Affordable housing financing model gains traction

Posted On Saturday, 07 July 2012 12:06 Published by eProp Commercial Property News
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On behalf of its clients, Futuregrowth's Development Equity Fund, has purchased a 12.5% equity stake in Johannesburg urban renewal property group TUHF (Pty) Ltd for R25m which will boost affordable housing in Johannesburg CBD. TUHF provides commercial property finance to emerging and established entrepreneurs to purchase and refurbish affordable rental housing residential buildings in the inner cities of  Gauteng, Durban, Pietermaritzburg, Port Elizabeth and surrounding areas


James Howard“This is a marvellous SMME finance opportunity which provides an investment with high social impact,” said James Howard, a portfolio manager at Futuregrowth managing the Development Equity Fund.

“TUHF has a great business model with strong management, excellent systems and a  nine-year profitable track record,” said Howard. 

“This is contributing to the eradication of crime and grime in the area and the development of much-needed housing in sought after living areas that is affordable, clean and safe,” said Howard.

TUHF has raised R125m in equity investments. “With a properly capitalised balance sheet, we will be in a stronger position to gear this equity by raising substantial debt facilities to finance our growth,” said TUHF CEO Paul Jackson.

“TUHF is bullish about inner city investments in Johannesburg and other central City areas around SA and we are essentially investing in local economic development to restore the area,” said Jackson.

TUHF, together with investors such as Futuregrowth, envisage an increase in investment in the inner city, and the stimulation of business which will lure companies to return, thus boosting restaurant trade and ultimately encouraging further flagship stores to open too. “We foresee steady growth in the local economy and a healthy return on our investment,” said Howard.

TUHF has assisted entrepreneurs through financing and business support to purchase and refurbish 490 derelict buildings over the past nine years. The focus is on quality rather than quantity deals, to minimise the risk of bad debt. “TUHF only finances projects that are economically sustainable and that will generate sufficient income to repay the necessary loans and make a profit,” said Jackson. 

Futuregrowth is a longstanding supporter of TUHF and was the first institutional investment manager to provide them with a loan facility that has increased from R50m to R350m in a five year period. James Howard will represent Futuregrowth on the TUHF board.

The Development Equity Fund is part of Futuregrowth's suite of socially responsible investments. Other funds in the suite include the Agri-Fund, Community Property Fund, and the Infrastructure & Development Bond Fund.

Futuregrowth believes that business has a significant role to play in transformation in South Africa; a belief demonstrated by its ethical principles, empowerment philosophy and development funding in under-serviced areas over more than a decade.

Last modified on Monday, 10 March 2014 10:06

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