International Housing Solutions, which specialises in financing affordable housing developments, was established to invest in housing for rent and sale to low and moderate-income families with a goal to meet the growing demand for affordable housing in South Africa. IHS opened its South African office in Johannesburg last year,
According to IHS South Africa country director Elize Stroebel, the fund capital includes USD95m from a North American pension fund and a US foundation endowment, as well as USD80m in participating debt from the US Overseas Private Investment Corporation.
She says four European and South African investors have also shown interest in committing additional capital to the fund over the next few months, bringing it up to a total of USD240m. With leverage bringing the fund's total resources to USD1bn, this will secure funding for an estimated 30,000 homes.
IHS was established in 2005 as a joint venture between Municipal Mortgage & Equity, a US group specialising in affordable housing finance with more than USD20bn in assets under management, and Howard Eurocape, a Dublin-based property investment and development group.
IHS works directly with owners and property developers in South Africa to fund homes for households earning between ZAR2,500 and ZAR18,500 (USD330 to USD2,440) a month. Families within this income range earn too much to qualify for government-funded housing, but find private sector housing is too expensive for purchase or rental. 'Historically developers in South Africa have had difficulties in obtaining finance to make large-scale affordable housing developments viable for both themselves and home buyers,' Stroebel says.
'To bridge this gap, IHS involves equity investors among others. We are committing our own capital, as well as that of international investors like OPIC, to help finance affordable housing projects in the form of equity. 'The equity allows developers to obtain larger bank loans at a reduced borrowing cost. As the developers achieve more scale in their projects, they can pass the lower costs on to middle-income families in the form of lower rentals and selling prices.'
Source: Property Funds World
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