News/Insights

Even as South Africans dare to start returning to “life as we knew it” under Level 1 lockdown, another global threat is making headlines. The Intergovernmental Panel on Climate Change (IPCC)’s Sixth Assessment Report1 was released in August 2021 and has been called a “‘Code red’ for human-driven global heating”. With this, governments and companies around the world have issued statements on their commitments to achieving net-zero. South Africa2 was among them, adopting a more ambitious emissions reduction target ahead of the UN’s COP26 in November.

We have also witnessed during the COVID pandemic and the recent unrest in July, that issues of poverty, the transformation of the economy and inclusive growth cannot be ignored. We need instruments that bring South Africans to the mainstream economy, ensuring that all are invested and have a share in the countries prospects.

According to Francois Engelbrecht of the Wits Global Change Institute and Pedro Monteiro of the CSIR SOCCO3: “South Africa is globally one of the top five countries in terms of carbon emitted per unit of energy. To meet net-zero global objectives, the challenge will be to transform its carbon-intensive economy, and simultaneously meet its development needs and objectives through a just transition.”

Though the country’s heavy reliance on fossil fuels for energy is at the heart of its carbon-intensive economy, the contribution of urban sprawl to this and to the country’s socio-economic ills4 shouldn’t be underestimated. We believe that ESG and Impact Investing in urban housing development have a crucial role to play, not only in terms of reducing carbon emissions but in meeting South Africa’s development needs and facilitating a just transition.

ESG – or Impact – Investing

ESG investing focuses on investments that meet Environmental, Social and Governance criteria to allow socially responsible investors to incorporate their values and concerns into their selection of investments along with potential profitability or risk. In South Africa, and indeed in many other emerging markets, these types of investments have long been recognised as key to both containing and reducing carbon emissions, and uplifting impoverished communities. There is a need to push for developments that prioritise environmental and social returns (along with financial ones) through legislated incentives. However, incentives – either positive or negative – have not been forthcoming. This means that investors who prioritise social and environmental impact returns remain few and far between. But this is changing.

As an impact-focused lender with an 18-year track record of successfully financing inner-city residential buildings to provide affordable rental housing, TUHF has long been leading the charge for real development impact. With the assistance of Standard Bank, TUHF launched its ground-breaking Sustainable Bond Framework, which has also been independently verified by ISS ESG. Following this launch, TUHF issued South Africa’s first Social bond, Urban Ubomi 1, as listed on the JSE Sustainability Segment, earlier this year. Another such issuance is also planned for the near future.

The Sustainable Bond Framework allows TUHF and its associated structured finance vehicles to issue Green, Sustainable and Social bonds that support its lending to qualifying projects and ensures that the relevant impact that TUHF has, such as providing funding in the affordable housing space and providing access to finance for small scale property entrepreneurs, is recognised.

Uplifting our country, saving our planet

TUHF’s Framework contributes to five of the UN’s SDGs, including alleviating poverty, affordable and clean energy, decent work and economic growth, sustainable cities and communities, and climate action. Additionally, the Framework aligns to principles outlined by the International Capital Markets Association (ICMA), namely “The Green Bond Principles” (GBP), the “Social Bond Principles” (SBP) and the “Sustainability Bond Guidelines” (SBG). Our social bond issuances both meet all the social requirements of the sustainable bond framework, and we are working hard to meet all the green criteria in the framework as well in the not-too-distant future.

By offering investors a framework by which to measure the social and environmental impacts of their investments, we hope to encourage more investors to prioritise these. The uptake of our first sustainable bond issuance was extremely encouraging, and we believe investors are clearly realising the value of making sustainable investment choices.

As we emerge from the pandemic, we find that social inequalities that have long been of concern – such as lack of access to affordable housing and lack of access to funding for entrepreneurs – have reached critical intervention point.. 

Since inception, TUHF has financed over 44 000 units of affordable rentals units in areas of economic opportunities that have effectively improved many livelihoods. TUHF  has supported over 400 entrepreneurs many of whom have grown it to successful landlords with sizable portfolios. Our projects have created 8600 permanent and short-term jobs over the 6-years. These stats demonstrate our ability that TUHF’s impact investing is a key piece of the puzzle in addressing and correcting social and environmental ills in our country, as it provides an avenue for private capital and the capital markets to make a measurable contribution towards transforming South Africa for the better.

TUHF: CROWDING-IN CAPITAL MARKET TO TACKLE SA’S CHALLENGES THROUGH ESG AND IMPACT INVESTING Read More »

It has been said that every journey begins with a single step. For Thomas Chauke, the owner of Gardenia at 149 Johnson Street, his journey towards becoming a successful property owner began by walking 10km to, and 10km from, school every day.

After moving to Pretoria upon matriculating, he started another kind of journey, one that took him into property development. 

His first acquisition came about through a chance opportunity to buy a property from a friend. Thomas had some experience already in being a business owner, with his entrepreneurship beginning by buying and running a driving school.

After obtaining his degree in Electrical Engineering, Thomas worked for Eskom and then Telkom as a technician. With the money he earned from the driving school and his career, he made his first investment – a single unit in a building – and quickly saw the value of having a predictable rental income every month.

Enthused, he set himself a goal of obtaining five buildings. However, he soon realised that the capital outlay to purchase buildings was considerably more than required to purchase single unit apartments. That is when he turned to TUHF for help.

“The first building I wanted to purchase was valued at about R20 million. The requirements from other banks were very difficult, but I found TUHF to be much more user friendly,” he explains.

His purchase of Gardenia in Pretoria was unique in that it is part of a bouquet of other properties. Gardenia consists of ten 1-bedroom units and ten 2-bedroom units. The property did not require major refurbishing, but rather minor renovation and maintenance work.  

The key attractor to the purchase was the building’s location. Situated close to a main road, Gardenia offers residents easy access to transportation. “There are a lot of people who stay in town who cannot afford to rent in the suburbs, which command higher prices. Because of its location, however, they can rent in town and still more easily travel to the suburbs and back,” he explains.

Gardenia is also near by a railway station and university. This makes it ideal for the property’s target market – students, young professionals and those starting out in their adult lives. It also caters to young families. As Thomas notes, those who are already well established do not normally prefer to stay in town.

The property offers two essential amenities – Wi-Fi and a shared laundry. Internet connectivity is either provided as part of the rental agreement or on an ad-hoc basis through the use of tokens. While younger tenants have been interested in sharing the two-bedroom units, the pandemic has driven up interest in the one-bedroom units, as people prefer to have their privacy.

Other than that, the COVID-19 pandemic has not had much of an impact on the student accommodation business, with Thomas still expecting a 12% return on his overall investment.

One learning from his experience that he shares is the value of having a satellite office and several properties close to one another. This makes property management considerably easier, enabling one caretaker to manage several properties.  

Thomas does not intend to stop investing in properties, but plans to keep moving forward, taking one step after the next as he did to obtain his education, purchasing further properties and growing his business, with a trusted partner in TUHF.

“Whereas other banks require you to present the details of your project to try secure funding they do not give you support if you are successful. In TUHF I have found ongoing assistance and guidance all the way,” he concludes.  

Facts

Project Name: Gardenia

Location: 149 Johnston Street, Sunnyside, Pretoria

TUHF Product: Funding to purchase the building at purchase price of R7,500,000.00

Original configuration: 10 one-bedrooms and 10 two-bedrooms, for a total of 20 units

Configuration upon completion: 10 one-bedrooms and 10-two bedrooms, for a total of 20 units

TUHF enables ongoing journey to property ownership success Read More »

When Anele spotted the ideal property for her property development vision in February 2020, she was excited to get started. She and her husband wanted to transform the run-down, single story family home on a 700m2 stand into modern, affordable rental units.

“When my husband and I were students – he is an architectural technologist and I am a Chartered Accountant – student accommodation was a challenge,” Anele says. “After we graduated, we stayed in East London and we realised the challenge hadn’t changed. So, we bought our first property with the intention of building ourselves up to a point where we could take advantage of the opportunities in providing accommodation.”

“We met Letlatsa Lekhelebana from TUHF when we were looking to buy a different property that we had some great ideas for. But the project fell through when the building was bought by someone else. Still, we kept searching and when we found the property that is now LT Court, it was love at first site” she says.  

The area that LT Court is in has been the subject of a lot of high-density development recently. Made up of fairly large stands with historical houses on them, the area offers good value for investors who can see the potential in refurbishing the existing buildings. “It was the perfect place to get started on our vision,” Anele says. “In its original form – the house was being used as a commune – it didn’t look like much, but we saw the potential to make it into something great.”

With TUHF’s support, Anele got clearance from the Heritage Council to develop the property. The stand now comprises 14 modern, studio apartments. But the project wasn’t an easy one.

“Once we put in the offer everything moved very quickly because we had dealt with TUHF before, and we knew what the requirements were. We were expecting to take transfer on 30 March 2020, and then lockdown was announced on the 26th,” she recalls. “That brought everything to a halt. The property was standing empty because we were prepared to start renovating, but the transfer couldn’t go through under Level 5. We also couldn’t start any work on the site. The house was vandalized in that period – windows were broken, fittings were stolen – and because the transfer was on hold there was some disagreement about who was responsible for securing the property.”

In addition to the theft and vandalism, squatters had moved into the vacant building. The laws governing squatting rights are quite challenging and getting people to move out can be extremely difficult. With their deposit already paid, Anele and her husband were worried that they may have to cancel the deal and start over. “But I must give credit to Letlatsa,” she says, “because he was so supportive during such an uncertain time and helped us to keep our eye on the finish line.”

In August 2020, when lockdown had been lifted enough for the transfer to go through and construction to begin, the squatters remained the biggest challenge. “We couldn’t simply start building while they were there,” Anele says. “We would have been liable for any injuries on the site, so we did what we could in terms of the renovation without taking that risk. We had to do everything in our power to get them to move out, safely. In the end, it was the coming of the rain in January 2021 that moved the squatters out of the building because it didn’t have a roof anymore.”

From here, despite a few small issues in the existing building, construction ran smoothly and by mid-July LT Court was finished. The building consists of classy studio apartments for middle-income earners that require accommodation near the CBD. The units have individual water and electricity metres so that tenants can monitor their own utility costs, with stoves and Wi-Fi included. At the time of the interview, it was 60% tenanted.

“The building is designed to appeal to confident, modern young professionals – from the choice of colours to the kitchen countertops and bathroom fittings – with parking for those tenants that have vehicles,” Anele says.

LT Court is named for Lady T – Anele’s grandmother-in-law. “My husband was very fond of his grandmother, so we named the building for this key family member that played such a significant role in his life and made him such a strong person.”

“Now that we’ve got this property in operation, we are looking at ways to update and improve some of our other property investments,” Anele says.

For other aspiring property entrepreneurs, Anele advises patience. “This isn’t a get rich quick scheme,” she says. “You have to be patient. Have a vision and passion, but also do your due diligence and your own research before you even approach someone like TUHF to help with getting your project off the ground.”

“Working with TUHF,” Anele says, “meant we had incredible support from the onset. They don’t just give you the funding, they hold your hand as an entrepreneur and help you to think of things you may have overlooked. They are very involved and offer a lot of guidance so that you understand the risks and how to overcome them.”

LT Court rises above Read More »

Keabetswe Nkotswe started her career in the property industry as a qualified Quantity Surveyor. Fresh out of Pretoria Tech (now Tshwane University of Technology), she spent thirteen years working with numerous well-known companies including Turner & Townsend, Pentad Quantity Surveyors, Tiber, and the De Leeuw Group.

But having spent over a decade in the built environment, Kea realised that she needed to explore other career path avenues and serendipitously, TUHF offered her a position as a Portfolio Manager.

While Kea loved the construction industry, she, as so many other women, have experienced challenges as a female professional in the real estate industry.

When I started out as a Quantity Surveyor, I was quite intimidated. I had to work with men who had been in the sector for a lot longer than me. The transition from Quantity Surveyor to Property Portfolio Manager wasn’t easy either – I was used to protecting my clients’ money but my role as a Portfolio Manager presented the complete opposite”.

During my first year at TUHF, I remember calling my boss at the time into a meeting room to tell her that I did not believe that I was cut out for the industry. She – and my colleagues at the time – supported me to transition smoothly from the Quantity Surveying approach to the Portfolio Manager approach. I am fortunate enough to work in a ‘laid back’ but professional environment that acts as a support structure through a culmination of different skills. Everyone has a direct line to the CEO, including our clients. We are different from other traditional finance institutions”.

However, Kea won’t take away from the fact that many female professionals still face discrimination within the workplace.

I am very mindful that there are still challenges faced by women but what has helped me in my career, is knowing where I operate and who I am within my own space. I believe that females entering the broader real estate spectrum need to know their strengths and abilities, the market and which product they want to invest in. While there is still a lot to be done for women in their professional capacities, there is also room for women to contribute to the property management space which is still quite male dominated. It all boils down to a lack of awareness and exposure”.

Not only does Kea have a good support system within her professional career, but she has always had the support of her parents.

I credit my hardworking parents for where I am today. I fondly remember my dad teaching me how to drive at the age of thirteen – and don’t forget that I am not tall. He used to tell my sister and I that he did not want to drive us around for the rest of our lives and that we needed to learn how to drive from a young age. My parents always pushed me, and fear was never an option”.

The difference that Kea gets to make in her clients’ lives is what excites her. In doing so, she and her team at TUHF are contributing to the regeneration of South Africa’s cities which, post-1994, started declining.

There was a time where I was not comfortable visiting the inner cities but now, I and many others, are happy to walk the inner cities alone. Being a part of this change and the rejuvenation is truly a highlight of mine”.

While there is still a lot of demand for inner city real estate, even though Covid-19 has shown us a few weak spots, Gauteng – the City of Gold – will remain the New York of Africa says Kea.

Everyone on the African continent who wants to ‘dig for gold’ comes to Johannesburg. Accommodation will always be in demand – the same goes for Pretoria. These two cities will always present opportunities and job creation and by TUHF providing clients with these opportunities, we are assisting with job creation while creating safer spaces for tenants. We aren’t only making a difference in our clients’ lives, but we are making a difference throughout the entire supply chain. It is a circular economy”.

**Republished with permission from Property Wheel

KEABETSWE NKOTSWE, TUHF: CONTRIBUTING TO THE REJUVENATION OF SA’S INNER CITIES Read More »

Velda Derrocks began her career in 2000, joining a management training programme at Absa after completing her BEcon, Commerce at Stellenbosch University. The graduate programme included exposure across the bank, from business banking to credit and finance. At the end of the programme, she joined Absa Commercial Property Finance full time. 

“It was seen as a high-profile, niche space that was very male dominated at the time, so I saw that as a challenge,” Velda says. “I always strive for excellence and, even though most of the people I dealt with in those early days were male and it could be a little difficult at times, I built up a good reputation in the Eastern Cape quite quickly.”

Velda stayed with Absa until 2011, Standard Bank Real Estate Finance approached her to manage their commercial property finance division in the Eastern Cape. In 2015, she was asked to relocate to Cape Town – a move she wasn’t ready to make at the time – and so joined TUHF for the first time. “It honestly wasn’t the best fit for me then,” Velda admits. “I was pleased to join Investec as an external property consultant at the time.”

TUHF investors that make a difference.

Velda describes her experience at Investec as a great learning opportunity that contributed greatly to her professional development and, when she was approached to re-join TUHF as the Regional Manager for the Cape Coastal region in 2017, she was ready to take on the challenge. “I had built and kept a very good relationship with the senior management team at TUHF, so when I was asked to come back in a more strategic role – I was keen to do it,” she says.

Velda is a true believer in TUHF’s philosophy of creating impact through scale. “TUHF really makes a difference where it matters most,” she says. “What makes us different is that we see the potential in entrepreneurs, from start-ups to established entrepreneurs, and not just in the project itself.” TUHF works with many entrepreneurs that are new to the property industry and offers programmes that assist them to start building a portfolio.  

“Often these entrepreneurs are just starting out, or their portfolios are not yet strong enough to qualify for traditional finance,” Velda says. “We look at the person – their strengths and their knowledge of the area they want to invest in – and provide support in terms of finance as well as industry expertise and advice to help them succeed.”

She continues: “TUHF is not just a financier. We focus on inclusive growth and transformation. We develop and grow relationships with all the key stakeholders in the areas where we operate and we really work to understand the local economies in which we invest.”

TUHF’s focus is on affordable rental housing, including mixed-use developments and developments for sale. “It’s about bringing good quality rental accommodation into the market and having a positive impact on inner-city and in-city communities,” Velda says. “We invest where it makes sense, where it makes a difference, and where it provides tenants easier access to supporting economic activity, such as places of work, services and amenities.”

“It’s a very dynamic market,” she adds. “At the end of the day, everybody needs a home. TUHF operates where people don’t qualify for social housing or subsidised rental housing, but also can’t yet afford to buy or rent in affluent areas. We partner with developers that understand this need.”

Another thing that sets TUHF apart is the type of investor that gets involved. “The investors are driven by the impact they make, not just by the financial returns,” Velda says, “and so when they make small additional investments – like adding Wi-Fi, rooftop gardens or libraries to their buildings – they are opening up access to information, study materials, and safe relaxation spaces that their tenants wouldn’t have had otherwise.”

Velda believes the inner-city and in-city opportunities are directly impacted by the investment environment created by Government and the extent to which investors feel that their investments are protected. Investors rely on Government for public health and safety, law enforcement and governance, and to promote an investment climate that makes it easy to do business, amongst other things. 

Highlights in Velda’s career include two Masters degrees – an MBA and an MPhil in Development Finance, both from Nelson Mandela University. She also recently completed an International Housing Finance Programme at the Wharton School, University of Pennsylvania. Throughout her career, Velda has been involved with projects ranging from a few million Rands in investment up to R500 million. She believes that every project is unique and presents an opportunity to develop the economy and grow the property market.

In her time with TUHF, she says she is particularly proud of a mixed-used refurbishment project that was recently completed in Belgravia, East London. The original building was a dilapidated, four story building consisting of 15 residential units and three retail spaces. It was reconfigured and refurbished to comprise 46 apartments and seven retail stores, with parking for tenants.

“It’s the perfect example of what TUHF is all about – the residential units are beautifully finished and the small businesses on the ground floor are well suited to serve the tenants.”

Velda’s personal philosophy is to be someone that brings about change. “I’m motivated by the fact that I am bringing about change – in the way people think about investing in cities, in the way entrepreneurs can access finance to fund their ambitions, in the way people in the inner cities live and, in the economies, surrounding the buildings we develop.”

Growth & transformation in business Read More »

Velda Derrocks began her career in 2000, joining a management training programme at Absa after completing her BEcon, Commerce at Stellenbosch University. The graduate programme included exposure across the bank, from business banking to credit and finance. At the end of the programme, she joined Absa Commercial Property Finance full time. 

“It was seen as a high-profile, niche space that was very male dominated at the time, so I saw that as a challenge,” Velda says. “I always strive for excellence and, even though most of the people I dealt with in those early days were male and it could be a little difficult at times, I built up a good reputation in the Eastern Cape quite quickly.”

Velda stayed with Absa until 2011, Standard Bank Real Estate Finance approached her to manage their commercial property finance division in the Eastern Cape. In 2015, she was asked to relocate to Cape Town – a move she wasn’t ready to make at the time – and so joined TUHF for the first time. “It honestly wasn’t the best fit for me then,” Velda admits. “I was pleased to join Investec as an external property consultant at the time.”

Velda describes her experience at Investec as a great learning opportunity that contributed greatly to her professional development and, when she was approached to re-join TUHF as the Regional Manager for the Cape Coastal region in 2017, she was ready to take on the challenge. “I had built and kept a very good relationship with the senior management team at TUHF, so when I was asked to come back in a more strategic role – I was keen to do it,” she says.

Velda is a true believer in TUHF’s philosophy of creating impact through scale. “TUHF really makes a difference where it matters most,” she says. “What makes us different is that we see the potential in entrepreneurs, from start-ups to established entrepreneurs, and not just in the project itself.” TUHF works with many entrepreneurs that are new to the property industry and offers programmes that assist them to start building a portfolio.  

“Often these entrepreneurs are just starting out, or their portfolios are not yet strong enough to qualify for traditional finance,” Velda says. “We look at the person – their strengths and their knowledge of the area they want to invest in – and provide support in terms of finance as well as industry expertise and advice to help them succeed.”

She continues: “TUHF is not just a financier. We focus on inclusive growth and transformation. We develop and grow relationships with all the key stakeholders in the areas where we operate and we really work to understand the local economies in which we invest.”

TUHF’s focus is on affordable rental housing, including mixed-use developments and developments for sale. “It’s about bringing good quality rental accommodation into the market and having a positive impact on inner-city and in-city communities,” Velda says. “We invest where it makes sense, where it makes a difference, and where it provides tenants easier access to supporting economic activity, such as places of work, services and amenities.”

“It’s a very dynamic market,” she adds. “At the end of the day, everybody needs a home. TUHF operates where people don’t qualify for social housing or subsidised rental housing, but also can’t yet afford to buy or rent in affluent areas. We partner with developers that understand this need.”

Another thing that sets TUHF apart is the type of investor that gets involved. “The investors are driven by the impact they make, not just by the financial returns,” Velda says, “and so when they make small additional investments – like adding Wi-Fi, rooftop gardens or libraries to their buildings – they are opening up access to information, study materials, and safe relaxation spaces that their tenants wouldn’t have had otherwise.”

Velda believes the inner-city and in-city opportunities are directly impacted by the investment environment created by Government and the extent to which investors feel that their investments are protected. Investors rely on Government for public health and safety, law enforcement and governance, and to promote an investment climate that makes it easy to do business, amongst other things. 

Highlights in Velda’s career include two Masters degrees – an MBA and an MPhil in Development Finance, both from Nelson Mandela University. She also recently completed an International Housing Finance Programme at the Wharton School, University of Pennsylvania. Throughout her career, Velda has been involved with projects ranging from a few million Rands in investment up to R500 million. She believes that every project is unique and presents an opportunity to develop the economy and grow the property market.

In her time with TUHF, she says she is particularly proud of a mixed-used refurbishment project that was recently completed in Belgravia, East London. The original building was a dilapidated, four story building consisting of 15 residential units and three retail spaces. It was reconfigured and refurbished to comprise 46 apartments and seven retail stores, with parking for tenants.

“It’s the perfect example of what TUHF is all about – the residential units are beautifully finished and the small businesses on the ground floor are well suited to serve the tenants.”

Velda’s personal philosophy is to be someone that brings about change. “I’m motivated by the fact that I am bringing about change – in the way people think about investing in cities, in the way entrepreneurs can access finance to fund their ambitions, in the way people in the inner cities live and, in the economies, surrounding the buildings we develop.”

Velda Derrocks – Leading Lady of TUHF Read More »

Nthabiseng Masithela is an electrician by profession, owns a construction business, and became a property entrepreneur in 2019. Seeking to expand her portfolio, she worked with TUHF and the Intuthuko Equity Fund to buy Fatima Court in Rosettenville, Johannesburg, in August 2020.

“Construction is about creating beautiful properties for other people, and I realised that I wanted to do this for myself,” Nthabiseng says. “This property is an opportunity to do that, as my company will be doing the construction work needed to give Fatima Court a new lease on life.”

When Nthabiseng realised she wanted to become a property entrepreneur, she began looking for opportunities to learn about property as a business. “I came across TUHF through Henry Chitsulo in 2019,” she says. “I was speaking to him on site one day and told him I was looking to expand my property portfolio. That’s when he mentioned that he consults to TUHF and is one of the mentors on TUHF’s TPPE training programme. He told me about the programme, and that TUHF would be opening it up to non-clients that year, so I was able to attend with a few of my friends.”

“The TPPE really helped me understand more about the industry and how it works,” she says. “As entrepreneurs we often tend to jump in, and the TPPE shows you how to do it in a structured and professional way. It also helped me understand the market better and which areas make sense to invest in if you want to create affordable housing.”

The TPPE made such an impression on Nthabiseng that she often nominates aspiring entrepreneurs to attend. “I was inspired and excited, and I wanted to get my first project going as soon as possible,” she says.

She worked with TUHF and the Intuthuko Equity Fund (IEF) – a unique inner-city property finance initiative for property entrepreneurs who face constraints in accessing equity finance – to conduct a feasibility study and acquire Fatima Court.

“It’s easy to go out there, find the property and do the numbers,” she says, “but it’s not always the case that one has the money for the equity contribution. That’s where Intuthuko really helped. They funded the portion of the equity that I didn’t have on hand – about 10% – while TUHF extended the loan to purchase the property.”

The building needs renovations, which Nthabiseng intends to start in July 2020. The mixed-use building has four commercial units on the ground floor, while the three flats on the top floor will be divided up to form seven residential units aimed at young professionals or start-up families.

“The final configuration will be four bachelor studios and three one-bed units,” Nthabiseng says. “We’re hoping to complete the renovations in three months.”

Fatima Court gets a new lease on life Read More »

“We came across the property [Elvon Court] in July 2020, just after the hard lockdown began to lift, through a real estate agent with whom we had built a relationship. We liked the building, but because of the uncer­tainty brought about by the pan­demic, we held off on purchasing it until September.”

Msizi describes the property’s state at the time as extremely neglected. “For example, it had wooden floors that hadn’t been maintained well, there were broken windows and the bathrooms weren’t in great shape. Its occupancy level was low – about 10 out of the 21 units had tenants,” he says. “But we believed that the property had great potential, even though it has been undermanaged in the past.”

Playing the long game

Msizi’s journey is an interesting and inspiring one. Raised by a single mother in Pietermaritzburg, he orig­inally attended a township school until he earned an academic scholar­ship to attend Maritzburg College. “I learned about KPIs very early in my life,” he laughs. He was later award­ed a bursary from one of the state-owned entities to study towards an electronic engineering degree at the University of KwaZulu-Natal, and later joined an engineering firm upon completing his degree. He quickly realised engineering wasn’t a fit for him and moved into management consulting before progressing to investment banking. He and his busi­ness partners – who are both practic­ing engineers – intend to become full time property entrepreneurs.

Msizi’s journey towards full-time property entrepreneurship began in 2014. “I came across TUHF when we started looking for our first property asset. We were specifically interested in the inner-city, where we knew we could expect better yields and high occupancy rates,” Msizi says. “I found TUHF through an internet search, and then reached out to my network who put me in touch with people at TUHF.”

It took some time and perseverance to find the right property. “This project is our sixth-time lucky,” Msizi points out. “We’ve walked a journey with TUHF, where we’ve brought properties to them that we thought would make good investments and they’ve advised about the feasibil­ity or appropriate pricing for the purchase, and we’ve ended up not going through with those deals for one reason or another. But our ex­perience was always very supportive and collaborative. TUHF was always keen to keep on looking and to let us know if they came across appropriate opportunities through their network. Our experience with TUHF is one of ‘partnership’ in a very true sense of the word.”

The equity built up through the stokvel enabled Msizi and his part­ners to apply for a loan with TUHF to purchase Elvon Court, but needed to be supplemented to make up the full equity contribution required by TUHF. The shortfall was funded through the Intuthuko Equity Fund, and the dream to own and manage a portfolio of property assets met its first milestone. The Intuthuko Equity Fund is managed by TUHF21, with funding from The Jobs Fund. IEF’s objective is to finance the equity portion of a TUHF loan for PDIs who may not otherwise have access to the required equity.

The existing units were refurbished and updated in three months, with repairs done to the damaged win­dows as well as new bathrooms, new floors, and a fresh coat of paint. The building is a combination of 1 and 2 bedroom units, with bachelor studios on the top floor. It was 80% tenant­ed in May 2021.

Msizi’s advice to other aspiring property entrepreneurs is to take their time building up their capital and finding the right asset. “That’s actually one of the great value-adds of working with TUHF,” he says. “They bring in-depth market knowl­edge, a sharp commercial lens as well as a deep understanding of property management that really enriches you as an entrepreneur as well as the deal.”

“The other piece of advice I must give is to be ambitious in your thinking,” he adds. “Your dreams must be wor­thy of your pursuits. So, start small and get to know the business and the industry, but keep your dreams and ambitions big.”

Elvon Court marks a significant milestone for three university friends Read More »

For over 50 years, the United Cerebral Palsy Association of South Africa (UCPASA) has cared for the needs of Cerebral Palsy patients in Gauteng, and beyond. The organisation’s reputation as a caring, efficient and profes­sional institution is irrefutable.

The UCPASA has clearly defined objectives, and the res­idents in their care are their foremost and only concern. Unfortunately, the organisation was significantly affect­ed by the COVID-19 pandemic as no one who wasn’t employed by the Home could enter the premises during Lockdown.

Funders and volunteers were unable to visit the home, putting enormous pressure on the small team of employees to care for residents. To make matters worse, many long-time supporters had to stop their donations – individuals and companies – as they came under their own economic pressure resulting from the pandemic.

“We were able to visit the UCPASA premises before Level 5 lockdown was implemented, and it was heart-breaking to see the organisation working so hard to provide the degree of care their wards require despite their economic challenges,” says Katherine Cox, Research, Development & Innovation Manager at TUHF.

“It was clear that, if the UCPASA could not take care of those children, their situation would be dire indeed. It was also plainly evident that the different ‘facets’ of the charitable association – all of which rely on charitable do­nations for funding – are many and varied, and we simply had to offer our support,” Katherine adds.

TUHF donated R 100 000 to the UCPASA. “The refurbish­ment of the children’s sensory room and residential block closely aligned with TUHF’s CSI Policy,” Cox says. “The UCPASA also occupies and maintains a significant land parcel towards the south of Turffontein, which is an area TUHF currently invests in, and which has potential for increased affordable residential development and invest­ment. The land is used for the children and is maintained to a high standard.”

TUHF supports the UCPASA Read More »

The property market in South Africa took an enormous knock when President Ramaphosa implemented a hard lockdown to slow the spread of COVID-19 in March 2020. Property entrepreneurs working with uMaStandi in townships around the country were not immune to the impact. But, with uMaStandi’s personal and hands-on support many were able to weather the storm. Two of our clients share their experience.

From left to right: Athi Matinise, Brahms Court; Shumani Pharamela , Lutendo Heights.

Athie Mathinise, whose second uMaStandi-funded development was 60% complete when the lockdown was announced, says: “I was starting to do marketing to get tenants in for occupation by 1 July 2020 when the announcement was made, and of course everything came to a sudden stop.”

“It was really difficult. First, the contractors couldn’t come on to the site to keep building. Then, there were delays in getting building supplies because both imports and local manufacturing were stopped. This also affected the prices as everything became very expensive. And, on top of all that, we had a lot of materials being stolen from the site because no one was allowed to be there to keep it secure. 

“I also paid my contractor in advance when we heard lockdown was likely, thinking that I could help to keep him and his employees paid over the period, and that shot me in the foot. When we were able to start building again the contractor no longer had the funds to continue with the project.” 

Athie found himself in an awkward position, to say the least, and took a personal loan to start buying the materials and finishings that were needed to complete the build, such as doors and toilets. But the loan’s interest rate was extremely high, and it added a lot of stress to an already challenging situation.

He then spoke to his portfolio manager at uMaStandi, who jumped into action immediately. “Nomfundo offered great support in finding cheaper contractors and materials and came with me to site visits to inspect the work and make sure everything was on track and to the right standard. uMaStandi also helped me to safeguard the materials on site,” Athie says.

“But,” he continues, “even more importantly they helped me to stay motivated. There was a time I felt like I had made mistakes and had to give up on the project, but the team at uMaStandi were very encouraging and helped me to keep going when I felt that way.”

Athie’s other, smaller property is also funded by uMaStandi, and was also affected by the hard lockdown. “Most of the tenants in that property were employed in hospitality, and of course that was one of the worst affected industries at the time. So, when they lost their jobs they couldn’t pay rent and I knew I had to do something to help them through such a tough time,” he says.

“How you treat tenants is very important. I worked with each of them to make a plan to pay what they could until they were back on their feet and uMaStandi supported that by renegotiating my loan payment terms as well, so that I could help them,” he concludes.

Both Atthie’s properties have recovered well – they are fully tenanted and collecting rent so that his repayments are also back on track.

Shumani Pharamela, another uMaStandi client, had just started building on his first project in Protea Glen, Soweto, when the lockdown was announced. All the Quantity Surveying and costing had been done, but the price increases in materials due to the lockdown threw all that work off course. “Prices increased by 10-15% on most of the materials we needed, and steel went up by as much as 30%,” he says. “So, we had to replan everything.”

Shumani says the uMaStandi team and his contractors were very proactive, working with him every day to look for opportunities to cut back or renegotiate prices. “Because we buy a lot of materials from local hardware stores and wholesalers, who either couldn’t get stock or had to increase their prices too much to come close to our budget, we were forced to go to the manufacturers for some materials to try to offset the increases,” he says.

“uMastandi extended my grace period by a few months to accommodate the delay in construction caused by the lockdown, and that really helped. 

“We also had delays in delivery of the materials when the manufacturers and suppliers started to come back to work, as bigger projects and contractors took precedence,” he continues. “This had a knock-on effect to getting the construction going after lockdown lifted. The uMaStandi team and the project managers were very helpful and proactive in terms of planning for this and mitigating against it. They proactively advised me to apply for an increase on my loan, for example, knowing that the cost of materials would remain higher than we had planned.”

“We finally started building in June 2020 and the project is now complete and ready for tenanting,” Shumani concludes.

Both Athie and Shumani are extremely happy with the support they received from uMaStandi during such a difficult time, and are looking forward to expanding the property portfolios.

Below are images of Athi Matinise’s property, Brahms Court

Below are images of Shumani Pharamela’s property, Lutendo Heights

In it together: uMaStandi supports clients through lockdown Read More »