UACN Property Development Company (UPDC) Plc is one of the top shorts in the high-end segment of the Nigerian real estate market. The company operated as a division of UAC of Nigeria Plc until 1997 when the business was incorporated as a public limited liability company and listed on the floor of the Nigerian Stock Exchange (NSE). The core business of the
company is the acquisition, development, sales and management of quality serviced commercial and residential properties in the luxury, premium and classic segments of the real estate market in Nigeria. The company’s portfolio included several residential estates and commercial properties in Nigeria.
UACN Property Development Company Plc recorded a profit and loss account that showed an impressive growth in its group gross earnings of N 161 billion recorded in 2012 as against N124 billion recorded in period of 2011. The company’s top-line was majorly driven largely by substantial growth in revenue. Its revenue recorded a growth of 78 per cent from N6,782 billion in 2011to N12.039 billion in 2012.
Profit before tax stood at N2.45 billion in 2012 in contrast with a loss of N2.39 billion in 2011 as adjusted. However, the Post-Tax loss of N1.670 billion the previous year rose by 31 per cent to N2.180 billion in 2012. The company’s effective top-line cost management further enhanced its movement to N1.3 billion, gaining over 50 per cent that similarly display a full recovery of profits losses in the 2011 financial year report and accounts.
Further analysis of the company’s financial attests to the recovery of the company was its growth in basic Earnings Per Share that went from a loss of N124 billion in 2011 compared with N161 earnings that was recorded in 2012.
The balance sheet of UACN Property Development Company Plc improved in both its fundamentals and strength terms. Total balance sheet size grew by 31 per cent and nearly crossed the N1 billion marks at which N908.5 million was recorded.
This 31 per cent in assets was driven largely by both revenue and the company’s current assets respectively. The current assets stood at N16.656 million as against the increase of N21 million recorded in the corresponding period of 2011, while revenue also recorded a significant growth of 57 per cent from N6.782 million as at the end of December 31, 2011 to N12.039 in the period under review. Operating profit also stood at N3.790 million in the reviewing period from N3.623 million in 2011.
Revenue in this case is measured at the fair value of the consideration it received or receivable and represents amount receivable for goods and services provided in the normal cause of business, net of discounts, rebates and sales related taxes but including interest receivable on sales on extended credit and income from the provision of technical services and agreements.
Non-Controlling Interests rose from N1,067 billion to N2,180 billion, indicating an increase of 31 per cent during the period. The company also recommended for consideration and approval, a dividend of N962.5 million, representing 70 kobo per ordinary share held by the members.
Addressing shareholders at the Company’s Annual General Meeting, the Chairman of the Company, Mr Larry Ettah, said the company was positioned to take advantage of the opportunities in the real estate sector as the business, ‘’continues to be attractive with the huge housing deficit of about 17 million units, the growing population and the emerging middle class. Partnership opportunities are also emerging across different segments of the market and your company is poised to take advantage of them.’’
He pointed out that in spite of the seeming glut in the luxury market, however, rents and sale prices for high-end apartments remained quite high while in the commercial segment, headline rents in Lagos ranked among the highest in the world. ‘’International operators continue to express a strong desire to expand their foot prints in the Nigerian market, as significant demand and supply imbalance exists for quality hotel accommodation. The retail segment is primed for a major revolution with several mall developments under way in key metropolitan cities of Nigeria,’’ he posited.
The 2012 financial year was a significant one for UPDC in terms of profitability ratios, as the company recorded an improvement in major profitability outcome to indicate a recovery result. Aided by property development company in the Nigerian real estate market is currently promoting the N30 billion UPDC Real Estate Investment Trust (REIT). The Offer is one of the strategic initiatives being taken by the company in line with its growth aspirations and also in a bid to deepen the Nigerian REIT market. The UPDC REIT is a close-ended trust,
authorised and registered with the Securities and Exchange Commission (SEC) as a Collective Investment Scheme (CIS). The primary objective of the UPDC REIT is to provide Unit-holders with stable cash distributions from investment in a diversified portfolio of real estate properties. It is intended that at least 90 per cent of the REIT’s income will be distributed to unit-holders. The REIT will invest a minimum of 75 per cent in real estate. A maximum of 25 per cent may be invested in real estate related assets with no more than 10 cent held in liquid assets.
As a result, a total of 3 billion units of the UPDC REIT are now being offered to the public at the par value of N10 per unit, with a minimum investment of 10,000 units (i.e. N100,000). Profit after tax and non-controlling interests of N1.708 million in 2011 is now N2.215 million in the reviewing period.
Despite the security, electricity and energy reforms, the company still hopes that the real estate business shall continue to be attractive with huge housing deficit of 17 million units, the growing population and the emerging middle class. The company also reported to have concluded the REIT transaction as at the first half of 2013 while other avenues will be pursued to de-leverage the balance sheet and secure improved returns for shareholders in the future.
Commenting on the outlook of the business for 2013, the Chairman, who reviewed the progress made by the company on building development to include the completion of the 55-unit Metro Gardens in Lekki and the 18-unit Grandville in GRA, Ikeja, stated that the commencement of development of 90-unit Vintage Gardens, Port Harcourt and the remarkable progress recorded in the construction of the 32-unit Cameron Green luxury development in Ikoyi and Phase 1 of UPDC Metro City Dutse, Abuja would go a long way to improve the company’s efficiency.
Investing in the UPDC REIT provides an opportunity for individual and institutional investors to invest in a diversified portfolio of real estate properties and participate in the income distribution derivable from the portfolio of real estate assets. Investors will benefit from the superior quality of the real estate portfolio to be vested in the UPDC REIT as well as highly
competent members of the investment committee comprising seasoned real estate experts with a wealth of experience spanning decades. Investment in the UPDC REIT assures stable returns as the UPDC REIT properties are strategically located and have historically enjoyed well over 95 per cent occupancy rate from a base of high quality corporate and individual clients.