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Locke Apartment tops rental yields in Union Homes REIT

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Locke Apartment property Lekki, Lagos, a property owned by Union Homes Real Estate Investment Trust (UH REITs) has come tops with the highest rental yield of about 8 percent.This was closely followed by UH REITs’ commercial property at N0 64 Opebi Road, Ikeja measuring 1,433 square metres and Ogoaro Crescent, Garki, Abuja commercial property measuring 2,427 square metres.

Locke apartment is fully residential and comprises of 15 units block of flats with yearly tenancy as well as 80 percent of occupancy rate.The property was built a year old against that of Ikeja and Garki property built seven years ago.Typically, rental yields reduce as the property ages. Property values in Lagos rise faster than rental income. The lower the rental yield, the higher the property value and vice versa.

The figures were posted on the website of the Nigerian Stock Exchange by Union Homes Real Estate Investment Trust as its official rental yield data provided for their real estate properties located in Lagos and Abuja.Union Homes in the report listed property in 13 locations with 10 located in Lagos and three in Abuja respectively.

The report indicates that Union Homes REITs booked a rental income of about N150 million for the period ended September 2017 and N81.9 million for the first quarter of 2018.It also reveals Real Estate Rental Yields of between three per cent and eight per cent respectively for the month ended May 2018.Real Estate rental yield is the rental income as a percentage of the property’s value. It can be calculated as a gross percentage, before expenses are deducted, or as a net percentage, with expenses and purchasing or transaction costs accounted for. 



The simplest way to calculate rental yield is to divide the amount paid for the property by the amount received in yearly rent.For example, if you paid N100, 000.00 for a flat and received N200 per week in rent, then your annual rental rate would be N10, 400.This means your yield would be 10.4 per cent (100,000 divided by 10,400).Yields are also a good indicator of property values and it is frequently used around the world as a proxy for determining property values.

According to the data, Union Homes REIT has a total property net asset value of about N12.8 billion with a combined delinquency rate of just 0.75 per cent.The report also detailed occupancy rates for highbrow areas like Victoria Island, Ikoyi and Apo Abuja. The age of the properties ranges from one year to seven years.Interestingly, one of the oldest properties at seven years of age is located on Ikorodu road in mainland Lagos, a busy stretch of the expressway that is mostly dominated by commercial buildings.The Ikorodu Road property covers a land area of 3,075sqm and attracts a rental yield of about seven percent.

The report reveals further that its residential property located in Lagos produced the lowest rental yields.The property are aged between five and seven years with a significant number of units, perhaps reflects the rising value of property in highbrow areas of Lagos, particularly Ikoyi and Lekki. In fact, the Ikoyi Property had a rental yield of mostly three per cent.The Apo property had a rental yield of about 4 per cent. Rental Income in Abuja is significantly higher than in Lagos, perhaps proving a more profitable place to lease out residential property.


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