Fund StrategyFund CapitalizationExit StrategyFund PerformanceImpactData Room

We seek opportunities where there is rapid growth in housing demand that is not being met by existing supply, and where there is a robust mortgage market.

Our investment strategy is tailored to local market conditions where economic and political conditions are supportive of development and private market investments.

We are committed to partnering with local companies to make the best use of existing capacity, while minimizing investment risk. We help build organizational strength among these local housing market participants to pave the way for further regional economic growth and to foster international partnerships.

Our investments are diversified across geographic regions and differ according to our partners and products.

We aim to go far beyond simply generating housing units, by creating viable communities through our mixed-income and mixed-use model.

Fund Capitalization

Fund I – South Africa Workforce Housing Fund

This $230 million fund is closed and fully committed and includes an $80 million participating debt facility provided by the United States Overseas Private Investment Corporation (OPIC), as well as investments by institutional investors from North America and South Africa.

IHS Fund II

First Close – July 2014

Final Close – Expected January 2017

IHS Fund II consists of two separate legal sleeves, one of which will invest 100% in South Africa and is ZAR denominated, and the other which will invest 100% in other targeted Sub Saharan countries and is US$ denominated. Investors determine the allocation to the sleeves based on their geographic priorities.

The fund has already attracted capital of approximately $180 million from a number of investors, including OPIC participating debt, and $30 million “green capital” from the IFC Global Environmental Facility and KfW, which will be used to improve the energy and water efficiency in units.

 

Our investors include:

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Exit Strategy

The typical duration of individual projects is expected to be between five and seven years, with all projects fully exited by the maturity of the funds.

The current residential real estate market for exiting investments in Sub Saharan and South Africa is strong, driven by several factors including ongoing demand for developed homes by end users and robust sales or listings of rental portfolios.

Fund Performance

Fund I – South Africa Workforce Housing Fund

IHS Exits:

PROJECT
1. Hatfield
2. Dainfern Estates (Dev)
3. Summerset
4. Stuttafords
5. The Mews
6. Fleurhof (Dev)
YEAR EXITED
2012
2013
2014
2014
2015
2016

The weighted average internal rate of return of the exited deals, based on capital invested, is 25.2% with an average multiple of 2.47

Fund I – South Africa Workforce Housing Fund

  • First close in 2008 – 10-year fund, now fully committed
  • 35 investments with 19 developer partners yielding about 27 000 units in South Africa, with 85% of units affordable to low-and moderate-income households
  • Income growth of 5%-6% in our stabilized rental portfolio
  • High occupancy rates (over 90%) with arrears far below the national average (17.8% at March 2016) as reported by TPN (Registered Credit Bureau)
  • Completed or began construction on over 15,000 units
  • Sold over 10,000 units

Fund 2 – IHS Fund II

  • First close in 2014
  • $180mn capital raised to date
  • OPIC loan of up to $80mn additional capital closed in 2015
  • Our Investment Committee has approved eight rental turn-key investments to date
  • Six projects have closed to fund 1,630 units, five of which have utilized the green investment facility (1,150 units or 72%)

Impact

At International Housing Solutions we pride ourselves on the lasting legacy of our developments, and the significant difference they make to the lives of thousands of South Africans.

An independent study, conducted by the University of Cape Town, found quality and well located housing, which provides access to social amenities, had a profound impact on the lives and overall welfare of the residents.  Over 72% of the households polled said their lives had improved significantly.

Highlights from the latest social impact study into our SA Workforce Housing Fund show the following benefits in the areas of job creation, economic growth and development and our track record in quality governance:

JOB CREATION

  • The impact of the fund equates to jobs for more than 4000 people at present, of whom 85% are considered previously disadvantaged and 10% are women.
  • An independent report estimates that 100 000 jobs will be created over the life of the fund, of which 5 000 per annum are expected to become permanent.
  • Almost all of the previously disadvantaged workers who were employed in our projects were unskilled and came from the local communities in which our developments are located.

ECONOMIC GROWTH AND DEVELOPMENT

  • The SAWHF has investments valued at more than $230 million, and we have unlocked major public sector funding through infrastructure, subsidies and guarantees.
  • 82% of our funds are invested in low-income areas.

SOCIAL

To further extend the positive impact countrywide, IHS provides ongoing support and funding for:

  • The Hope Factory and TSA Africa which provide mentorship and support to assist in job creation for disadvantaged entrepreneurs;
  • A bursary scheme for students at the University of the Witwatersrand in Johannesburg;
  • Learnerships and employment for women with disabilities, and
  • The Al Noor Orphanage.

ENVIRONMENT

IHS abides by the International Finance Corporation’s Performance Standards for Social and Environmental Assessment, which is strictly enforced in all our projects.

We also provide quarterly and annual social impact reports that track the impact and performance of all our closed transactions.

GOVERNANCE

IHS maintains a rigorous system of governance and detailed reporting for its funds to keep investors well-informed on issues affecting the ongoing performance by:

  • Providing transparent and clearly regulated internal processes;
  • Ensuring investors have key approval rights;
  • Regular site visits;
  • Detailed quarterly reports;
  • Annual advisory committee meetings, and
  • Obtaining internal and 3rd party valuations of all projects.

Social Impact Audit Report
Candidate Countries Report
Case for South Africa

 

 

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