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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
16 units of 4-Bedroom Flats
VICTORIA MALL PLAZA 1, LAGOS
(RESIDENTIAL)
Net Lettable Area (Sq.m): 7,656
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)
Net Lettable Area (Sq.m): 6,230
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
30
30
31
31
32
32
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)
Why Invest in a REIT by UPDC?
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Why Invest in a REIT by UPDC?
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
Luxury residential development
36 housing units (2 Blocks of 18 units)
20 units of 3-Bedroom Flats
10 units of 4-Bedroom Flats
6 units of 4-Bedroom Penthouses
NIGER TOWERS, IKOYI, LAGOS
Luxury residential development
54 housing units (3 Blocks of 18 units)
24 units of 3-Bedroom Flats
24 units of 4-Bedroom Flats
6 units of 4-Bedroom Penthouses
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Select Developments by UPDC
BOURDILLON
COURT, IKOYI, LAGOS
Luxury residential development
32 housing units
8 units of 3-Bedroom Flats
16 units of 4-Bedroom Flats
8 units of 4-Bedroom Terrace Houses
8 THOMPSON AVENUE
IKOYI, LAGOS
Luxury residential development
2 housing units
4 units of 3-Bedroom Flats
8 units of 4-Bedroom Flats
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Select Developments by UPDC
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)
12 units of 3-Bedroom Flats
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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