UPDC To Use N15.961bn Rights Issue To Improve Cash Flow, Create Value For Shareholders

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Wednesday, February 19, 2020 / 9:30 AM / Nifemi Taiyese for WebTV / Header Image Credit: WebTV

 

The United Africa Company of Nigeria Property Development Company Plc, UPDC, has assured the capital market community that the N15.961bn right issue it raised through the Nigerian Stock Exchange (NSE) will to improve cash flow in its operations and create value for shareholders.

 

The Managing Director/CEO of UPDC, Mr. Folasope Aiyesimoju, disclosed this at a "Facts Behind The Rights Issue" hosted by the NSE.

 

Mr. Aiyesimoju said part of the N15.961bn would go to reducing the debt of the company, which he put at  N20.8bn.

 

Other benefits of the rights issue, according to Mr. Aiyesimoji, include; strengthening and improving UPDC's capital structure and providing the company with financial and operational flexibility to embark on the next phase of growth and take advantage of emerging opportunities.

 

The UPDC MD/CEO was optimistic that the rights issue would improve the company's capital structure and enhance its operations in the property and real estate market.

 

Speaking further on the outlook for the UPDC business model for 2020 and beyond Mr, Aiyesimoju stressed that the focus would be in three areas;

  • Property Development- Which entails refocusing on developments that address emerging economic trends which would provide 70% revenue contribution

  • Investment- Owning and optimizing assets for improved yield, which would achieve a 25% revenue contribution.

  • Real Estate Management Services-This involves growing property asset and facilities management business lines. The segment is expected to bring a revenue contribution of 5%.

 

In terms of the target portfolio mix of the company, Real estate, according to the MD/CEO, will remain the core business with the strategy of attaining a well-diversified portfolio for stable and sustainable growth.

 

The mix will have Residential as the highest with 50%, Hospitality 20%, Office 20% and Retail 10%.

 

He acknowledged that there is work to be done to improve the REITs performance, which is undoubtedly an attractive asset.

  

Giving further insight, he said the following key segments of the market would form the thrust of the activities of UPDC;

  • Residential apartments (Middle-income homes) with target returns of 30%

  • Commercial (Grade B Offices) with target returns of 10-12%

  • Retail (Community malls) with target returns of 10%

  • Hospitality (Student housing) with target returns of 15%

  

UPDC has the largest Real Estate Investments Trust, REIT in West Africa with total assets under management (AUM) of N33.5bn, with N4.1bn cash and cash equivalent available for investment, N1.9bn profit-after-tax for 2019 financial year.

 

All shareholders will get direct access to the UPDC REITs, which is a close-ended property fund with underlying assets, comprising a diversified portfolio of commercial and residential real estate assets in major cities across Nigeria.

 

Mr. Aiyemisoju urged stakeholders in the market to participate fully in the rights issue that commences on Monday 10th February 2020 to Friday, 13th March 2020.

 

Giving the opening remarks at the UPDC Facts Behind the Rights Issue, Mr. Bola Adeeko, the Divisional Head, Shared Services, NSE lauded the company for accessing the market to raise funds to reposition its operations.

 

Mr. Adeeko was particularly pleased that the UPDC chose the NSE platform to inform the market of the ongoing offer and other strategic and operational developments in the company.

 

The NSE Divisional Head described UPDC as a leading Nigerian indigenous real estate company engaging in the acquisition, development, sales and management of high grade residential and commercial properties.


He assured UPDC that the NSE would continue to support the agenda of companies listed on the Exchange, that are seeking to deepen the Nigerian economy through the market.

 

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