Mortgage REITs in Nigeria: The Complete Investor’s Guide (2025)
by Bright Ugochukwu
Last Updated: May 7, 2025
Ready to make money from real estate without buying property? Discover Mortgage REITs in Nigeria!
Think real estate investing is only for millionaires?
Think AGAIN.
With Mortgage Real Estate Investment Trusts (mREITs), you can invest in real estate, earn high dividends, and skip the stress of managing property.
This guide breaks it all down, including:
- What Are Mortgage REITs?
- How Nigeria mREITs Work
- Mortgage REITs Benefits
- Risks & Challenges
- Investing in Mortgage REITs
- Mortgage REITs to Watch Out For
- Are Mortgage REITs Right for You?
With these, you can confidently invest in mortgage REITs in Nigeria in 2025.
Let’s get started!
Key Takeaways
- Mortgage REITs (mREITs) invest in mortgage loans and earn through interest income.
- They differ from equity REITs by focusing on debt, not property ownership.
- In Nigeria, mREITs are emerging, with regulatory backing from the SEC.
- Investors benefit from high dividend yields (8–15%) and lower capital requirements.
- Risks include interest rate volatility, default risk, and limited liquidity.
- Ideal for income-focused investors looking to diversify beyond physical real estate.
- You can invest via SEC-approved REITs and licensed brokers on the NGX.
What Are Mortgage REITs?
Definition of Mortgage REITs (mREITs)
Mortgage Real Estate Investment Trusts (mREITs) are companies that invest in real estate debt.
Unlike equity REITs that own and manage physical properties, mREITs lend money to homebuyers and property developers through mortgage loans or buy existing mortgage-backed securities (MBS).
mREITs earn income mainly from the interest paid on those loans or securities. They are required by law to pay out up to 90% of their income as dividends, making them attractive to income-focused investors.
How They Differ from Equity REITs
Key distinctions in asset focus (loans vs. properties)
- Mortgage REITs: Invest in loans and mortgage-backed securities.
- Equity REITs: Invest in physical real estate like shopping malls or apartments.
| Feature | Mortgage REITs (mREITs) | Equity REITs |
|---|---|---|
| Asset Type | Mortgage loans, MBS | Physical properties |
| Revenue Source | Interest income | Rental income, property sales |
| Interest Rate Sensitivity | High | Moderate |
| Dividend Yield Potential | Typically higher (8-15%) | Moderate (5-10%) |
| Risk Profile | High volatility | More stable |
Table 1: A comparison table outlining the differences between Mortgage REITs and Equity REITs.
Risk-return profiles compared
- mREITs tend to offer higher dividend yields but also carry higher interest rate risk.
- Equity REITs often offer capital appreciation in addition to dividends, but may pay lower yields.
Pro Tip: Understanding the core difference between equity and mortgage REITs helps you avoid costly confusion — mREITs don’t buy properties, they fund them.
How Mortgage REITs Work in Nigeria
The Nigerian mREIT Ecosystem
Regulatory framework (SEC guidelines, listing requirements)
The Securities and Exchange Commission (SEC) regulates all REITs in Nigeria.
For a company to qualify as a REIT, it must:
- Be registered with the SEC
- Be listed on the Nigerian Exchange (NGX)
- Distribute at least 90% of its income as dividends
Major players (e.g., UPDC REIT, others?)
- UPDC REIT is Nigeria’s leading listed REIT. Though it operates mainly as an equity REIT, it provides insight into how REITs function locally.
- Union Homes REIT and SFS REIT are other notable players.
We expect new players focused on mortgage-backed securities to emerge as housing demand and fintech lending rise.
Revenue Model
Interest income from mortgage loans
The core revenue for mREITs is interest income earned from:
- Residential mortgages
- Commercial property loans
- Construction finance
This income is passed on to investors as dividends.
Securitization of housing debt
mREITs can also package mortgage loans into mortgage-backed securities (MBS) and sell them to other investors.
This creates liquidity and more investment opportunities in the housing market.
Pro Tip: mREITs may not offer ownership of physical assets, but their strong dividend yields and inflation protection make them worth a second look.
Benefits of Investing in Nigerian Mortgage REITs
High Dividend Yields (8–15% range)
In a low-yield environment, mREITs stand out.
Investors can earn 8% to 15% annual dividends, significantly higher than savings accounts or bonds. That’s passive income without owning a single property.
Lower Capital Requirements vs. Direct Real Estate
Buying a house in Lagos? You’ll need tens of millions.
But with mREITs, you can start investing with as little as ₦10,000 to ₦50,000, depending on the REIT. It’s real estate investing for everyone.
Hedge Against Inflation
As inflation rises, property values and rents often go up.
Mortgage rates also rise, boosting mREIT returns. This makes mortgage REITs a potential inflation hedge in Nigeria’s volatile economy.
Pro Tip: Look for mREITs that have a consistent dividend payout history. High yields are great, but stability is key to long-term income.
Risks & Challenges of mREITs
Interest Rate Sensitivity
mREITs are very sensitive to interest rates. When rates rise, borrowing becomes costlier and MBS values drop, which can hurt returns.
Liquidity Risks in Nigeria’s Market
Nigeria’s capital market is not as liquid as others. It may be hard to quickly sell your REIT shares, especially if they’re thinly traded.
Default Risks in Mortgage Portfolios
High mortgage defaults in Nigeria can reduce interest income and affect dividend payouts. This is a key concern in a country where informal income and job insecurity are common.
Investor Insight: When interest rates rise, mREITs often fall. Timing your entry during rate cuts or stable periods can protect your capital.
How to Invest in Mortgage REITs in Nigeria
Step 1: Choose a Licensed mREIT (SEC-approved)
Only invest in REITs registered with the SEC. Visit the SEC Nigeria website or NGX to verify the REIT’s license and track record.
Step 2: Open a Brokerage Account
To buy REIT shares, you’ll need a stock brokerage account.
Top options in Nigeria include:
- Meristem Securities
- ARM Securities
- Stanbic IBTC Stockbrokers
Step 3: Minimum Investment and Fees
Each REIT sets its minimum investment. Most range from ₦10,000 to ₦50,000.
Also, consider:
- Brokerage fees
- Management fees
- Custodian charges
These affect your net return, so choose wisely.
| REIT Name | Focus Area | Dividend Yield (2024) | NAV Growth | Listed on NGX |
|---|---|---|---|---|
| UPDC REIT | Comm./Residential | ~8% | Low | Yes |
| Union Homes REIT | Mortg./Residential | ~13% | Moderate | Yes |
| SFS REIT | Mixed Portfolio | ~10% | Moderate | Yes |
Table 2: A comparison table of REITs’ performance in 2024.
Pro Tip: Always verify a REIT’s registration on the SEC Nigeria portal before investing. Avoid unregulated schemes.
Top Mortgage REITs to Watch in 2025
Performance comparison (dividends, NAV growth)
- UPDC REIT: Dividend yield around 8.16% (as of Nov, 2024), but potential for improvement if it expands into mortgage assets.
- SFS REIT: Offers a more diversified portfolio, including fixed-income assets.
While not strictly mortgage REITs, these offer exposure to Nigeria’s real estate market and provide a benchmark for future mREIT performance.
| Broker/REIT Name | Minimum Investment | Management Fee | Dividend Payout Frequency |
|---|---|---|---|
| UPDC REIT (via ARM) | ₦5,000 | 1-2% annually | Quarterly |
| SFS REIT (via SFS) | ₦100 | 1.5% annually | Annually |
| Union Homes REIT | 1,000 Units | 2% annually | Quarterly |
Table 3: Showing minimum investment amounts and typical fee structures.
Pro Tip: Don’t just chase yield. Review the REIT’s underlying mortgage quality and sector exposure—affordable housing REITs may offer better long-term growth.
Emerging opportunities in affordable housing
With Nigeria’s 22 million housing deficit, there’s growing demand for affordable housing. REITs investing in mortgages tied to low-cost housing could see strong growth.
Watch out for fintech startups and housing funds entering the mREIT space in 2025.
Final Verdict: Are Mortgage REITs Right for You?
Ideal Investor Profile
Mortgage REITs are ideal for:
- Low-capital investors
- Income-focused investors
- Real estate enthusiasts seeking passive income
If you want high dividends without buying or managing property, mREITs are for you.
Alternatives to Consider
Not sure about mREITs?
Consider:
- Equity REITs (like UPDC REIT)
- Real estate mutual funds
- Direct property investing (if you have the capital)
Always diversify your portfolio.
Quick Take: mREITs suit income-focused investors who understand interest rate risks. If you prefer property ownership or capital appreciation, consider equity REITs instead.
Final Thoughts
Mortgage REITs in Nigeria offer a smart way to earn passive income, hedge against inflation, and gain exposure to the booming real estate market without owning property.
As more players enter the Nigerian mREIT space, investors have a golden chance to profit early.
Start small. Stay consistent. Reap the rewards.
FAQs on mREITs
Are there REITs in Nigeria?
Yes, Nigeria has REITs, including UPDC REIT, Union Homes REIT, and SFS REIT. While most are currently equity REITs, there is growing interest in mortgage REITs as the housing finance sector evolves.
Where can I buy REITs?
You can buy REITs in Nigeria through licensed stockbrokers on the Nigerian Exchange (NGX). To get started, open a brokerage account with firms like Meristem Securities, ARM Securities, or Stanbic IBTC Stockbrokers.
Can you lose money in REITs?
Yes, you can. Risks include rising interest rates, mortgage defaults, and liquidity issues. As with any investment, returns are not guaranteed, and capital loss is possible.
Can REITs invest in mortgages?
Yes. Mortgage REITs (mREITs) specifically invest in mortgage loans and mortgage-backed securities, earning revenue from interest payments.
How often do REITs pay dividends?
REITs in Nigeria typically pay dividends quarterly or annually, depending on the REIT’s structure. By law, they must distribute at least 90% of their taxable income to shareholders.
What are the largest mortgage REITs?
In Nigeria, most REITs currently focus on equity. However, globally, major mortgage REITs include Annaly Capital Management and AGNC Investment Corp. Locally, the market for pure mortgage REITs is still emerging.
