Our CEO Femi Awofala was a Speaker at the The Nigeria Real Estate Summit and Expo (NIRESE),Nigeria’s premier real estate event, gathers the most influential players from all sectors of the Nigerian property industry for two days of networking, learning and transaction through premium events, conferences and dedicated exhibition zones. The Presentation Topic: Long Term Financing Strategies For Real Estate Developments in Nigeria Venue: Federal Palace Hotel, Victoria Island-Lagos Date: August 24, 2018
The presentation key points are summarized below
Long Term Financing Strategies For Real Estate Companies in Nigeria
Financing is a very important part of every business and is the life blood of every Real Estate business.
- The common sources of financing for Real Estate Companies (not development) are capital that is generated by the firm itself and sometimes, it is capital from external funders, which is usually obtained after issuance of new debt and equity as well as spontaneous financing ( i.e Pre-Sales)
- A firm’s management is responsible for matching the long-term or short-term financing mix. This mix is applicable to the assets that are to be financed as closely as possible, regarding timing and cash flows
- Real Estate Development firms often need financing for construction of real estate projects. Many often depend on the term “PRE-SALES”….but this always creates a hole for equity needed to play its role.
- Even when land has been included as Equity in a project, there has been a shift of the Capital Structure is RE projects moving from 70:30 Debt to Equity ratio to almost 55:45 ratio, as the general investors become more risk adverse.
- As the Economy gets tougher and markets get tighter there is a need to look beyond spontaneous financing in terms of “PRE-SALES” and attract core long term finance into REAL ESTATE companies.