GPF NEWS Join us on this Social Network External Newsletter l Issue 04 l Jan - March 2014 Inside This Issue Pg. 02 Pg. 03 Pg. 04 Joint Rental Housing Advertorial The Student Accomodation Fund (SAF) Leveraging affordable housing finance advertorial Message from the Chairman of THE GPF Board Mr. Pakie Mphahlele The Gauteng Partnership Fund (GPF) Chairman of the Board of Trustees, Mr Pakie Mphahlele are pleased to announce the appointment of Mr Boni Muvevi as the new Chief Executive Officer (CEO) of GPF. Boni was appointed the Chief Investment Officer (CIO) of GPF in 2004 and had also been the acting CEO leading up to this appointment. Pakie Mphahlele Chairman of the Board He is an active member of the GPF Executive Committee and Senior Management Team. In his role as CIO, he has established many product offerings, as well as sustainable initiatives for the affordable housing market. Boni has over 15 years of construction and property industry experience and holds a BSc QS from the University of Natal, a Diploma in Project Management and an MBA from the University of Pretoria (Gordon Institute of Business). He has worked for large construction and finance companies, namely Group Five, African Bank (contractor finance), ABSA Barclays Bank (commercial property finance). He has led and managed astute residential property investments for various institutions including GPF. Boni Muvevi CEO of GPF As Head of the project team, GPF has benefited immensely from his technical and commercial property finance experience. He has achieved notable results, reflected by the GPF’s performance in a challenging housing finance environment over the period. The GPF Board of Trustees are confident that with his appointment, GPF now has both the leadership and the capacity to build on its existing strengths and develop a new direction that will ensure future sustainability and growth in the affordable housing market. Kind Regards Pakie Mphahlele Chairman of the Board 1 THINKING OF INVESTING IN AFFORDABLE RENTAL HOUSING OR STUDENT ACCOMMODATION IN GAUTENG? CONSTRAINED BY FUNDING CHALLENGES? The Solution - The Gauteng Partnership Fund (GPF) is the ideal partner for companies seeking to develop affordable rental housing as well as student accommodation. An opportunity exists to access funding from a dedicated Rental Housing and Student Accommodation Fund that aims to assist developers with equity type loans in the affordable housing market. The GPF equity type loans enhances the bankability of projects, encouraging senior funders to participate. For more information or to apply for funding contact: Maki: Tel - 011 685 6600 or Email: [email protected] www.gpf.org.za 2 Back to top The Student Accommodation Fund (SAF) Introduction The Gauteng Partnership Fund (GPF) was founded by The Gauteng Department of Housing in 2002 as a mechanism for mitigating risk faced by private sector funding institutions in financing affordable housing developments in the province. The GPF funding model introduces a public risk capital strategy that assumes a first lost position. The GPF funding instrument therefore has a character of equity but in a form of a subordinated debt. The GPF plays a facilitation and funding coordination role between government and private sector. We translate government needs into a financial language that investors can understand. We ensure the level of financial risk sharing is balanced or appropriate for housing projects across all public and private investors. Background Research shows that the student accommodation market bucked the economic downturn. In the past few years South Africa’s Student accommodation market has emerge as a key asset class. This sector has attracted growing interest from investors, developers and private operators countrywide. Student numbers have climbed significantly in recent years. The swift development of South Africa’s middle class, rapid urbanisation and the influx of approximately 72 000 foreign students, mainly from Africa, have left tertiary institutions unable to house all their students. Recent figures from the education department show that student housing in residences currently provides for approximately 100 000 students, but the student population is 530 000. This means that, on average, fewer than 20% of students will find accommodation on campus. The lack of funding for tertiary institutions has created lucrative opportunities for a small number of niche developers and private property companies. They are taking advantage of the opportunity presented by the high demand and low supply in the student accommodation market. Due to the serious shortage of residence accommodation for university students in South Africa, the private sector is a potentially key role player in the provision of student housing. International research indicates that the majority of university students are accommodated in private student housing. Students’ living conditions play a significant role in their overall performance. • The overwhelming demand for student accommodation inevitably leads to abuse The private sector is a significant contributor and stakeholder in the provision of accommodation to university students in South Africa, as is the case internationally. • GPF can facilitate SMME and BEE companies into the sector in line with governments mandate The recently released Department of Higher Education and Training (DHET) report on the review of the provision of student housing at South African universities confirms that the tertiary institutions have delivered minimal new stock of student accommodation. The reasons thereof vary from the lack of funding to the fact that the provision of student accommodation is not regarded as the core function of the university and therefore not prioritised. GPF’s Intervention GPF’s role is seen as strategic as GPF fulfils the role of government with regard to interaction with the private sector and furthermore GPF’s existing primary mandate is to promote rental housing. GPF deems it prudent to intervene in the student accommodation because: • Student accommodation is a sub sector of rental housing and within the domain of GPF’s mandate • Students compete for accommodation with GPF’s target market any way • GPF’s financial intervention can lead to reduced rentals if the weighted average cost of funding is reduced • GPF can facilitate well managed and quality accommodation to students GPF’s primary intervention will be in keeping with our core function of providing funding to the sector. Thus GPF will engage in an extensive marketing campaign to create awareness of GPF’s additional focus. GPF’s secondary intervention is to liaise with the various stakeholders, like the Department of Education and Higher Learning institutions, and facilitate the delivery of student accommodation on their behalf. The Student Accommodation programme will be a stand-alone Fund. The rationale being that the Student Accommodation Fund will be developed for entrepreneurial rental housing institutions that require GPF’s assistance to ensure the feasibility of the project. The GPF subordinated loans to these for-profit entities enhances the debt to equity ratio for their projects to enable senior lenders to finance on more favourable terms. Back to top 3 Leveraging affordable housing finance Gauteng Partnership Fund is a partner of choice in the mobilisation and facilitation of funding for the delivery of affordable housing. 82 Grayston Drive, Benmore, Sandton 2196, South Africa | Tel: 011 685 6600 | Fax: 011 685 6696 www.gpf.org.za | [email protected] GPF A4Advert_Affordable Housing_FA.indd 1 4 Back to top 2013/11/04 2:18 PM
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