SA Affordable Housing March - April 2019 // Issue: 75 | Page 34

FINANCE MATTERS
Urban densification requires the sale of hundreds of
thousands of units which to be derived from small projects,
on a mixed-use and mixed-income basis. However, getting
‘massive-small’ off the ground requires the right support
and an enabling environment. Land reform needs more
empowerment funding for emerging black entrepreneurs,
who are making the most contribution to housing in
urban areas.
TUHF established the Intuthuko Equity Fund in 2007 that
provides support to emerging inner city property
entrepreneurs, and for the past 10 years has raised
R30-million to R50-million a year to the fund. But for there
to be a real economic impact, a certain level of density
needs to be accomplished. There needs to be integration
between government and other public and private sector
institutions in improving city performance.
TUHF, for one, has contributed immensely to affordable
housing and urban development. We have financed over
34 000 units, with a loan book valued at R3-billion servicing
every major city in South Africa. This is our specialisation,
and we will continue to support ‘ordinary South Africans,
doing extraordinary things’.
REGULATIONS GOVERNING THE MASSIVE
SMALL APPROACH
Massive small should take place with the property
development framework already in place. We believe that
people should be at the heart of urban development and
future-thinking local governments will share that sentiment.
Obstacles need to be removed for people to get projects
approved. Cities have the potential to succeed and develop
into real urban places that people can be proud of. When we
all contribute in developing our cities, this is massive small.
People are becoming more pro-active about improving their
cities. The role of government is to break down complex
policies, to create trusted frameworks for collaboration and
should also provide access to economic opportunities,
which will stimulate economic development.
IMPLEMENTING A SUCCESSFUL SOLUTION
TUHF’s core business involves raising bridging and
mortgage finance from capital markets for our clients. We
raise these funds through asset managers such as
Futuregrowth, Sanlam, the Public Investment Corporation
and Mergence, among others. We usually raise about 80%
of the finance needed for each project.
Quite often, the majority of individuals who approach us
for funding are potential entrepreneurs and low-income
earners, who have been turned down for private funding by
commercial banks. They want to build multi-unit
developments where they have recognised demand. These
are the kind of individuals that need the funding and
encouragement.
Our funding approach is based on empowering
previously disadvantaged individuals to provide affordable
residential units that are sustainable; creating decent living
spaces in our communities.
CURRENT PROJECTS IN SOUTH AFRICA
Apart from what we do at TUHF, there are a number of
inner-city players who are doing very good work, and
making a meaningful contribution to development in urban
areas. They are made up of small and large private
companies and REITs.
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MARCH - APRIL 2019
Some of the organisations include Jozi Housing, Take Shape
Property Management, Respublica and Southpoint, which
provide decent and affordable accommodation in inner-city
areas and have helped to turn them around. However,
urban development needs to be viewed as the sum of
the collective.
Ordinary South Africans in their role of private
developers, are harnessing opportunities in their streets
and neighbourhoods – whether its five units to 20 units per
individual. The collective effort of every role-player makes a
massive small difference.
MANAGING DELIVERY AND QUALITY
Our company manages the construction phase through
support provided to clients by our portfolio managers.
Becoming a property entrepreneur requires a lot of
discipline. Even though no formal real estate experience is
necessary, the individual needs to display characteristics of
success, which we measure as their commitment to
developing a project that will generate them great returns.
TUHF is a character-based lending institution. A
successful property entrepreneur displays the following
characteristics:
• Entrepreneurial qualities;
• Open minded and willing to take advice;
• Self-discipline – manages the cash flows of the property
in the interest that will benefit the property, instead of
using the cash inflow for personal use;
• Integrity – do the ‘right thing’ in terms of property
management, ensuring the property is compliant and
safe for the tenants;
• Keep your tenants happy by keeping the property clean
and well maintained;
• Demonstrates ability and willingness to pay on time;
• Commitment – doing everything in their power to ensure
the success of the deal;
• Up-to-date regarding utilities; and
• A landlord who is directly involved in the property
management even if there is an external service provider.
In addition, we expect all our clients to maintain their
buildings according to the established TUHF standards.
Therefore, property fit is a very important assessment which
ensures the size and nature of the project matches the
client’s talents and experience.
SOCIO-ECONOMIC BENEFITS OF INVOLVEMENT
We invest in urban regeneration to transform derelict
buildings into asset classes that enhance the vitality of
urban neighbourhoods, providing people with a better way
of life. Creating positive socio-economic outcomes involves
developing places where people want to live, work and play.
Through pro-active participation in the communities we
operate in, particularly the inner city in the case of TUHF, we
support jobs, skills development, true transformation –
changing the complexion of ownership and economic growth.
MORE ABOUT TUHF
TUHF has helped finance various projects in Gauteng,
Western Cape, Free State and KwaZulu-Natal. The company
has grown consistently over the past 15 years and
commercial success and development impact remain its
core drivers heading into the new financial year.
www.saaffordablehousing.co.za