Stakeholders chart new course for REITS investors

FOLLOWING the clamour for a conducive environment for Real Estate Investment Trusts (REITS) investors, a key player in the nation’s housing sector, First Security Discount House Asset Management Limited (FSDH AM) has enjoined stakeholders to fashion out an effective and efficient tax regime for REITs in the country. 

   Participants made the plea in a seminar themed “Unlocking Investment Opportunities in the Real Estate” organised FSDH Asset Management Limited. The participants at the event included Managing Directors and Chief Investment Officers of Pension Fund Administrators, Insurance and Asset Management companies as well as representatives of regulatory authorities such as the Securities and Exchange Commission, Federal Inland Revenue Service and Chartered Institute of Taxation. 

   Although, investment in real estate assets via REITs is still unfamiliar to Nigerian investors, some stakeholders in this sector have identified the need to educate the property market players, including investors on the advantages of investing in real estate via REITs. The seminar provided participants with relevant and up to date information and was a strategic initiative by FSDH Asset Management Limited towards having a vibrant REIT industry in Nigeria. 

   The event had four sessions, which focused on issues bordering on the development of REITs in Nigeria.  The presentation on the topic: “Nature and Impact of REITs – Lessons for Nigeria from other Jurisdictions”, was handled by Mr. Andrew, the Founding Director and Corporate Finance Executive, Java Capital, South Africa.

     Brooking noted that REITs have come to be regarded as a key component of a balanced investment portfolio and are seen as an investment category separate from direct property ownership. He analysed the growth of the South African REITs and JSE-listed real estate sector and noted that the sector has grown substantially over the years and delivered excellent total returns to investors. This was illustrated with the history of REITs and some case studies.

   The Partner/Head of Tax and Corporate Advisory, PwC, Mr. Taiwo Oyedele discussed the controversial issue of tax, which has always been a challenge to stakeholders in the Nigerian REIT industry. A panel session, which had the professionals in the industry, provided insightful discussions and recommendations on ways of ensuring an effective and efficient Tax regime for REITs in Nigeria. 

   In his submission on Asset Selection and Management of REITs in Nigeria, the Managing Director, UACN Property Development Company Plc, Mr. Hakeem Ogunniran shedded light on factors to consider in selecting the underlying assets of a REIT. He stated that the success or failure of a REIT is determined by the quality of the underlying assets. These factors include the income generating capacity of the assets, the property title, location of the asset and quality of the tenants. 

   The final panel examined and discussed the regulatory environment for REITs in Nigeria. The Securities and Exchange Commission was applauded for the recent amendment to the SEC rules on REIT, the adoption of Declaration of Trust (DOT) structure, in order to reduce transfer cost of properties to a REIT.  Mrs. Yinka Edu, Partner, Udo Udoma & Belo-Osagie, in her presentation, highlighted the risks associated with the DOT structure and how these risks can be mitigated. She also made further recommendations that would grow the REIT Industry in Nigeria.