• Targets 90% Real Estate Investment

Sun Trust Savings and Loans Limited is set to raise N20 billion from the capital market through a hybrid placement. About 90 percent of the proceed from the Sun Trust Hybrid Real Estate Investment Trust Scheme (REITS) offer is expected to be invested largely in real estate and mortgage assets while 10 percent is to be channelled into quality money market instruments.

Speaking in Abuja at the Completion Board meeting, Managing Director, Lotus Capital- the Fund Manager to the Sun Trust REITS, Hajara Adeola said at the conclusion of the current offer, a total of N72 billion worth of REITS would be channelled towards addressing the present housing deficit estimated at over 16 million housing units. She said the issue would be listed on the Nigerian Stock Exchange to provide liquidity for investors.

Meanwhile, Managing Director, Sun Trust, Mr. Muhammad Jibrin, said the offer seeks to take advantage of the investment opportunities in the real estate and mortgage sector of the country and avail investors the opportunity to gain access to strong returns from the thriving mortgage market. However, Adeola said approval for the tax exemption of the N20 billion Suntrust REITS had been obtained from the Federal inland and Revenue Service (FIRS), in accordance with the provisions of the prevailing tax laws.

By implication, the tax exempt status of the REITS offers investors additional returns on investment considering the fact that most dividends are subject to withholding tax of 10 per cent. She said: “We are happy to inform you that the N20billion Suntrust REITS qualify as securities in which Pension Fund Administrators and Trustees may invest under the Pensions Reform Act and Trustee Investment Act, Cap T22, LFN, 2004 respectively.”

Jubrin said; “What we are trying to do here today is coming up with an instrument that has been wanted for a long time in the economy to get the housing market going. All of us here are aware that there are challenges facing the housing sector in the country. It is one of the most underdeveloped sectors in terms of focusing by investors. Everybody knows that the entire economy has lost a lot of money since the 2008 financial crisis, we are also aware that we have taken our own beat here in this part of the country.

“We believe that this is the right time for us to come out with alternative assets class to provide investors with the opportunity to invest in the real estate sector and at the same time give them opportunity of a common stock owner. It is only through the issuance of instruments like the real estate investment trust scheme which we are trying to do now that REIT provides people with that kind of opportunity”.

He added that the offer was a closed –ended unit trust scheme which aims to achieve long-term capital appreciation of assets by investing in a portfolio of high-quality real estate and mortgage assets.

ThisDay Vol. 17, no. 6133, Money Guide –Tuesday, February 7, 2012