Trust bemoans lack of property funding
Inner city property funder the Trust for Urban Housing Finance (TUHF) has lamented the lack of funds available for black entrepreneurs seeking to enter the property sector, saying this was a lost opportunity.
Since the company launched in 2003, TUHF has raised almost R5bn for entrepreneurs, 65% of whom were black. TUHF’s loan book has grown an average 13% annually for six years and is about R2.5bn.
“No development finance institutions have programmes or budgets in place and they will not allocate money to empower black property practitioners at an entry level and beyond,” said TUHF CEO Paul Jackson.
The only money TUHF had managed to raise from the government was R75m from the Jobs Fund. It took three years to acquire this sum.
Large listed property companies such as Rebosis Property Fund and Delta Property Fund had grown through private funding, he said.
TUHF had created the Intuthuko Equity Fund in 2007 to help the previously disadvantaged to obtain deposits and other initial funding needed to launch housing and other property projects worth R30m or less, thereby helping to redevelop the inner city and alleviate housing problems.
These people would also go through induction programmes and receive operations support.
“Empowerment funding for black property practitioners needs to be a government programme. It’s a public good. We have approached every development finance institution in the country and received no support,” Jackson said.
TUHF’s core business was to raise bridging and mortgage finance from capital markets for its clients. It would raise these funds via asset managers including Futuregrowth, Sanlam, Stanlib, the Public Investment Corporation, Ashburton and Mergence.
TUHF normally raised about 70% of the finance needed for each project and the client raised the balance from banks.
TUHF’s clients tended to be small to large clients who develop four to 4,000 units.
“These include UTF or Jozi Housing on the large side and many smaller clients around the few hundred unit down to people who own one or two buildings,” Jackson said.
UTF and Jozi Housing are both TUHF clients that own numerous flats and shops.
But Jackson said potential entrepreneurs and low earners had often been turned down for private funding by banks.
They usually approached TUHF and wanted to build multi-unit developments where they recognised demand. Such entrepreneurs needed funding,” he said.
“These are people who may want to build 30 or 50 units. They can tell where these developments would work and understand how to tenant them but they don’t necessarily have experience in residential property.
“If SA is serious about empowerment and about including more people in the country’s real estate market, this is where empowerment must happen,” he said.
Rory Mackey, CEO of SA Corporate Real Estate, a diversified listed property group that owns buildings in Johannesburg, said he had received funding for two buildings from the French Development Agency, a development finance institution (DFI).
There was scope for DFIs to fund housing developments, he said. “Empowerment funding from DFIs will go a long way in the inner city to promote entrepreneurs and improve livelihoods,” Mackey said.