Shareholders of UACN Property Development Company on Tuesday enjoined the management of the company to reduce prices of housing properties being sold to the public as its revenue and profit dropped significantly in the 2015 financial year.
Investigation by our reporter showed that most of the housing estates located at Ikeja GRA, Lagos and Abuja are unoccupied.
Speaking at the company’s Annual General Meeting in Lagos, a shareholder, Mr. Shobowale Olusegun, said that the company’s revenue dropped significantly in the year under review as most of the houses are not occupied and are very expensive.
He said, “To increase the company’s turnover, the price for would be buyers should be reduced to forestall empty properties.”
Analysis of the company’s financials showed revenue of N5.12 billion for the year ended December 31, 2015, a decline of 56 per cent when compared to N11.7 billion recorded in the same period of 2014.
The company’s profit after tax dropped by 88 per cent to N421 million, from N3.60 billion recorded in the corresponding period of 2014.
According to the result, the company paid a total of N2.7 billion to service debts in 2015, same as in 2014. The loan from bank was N16 billion.
The chairman of the company, Mr Larry Ettah, stated that despite the slow-down in the luxury segment, the Nigerian 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 pointed out 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.
Commenting on the operating environment, he noted that as in almost all of Africa’s 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.
Explaining 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).
He stressed that 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.
Noting that though there are indications of over-supply in the premium market segment evidenced by high vacancy factors and declining rentals in Ikoyi, Victoria Island and Abuja, the retail sector of the market was still on a growth path.
Ettah revealed that the company continued its ongoing developments in 2015 and commenced some new ones, noting 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
N473m was passed on the group result based on a market valuation of the hotel asset in June 2015.
Providing details on the company’s plan for the future, he said “Our strategy for 2016 and beyond includes deleveraging the business through equity capital injection by way of Rights Issue, sell down of surplus stake in the REIT and disposal of low-performing assets, as well as leveraging on partnerships and alliances that are in sync with the company’s long term goals.”