CATEGORIES: Private Equity, REITs & Funds

Proposed Changes to Nigerian REIT Trading Framework

The Nigerian Stock Exchange (NSE) has published proposed changes to the framework regarding the trading of Real Esta​te Investment Trusts (REITs); and Closed End Funds listed on The Exchange. While there are still many other issues that need to be resolved including liquidity, we await to see the impact these proposed changes will have to the Nigerian REIT market.

The proposed changes, which will be implemented over the next three (3) quarters of 2017 are aimed at promoting transparency, disclosure, visibility and liquidity of listed REITs and Closed End Funds in our market. The changes will also make it easier for existing and potential investors to access information required to make investment decisions thereby contributing to the growth of these products in our market. ​

The proposed changes are as follows:

  • Rules: Specific rules relating to REITs and Closed End Funds are to be incorporated into the Rulebook of The Exchange.
  • Periodic Disclosure: REITs and Closed End Funds listed on The Exchange are to submit quarterly financials and audited full year financial statements to The Exchange via the NSE X-Issuer Portal. The financials will be accessible to the pubic via the NSE’s website and other NSE platforms.
  • Key Performance Metrics: REITs and Closed End Funds listed on The Exchange are to submit on a weekly basis, key performance metrics (as applicable) to the NSE which will be accessible via the NSE’s website. In addition, the Fund Managers will be required to post the information on their website. The information to be provided will include:
    • Net Asset Value (NAV),
    • Number of properties,
    • Property type/distribution,
    • Occupancy rates,
    • Delinquency rates on rents,
    • Average Property age,
    • any other relevant information

The prescribed submission format will be communicated to the Issuers/Fund Managers in due course.

  • Reclassification: REITs and Closed End Funds listed on The Exchange will be reclassified from the Main Board to a separate board specially created for REITs and Closed End Funds under the Equities Market.

Further to the proposed changes above, The Exchange is planning to host the first REITs Workshop before the end of the second quarter of 2017, to further engage with the relevant stakeholders within the market, on the proposed developments.

Fund Managers to the REITs and Closed End Funds are encouraged to embark on consistent marketing campaign on the developments, and provide detailed information to sensitize and educate investors about this asset class, as a viable alternative investment vehicle.

The Exchange looks forward to partnering with its esteemed issuers, investors and other stakeholders, on its course towards delivering service excellence, and a first rate capital market experience that will cement its position as “Africa’s foremost securities exchange”.

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  1. I really doubt the reasonability of the valuation of most underlying assts of the REIT. Perhaps international estate valuers are needed in the country. That may in a way add value to the sector.

    1. True, valuation is an issue that many stakeholders have raised in REIT seminars in Nigeria. For the assets in the most recent REIT (TSL), the unexpired term on the land for most of the prperties was quite low at around 30-40 years and I don’t think this was properly reflected in the valuations. Some international valuers like Broll and JLL are already active in the market. Do you think others are needed?

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