Uhreit) quarter 5 financial statement for 2024

UH REAL ESTATE INVESTMENT TRUST

(formerly)

UNION HOMES REAL ESTATE INVESTMENT TRUST

REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024

UH REAL ESTATE INVESTMENT TRUST

(formerly)

UNION HOMES REAL ESTATE INVESTMENT TRUST

REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024

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UH REAL ESTATE INVESTMENT TRUST

(formerly)

UNION HOMES REAL ESTATE INVESTMENT TRUST FUND MANAGER, PROFESSIONAL ADVISERS ETC

Directors of the Fund Manager:

Fund Manager: Trustee to the Fund: Custodian: Registrar: Independent Auditors:

SFS Capital Nigeria Limited, Plot 287, Ajose Adeogun, Victoria Island,

Lagos.

United Capital Trustees Limited, 3rd & 4th Floor, Afriland Towers, 97/105, Broad Street,

Lagos.

UBA Global Investor Services, UBA House (11th Floor),

57, Marina, Lagos.

Greenwich Registrars & Data Solution, 274, Murtala Muhammed Way, Alogomeji, Yaba,

Lagos.

Baker Tilly Nigeria, (Chartered Accountants),

Kresta Laurel Complex (4th Floor), 376, Ikorodu Road,

Maryland,

Lagos.

Bankers:

United Bank for Africa Plc Polaris Bank Nigeria Limited

UH REAL ESTATE INVESTMENT TRUST

(formerly)

UNION HOMES REAL ESTATE INVESTMENT TRUST

STATEMENT OF FUND MANAGER'S RESPONSIBILITIES

The responsibilities of the Manager to the Fund are as follows: -

• 1. To carry on and conduct the business of the Fund in a proper and efficient manner and in particular, to diligently carry out the purpose for which Units are issued.

• 2. To act with prudence in relation to all moneys and accounts kept for the purpose of the Fund.

• 3. To keep proper books of accounts and prepare financial statements for the Fund and therein make true and proper entries of all affairs.

• 4. To issue jointly with the Trustee, certificates evidencing the purchase of Units of the Fund.

• 5. To invest the portfolio pool in a manner consistent with the investment objective of the Fund and investment guidelines.

• 6. To pay out of the Fund all expenses incurred or to be met in connection with the management of the Fund.

• 7. To appoint, with the consent of the Trustee, the Auditor to the Fund.

• 8. To make periodic returns to the Securities and Exchange Commission as may be specified from time to time.

• 9. To periodically avail unit-holders with information relating to the performance of the Fund.

• 10. To convene Annual General Meeting of the Fund's unit-holders.

UH REAL ESTATE INVESTMENT TRUST

(formerly)

UNION HOMES REAL ESTATE INVESTMENT TRUST

REPORT OF FUND MANAGER

ECONOMIC REVIEW 2024

The domestic economy remained resilient in 2024, posting a 3.84% growth (year-on-year) in real terms in Q4 2024; as economic headwinds were met with a slew of policies aimed at steering key macroeconomic indicators back on track.

Comparison to Q4 2023 and Q3 2024, which both logged 3.46% growth is a pointer at sustained economic progression. The Services sector was a notable driver of growth in Q4 2024.

QUARTERLY GDP GROWTH (Q1 2023 - Q4 2024)

Source: National Bureau of Statistics (NBS)

ANNUAL GDP GROWTH (2020 - 2024)

CONTRIBUTION TO REAL GDP Q4 2024

CONTRIBUTION OF OIL AND NON-OIL SECTORS

NON-OIL

SECTOR

The Non-Oil sector contributed 95.4% to Nigeria's GDP in Q4 2024, marginally higher than 95.30% recorded in Q4 2023. Growth was mainly driven by Financial Services, Information and communication (Telecommunications), Agriculture (crop production), Trade, Transportation and storage (road Transport) and Manufacturing.

OIL SECTOR

The Oil sector contributed 4.60% to the GDP in Q4 2024 and expanded by 1.48% year-on-year in Q4 2024; down 10.64% compared to Q4 2023. Growth also declined by 3.70% compared to Q3 2024 (+5.17%). Over the quarter, Nigeria's oil production averaged 1.54 million barrels per day (mbpd) compared to 1.56mbpd in Q4 2023 (Q3 2024: 1.47mbpd).

INFLATION RATE % (JANUARY 2024 - DECEMBER 2024)

Source: National Bureau of Statistics (NBS), SFS Capital

Research

Like previous years, Inflation remained in the ascendancy in 2024. The Consumer Price Index (CPI) logged growth of 34.8% in December 2024, compared to a 12-month low of 32.15%. Food inflation remained a key driver of inflation in 2024, accompanied by Housing, Water, Electricity Gas & Other Fuel as well as Clothing and footwear. Pricey imports due to unfavorable exchange rates and weak FX policies also remained a major inflation driver in 2024.

I&E FX WINDOW

In 2024, bearish pressure kept the naira on the back foot against the dollar. Having commenced the year at an official rate of N914.43/$, rates rallied against the naira to close Q1 at N1,330,76/$. Q2 and Q3 2024 closed even higher at N1,470.69 and N1,601.59 respectively; while the year eventually ended with an exchange rate of N1,535,82 as per data from the CBN. The CBN pressed on with efforts to manage the exchange rate in 2024. While the CBN had sold dollars to authorised BDCs over the course of the year, the CBN granted temporary access to the NFEM window to BDCs; to purchase dollars from authorized dealers, subject to a weekly cap of $25,000 in December 2024. These trades were subject to 1% maximum spread. The CBN also stressed the continued availability of PTA and BTA from banks at the NFEM rate. Given the position of the exchange rate, efforts of the CBN are paying off to bring about availability and stability of FX.

BRENT PRICE, OIL PRODUCTION & NIGERIA'S FX RESERVES (January 2024 - December 2024)

1,4855mbpd

$74.72

$40.88bn

Source: Central Bank of Nigeria, OPEC, SFS Capital Research

Oil Production - in thousands of barrels per day

FX Reserves - US$ Billion (bn)

Oil Price - Brent Crude US$ per barrel

Although Brent crude closed at $79.12 per barrel (pb) in December 2023, it had surpassed $90pb by April 2024. However, it commenced a gradual descent that saw it dip to $76.05pb by the end of Q3 2024 and it ended the year at $74.72pb. The price of Bonny Light, Nigeria's oil variant dipped to $76.21pb in June 2024, and further to $72.44pb in September 2024 but still ended the year above $74pb.

Despite the dip in oil prices, FX reserves, which opened 2024 at circa. US$32.91bn had spiked to US$40.88bn by December 2024. However, there is need to further diversify FX revenues, although domestic oil production improved over the year (December 2024: 1.455mbpd, March 2024: 1.231mbpd). Agriculture- one of the more resilient sectors over time, remains a critical sector worth exploring.

MONETARY POLICY RATE % (January 2024 - December 2024)

The MPR started the year at 18.75%

The Monetary Policy Rate is the rate at which the CBN lends to other banks. The aggressive rise in H1 2024 from 18.75% to 26.25% in June 2024 tapered down in H2, with the rate ending the year at 27.5%. Thus, the other parameters as at year end were:

1.

The Asymmetric Corridor within +500/-100bps of the MPR.

• 2. The Cash Reserve Ratio of 50% for Deposit money banks and 16% for Merchant Banks.

3.

The liquidity Ratio at 30%.

Real Estate Sector Review

In 2024, the Real Estate Sector grew by 0.79% (2023:1.68%). The sector also contributed 5.45% to real GDP in 2024 compared to 5.59% in 2023, amid a cocktail of adverse macroeconomic factors like infrastructural deficit, currency depreciation and rising construction costs. Nigeria's infrastructure deficit requires circa. $3trillion over the next 30 years to close the infrastructural gap, while construction costs are continuously ballooned by rising import costs. Though waning economic performance has led to unfavorable business conditions and a decline in FDI which has curtailed the availability of capital for real estate and construction projects, estimates still put the value of the Nigerian Real Estate Market at about $2.14trillion in 2024, with residential real estate accounting for $1.77trillion.

Cities like Lagos, Abuja and Port Harcourt remained the prime markets in the Real Estate space in 2024. Representing the South-West, North-Central and South-South geopolitical zones respectively, these areas have evolved into a mix of residential and commercial structures that continually attract investment both locally and internationally; accented by the rapid population and industrial explosions. In mid-market areas, population growth continues to fuel demand for residential apartments. Still on the back of population growth, the supply of grade B+ retail mall developments grew in areas like Abuja.

A few notable trends evolved over the course of the year. There was higher demand for affordable housing, particularly in the noted cities due to the population boom. Hence, increased investments in low and middle-income housing projects with support from public private partnerships and government initiatives. Smart cities and sustainable projects remained at the fore, evidenced in Eko Atlantic (Lagos) and Centenary City (Abuja) where technology has seamlessly dovetailed with sustainability in Urban planning. Proptech solutions like virtual tours, online marketplaces and block-chain transactions have all facilitated real estate transactions in 2024, alongside integration of Artificial Intelligence (AI) and big data. With the introduction of remote and hybrid working arrangements, underutilized commercial properties are being converted into coworking hubs and joint workspaces. In addition, mixed use developments have become more prominent, combining residential, commercial and recreational spaces to meet lifestyle-oriented living.

The Government is involved in alleviating the existing infrastructure deficit. In the 2024 budget, N2.25tn was allocated to 45 ministries to provide infrastructure. The Federal Government also moved to provide 50,000 houses under its Renewed Hope Cities Agenda, with State Governments contributing land and labour. From a commercial and industrial perspective, the FG commissioned a 181MW geometric powerplant in Aba alongside a 188MW thermal plant. Africa Development Bank (AfDB) also commenced the disbursement of $540m for developing Special Agro-Industrial Processing Zones (SAPZs) in Nigeria, to transform rural areas into economic hubs via commercial agriculture and food processing. With Oyo, Kaduna and Cross River States set to be the early beneficiaries, 27 states would subsequently follow.

FUND PERFORMANCE

The UH Real Estate Investment Trust Fund ("UH REIT" or "the Fund") generated gross revenue of N1.28 billion in 2024 compared to N884.28 million in 2023, attributable to higher rental income, property disposal and interest income. Net Income had crossed the N1bn mark by year end to close at N1.05 billion, up 59.29% from the preceding year at N656.13 million. At N5.56, Earnings per Share in 2024 is also higher than 2023 by 59.31%, which posted at N3.49.

The REIT has a proposed dividend of N5.05 for the year ended 2024 (2023: N3.15). The Net Asset Value ("NAV") of the fund grew by 4.42% in 2024, to close the year N10.69 billion. As at year end, the share price was N36.6.

DISTRIBUTION TREND

NAV TREND

Some Properties in the UH REIT include:

• 1. Macdonald Court

• 2. Savannah Court

• 3. Contemporary Apartment

• 4. Olive Apartment

• 5. Continental Apartment

• 6. Charter Court among others

FORECAST

The Nigeria Real Estate Market is estimated to grow to $2.61tr by 2025, with residential real estate expected to account for $2.25tr, on the back of urbanization and rising demand for housing.

Housing demand is projected to grow by 8% annually to 30 million units by end of 2025, catalyzed by a 2.5% annual population growth rate and urban migration among other factors.