More Investors Willing to Stake Their Funds in REITs
Stockbrokers have urged companies listed on the Nigerian Stock Exchange (NSE) to consider the fast-developing real estate investment trust (REIT) industry, and in particular REIT stock market flotation, with a growing number of investors in the west African country now willing to stake their funds in listed REITs.
The chairman of the Association of Stockbroking Houses (ASHON), Emeka Madubuike, made the call at the Nigerian Stock Exchange yesterday (February 27) during UACN Property Development Company Plc's (UPDC) presentation of Facts Behind the Offer' in respect of its pending launch of a NGN30 billion (124 million) real estate investment trust.
According to Madubuike, listed real estate investment trusts provide investors with the opportunity to diversify their investments outside equities, with many fund managers seeking alternative investment options after the 2008 downturn hit traditional financial markets. He added: We therefore, urge companies to come with alternative investments for investors in the market. Madubuike also noted that UPDC's real estate investment trust launch was the first Initial Public Offering (IPO) to come to Nigeria's stock market in recent times.
Call in Line with UPDC's REIT Agenda
While presenting the story behind the float of UPDC REIT, the company's managing director and chief executive, Hakeem Ogunniran, shared that the the primary objective of the REIT is to provide unit holders with stable cash distributions from investments in a diversified portfolio of income-producing real estate properties and to improve and maximise unit value through the ongoing management of the REIT's assets, future acquisition and the development of additional income-producing real estate properties.
Mr Ogunniran also revealed that to enhance appropriate corporate governance on the REIT and ensure the safety of investments, UACN Property Development Company has established an investment committee whose task is to provide appropriate policies and guidance for fund managers in respect of the offer. Addressing stockbrokers during the company's presentation in Lagos yesterday, Ogunniran explained that UPDC chose to remain a minority interest-holder to ensure that it does not have undue influence over the REIT once listed. According to the CEO's statement, UPDC intends to hold 40 per cent of the real estate investment trust, with the remaining 60 per cent being in public hands.