The unit-holders of UPDC Real Estate Investment Trust (REIT) will be receiving 26kobo per unit in the proposed final distribution totaling N688.18 million for the financial year ended December 2018 as against N517.53 million paid in December 2017. This is contained in the audited financial statement of UPDC REIT as of December 31, 2018, released at the Nigerian Stock Exchange.
The REIT’s allocation in various asset classes shows Real Estate Assets (84.65percent), Real Estate Related Assets (5.61percent), and Liquid Assets (9.63percent). The allocation to Real Estate asset class which exceeded the target minimum of 75percent as well as allocation to liquid asset below the maximum investment of 10 percent as a result of the acquisition of additional real estate assets that met the REIT’s requirements, according to the Fund Manager.
The report on its performance shows that in the financial year ended December 31, 2018, the UPDC REIT recorded profit after tax (PAT) of N2.644billion, an increase from PAT of N2.20billion in 2017. Net income increased to N3.052billion in 2018 from N2.637billion in 2017. Rental income accounted for N1.32billion in 2018 as against N1.124billion in 2017. Earnings per unit – basic and diluted (Naira) increased to 99kobo from 83kobo in 2017.
The Investments and Securities Act (ISA), 2007 requires the Fund Manager to keep proper books of account and prepare annual financial statements, which give a true and fair view of the state of affairs of the Real Estate Investment Trust during the period covered by the financial statements. FSDH Asset Management Limited is the Fund Manager of UPDC REIT.
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The principal activity of the UPDC Real Estate Investment Trust (the Trust) is to pool investment in a diversified portfolio of income-generating real estate in Nigeria with high growth potential in accordance with the Trustee Investments Act, the Investments and Securities Act (2007), the Securities and Exchange Commission’s Rules and Regulations and the Trust Deed (the Applicable Regulations).
The market capitalisation stood at N15 billion as December 2018 while the last trading price fell from N8.10 to N6.60 as of December 31, 2018; while net assets attributable to unit-holders grew by 19.7percent to 2.6billion as December 31, 2018.
In line with the provisions of the Trust Deed, the minimum of 90percent of the Trust’s distributable income is meant to be distributed to unit-holders at the end of every financial year.
Final distributions are not accounted for until they have been ratified at the Annual General Meeting (AGM) of the unit-holders. Interim distribution was approved by the Joint Trustees. Interim distribution of 31kobo (December 2017 was 44kobo) per share totaling N827.16million (December 2017 was N1.17billion) was paid for the six months ended June 30, 2018, while 26kobo totaling N688.18million (December 2017 was N517.53million) is being proposed as the final distribution for the year ended December 31, 2018.
In the course of the review year, the fund managers identified a couple of real estate assets and acquired the Pearl Hostel 1 at the Pan Atlantic University, Lagos and Kingsway Building Marina, Lagos. The investment in Pearl Hostel 1 and Kingsway Building reduced the current allocation in liquid assets to 9.63percent, according to the Fund Managers.
While minimal activities were expected within the real estate sector in the first half of 2019 due to election season which slowed down activities across various sectors including real estate, the fund managers expect activities within the sector to improve by this second half driven by increased government spending.
“The UPDC REIT portfolio is diversified and positioned to benefit from the growth opportunities in both the residential and commercial sub-segments. In addition, the Fund Manager will continue to seek additional investment in quality real estate assets and real estate related assets and ensure that the REIT continues to maintain the quality of the real estate assets in its portfolio and also invest in high yielding investment-grade real estate related assets in order to deliver on its promise to generate and distribute competitive returns to its unit-holders”, said Olumayowa Ogunwemimo, Managing Director, FSDH Asset Management Limited, the Fund Manager to UPDC REIT.
In its report, UPDC REIT fund manager noted that despite the improvement in the macroeconomic environment in the latter part of the year 2018, the real estate market was not affected significantly by the improvement.
“This is mainly due to the usual lag between economic recovery and the recovery market of the market. There were fewer developments and slower take-up rates for existing properties. To attract tenants, Landlords had to reduce rental rates, offer longer rent-free period and reduce the tenor of leases”, the fund manager stated.
