Real estate firm, UPDC, posts N2.65bn quarterly loss

UAC Property Development Company Plc, a Nigerian real estate firm, more than doubled its loss for the three months ended March 31, 2020, compared to the same period a year ago.

The company, a subsidiary of UAC of Nigeria Plc, recorded a loss of N2.65 billion for the quarter, up from N1.03 billion in the same period in 2019.

Its loss before tax fell to N780.68 million from N967.72 million, according to its unaudited financial statements obtained by Markets Reporters from the Nigerian Stock Exchange.

UPDC’s total assets dropped to N27.04 billion as of March 2020 from N28.94 billion in December 2019, while total liabilities rose to N27.51 billion from N26.76 billion.

The company had a negative total equity of N476 million as at March 31, 2020.

It said, “This was mainly as a result of the impairment of UPDC Real Estate Investment Trust, which had a market price of N3.15 as at March 31, 2020, as against N4.25 as at 31 December 2019.

“However the rights issue allotment has been approved on April 20, 2020, and we have therefore recorded the increase in share capital in April.”

Total equity stood at N15bn as at April 30, 2020, according to the company.

UPDC’s principal activities include the acquisition, sale, development, management and leasing of commercial and residential properties across the country.

The UPDC REIT is a close-ended real estate investment trust listed on the Nigerian Stock Exchange.

According to the company, the lockdown on movement in major states in Nigeria as a result of COVID-19 outbreak is expected to impact economic activities, including hampering site visits, which are usually required for the sale of property stock.

It said the hospitality sector had been negatively impacted by the pandemic, adding that all events and conferences booked at UPDC Hotel Limited had been either postponed or cancelled.

“In line with the presidential stay home order, we have suspended operations until the lockdown is lifted. We have also taken aggressive cost management measures at the hotel, which includes keeping essential minimum number of staff only,” it added.

UPDC was carved out of the real estate division of UACN in 1997 and subsequently, all the investment properties held by UACN were transferred to UPDC via a scheme of arrangement.

Reuters reported earlier this month that UACN planned to complete an unbundling of its majority stake in its loss-making property arm, UPDC, by July, subject to regulatory approvals, quoting its Group Managing Director, Fola Aiyesimoju.

UACN said it upped its stake to 93.9 percent in the real estate unit from 64.2 percent following a rights issue, where it converted its bridge loan to equity to conserve cash.