INVESTING IN URBAN REGENERATION
Having financed over R4bn in inner-city residential rental property development in its 13 years of existence, investors looking to buy into the upgrading of the Johannesburg inner city have frequently found their willing rands directed towards the JSE-listed Trust for Urban Housing Finance (TUHF).
The trust provides finance for inner-city mixed-use developments of which the largest component is residential, up to the value of R50m. Working with projects that range from small semi-detached houses to multi-unit buildings, TUHF focuses on funding development in run-down areas of the city, and currently holds a loan book of over 20 000 residential units.
“During the year, disbursements and approvals exceeded our targets, with disbursements at R519m (15% above target) and approvals at R800m (33% above target), however, we experienced a particularly high prepayment rate. Early prepayments constituted approximately R388m,” TUHF co-founder and CEO Paul Jackson commented at the trust’s 2016 annual results presentation.
The group last year announced a decision to issue corporate bonds into the debt capital market, with the Domestic Medium-Term Note (DMTN) Programme expected to see debt instruments being available to investors to the value of R1bn.
This will be released to the market over the next three years in tranches of R350m.
Speaking to the JSE Magazine, Jackson said at the time that the programme aimed to test the appetite of institutional funders for a unique form of mortgage-backed security.
“The advantage of a DMTN programme is that it offers asset managers a listed and investmentgrade rated debt instrument, which should appeal especially to those with mandates that do not extend to unlisted debt,” he commented.
“We expect the DMTN programme to expand our debt capital sources – moving to new financing structures, now that we have both the track record and the capacity to offer it confidently. We hope this credit-enhanced pool of assets will attract more competition for pricing and assets to reduce our cost of debt, resulting in a more competitive offering to TUHF clients,” the publication quoted him as saying.