regression analysis with appropriate endogeneity controls is applied to establish the optimal leverage range for the sector. The theoretical framework draws on the trade-off theory of capital structure, the pecking order hypothesis, and the agency costs of debt literature. The study also evaluates whether the Federal Mortgage Bank of Nigeria and the newly established Family Homes Fund have expanded the financing options available to real estate developers. Existing literature on Nigerian real estate financing confirms a gap between available financing instruments and the sector's long-term capital needs. The study contributes practical insights on capital structure optimisation for real estate CFOs, the Central Bank of Nigeria, and capital market operators developing mortgage-backed security products. Keywords: capital structure, real estate, firm value, Nigeria, mortgage financing