Reits Presentation

8/11/2019 Reits Presentation

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UACN PROPERTY DEVELOPMENT COMPANY PLC

Private & Confidential

Investor Presentation


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Introduction

The

NigerianReal

EstateSector

The UPDC

Real EstateInvestment

Trust

FinancialForecasts

Why

Invest ina REIT by

UPDC?

Contacts


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Introduction

UACN Property Development Company (UPDC or the

Company) is the leading property developer in theNigerian real estate industry.

The Companys property portfolio is currently valued at

over N43 billion.

UPDC is currently focused on the premium segment ofreal estate markets in selected cities.

In line with its growth aspirations, the Company is

promoting a N30 billion Real Estate Investment Trust(REIT)

Principal business activities are to acquire, develop and

provide high quality, serviced commercial and residential

accommodation for its customers in carefully selected high yielding

urban areas including Lagos, Abuja and Port Harcourt.


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The Fund Manager

FSDH Asset Management Limited

(FAML)is one of the leading FundManagers in Nigeria and is a wholly-owned subsidiary of First SecuritiesDiscount House Limited, a leading

financial institution which commencedbusiness in 1993

FAML is registered with the Securities &

Exchange Commission as a Fund/PortfolioManager, Corporate Investment Adviser

and is Fund Manager to the Coral IncomeFund and the Coral Growth Fund whichhave been in operation since 2006 and

2001 respectively

FAML also actively manages andadministers segregated portfolios such as

gratuity schemes, provident schemes,endowment funds and other special

purpose funds of large corporates, theCompanys assets under management are

in excess of N11 billion

FAML has a team of professionals, whohave the relevant technical know-how

and the capability to ensure that the REITis managed efficiently and effectively to

provide consistent returns over time

FSDH AssetManagement Limited

(FAML)


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Sponsor: UACN Property Development Company Plc

Fund Manager: FSDH Asset Management Limited

Lead Issuing House: Stanbic IBTC Bank PLC

Co-Issuing House: BGL Plc

Joint Trustees to the REIT: First Trustees Nigeria Limited and UBA Trustees Limited

Custodian UBA Plc (Global Investor Services Division)

Asset Valuers Jide Taiwo & Co and Joe Akhigbe & Associates

Reporting Accountants Ernst & Young

The Offer: 3,000,000,000 Units of N10.00 each at par in the UPDC REIT

Mode of Offer: Offer for Subscription

Nature of the REIT: The REIT aims to achieve long-term capital growth of its assets by investing at least 75% of its assets directly in

quality real estate (land and/or properties) in strategic locations across Nigeria, which the Fund Manager has

identified as offering excellent growth/appreciationpotential

A maximum of 25% of the REITs assets may be invested in real estate related assets with no more than 10% in

liquid assets including investments in fixed income securities

The REIT is close-ended and its Units will be listed on the floor of The Nigerian Stock Exchange(The NSE orThe

Exchange). Once this Offer is concluded, Units of the REIT can only be bought or sold through a licensed

Stockbroker on the floor of The Exchange. Consequently, the price will be market driven and not based on the Net

Asset Value of the REIT

However the REIT may undertake secondary offerings as the need arises

Transaction Summary


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Investment Committee: The investment process will be overseen by an Investment Committee made up of a team of portfolio

managers and financial consultants who collectively have over 100 years experience in real estate

investments and finance in Nigeria

The committee comprises 9 individuals in the following categories:

2 members from FSDH Asset Management Limited

1 member from First Trustees Nigeria Limited

1 member from UBA Trustees Limited

2 members from UPDC and

3 independent members

Units of Sale: Minimum of 10,000 Units and multiples of 1,000 Units thereafter

Offer price: N10.00 per Unit

Foreign currency subscriptions will be processed at the applicable foreign exchange rate at the time of

subscription

Offer size: N30,000,000,000

Payment Terms: In full on application

Underwriting: At the instance of the Sponsor, the Offer is not underwritten

Opening Date: Q1 2013

Transaction Summary


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2 The Nigerian Real EstateSector


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The Real Estate Industry

Industry Segmentation

Residential

Residential real estate in Nigeria has inrecent times experienced a significant

level of growth largely driven by risingdisposable incomes rapidly growingmiddleclass and increasedurbanisation

Despite the recent banking sectorreforms, high end residential realestate assets still enjoy a great deal ofpatronage

Commercial

Nigeria has received a large number ofinternational franchises in the last year.

Commercial activities in the majorcosmopolitan cities in Nigeria haveincreased significantly due to an influxof international operating companiesseeking grade A officeaccommodation.


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The Real Estate Industry

Industry Segmentation

Retail

Retail is an emerging segment of theNigerian real estate industry, which is

expected to experience double digitgrowth rates which has led to reducedbank lending over the next decadewith recent developments in keymetropolitan cities of Nigeria.

The influx of international retailers,increasing disposable income andincreasing population is expected todrive growth in this segment

Hospitality

The hospitality market recentlywitnessed an addition of over 700 keys

in Lagos alone

International operators continue toexpress a strong desire to impress andexpand their footprint in the Nigerianmarket and as significant demand andsupply imbalance exists for qualityhotel accommodation.


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Real EstateIndustry

Challenges

LandPolicies

Accessto

Capital

LandTitling

The Real Estate Industry- Challenges


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Section 1 of the Land Use Act proclaims that all land isvested in government to be held in trust and administered

for the use and common benefit of all Nigerians In this regard, several Federal and State parastatals were

charged with the responsibility of developing mass urbanhousing, with a view to assessing the will and capacity tobridge the demand and supply imbalance

Whilst housing continues to be a key focal responsibility ofGovernment, this has led to a very slow pace of development

across the entire country and leaves much of the housingdemand unmet

LandPolicies

There is uncertainty of title due to the complex land tenuresystem in Nigeria

This situation is compounded by the Land Use Act whichprovides for governors consent, land transfers and mortgages

However, the process and procedure for obtaining governorsconsent is expensive thereby exacerbating land costs

Land Titling

The Real Estate Industry- Challenges


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The drastic banking reforms of 2009/2010 made it difficultfor real estate development companies to access capital

from banks to finance new developments Loans/credit extended to players in the real estate industry

were issued at extremely high rates of interest. This hasstifled growth in the sector and also had a negative effecton mortgage financing

Access toCapital

The Real Estate Industry- Challenges(Contd)


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Economic Growth

A strong driver of thedevelopment and demand of thereal estate industry in the countryis the estimated growth of theNigerian economy which isexpected to be at a rate of about7.4% over the next three years

It is also expected that thisgrowth will further boost theinflux of foreign directinvestments, stimulate economicactivity, boost consumer spendingand collectively increase thedemand for and supply of realestate products

Financial MarketReforms

The success of the on-going banking reforms,which will potentiallyengender increasedlending activity in themedium term, will bebeneficial to the real

estate industry

Land Titling

Increased efforts by Stategovernments to create anefficient platform forprocuring land title andreducing transfer costs onproperty will furtherstimulate thedevelopment of realestate

It will also encourageexisting holders of realestate assets to transfertheir portfolio into REITsas a viable means ofunlocking capital

The Real Estate Industry- Outlook


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3 The UPDC Real Estate InvestmentTrust (REIT)


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The UPDC REIT

The REIT is established with the principal investment objective of investing andowning in a diversified portfolio of income-producing real estate in Nigeriacharacterised by high growth potential

The REIT is close-ended and its units will be listed on The NSE

3,000,000,000 Units of the REIT are currently being offered for subscription

The REIT is governed by a Trust Deed with First Trustees Nigeria Limited and UBA

Trustees Limited acting as Joint Trustees


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The UPDC REIT

The Fund Manager seeks to grow rental yields, produce regular and stable distributions

to Unitholders and achieve long-term growth in the Net Asset Value per Unit of the REITthrough the following:

The initial portfolio of property to be acquired by the UPDC REIT following theconclusion of the Offer has already been identified

Acquiring properties that meet the Fund Managers investment objectives;

Actively managing the REITs property portfolio; and

Developing and maintaining excellent tenant relationships through the provision

of proactive property-related services


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The UPDC REIT Participation

UPDC intends to participate in the REIT by contributing aportion of its existing real estate portfolio

In exchange for its real estate portfolio, UPDC will receive

a combination of cash proceeds and units in the REIT

UPDC intends to hold 40% of the REIT, while 60% will beheld by the investing public

UPDCs participation in the REIT will increase investorconfidence as it shows substantial alignment of theCompanys interest with the REIT


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Schedule of Assets

UPDC is seeking to transfer a portfolio of commercial, residential and warehouse properties

situated in Lagos, Abuja and other parts of Nigeria into the proposed REIT

ABEBE COURT IKOYI, LAGOS

(RESIDENTIAL)

Net Lettable Area (Sq.m): 5,182

Open Market Value (Nm): 4,320

Luxury residential development

32 housing units (4 Blocks of 8 units)

16 units of 3-Bedroom Flats


VICTORIA MALL PLAZA 1, LAGOS

(RESIDENTIAL)


Open Market Value (Nm): 8,278

Mixed development

2 Blocks of residential buildings

An office block

Shopping mall

Commercial parking lots


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Schedule of Assets

1-2 FACTORY ROAD, ABA

(COMMERCIAL)


Open Market Value (Nm): 740

13 rental units

Offices, banks, restaurants and warehouses

Total Asset Value based on an independent property valuation carried out by Jide Taiwo &

Co and Joe Aigbe & Associates is approximately N21.915Billion


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Investment Objectives & Asset Allocation

Stable CashDistribution

DiversifiedPortfolio

HighYieldingProperties

DiversifiedFundingSources

The REITs investments will be made by the Fund

Manager with the consent of the Joint Trustees, in any or

all of the following asset classes and in accordance with

the maximum proportions specified above in line with the

Securities and Exchange Commissions (SEC)requirement

The objective of the REIT is to ensure optimal returns for

the investors by ensuring that investments are only made

in high yielding property asset classes

INESTMENT OBJECTIVES ASSET ALLOCATION


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Investment Highlights and Policy

Immediate investment income

Instant cash Payback (Refund of Advance Rent)

Experienced and professional Property Manager

Stable and regular distributions.

Exposure to a diversified property portfolio of income

generating assets

Opportunities for future capital growth through the

acquisition of additional properties that fit the REITs

investment criteria and active portfolio management

Potential for maximized distributions through a

performance based fee structure for the Fund Manager

Substantial alignment ofSponsors interests with those of

Unitholders as evidenced by intention to own up to 40% of

the REIT

Reduced acquisition costs of initial property portfolio as a

result of the Declaration of Trust structure

Low maintenance costs the main assets (i.e. VMP 1 and

2) are brand new properties and the warehouses are

traditionally low maintenance assets as well

Investment Highlights

The REIT will focus on investing in residential and

commercial properties

The Fund Manager will continue to ensure adequate

diversity in the REITs portfolio

The number, size and mix of investments made will depend

on market conditions and other circumstances existing at

the time of investment

Potential investments should have some or all of the

following attributes:

Prime Location

Premium Buildings

Quality Tenancy

The REIT may invest in land and/or properties under

development as prescribed by the SEC rules

The REIT may enter into joint ventures with third parties

including the Sponsor or its affiliates, co-ownership

arrangements or participation with real estate developers,

and parties for the purpose of owning and/or operating real

estate investments. In determining whether to invest in a

particular joint venture, the Fund Manager will evaluate the

real estate investments that such joint venture will own

under the same criteria for the selection of direct real estate

investments

Investment Policy


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The Declaration of Trust (DOT) Structure

The DOT is a Tax efficient legal structure; it seeks to minimize the potential transfer costs and the tax impact related to

properties

UPDC transfers all beneficial ownership rights in the real estate properties to be accommodated in the REIT via aDeed of Declaration of Trust while retaining in trust, the legal title on behalf of the Joint Trustees to the REIT

All of UPDCs beneficial interests and powers in the properties, including right to rental incomes and capitalappreciation will be legally assigned to the Joint Trustees

UPDC shall have absolutely no right/powers to independently sell, mortgage or transfer title of properties withoutexpress authorisation from the Joint Trustees

The DOT is bankruptcy remote, thus the properties transferred to the REIT will be segregated from the general

assets of UPDC and cannot be used to offset debts owed by UPDC in the unlikely event that UPDC becomesbankrupt

The DOT is irrevocable. Consideration would have been offered and accepted and the REIT will have clear legalrights to claim title to the properties

The physical legal title documents of the real estate portfolio (subject matter of the DOT) shall be deposited with theCustodian on behalf of the Joint Trustees. In addition, a notice stating the interest of the REIT shall be affixed on allthe properties

Underlying Features of the DOT Structure

Description of the DOT Structure


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The Investment Committee

Name Work experience

Hakeem D. Ogunniran

(LLB, LLM, MBA)

Joined UAC in 1995 as Manager, Legal Services

Appointed Divisional Managing Director of MDS Logistics in April 2000

Appointed as Managing Director of UPDC in January 2010

Folasade Oluwatoyin Ogunde

(BSc., FCA)

Started with Deloitte Haskins & Sells (1985 to 1990)

Joined UAC in 1997; served as Management Accountant, UAC Foods Division

Divisional Commercial Director, MrBiggs, and Group Treasurer, UAC

Appointed Finance Director in 2005

Olumayowa Ogunwemimo

(B.Sc., ACA) Started her career in the Risk Management department (2001) and then Research in

FSDH

Moved to the asset management subsidiary, i.e. FSDH Asset Management Limited in

2004 and was appointed as the Managing Director

Robert Ajiamah

(B.Sc., M.Sc., MBA)

Over 18 years of varied banking experience, joined FSDH in 1999 and became the head

of the Abuja regional office in 2003

Head of risk management for the FSDH group since 2007, led the Public Sector and

Abuja regional Office of FSDH between 1999 and 2006

He is currently the Head, Risk Management

Oluwatoyin Sanni

(LLB) She was an Assistant General Manager, with First Trustees Nigeria Limited and

Managing Director of Cornerstone Trustees Limited.

President of the Association of Corporate Trustees

Currently MD/CEO of UBA Trustees


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0

50

100

150

200

250

300

350

400

0

1

2

3

4

5

6

7

2013 2014 2015 2016 2017

Nbillion

Total Income Profit before tax Profit after tax Total Expenses

Analysis of Net Income Growth

Earnings per unit vs. Dividends per unit (N)

0.00

0.50

1.00

1.50

2.00

2013 2014 2015 2016 2017

Earnings per unit Dividend per unit

NMillion

Financial Forecasts


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30

31

31

31

32

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30

31

31

32

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2013 2014 2015 2016 2017

N'Billion

Financial Forecasts

2013 2014 2015 2016 2017

N'm N'm N'm N'm N'm

Total non-current assets 28,155 27,117 27,391 28,139 28,604

Total current assets 3,579 3,907 3,486 3,104 3,137

Net current assets 2,107 3,428 3,486 3,104 3,137

NET ASSETS 30,262 30,545 30,877 31,343 31,741

CAPITAL AND RESERVES

REIT Capital 30,000 30,000 30,000 30,000 30,000

Retained earnings 262 545 877 1,243 1,741

Shareholders Funds 30,262 30,545 30,877 31,243 31,741

Net Assets

0

500

1000

1500

2000

29

30

30

31

31

32

32

2013 2014 2015 2016 2017

N

Billion

REIT Capital Shareholders Funds Retained Earnings

Capital and Reserves


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5 Why Invest in a REIT by UPDC


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Great Business Model

The Company has perfected the art ofacquiring developing managing and sellinghigh quality serviced commercial andresidential properties

Major emphasis is in the highly rewardingluxury, premium and classic segments of thereal estate market in Nigeria

There has been a great deal of customerfocus via the creation of world class living andworking environments

UPDC has also adopted a focused approachin Nigerias key economic hubs: Lagos, Abuja

and Port Harcourt

Competitive Strengths

The UPDC brand is very well known countrywide

Years of experience have turned the

Company into a real estate behemoth Good financial relationships with Nigeriasmain lenders

Established systems & processes

Strong corporate governance reminiscent ofglobal standards

Professional & Technical competence fromexperience garnered over the years

Longstanding Reputation / Reliability Successful track record in JV management &

delivery

UACN pedigree

Why Invest in a REIT by UPDC?


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Successful Subsidiaries

UPDC Hotels Limited

Owner of Festac 77 Hotel

(Golden Tulip) with a totalshare capital of N2.2 billion

Manor Gardens PropertyDevelopment Company Limited

Rewarding JointVentures

Romay Gardens (with Romay

Sales Limited)

Anchorage Estate (withKnighthood Properties Limited)

Salatu Royal Estate (with SalatuInternational Limited)



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UPDC remains the first and only listed real estate company on The Nigerian Stock

Exchange

Over 50 years experience developing real estate assets across the three major

economic hubs of the country and has over the years acquired significant land

holdings in several prime locations such as Ikoyi

Today, UPDC is the leading private developer in the Nigerian real estate industry

with an asset base of over N60 billion Turnover of over N10 billion as at 31 December 2011

Very well positioned to reap the benefits of a largely under tapped market due to the

following facts:

Estimated Current untapped market of over N13 trillion housing

units, commercial properties and associated infrastructural facilitiesHigh growth potential: Estimated population by 2050 is 289million1 and 264

million2

Highly experienced and motivated management with an extensive knowledge of the

real estate market and the Nigerian market

CLEAR MARKET LEADER

Source1:Encarta 2: United States Census Bureau


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Select Developments by UPDC

TRENCHARD

PLACE, IKOYI, LAGOS





6 units of 4-Bedroom Penthouses

NIGER TOWERS, IKOYI, LAGOS





6 units of 4-Bedroom Penthouses


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BOURDILLON

COURT, IKOYI, LAGOS


32 housing units



8 units of 4-Bedroom Terrace Houses

8 THOMPSON AVENUE

IKOYI, LAGOS


2 housing units




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ROMAY GARDENS. LEKKI, LAGOS

JV with Romay Gardens with Romay Sales

Limited

Residential estate with 82 housing units

26 units of 4-Bedroom Semi-detached

16 units of 4-Bedroom Town Houses (Type A)

28 units of 4-Bedroom Town Houses (Type B)


UPDC ESTATE, LEKKI, LAGOS

Residential estate with 81 housing units:

8 units of 4-Bedroom Detached Bungalows

32 units of 3-Bedroom Detached Bungalows

20 units of 3 & 4-Bedroom Semi-detached

Houses

21 units of 5-Bedroom Detached Houses

26 units of 4-Bedroom Semi-detached

Houses, etc


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Cameron Green, Ikoyi.


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VintageGarden

sNAFF Estate,

Port-Harcourt

Vintage Gardens NAAF Estate, PH.


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Napeir Gardens Lekki

Land Size is 1.7Hectars.

Development Vehicle = Joint Venture

Total Units for UPDCPLC = 100

4 bedroom detached bungalow = 50 units

4 Bedroom detached duplex = 50 unitsProject Status: 100% Complete.

Napier Gardens Lekki


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Metro City Project Status

TheTypical Front View


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The

Pinnacle

Maitama, Abuja

The Pinnacle is a 27

units, luxuriously finished

apartments, consisting of 1bedroom studio, 3 bedroom

flats and 4 bedroom

maisonettes.

Aerial View

Play Area

Pool Area


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Festival Mall Festac

Located adjacent Golden Tulip Hotel.

Land Size is 3.27Hectars.

Proposed GBA is 12,180 sqm.

Proposed GLA is 9,480 sqm

Space Utilization:

Anchor = 3,800 sqm

Cinema = 1,100 SqmRestaurants, Pubs & line Shops = 4,586 Sqm

Overal efficiency = 78%

Festival Mall Festac


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7 Contacts


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Documents

Reits Presentation