Retail sector receives boost as firms float N20bn REIT

Retail sector, an integral part of Real Estate industry, receives boost last week, as consortium of firms finalising all the requited documents, on a N20b-Real Estate Investment Trust (REIT), towards boosting the sector in Nigeria.

Promoted by Top Services Limited, the newly berth REIT, would be managed by Messrs. First Ally Asset Management.

REIT is a close-ended Real Estate Investment Trust registered and regulated by the Securities and Exchange Commission (SEC) and to be listed on the Nigerian Stock Exchange (NSE).

While the lead issuing house is First Ally Asset Management, co-issuing houses Cowry Asset Management, Future View Financial Services and Greenwich Trust Limited.

Speaking at the signing of the Memorandum of Understanding (MOU), in Ikoyi, last week, Chairman, Top Services Limited, ‘Tokunbo Omisore, said the need to grow the retail sector of the real estate industry prompted his company to spearhead the floating of the REIT.

Omisore, an architect, said the growing urbanisation in Nigeria is driving the opportunities for organized retailers (Shoprite, SPAR) to enter the market, adding that: “This is a high turnover, low margin business and sensitive to rental pricing. Their business model depends on lower margins, higher turnover of everyday goods and services. Thus they are sensitive to pricing and location.”

He added that this has led developers to move away from malls catering to international brands and towards malls focusing on retailers selling groceries, dry goods and other everyday items, hinted that the offer price of the REIT is N1,000 per unit.

Assuring would be investors of safety, the new REIT, according to Omisore, would invest in retail related real estate and has identified four malls that will constitute the initial investments including Adeniran Ogunsanya Mall, Surulere and  Apapa Mall, Lagos State.  Others are Cocoa Mall and Akure Mall in Akure, Ondo State.

Prior to investing the following thresholds will need to be met or exceed gross lettable area over 8,000sqm occupancy ratio over 75 percent  of gross lettable area.

Wooing investors, Omisore said the REIT has a stable and regular income distribution from diversified portfolio of real estate and real estate related assets; long term leases with tenants and diverse corporate tenant profile with staggered rental renewal periods, which prevent mass vacancy at any one period and provides stable and resilient portfolio performance, among others.