Home > REITs > What Is the Best REIT Exit Strategy? A Simple and Practical Guide

REITs let you get into real estate in Nigeria without buying or owning buildings, but you still need an exit strategy.

An exit strategy is simply a pre-planned way for an investor to cash out of an investment. It's the plan for how you'll sell your asset and take your profit or minimise your loss.

Think of it as your planned “way out” when you decide the time is right to end your investment.

In this simple and practical guide, you’ll learn the best REIT exit strategy for when maximising profits or minimising losses.

5 common exit strategies for REIT investors

Below are the most common, practical REIT exit strategies with examples and what to watch for before selling or exiting the market:

• Selling on the exchange

• Dividend capture

• Partial selling

• Targeted exiting on fundamental change

• Tactical exiting during macro shifts.

1. Selling on the exchange (market exit)

This is the simplest exit strategy.

It entails selling your REIT units on the Nigerian Exchange (NGX) when the price hits your target. It is quick (if the stock is actively traded) and lets you secure your profits or limit your losses.

Example:

Imagine you bought 10,000 units of a REIT at N10 per unit. Your target is to sell when the price reaches N15 per unit. When the REIT unit price climbs to N15, you place a “sell” order on the Nigerian Exchange (NGX) for your 10,000 units. If the stock is actively traded, the sale will execute quickly, and you’ll secure a profit of N5 per unit (N15 - N10), totalling N50,000 (before brokerage fees).

Case study

Consider the UPDC REIT’s 2023 performance. The REIT unit price moved from N3 to N6.4. This is an exceptional 113.33% increase, which is a huge capital appreciation.

So, if you bought 10,000 units of the REIT at N3, you would have sold or exited the market when the price rose to N6.4 to enjoy your profit of N34,000.

Here’s the calculation:

Visual Content: The Calculation

• Purchase: 10,000 units at N3/unit = N30,000 cost.

• Sale: 10,000 units at N6.4/unit = N64,000 proceeds.

• Profit: N64,000 - N30,000 = N34,000 profit.

The UPDC’s strong 2023 performance shows how price movements can create good opportunities to exit or sell off an investment. This is why selling on the exchange is the easiest exit strategy.

Due diligence

Before selling or exiting the market:

• Watch out for low trading volumes (illiquidity), which means it's hard to sell quickly or get a good price.

• Check recent turnover before you place a big sell order.

See: How to buy REITs on NGX.

2. Dividend capture/Holding through distribution (income exit)

Some investors hold their REIT units just long enough to receive their dividends and then sell shortly after.

This means that they don’t sell their units until they have collected their dividends. This exit strategy is useful if you want to take your profits before exiting.

Example:

You buy 10,000 units of a REIT in January. If the REIT pays dividends every quarter (March, June, September, December), you wait until you receive your first dividend payment in March. Immediately after the dividend is paid into your account, you sell all 10,000 units.

In this example, you used the “buy just before the dividend, sell immediately after” strategy to collect your profit (the dividend) before exiting her investment.

Case study

SFS REIT usually offers good dividend yields. In 2025, it declared a dividend of N21.5 per unit (with a unit selling at N206), according to a Business Day report. This is the highest dividend distributed in the Fund's history.

For an investor using the dividend capture exit strategy, this record-breaking N21.5 dividend means two main things:

1. Massive potential reward

You stand to make a very large profit (N21.5 per unit/share = N215,000) if the strategy works. This huge dividend is exactly what makes the short-term trade much more appealing.

You stand to make a large profit using this exit strategy if it. That’s an estimated profit of N21.5 per unit/share. So, if you bought 10,000 units, the total profit can hit N215,000.

That massive return is what makes this short-term trade so appealing. A quick, substantial payout like this easily beats just waiting around for long-term growth. The chance for such fast capital appreciation makes this short-term move an exciting option for anyone focused on boosting their immediate returns.

2. Much higher risk

Because the dividend is so huge, the REIT's price is likely to drop significantly and very quickly right after the "go-date" (the ex-dividend date). For your strategy to succeed, you have to sell your units for nearly the same price you bought them (N206), even if their value drops by N21.5 first.

This means the dividend stock price will be very volatile, and there's a greater chance the price will fall more than N21.5. If that happens, it can wipe out your profit and cause you to actually lose money.

So, while the potential payout of this exit strategy is huge, the price drop and market scramble to sell afterwards make it much riskier than usual.

Due diligence

Before selling or exiting the market:

• Check if the unit or share price drops after the dividend is paid.

• Watch out for transaction costs and taxes as they can eat into your yield.

• Learn about the REIT’s dividend payment schedule (monthly, quarterly, semi-annually, or annually) before you plan this move.

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3. Partial selling/rebalancing (gradual exit)

This strategy allows you to gradually exit the investment.

So, instead of selling everything at once, you can sell part of your shares to make a profit and still hold onto the rest of your shares for potential future gains or growth.

This reduces regret and the risk of poor timing.

Example:

Imagine you own 10,000 shares of REIT Company X, which you bought at N10 per share (at N100,000). And then the stock price now rises to N30 per share.

Now, instead of selling all 10,000 shares at N30 (a lump-sum exit), you can use a gradual exit strategy:

1. Sell 2,500 shares (25%) now at N30 to regain your initial investment for those shares (N25,000) and make a profit (N50,000).

2. Hold the remaining 7,500 shares (75%) to benefit more (if the stock continues to rise), or to sell later (if you need the capital).

Here’s the calculation in the example of the gradual exit strategy:

• Initial investment for the 2,500 shares: 2,500 shares x N10/share = N25,000

• Proceeds from selling 2,500 shares: 2,500 shares x N30/share = N75,000

• Profit: N75,000 (proceeds) - N25,000 (initial investment) = N50,000.

So, selling 2,500 shares at N30 results in a N50,000 profit and also regains the N25,000 initial investment for those specific shares.

By using this gradual exit strategy, you

• Get your profit right away

• Lower your risk, and

• Still get to benefit from potential future appreciation or stock growth.

This way, you don’t have to regret selling at all when the stock price continues to rise, since you’ll still have 75% of your shares.

Due diligence

Before selling or exiting the market, set clear rules (percentage shares to sell or target price), so that emotion doesn’t drive your decisions.

4. Targeted exiting on fundamental change (event-driven exit)

This strategy lets you exit when the REIT’s fundamentals start to change or go downhill. Think factors such as:

• Falling occupancy or empty buildings

• Losing major tenants

• High leverage or having too much debt

• Poor management.

Here, your exit is defensive. You're selling to protect against the value dropping later.

Example:

Imagine you own shares in InnerCity REIT, which focuses on office buildings. For a few years, InnerCity REIT has had a 98% occupancy rate and low debt. You bought the shares when the price was N20. Then, you notice some changes:

• Their largest tenant, a major tech company, announces they’re moving all their operations to another state/country.

• The REIT's latest financial report shows the overall occupancy is now expected to fall to 85% from 98%.

• The CEO (part of the “poor management” factor) makes a public comment dismissing the loss, which worries investors.

Even though the share price is still N20, this is a sign that the company’s fundamentals are starting to go downhill. Your defensive exit is to sell your shares now at N20 to protect your profit and prevent a potential drop to N15 or even lower once the full effect of the changes hits.

Remember: The goal of this defensive exit is not to maximise profit but to preserve capital and prevent a larger loss, which the market is likely to have soon.

Due diligence

Before selling or exiting the market:

• Consider that short-term headlines can be noisy.

• Confirm your information with official quarterly reports before you act.

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5. Tactical exiting during macro shifts (market exit timing)

Sometimes you have to exit because large-scale factors change. Examples of such changes include:

• When the Central Bank of Nigeria (CBN) suddenly raises its key interest rates

• When the currency’s value experiences extreme and unpredictable fluctuations

• When it’s difficult for investors to buy or sell their shares quickly without significantly affecting the price.

REITs are susceptible to these major factors, according to a Scientific African study. So, changes in government policy, particularly those affecting interest rates or economic growth, can significantly impact the value of your REIT shares.

When this happens, it might be time for you to consider selling.

Example:

Imagine you own shares in a Real Estate Investment Trust (REIT) in Nigeria. Then the CBN suddenly raises its key interest rate from 15% to 20%.

When that happens, here’s the possible impact:

1. Borrowing becomes more expensive: The REIT relies on loans to buy and develop properties. With higher interest rates, its borrowing costs will be more expensive.

2. Reduced profits: Higher borrowing costs eat into the REIT's profits, meaning less money is available to pay shareholders (you).

3. Alternative investments become attractive: Higher interest rates mean that safer investments, like government bonds or fixed deposits, now offer much higher returns. Investors start selling their REIT shares (which are riskier) to buy these safer, high-yield options.

4. Stock price drops: When there's more selling, your REIT shares typically drop in value.

With the macro-factor change (CBN hiking interest rates), the REIT will be less attractive and less profitable. So, this might be a good time to sell your shares to cut your losses or find other assets to invest in.

Due diligence

Before selling or exiting the market:

• Consider selling when your REIT is doing super well, such as after buying major assets or achieving excellent occupancy rates.

• Check the overall market and ensure interest rates are low, and that the real estate sector relevant to your REIT is in high demand.

Keep an eye out for changes in regulations or tax laws, since those can affect how appealing your REIT is to buyers and how much you'll get for it.

Bottom line

A good REIT exit strategy balances profit-taking with ongoing income needs. Choose the best strategy, like selling on exchange, capturing dividends, rebalancing, exiting on fundamentals, or acting on macro shifts. Then do your due diligence. Without these, you might never maximise returns and minimise loss.

REIT exit strategy FAQs

How long should you hold onto a REIT?

Hold a REIT for at least 3–5 years if you want steady income and growth. Sell sooner only if you need cash. Ultimately, determine how long to hold onto your REIT based on financial goals, dividends, and fundamentals.

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