UPDC to raise additional capital

The UACN Property Development Company (UPDC) Plc has expressed its readiness to leverage emerging opportunities in the industry and enhance profitability in the current financial year.

In view of this, the company unveiled plans to raise additional capital by way of rights to boost business.

The company is also seeking N10 billion commercial paper bond to enable it dispose of low performing assets and move its exposures into commercial paper.

The Chairman of the company, Larry Ettah, while addressing shareholders during the company’s 18th yearly general meeting, held in Lagos yesterday, explained that the company has submitted the proposal for the rights issue to the Securities and Exchange Commission (SEC) for approval.

He pointed out that once the proposal was endorsed, the company would seek shareholders’ consent on when to commence the rights issue.

The Chairman said the company would also leverage on partnership and alliances that are similar to the company’s long-term goal.

He added that the firm is also boosting the retail segment of the business and has put in place strategies to enable it take advantage of emerging opportunities in the segment.

He pointed out that despite the slow-down in the luxury segment, the nation’s real estate market remained attractive, as there were significant untapped potentials in the residential category and numerous opportunities in the retail, commercial and industrial segments of the market in the near term.

He explained that the challenges being faced by the market in terms of issues with titles, high cost of funding, inadequate mortgage financing and poor infrastructure were expected to persist in the medium-term and would continue to prevent effective demand in the low/medium residential market segments.

According to Ettah, the company posted revenue of N3.74 billion as against 2014’s revenue of N10.08 billion.  Loss before tax was N1.80 billion against N2.04 billion achieved in 2014.

Commenting on the operating environment, he noted that as witnessed in other emerging markets, demand for high-quality retail, office and industrial real estate in Nigeria continues to outstrip supply.

He stated that the Nigerian real estate market has continued to record significant growth in the last decade in response to demand for residential & commercial properties.

He pointed out that growth in the commercial segment has been driven by new investments in high growth sectors like retail, hospitality/tourism and telecommunications, while the spike in demand for residential housing is linked to population growth & rising income levels (emergence of middle class).

“Although real estate development activity is increasing in several states of the federation, demand & supply for commercial and residential properties remain more predominant in Lagos, Abuja and Port Harcourt,” Ettah said, stressing that the company would continue its ongoing developments in 2015 and commenced some new ones.

He noted that the Board also took a decision to impair UPDC’s equity in the hotel business (N2.08b), which had a major adverse impact on the PBT for the company.

“A further impairment of million was passed on the group result based on a market valuation of the hotel asset in June 2015,” he added.