As Haldane McCall targets N13.39bn in REIT IPO

Investors in Nigeria’s capital market have another opportunity to increase their return, this time coming from the Initial Public

Offering (IPO) of Haldane McCall Real Estate Investment Trust (HMK REIT).

The IPO of 2.6 billion units of HMK REIT at N5.15 each at par is payable in full on application. The offer, which opened December 4, 2014, will close January 14, 2015.

The offer size is N13.39 billion, but in the event of oversubscription, the REIT will take up additional 15 percent of the excess monies as provided in the SEC rule.

Fund manager to the offer is FSDH Asset Management Limited, while Suru is the sponsor of the offer. Trustee to the offer is Skye Trustees while UBA plc (Global Investors Services Division) is the custodian to the REIT IPO; among other parties to the offer as indicated in the abridged prospectus sighted by INVESTOR.

The HMK REIT, which is constituted under a Trust Deed, is a close ended real estate investment that aims to provide unit holders with regular and stable income, and sustainable long-term growth in dividend payment and NAV per unit.

The REIT will invest in a portfolio of high-quality residential and commercial real estate properties that are already generating income, other potential high yield real estate assets, real estate related assets and money market instruments.

The investment objective of the REIT is to provide unit holders with regular and stable income, sustainable long-term growth in dividend payment and Net Asset Value (NAV) per unit. It also aims to achieve a long-term appreciation of its assets and maximise returns on capital employed.

The Fund Manager shall seek to maintain a balance between realised income and capital growth to ensure regular income and continuous appreciation in asset values while ensuring optimal safety of assets and adequate liquidity to meet the Trust‘s obligation as they fall due.

The Trust seeks to maximise returns to investors from Real Estate income sources and limiting the risks of volatility through diversification.

Diversification of the REIT portfolio results in higher yields to investors at minimum risks and affords investors opportunity to enjoy returns from both commercial and residential properties.

The proactive management of the REIT portfolio by the Fund Manager and active trading on the stock on the floor of the Nigerian Stock Exchange will ensure a sustained growth of the unit value of the stock and returns to unit holders.

The investment outlets through which this policy will be achieved shall be structured as follows: Real Estate assets (minimum of 90 %) and Liquid Asset Investment (maximum of 10%).

The Fund Manager will diversify the REIT portfolio by property type, investment size and risk with the goal of attaining a portfolio of income-producing properties that provide attractive and stable returns to investors.

The Fund Manager in the course of managing the REIT has the liberty to invest in real estate related assets as it deems fit with the consent of the Trustee and the approval of the Investment Committee.

An application has been made to the council of the Exchange for the admission of the 2.6 billion units being offered for subscription to its daily official list. Units of the REIT will be tradable on the floor of the Nigerian Stock Exchange on the conclusion of the offer.

According to the prospectus, an application has been made to the Exchange to appoint a Market Maker to ensure that units of the REIT are available for trading as at when required.

The units qualify as securities in which Pension Fund Assets can be invested under the Pension Reform Act 2004, and securities in which Trustees may invest under the Trustees Investments Act, Cap T22, Laws of the Federation of Nigeria, 2004.

The sponsor shall hold 5 percent of the REIT while 95 percent will be held by the investing public. The proceeds of the offer will be applied as consideration for the purchase of the initial assets of the REIT.

The sponsor will receive a combination of units equivalent to 5 percent and cash payment. A minimum of 90 percent of the income earned in any financial year will be distributed to unit holders at the end of every financial year. The N13.3 billion Haldane McCall Real Estate Investment Trust is assigned a ―BBB rating by Global Credit Rating Company Limited.

Iheanyi Nwachukwu