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5) How does the Skye Shelter Fund generate profits?

REITS derives profits primarily through income (rents, interest) and disposal of properties. The Fund does not generate income from additional services e.g. property management as this is outsourced.

6) Who invests in REITs?

REITs are attractive to a wide-range of investors through provision of high levels of current income, potential for moderate long term capital appreciation and diversification benefits.

Typical investors are:

  • Pension Funds

  • Endowment Funds and Foundations

  • Insurance Companies

  • Bank Trust Units

  • Mutual Funds

  • Individual Investors

The ₦3 interim dividend in 2010 by the Skye Shelter Fund would imply that the Fund has declared a dividend for 3 years. The Fund manager expects the share to qualify for investment by Pension Fund Administrators (PFAs) with the declaration and payment of the third dividend.

7) What benefits do investors gain from investing in REITs?

Cash flow: Consistent and predictable cash flow generated from rents paid, real estate sold and income from fixed income investments (dividend of N4.65k in 2008 and proposes N7.00k in 2009);

Inflation hedging: Real estate tends to act as an ideal hedge against inflation, increasing in value at a rate faster than inflation over the long term;

Capital Appreciation: The listed share of Skye Shelter Fund can appreciate in price. It is also less volatile than traditional equities.

Portfolio diversification: Real Estate produces returns which behave differently from both stocks and bonds. This low correlation of return provides an added diversification benefit when real estate is added to a multi asset portfolio.

Liquidity: Direct investment in real estate tends to be relatively illiquid. However, this dilemma is resolved by the REIT structure, which enables real estate exposure to be entered and exited freely on the floor of the Nigerian Stock Exchange.

Tax exemption: Recently the Debt Management Office of Nigeria issued a publication exempting all asset backed securities from tax. The tax exemption is expected to cover Personal Income Tax, Value Added Tax, Capital Gains Tax and Companies Income Tax.

8) Who determines the Skye Shelter Fund Investments?

The fund has a 10-man investment committee as follows:

  • 4 representatives of the Fund Manager

  • 2 Representative of the Trustee

  • 2 Independent property experts

  • 2 Independent subscribers to the fund

The function of the Investment Committee is to make investment decisions for the fund and review the status and performance of the portfolio periodically (quarterly). A sub-investment committee may be set up to more frequently to implement the decisions of the main investment committee. Summaries of minutes of the meeting of the sub-committee will be distributed to the main committee.

9) How do I invest in the Skye Shelter Fund?

You can purchase units of the Skye Shelter Fund through your stockbroker on the floor of the Nigerian Stock Exchange. You may contact the fund manager using the following details:

Skye Stockbrokers
5th Floor, Skye Bank Building
30 Marina
01-7349752, 01-7349753

SFS Financial Services Limited
287 Ajose Adeogun
Victoria Island