Union Homes Real Estate Investment Trust Scheme (Union Homes REITS) and Skye Shelter Real Estate Investment Trust (Skye Shelter Fund) both had N12.3 billion as net asset value (NAV) at half year 2019. Union Homes REITS controlled 81 percent of the NAV while Skye Shelter Fund controlled 19 percent.
A real estate investment trust scheme provides investors the platform to have stake in the real estate market, helping in diversification of portfolios thus leading to regular inflow of income from different sources.
Information gleaned from the unaudited financial statement for the period ended June 30, 2019 showed that Union Homes REITS recorded N235.9 million as total income in June 2019, translating to a decline of 7.91 percent when compared with N256.1 million made last year June. Similarly, net income fell to N144.2 million compared with N156.20 million realised in June 2018.
Skye Shelter Fund RIETS raked in N111.2 million at half year as total income , an increase of 0.85 percent over N110.3 million realised last year June. However, net income remained N85.6 million, as against N85.3 million the company realised in June 2019.
In terms of the number of assets, Union Homes REITS has seven properties while Skye Shelter Fund has nine. The delinquency rate for Union Homes REITS was 0.60 percent while that of the Skye Shelter Fund was 2.1 percent by June 2019.
The nine properties of Union Homes REITS have 94 housing units with yields ranging from 3.12 percent to 6.43 percent. Basically designed as individual housing units, the occupancy rate ranges from 20 percent to 100 percent. By age, the newest property is aged 3 years while the oldest is 8 years.
The seven Skye Shelter Fund’s properties have 59 housing units, with yields ranging from 4.3 percent to 6.5 percent. They are a mix of housings units meant for individuals and corporate clients. The oldest property is aged 10 years while the newest is 3 years old.
Only 18 percent of Union Homes REITS’ housing units are located at Abuja while the remaining housing units are in Lagos with their locations being Ikoyi, Victoria Island and Lekki. Based on the available data, Locke Apartment, a property in Lekki, Lagos State posted the highest yield at 6.43 percent, followed by Amina Court in Abuja which recorded 5.22 percent yield.
MacDonald Court in Ikoyi ended the first half of the year with 4.09 percent yield. Savannah Court in Victoria Island Lagos recorded 4.59 percent yield while Contemporary Apartment at Ikoyi closed the period with 4.53 percent yield. Victors Court in Ikoyi recorded the least yield of 3.12 percent.
The property with the highest yield among Skye Shelter Funds was Victor Park in Lekki Lagos with a 6.5 percent yield during the period. Milverton Court, also in Lekki was second on the yield table with 6.28 percent. Bourdillon Court in Lekki recorded 6 percent yield.
Sapphire Gardens in Lekki and Harold Shodipo in Ikeja recorded 5.6 percent and 4.3 percent yields respectively.
Interestingly, all the properties under the management of Skye REITS have 100 percent occupancy rates at half year. On the contrary, only three properties of Union Homes REITS- Savannah Court, Victors Court, Charter Court, have 100 percent occupancy rates.
MacDonald Court at Ikoyi has 88 percent occupancy rate; Contemporary Apartment Ikoyi has 75 percent occupancy rate; Amina Court Abuja has 20 percent occupancy rate; and Locke Apartment in Lekki has 93 percent occupancy rate.
To improve the performance of REITS, fund managers will do well by developing properties that meet the taste of millennial. According to a recent survey by Bankrate, millennial selected real estate investments as their top pick.
When asked, “For money you wouldn’t need for more than 10 years, which one of the following do you think would be the best way to invest it?” The survey findings showed that thirty-one (31) percent of the millennial selected real estate. Twenty percent (20%) selected stocks, 19 percent cash investments; 11 percent gold; 7 percent bonds while 5 percent selected none, Bankrate stated.