By Nkiruka Nnorom
The Chairman of UACN Property Development Company (UPDC) Plc, Mr. Larry Ettah, has said that the Nigerian real estate sector is plagued by the on-going foreign exchange crisis.
He said as a result of these restrictions, most retailers in existing malls are demanding reduction in rentals, while occupancy levels have been adversely affected. Speaking at the company’s Annual General Meeting, AGM, in Lagos, he said that the lack of mortgage financing and cost of funding were preventing effective demand in the low/medium residential housing market. He stated that there were indications of over-supply in the premium market segment evidenced by high property space vacancy and declining rentals in Ikoyi, Victoria Island and Abuja.
He noted that UPDC Plc was recalibrating development towards the retail segment and had put strategies in place to enable it take advantage of emerging opportunities in the segment. Emerging opportunities He disclosed that the company successfully launched series 1 of its N24 billion Commercial Paper early in the year, as a cheaper alternative to bank’s loans. According to him, the company posted N3.74 billion in revenue for the year ended December 31, 2015, as against N10.08 billion recorded in the same period in 2014.
Loss before tax was N1.80 billion as against N2.04 billion and Group’s N3.54 billion in 2014. He revealed that the company continued its on-going developments in 2015 and commenced some new ones, noting that the Board also took a decision to impair UPDC’s equity in the hotel business, which had a major adverse impact on the company’s profit before tax. A further impairment of N473 million was passed on the group result based on a market valuation of the hotel asset in June 2015.
Providing details on the company’s plan for the future, he said “Our strategy for 2016 and beyond includes deleveraging the business through equity capital injection by way of Rights Issue, sell down of surplus stake in the Real Estate Investment Trust, REIT, and disposal of low-performing assets, as well as leveraging on partnerships and alliances that are in sync with the company’s long term goals.”
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