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African REITs Market Worth $29b—NSE Chief

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African REITs Market Worth $29b—NSE Chief

African REITs Market Worth $29b—NSE Chief

By Dipo Olowookere

Director-General of the Nigerian Stock Exchange (NSE), Mr Oscar Onyema, has disclosed that Nigeria has the potentials of growing its Real Estate Investment Trust (REITs) to compete favourably with other emerging markets such as Mexico, South Africa and Singapore.

Mr Onyema made this known at the maiden edition of the REIT Conference organised by the stock exchange and held at the NSE Event Centre, Lagos on Tuesday, May 23, 2017.

According to the NSE Chief, the African REITs market is presently valued at $29b and is available in four countries; Ghana, Nigeria, South Africa and Kenya.

He explained that the conference was put together in line with its strategic initiative to promote and create enabling environment for sustainable development of REITs in Nigeria and sub-Saharan Africa.

The event was themed, ‘Real Estate Investment Trust in Sub-Sahara Africa: The Role of the Capital Market’ and it brought together key decision-makers, policy-makers, government officials, private sector players, property developers, asset managers, dealing members, investors and thought leaders to dimension the current state of the Real Estate sector and the opportunities inherent in REITs.

Speaking further on the occasion, Mr Onyema, pointed out that, “There are only 32 REITs in Africa with South Africa being the largest REIT market having 27 REITs and Nigeria second with three REITs listed. In 2015, an estimated $265 million worth of transactions were concluded in Kenya, Nigeria and Ghana, a big improvement to the $65 million seen in all three markets during 2012.”

He noted that, “This indicates an increasing market as a larger number of investors are beginning to take increased interest and participation in the Real Estate Investment sector.”

Mr Onyema further stated that, “Whilst the Nigerian market may not be as developed as other emerging markets such as Mexico, South Africa and Singapore, this asset class has definitely come to stay.”

“Today, we have about N40 billion in REITs market cap listed on the NSE and a total of N96 billion i​n the Construction/ Real Estate sector of our equity market,” he disclosed.

He remarked that, “To create a more transparent, liquid and accessible market structure in line with global best practices for REITs, the NSE recently started the process of implementing some changes in terms of reporting and valuation of REITs and other collective investment schemes listed on the NSE.”

Delivering his keynote address, Minister of Power, Works and Housing, Mr Babatunde Fashola, who was represented by Mr Ayo Gbeleyi, the Managing Partner of GA Capital Limited, remarked that, “It is difficult, if not impossible, for government to provide all Housing solutions given the diverse demands.”

“The truth, which we must accept, is that 100 percent home ownership is an ideal, but the reality is that, best practices in places like the UK, US, Canada and Singapore are stories of a mixture of ownership and rental arrangements,” he added.

On the sources of funding for housing projects by the Ministry, the Minister stated that, “In the medium term, we intend to raise more capital outside direct Government Treasury, working with the Federal Ministry of Finance, through Infrastructure Bonds, REITS and other forms of real estate financing instruments, leveraging as most appropriate the platform of the Nigerian Stock Exchange.”

He added that other funding sources such as pension funds, private equity funds, and the National Housing Fund managed by the Federal Mortgage Bank to finance development and also acquisition will be under consideration for the new capital issues.

On his part, the first Vice President of the National Council of NSE, Mr Abimbola Ogunbanjo, noted in his keynote address that the Nigerian REITs market is largely underdeveloped due to lack of clarity on diverse regulatory issues which are required to stimulate greater market confidence, transparency and foreign capital inflows.

“The major challenges facing the REITs industry in Nigeria include restrictive legislation, poor knowledge and understanding of the industry in addition to prolonged bottlenecks created by the Land Use Act of 1978. Nigeria’s Land Use Act is embedded in the constitution of our country. Thus, any attempt to rectify its inadequacies requires a constitutional amendment which of itself is a major challenge.”

Mr Ogunbanjo therefore called for the establishment of a separate and dedicated Lands registry in each viable State of the Federation, a (REITS registry of sorts) within the existing legal framework to specifically handle all REIT related transactions.

The 2017 NSE REITs Conference featured three presentations and panel discussions on the Critical Elements for a Successful REIT’s Market; Regulatory, Tax and Role of Capital Market in Developing REITs in Nigeria and Sub-Sahara Africa; and Developing sustainable capital flows for financing real estate assets moderated by Mr Adeniyi Adeleye, Head, Real Estate Finance, West Africa, Standard Bank/Executive Director St​anbic IB​TC Capital; Mr Taiwo Oyedele, Partner, PwC West Africa Tax Leader; and Mr Chris Godman, Executive Managing Director, Equity Capital Markets, Standard Bank International.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

Economy

Demand Pressure Jerks NGX All-Share Index to 54,213.09 points

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All-Share Index NGX

By Dipo Olowookere

The sustained demand for domestic stocks further raised the Nigerian Exchange (NGX) Limited by 0.40 per cent on Friday, with the All-Share Index (ASI) crossing the 54,000-point threshold at the close of business.

The index, which measures the general performance of the bourse, appreciated by 214.97 points to settle at 54,213.09 points compared with the preceding day’s 53,998.12 points, as the market capitalisation expanded by N117 billion to close at N29.528 trillion as against Thursday’s closing value of N29.411 trillion.

The growth reported yesterday was supported by buying pressure across sectors of the market, though the consumer goods space came under selling pressure, losing 0.39 per cent.

However, this did not affect the outcome of the bourse due to the 1.06 per cent recorded by the banking counter, the 0.31 per cent expansion posted by the insurance sector, the 0.17 per cent growth printed by the energy counter, and the 0.04 per cent improvement reported by the industrial goods space.

Business Post reports that the market breadth remained positive on Friday, with 35 price gainers and 10 price losers, indicating a very strong investor sentiment.

Red Star Express, International Energy Insurance, and FTN Cocoa gained 10.00 per cent each yesterday to finish at N2.53, 99 Kobo, and 33 Kobo, respectively. MRS Oil gained 9.94 per cent to end at N19.35, and Northern Nigerian Flour Mills rose by 9.55 per cent to N9.75.

Conversely, Ikeja Hotel was the worst-performing stock after it dropped 10.00 per cent to 99 Kobo, Lasaco Assurance fell by 5.88 per cent to 96 Kobo, ABC Transport declined by 5.41 per cent to 35 Kobo, Universal Insurance went down by 4.76 per cent to 20 Kobo, and May & Baker shed 2.89 per cent to N4.71.

At the market yesterday, investors traded 268.02 million stocks worth N2.4 billion in 4,017 deals compared with the 2.9 billion stocks worth N8.1 billion traded in 3,940 deals on Thursday, indicating an increase in the number of deals by 1.95 per cent and a decline in the trading volume and value by 90.66 per cent and 70.37 per cent apiece.

Universal Insurance topped the activity chart after it sold 63.4 million shares, GTCO traded 20.8 million equities, Transcorp exchanged 19.5 million stocks, International Energy Insurance transacted 12.8 million equities, and Access Holdings traded 12.5 million shares.

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Economy

Naira Shortage: President Buhari Calls for Calm

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President Buhari

By Modupe Gbadeyanka

President Muhammadu Buhari has urged Nigerians to remain calm as they express their anger over the shortage of Naira in the financial system.

Since last week, many citizens of the country have been unable to access their funds in the banks because of a shortage in the supply of the redesigned Naira notes.

This has resulted in a huge crowd at banking premises across the nation, with several persons queuing at Automated Teller Machine (ATM) terminals waiting to withdraw their money with success.

The Central Bank of Nigeria (CBN) redesigned the N200, N500, and N1,000 denominations last year and said the old notes would no longer be legal tender from January 31, 2023.

However, while many Nigerians approached their banks last Sunday to quickly deposit their funds to beat the deadline, the CBN announced that the deadline had been moved to February 10, 2023.

The next day, while customers attempted to withdraw their funds over the counter, they were informed that the apex bank had directed them (commercial banks) not to honour cash withdrawal requests.

Also, cash withdrawal from ATMs was limited, making it very difficult for businesses to operate, triggering a protest in Ibadan on Friday.

When the demonstration was going on, Governors of the All Progressives Congress (APC) were meeting with President Buhari to persuade him to do something about the Naira scarcity.

After the gathering, he said in a social media post that, “I am aware of the cash shortages and hardship being faced by people and businesses on account of the Naira redesign.

“I want to assure you that we are doing everything to resolve these issues. Nigerians should expect significant improvements between now and the February 10 deadline.

“I met with a delegation of Governors today on the matter. All the complaints about the execution of the currency change are being seriously looked into.

“I will ensure that everything is resolved in a lasting manner, and we will all enjoy the long-term benefits of the decision.”

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Economy

Local Currency Appreciates at P2P, I&E, Depreciates at Black Market

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local currency nigeria

By Adedapo Adesanya

The local currency appreciated by N2 on the United States Dollar at the Peer-2-Peer (P2P) foreign exchange (FX) window, closing at N760/$1 on Friday, February 3, compared with the previous day’s N762/$1, indicating a form of ease as tensions rose across the country following a cash crunch that has triggered anger and aggression in some states.

President Muhammadu Buhari stepped in on Friday and pleaded with Nigerians to give him seven days to resolve the crisis caused by the scarcity of new Naira notes.

The President said he had seen reports about cash shortages and the effect on local businesses and ordinary people.

In the Investors and Exporters (I&E) segment, the Naira recorded a 50 Kobo or 0.11 per cent upward movement against the US Dollar to trade at N461.50/$1 compared with the preceding day’s N462.00/$1.

The day’s trading data showed that the value of forex transactions during the official market slightly increased by 3.54 per cent or $4.08 million to $119.43 million from the $115.35 million recorded a day before.

But in the black market, the Nigerian currency depreciated against the Dollar by N1 to close at N753/$1, in contrast to Thursday’s exchange rate of N752/$1.

In the interbank window, the domestic currency closed flat against the British Pound Sterling and the Euro on Friday at N568.32/£1 and N507.14/€1, respectively.

At the cryptocurrency market, there was a mixed outcome across the tokens tracked by Business Post as moves by the US Federal Reserve to raise rates by 25 basis points continued to send jittery signals.

Binance Coin (BNB) recorded a 2.8 per cent rise to sell at $329.32, Dogecoin (DOGE) grew by 2.4 per cent to trade at $0.0935, Solana (SOL) appreciated by 1.1 per cent to $24.49, Ethereum (ETH) improved by 0.9 per cent to $1,654.18, Cardano (ADA) recorded a 0.6 per cent addition to quote at $0.4006, while Litecoin (LTC) rose by 0.4 per cent to $99.15.

However, Bitcoin (BTC) declined by 0.7 per cent to trade at $23,356.32, and Ripple (XRP) recorded a 0.2 per cent slump to trade at $0.4092, while Binance USD (BUSD) and the US Dollar Tether (USDT) closed flat at $1.00 each.

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