UACN Property Development Company (UPDC) Plc plans to source additional capital through a supplementary equity issue and disposal of certain surplus assets as part of a medium-term plan to deleverage the real estate company and boost its liquidity.
Chairman, UACN Property Development Company (UPDC) Plc, Mr. Larry Ettah, outlined the strategic plan of the company at the annual general meeting held at Golden Tulip, Festac, Lagos. Shareholders approved distribution of N N859.4 million as cash dividends for the 2014 business year, representing a dividend per share of 50 kobo.
Ettah said the company is focused on long-term value creation and has put in place strategies to enable it take advantage of emerging opportunities in the market place.
He outlined that the company would be raising new equity funds through a supplementary capital issue while it would also dispose its surplus equity stake in the UPDC Real Estate Investment Trust (UPDC Reit) to reduce its debt overhang and free more earnings for shareholders.
“Our strategy for 2015 and beyond include deleveraging the business through equity capital injection, disposal of the surplus stake currently held in UPDC REIT, about 21.5 per cent, to generate liquidity and re-creating our products portfolio to include more commercial and retail offerings which have proven to be more resilient revenue sources in periods of depression,” Ettah said.
He noted that the Nigerian real estate market remained attractive as there were significant untapped potentials in the residential segment, and numerous opportunities in the hospitality, retail, commercial and industrial segments of the market in the near term.
According to him, in recent years, foreign private equity firms have invested millions of dollars in the Nigerian real estate market due to existing and emerging huge demand which is driven by increasing urban population and changing shopping culture among the expanding middle class.
“The real estate market is gradually rebounding and has experienced reasonable growth and performance in the last few years. This performance is largely driven by the re-emergence of the Nigerian middle-class and the increasing demand for decent residential and commercial accommodation by high net-worth individuals, corporate organizations and key players in the retail segment of the economy,” Ettah pointed out.
He added that the upturn in economic activity which started in the last quarter of 2011 has led to an increase in demand and supply for commercial and high end residential developments, particularly in the key cities of Abuja, Lagos and Port Harcourt.
He said UPDC has continued its ongoing developments in 2014 and commenced some new ones, assuring that the company is on a good footing to sustain good performance.
Ettah however highlighted that challenges being faced by the industry in terms of title uncertainties, high cost of funding, inadequate mortgage financing and poor infrastructure are expected to persist in the medium term and might continue to prevent effective demand in the low to medium residential market segments.
Audited report and accounts for the year ended December 31, 2014 showed group turnover of N11.70 billion in 2014 as against N11.29 billion in 2013. Profit before taxation stood N3.54 billion compared with N3.71 billion in 2013.
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