PROPERTY TRANSACTION GUIDE

Jubilee-Life Foresees Bright Future For Mortgage Sector Amid Recapitalisation Drive
By Michael Simire, Houses & Homes Editor

Independent, Monday, 19th Jan 2009

"The Board has carried out a strategic review of the mortgage sector in Nigeria and arrived at the conclusion that the future outlook of mortgage business in Nigeria is very bright and promising."

Those were the somewhat optimistic words of the Chairman of Jubilee-Life Savings & Loans Limited (JLSLL), Felix Ohiwerei, last week in Lagos during the Primary Mortgage Institution's (PMI) fourth Annual General Meeting (AGM).

According to the veteran entrepreneur, demographic trends show that the mortgage business would continue to play a pivotal role in the country's economy, the current global economic meltdown notwithstanding.

"We expect that in major cities of Nigeria the ratio of people desiring to own their homes will continue to rise. "This will intensify the need for housing products and other related services," he said.

Ohiwerei lamented that Nigeria was already being affected by the meltdown, but stressed that certain sectors - like mortgage financing - that have the potential to do well would likely remain unscratched. He attributed this to the growing consumers' need for housing.

"The key to success is to make sure that what you can market is within the reach of the consumer," he stressed, adding that in this regard, the firm had units for the low, middle and high-income categories of the society.

He added: "In these hard times, some sectors of the economy, with the right entrepreneurship, can do well. The mortgage sector is one. The home ownership level is low, the potential is great. As the economy picks up, there will be great demand for housing. "Lagos, for example, is bursting at its seam. But we should continue to deliver good quality product, go for the best contractors and ensure that what we have is what the consumer can afford."

In the bid to address its seemingly low capital base (that currently stands at N148 million), which has apparently made the firm unable to invest in long-term growth, JLSLL has launched a campaign to shore up its financial might to N6 billion, courtesy of a hybrid offer.

Under the endeavour, the PMI is offering to selected investors 2,880,000,000 ordinary shares of 50 kobo per share and right issue of N2,315,789,474 ordinary shares of 50 kobo per share.

Similarly, the firm is offering, besides a bonus issue in proportion of one new share for every two shares currently held, a dividend of 15 kobo for every N100 share held by shareholders as at the end of April 2008.

The firm made a profit before tax of N149.3 million, representing a 176 per cent increase over the figure reported for last year. Gross earnings increased by 195 per cent over the figure for the previous year to hit N399 million, added Ohiwerei.

"Total deposit grew by 138 per cent to N1.4 billion while shareholders fund rose to N285 million, showing 76 per cent growth over the figure recorded in the last financial year. Earnings per share rose from 44 kobo, representing a 125 per cent increase."

He went further: "It is noteworthy that at a time when equity markets remained bearish, the company has continued to deliver adequate returns on shareholders' investment, as a an investment of N100,000 in Jubilee-Life in 2003 is now worth N363,750. This is a compounded annual growth rate of 364 per cent over the last five years exclusive of current dividend payable.

"In the last two years we have recorded impressive growth of our core mortgage business. There are indications that this trend will continue in the next financial year."

Explaining that the firm operates from five branches in Lagos, Ibadan and Abuja, the JLSLL boss listed its housing schemes to included 'King's Court' in Shasha in Lagos (200 flats, selling for N10 million per flat), 'Noah's Pavilion' in Mowe in Ogun State (where about 420 bungalows are scheduled for delivery by June 2009), 'Goshen Estate' in Ibadan in Oyo State (78 units of varying house types), 'Dominium Cottage' in Ibadan in Oyo State (four duplex units in two blocks, already sold out), 'Shalom Royal garden' in Ibafo in Ogun State (a high-brow of 150 units of varying house types targeting Nigerians in the Diaspora, still at the design stages, but to be developed jointly with Messrs. Basap International Ventures Limited) and 'His Grace Pavilion' in Abuja (252 units of varying house types).

Managing Director, Wale Osisanya, who said the 22-bungalow 'Victory Court' in Benin City in Edo State is likewise ongoing, stressed that the effects of the economic problem were emerging.

He said: "Those buying the product are not as many as before, but there is the tendency that the effect of not buying has not been too noticeable. However, the good news is that there is always a thriving market for real estate in Nigeria because of the potential demand, no matter the level of meltdown."

On financing, he added that the PMI is considering the idea of offshore funding. "Profit reinvestment, deposits through projects and shareholders' funds remain the surest and best way of financing," he insisted.

Osisanya expressed concern over the fact that the Federal Mortgage Bank of Nigeria (FMBN) - the apex mortgage institution - currently has no board of directors in place. He called on the authorities to speedily address this anomaly in the light of the importance of housing. He called on government to take a second look at the N5 million National Housing Fund (NHF) loan ceiling for contributors.

Also, Head of Treasury/Business Development, Shem Oluwagbayi, called on government to put in place the enabling environment in the housing sector for all cadres of stakeholders to successfully operate.

Incorporated in 1992, JLSLL used to be known as Gilt-bond Mortgage Finance Limited.