HCadmin

Effective 1 April 2022, Cas Coovadia will fulfil the role as Chairman of TUHF Holdings’ Limited Board. Cas is a longstanding member of the board and will take over from Samson Moraba, who has ably led the board since inception.

“It has been an honour to serve on the board under Mr Moraba’s leadership,” Cas says. “We have cemented our position as a leading impact investor during his tenure, and I look forward to working with the board and management team at TUHF to build on this foundation.”

“I am pleased that Samson will remain a member of the Board,” he continues. “His reputation in the industry is impeccable and we value his continued contribution to TUHF.”

Cas is the CEO of Business Unity South Africa, former MD of Banking Association of South Africa, chairman of the National Business Initiative, and chairman of Finmark Trust. He also serves on the boards of the Centre for Development and Enterprise, Nepad Business Foundation, Wits Business School, Youth Employment Services (YES) and on the Board of Governors of the International Organisation of Employers (IOE). “Cas’s longstanding relationship with TUHF, and his wealth of knowledge and experience in the financial services sector, has always been valuable to us,” says Paul Jackson, CEO of TUHF. “He is a prominent member of the business community and as chairman, he brings further continuity to our leadership as we continue on our path for growth.”

Despite the disruption caused by COVID-19 over the last two years, TUHF has maintained its position as a leader in several inner-cities and surrounds for affordable housing finance. TUHF adopted new ways of doing business during a very challenging time and demonstrated its ability to be responsive, sensitive, caring, and inclusive in its solutions. TUHF’s board remains confident that its market niche, especially affordable housing as an asset class, has shown resilience and is likely to show significant growth.

“We remain optimistic about the future,” Cas says. “The team at TUHF have done phenomenal work through the pandemic, and their resilience and commitment to make the transition to the new normal has been immense. Now, we need to build on the success of this effort to continue making an impact in our inner cities.”

Located in Westdene, Bloemfontein, Steven Modise has refurbished and converted a badly vandalised guest house into quality accommodation for students attending the University of the Free State.

Steven acquired the building in late 2019. Located less than 2 km from the UFS campus, it was ideal for student accommodation. The refurbishment had to be completed within three months to ensure it would be available for students to move in when campus opened in February 2020. Transfer went through in mid-December 2019 and by mid-January Urban Lofts was ready to open its doors.

“The place was in really bad shape when I bought it,” Steven says. “We put in new windows and new geysers, repaired the badly damaged plumbing and electricals, retiled and painted the roof, put up new blinds and installed the necessary appliances in the kitchen.”

Urban Lofts now boasts 18 sharing units of 26 m² each, all with ensuite bathrooms. The building includes a common area of 65 m² that holds a kitchen for students to prepare meals, and offers space to eat together, watch TV, do laundry and get to know each other. “It’s also a comfortable space for entertaining family and friends,” Steven says, “but doesn’t include pool tables or anything that could turn it into a hang-out for students that aren’t tenants. It’s about offering a safe and comfortable environment to relax and build friendships, but also to learn and do well at university.”

Steven takes real pride in Urban Lofts and the safe, well-equipped environment it creates for students to study and have a great student experience. “I want to be proud of what I do,” he says. “If I offer a product I want it to be of good quality. My clients are the most important and I make sure to give them a good quality product at an affordable price.”

The building was fully tenanted for the 2020 academic year. Not long after, the first COVID-19 lockdown was announced in March. “Though some of our students did go back home when lockdown was announced, most opted to come back in June,” Steven says. “Urban lofts offers Wi-Fi, as well as safe, quiet space to study and attend virtual lectures. Many of our students couldn’t access these things at home, so it made sense for them to return. Also, most of our students were first years, so they wanted to preserve some of the university experience if they could, and even with lockdown regulations and social distancing we were able to provide that through the pandemic.”

Steven manages his site himself, and says he’s been able to build relationships with the students. “I’ve never had any trouble with my tenants,” he says. “The university has a stringent accreditation process for private accommodation for their students, so having decent personal space, their own bathrooms, access to Wi-Fi and a fridge was critical to being approved as a provider. When the pandemic hit, having these things in place helped our students a lot.”

Safety was also a possible concern when the pandemic began, as many rental properties were vacated and suffered vandalisation because they were empty. Because Steven remained hands-on, maintained his property well and has a caretaker on site looking after the students’ wellbeing, his building was always occupied and protected from this kind of safety risk.

“One student actually stayed on the property the whole year, only going home when his exams were finished, because the facilities were better suited to studying than what he had access to at home,” Steven says. “He helped keep an eye on things when everyone else was away just because he cared about the space. He’s passing with distinction and is still living at Urban lofts. That makes me feel really good about what we’ve done with this building.”

This is Steven’s first foray into property entrepreneurship on this scale. “I’ve always wanted to get into it but never had the capital available,” he says. “I believe in the power of refurbishing abandoned, vandalised buildings to uplift communities. The first property I ever bought was just such a property, and was being used for illegal activities. It was unsafe for the community and I went to great lengths to acquire it and fix it up. It wasn’t a big site, but it did give me an opportunity to build reliable contacts that do good quality work and that contributed to the success of Urban Lofts”

Steven came across the property that would become Urban Lofts when he was helping a friend look for an opportunity in property. “My friend didn’t go for it, but I decided I would,” he says. “I wasn’t sure I’d qualify for financing, but then another friend put me onto contact with TUHF. The moment I walked into their offices I was greeted with a huge smile and such a willingness to help me. I told them which property I was interested in, and it turned out that they had recently done a valuation and looked at the rental income potential on it. They shared that information with me, and between July when we started the discussion and December when transfer went through they were extremely supportive.”

The configuration design of the property were all Steven’s ideas. He looked at other well-known, privately-run student accommodation in Bloemfontein and Cape Town for inspiration. “I wanted to understand what made them sought after and popular with students,” he says. “Safety, connectivity, and appropriate pricing were some of the key elements.”

“I want to create something that I can leave to my children, and that will allow me to retire earlier than 65, so I do want to build my property business,” Steven says. “But I want to remain focussed as well, and I think there’s a lot of potential in student accommodation.

“There’s always going to be a new intake every year, and so you might have regular turnover but you’re never going to run out of new tenants. It’s also profitable, even though your property is unoccupied for 2 months and your leases are only 10 months, not 12. Because so many students come from rural areas and haven’t experienced cities before, good accommodation with access to important amenities like the police station, youth centres, groceries and hospitals will always be in demand,” he says.

Keeping the buildings small means Steven has the ability to build relationships with his tenants and keep an eye on how their doing, offering support when it’s needed as they adjust to student life.

His advice to aspiring property entrepreneurs is, “Always be hands-on. A caretaker isn’t going to run your business, they’re just there to look after the building. Secondly, make sure you pick the right property so that you can align to the university’s accreditation requirements – a building that’s too far away means you have to provide transport, for example, and that can eat into your profits very quickly. Doing the right conversion on the right kind of property is key.”

Urban Ubomi 1 RF Limited, a mortgage-backed securities programme administered by TUHF Limited and developed with the assistance of arrangers Standard Bank, has won the Local Currency Bank/FI Bond Deal of the Year award in the 2022 GFC Media Group’s Bonds, Loans and Sukuk Africa Awards.

For TUHF, a residential property financier specialising in inner-city rental property, this recognition in a category where it saw competition from the likes of RMB and Nedbank, is significant.

Raising funds through securitisation is how TUHF plans to grow the organisation and its funding base. The social bond issuance under Urban Ubomi 1 in March 2021, enabled it to raise R609 million. These proceeds were used to acquire a pool of Loan Agreements originated by TUHF Limited. The Loan Agreements are extended to small and medium sized enterprises and entrepreneurs to fund predominantly residential property investments in the inner cities of South Africa.

“Winning the Local Currency Bond /FI Bond Deal of the year accolade bodes well for our investors’ confidence in TUHF and continues to build our credibility in this area. Partnering with Standard Bank has been key to our ability to steer the organisation through the events of the past two years and to continue to raise funding going forward,” said Ilona Roodt, Chief Financial Officer at TUHF.

Urban Ubomi 1’s social bonds were listed on the JSE’s Sustainability Segment of the Interest Rate Market, and the initial issuance coincided with the launch of TUHF’s Sustainable Bond Framework that, with its associated structured finance vehicles, allows TUHF to issue green, social and sustainable bonds that support its lending to qualifying projects.

According to Roodt, all the funds raised through the Urban Ubomi 1 bonds were used for client loans and have already been deployed on a use of proceeds basis under the social elements captured in TUHF’s Sustainable Bond Framework.

“Within this framework, local and international investors can help address social and sustainability issues through responsible finance. The lending we provide as an organisation focuses on social issues recognised under the Sustainable Bond Framework like affordable housing; empowering previously disadvantaged individuals based on Broad-Based Black Economic Empowerment principles; and increasing access to finance that promotes growth of micro- and SMME businesses in the country,” said Roodt. “And TUHF will continue to develop its impact in the environmental and green space, considering specifically the use of green bonds to finance building renovation or construction employs renewable energy products and principles whilst ensuring energy efficient and energy saving modalities are adopted.”  

GFC Media Group is a market-leading Corporate Finance and Investment Banking events business for Emerging and Frontier Markets. The Group has a substantial network of business partners and counterparties around the world, and it delivers conferences, roundtable events, briefing days and awards annually to 5000 participants. The selection process followed by GFC in respect of the Local Currency Bond/Deal of the year award involved close examination of deal size, tenor, structure, and distribution. Furthermore, judges conducted analysis on the background of the issuer and their access to finance, with extra credit for those deals demonstrating high quality execution, contribution to the sector, accessing new pools of liquidity, innovative structuring, and opening-up new markets.

Additionally, following the success of the initial note issuance (Urban Ubomi 1), TUHF approached the market for a further issuance under the R2.5 billion programme in February 2022 and an additional R440 million was issued, following a successful auction. The proceeds of the new notes were used to acquire additional qualifying loan agreements.

“We are very pleased with the outcome given that total bids received amounted to R601 million and two new investors participated in the structure,” said Roodt.

“TUHF’s business is greatly aligned with Standard Bank’s key focus on driving sustainable growth and value by providing societies with services and solutions that achieve inclusive growth and prosperity, and community well-being and upliftment. We are extremely proud of this partnership, the successes we’ve shared and the well-deserved accolade. Most of all, we’re proud of the role we’re playing in transforming South Africa’s inner-cities through enabling the development of quality affordable housing and expanding economic opportunities,” says Nicholas Gunning, Senior Manager in Standard Bank’s Debt Capital Markets Team.

Photo: (Left to right) Paul Jackson, CEO, TUHF; Tebogo Moseamedi, Treasury Specialist, TUHF; Ilona Roodt, CFO, TUHF; AJ Rothman, Consulting Capital Markets Specialist.

About building a billion rand business, the recent JSE censure, inner-city property investing and the optimistic future

Photo: Theo Kruger, director of Vredenberg Properties Ltd

Situated in the heart of Cape Town City Centre just off Long Street, Uxolo on 4 Vredenberg Lane provides a unique combination of long-term rental and short-term lease in modern, design-led micro apartments.

The brainchild of Theo Kruger, director of Vredenberg Properties Ltd., Uxolo (meaning peace in Xhosa), has transformed the existing heritage building by maintaining the front façade while building eight new stories to deliver everything city living should be about.

The ground floor features a retail space, reception, lobby, and bicycle storage. The upper eight floors consist of 32 studio apartments ranging in size from 24 to 30 square metres, and three one-bedroom loft units spanning two floors. There is a generator and heat pump room as well as a communal laundry area for residents.

“Uxolo is close to Kloof Street and is within walking distance of public transport and all modern amenities. Many of our residents either walk, cycle, or Uber to work. These units cater for a younger demographic that is all about a minimalist lifestyle,” says Kruger.

He says the location instantly drew Vredenberg Properties into investing in the property.

“Cape Town is transforming into a world-class city. In these apartments, we perfectly capture the ability for people to live more densely, maximising the space, while also contributing to a safe environment as people are here all hours of the day.”

While much of the interior of the existing building needed to be gutted to make way for the eight-storey expansion and new services, there was real value in the street façade and some of the internal stone walls that date back more than 100-years and it was important for Kruger to keep those elements and replace with the rebuild.

“Admittedly, both council and heritage approval took some time to receive, but we got through it and are now sitting with a very successful product. TUHF also provided invaluable support on the development finance side and was involved throughout the construction process to ensure everything went as smoothly as possible,” he adds.

TUHF provided very hands-on support, especially when it came to the approval stage. It also appointed a project review consultant to work with the Vredenberg Properties team to get all documentation in place.

“As with many other sectors, the hard lockdown last year hit us really hard. At the time we had to part ways with the existing contractor and decided to take over the construction of the building ourselves and complete it. This provided us with an invaluable opportunity to diversify our skill set as it was quite a complicated build. We really learnt so much through this process and are very happy with the final product.”

Already 21 of the 35 available apartments have been transferred. Vredenberg Properties are holding back the remainder to sell at a later stage when the market strengthens with the units being rented in the meantime.

“This was our first project with TUHF, and it was a very positive experience. We will definitely work with them again in future,” he concludes.