Sun Trust Real Estate Investment Trust (REIT) Seeks to Raise N 20 Billion from Investors
SUN Trust Savings and Loans, an indigenous mortgage bank, licensed by the Central Bank if Nigeria to provide mortgage banking services. The company has announced plans to raise N 20 billion from the capital markets via the floating of a Real Estate Investment Trust (REIT) scheme.
A REIT is an investment vehicle that uses the pooled capital of many investors to purchase and manage real estate. REITs are traded on stock exchanges and are granted special tax considerations.
The Sun Trust Real Estate investment is a close-ended unit trust scheme that aims to achieve long term capital appreciation by investing in high quality real estate assets. The fund will be quoted on the Nigerian Stock Exchange.
400 million units will be offered to investors at N50 per unit. Chairman of Lotus Capital, the Fund Manager has stated that the fund has gotten the required regulatory approvals from Securities and Exchange Commission (SEC) in order to proceed with the offer.
Managing Director of SunTrust, Mohammed Jibrin emphasized, “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 for us to get the housing market going. All of us here are aware of the 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 2008 financial crisis. We are also aware that we have taken our own bit here in this part of the country. We believe that this is the right time for us to come out with an alternative assets class to provide investors with the opportunity to invest in the real estate sector and at same time give them opportunity of a common stock owner.
“REITs are instruments approved by SEC usually that are trust in nature and also provide a big hedge against inflation. We know that there are huge gaps in terms of the housing deficit .We know that the big challenge in setting the housing sector is lack of long term funding that can be invested into the housing sector.”