uMaStandi Fund, owned by TUHF21 and provides financing for rental properties in townships, has attracted R125 million in funding from new sources in its first year of operations.
The uMaStandi facility uses ownership of property as equity to gear a rental enterprise where owners can build quality affordable rental units on their land. It also ensures that construction is properly managed and has all the necessary planning permissions in place.
TUHF21, a commercial property financier that provides specialised financial services and solutions to its clients in inner cities of the large metropolitans across South Africa, yesterday announced the finalisation of the uMaStandi Fund.
Lusanda Netshitenzhe, the CEO of TUHF21, said, “We are proud that we were able to attract a mixture of funding partners, including a commercial bank and some innovative impact funders. It is especially important to acknowledge that we secured this support because of the catalytic funding provided by Oppenheimer Generations Foundation.
“These partnerships will be key to building on the momentum we have created during the past year as we move forward in 2023. For a developing country like South Africa, uMaStandi provides an innovative way for township developers to grow and deliver compelling value for property owners to diversify their portfolios while offering quality, affordable housing,” Netshitenzhe said.
TUHF21 said the fact that the uMaStandi Fund had topped the R125m mark reflected the ground-breaking work that uMaStandi was doing to provide financing in townships, thereby unlocking investment potential in a market segment that had historically largely been ignored by traditional financiers.
uMaStandi will back property developers in townships to provide decent and affordable rental accommodation.
Property owners or entrepreneurs who hold title deeds and those who want to buy property or vacant land can apply for uMaStandi finance to develop units for rental purposes.
The uMaStandi team will conduct a feasibility study and, if the proposed project is feasible, will guide the entrepreneur to professionally design the rental units to ensure the layout, size and fittings, etc., respond adequately to market demand.
The funders of the facility included Nedbank, the Nedbank Black Business Partners Legacy Trust (which includes Old Mutual’s participation), the SA SME Fund, Novo Impact Fund NPC, Apex-Hi Charitable Trust and Oppenheimer Generations Foundation.
By the end of 2023, TUHF21 aimed to achieve R100 million worth of loans issued by uMaStandi.
“The demand is there, and we are seeing the need to mature beyond small-scale developers to mid-size developers,” said Netshitenzhe.
When TUHF21 approached funders to support the firm’s vision for township developments, it was initially apprehensive - but then pleasantly surprised by the high quality of investors who took the opportunity, their level of interest and their willingness to commit to township funding.
“In part, this can be attributed to the significant experience and reputation TUHF has built in the market over its 20-year history,” she said.
While the rental market in townships had largely been informal, it was becoming more formalised, and uMaStandi was committed to supporting its further growth. If anything, the investments received highlight how the township market was proving to be the next destination for micro-property development in the affordable housing sector.
“Because of the sprawl and low densities in townships – a result of the ineffective use of space in the past – there are many opportunities for densification and bringing in mixed-use developments. This kind of development will stimulate township economies, create places of employment, and offer people access to economic opportunity,” she said.
TUHF’s observation had been that Soweto was still the strongest market for development. However, its new operation in Durban was picking up far quicker than expected, with Cape Town and East London also remaining key growth markets.
Khayise Mashifane, a Nedbank executive of Residential Property Finance, said: “We worked extensively with uMaStandi and TUHF to come up with a bespoke funding offering which enables uMaStandi to achieve their end goal.”
To date, TUHF has financed close to R6 billion in inner-city residential rental property – 38 771 units financed by TUHF from inception to 2019.
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