PROPERTY finance company International Housing Solutions (IHS) has invested more than R230m in Aengus Lifestyle Properties, a subsidiary of Aengus Property Holdings.

The investment takes the form of an equity facility, providing IHS with a 26% share in Aengus Lifestyle Properties, and allowing Aengus to raise additional debt finance for the acquisition and refurbishment of a further 2500 units over the next 12 months.

The units are situated in the inner city of Johannesburg, including the central business district, Braamfontein, Parktown and Hillbrow, where there is an acute shortage of quality rental stock.

The funding provided by IHS will be used to acquire further stock in the Johannesburg inner city and possibly further projects in inner-city Durban.

IHS business development director Phia van der Spuy says the investment in Aengus represents the company’s largest investment in affordable housing.

It follows recent large scale investments by the IHS Workforce Housing Fund — the conversion of the Greaterman’s building in downtown Johannesburg into residential units, the Carnival City housing development on the East Rand and the multibillion- rand integrated property development at Fleurhof in western Johannesburg.

“We were attracted by the quality of Aengus’s refurbishments and the standard of their property management. The sheer size of Aengus’s projects and the opportunity to bring to the market so many new good quality units during this period of decreasing interest rates, is really exciting,” she says.

Van der Spuy says IHS operates on an equity basis rather than on interest based income, meaning the company does not charge interest on its investment but instead shares in the profits of the project.

With banks increasing their lending criteria and decreasing their loans, it has become extremely difficult to obtain sufficient debt finance. The equity that IHS provides allows banks to mitigate their risk, thereby allowing developers to grow their businesses and manage their own capital more efficiently.

IHS acquisitions director Sam Mokorosi says: “The facility allows the Aengus group to grow their portfolio in a cash-flow efficient manner, while delivering profitable returns for our fund. It is expected that the facility will allow Aengus to raise debt finance for the purchase of new buildings and the refurbishment of new units to be made available for rent.”

Aengus CEO Richard Rubin says the facility would allow his company to expand significantly the pool of affordable units available for rent in the inner cities of Johannesburg and Durban.

“Our goal has always been to restore life to these inner city areas, and we believe that our existing projects have set the benchmark for affordable housing in areas previously characterised by limited supply and poor quality,” Rubin says.

Source: Business Day