The South African Housing and Infrastructure Fund (SAHIF) is on a serious mission; to address the housing crisis in South Africa.
The newly launched land fund, SAHIF has expressed a non-binding interest to acquire a Johannesburg Stock Exchange listed company, Freedom Property Fund, trading as FDP on the JSE main board as released on SENS (Stock Exchange News Service).
SAHIF is looking to acquire all of the issued shares of Freedom subject to a due diligence investigation, exclusive to SAHIF, which is expected to take roughly about three to four months (120 days) to complete.
To advice on the potential takeover of Freedom Property Fund, SAHIF has appoint one of SA’s leading law firms, Bowden and Cliffe Dekker Hofmeyr.
According to SAHIF CFO, Kameel Keshav, part of the due diligence to be done will be to determine the net asset value (NAV) of Freedom Property Fund. “Should the outcome of the due diligence be favourable, SAHIF will likely make a formal offer for Freedom Property Fund,” says Keshav.
Formed in 2012 and listed on the JSE main board on 12 June 2014, Freedom Property Fund Limited is a capital growth fund with mainly a geographically diverse land portfolio as well as income producing property which hold a combined value of just over R1.5 billion as reported in the last released financial statements for the company.
SAHIF belives this is a strategic move for the newly launched land fund to make its mark in the real estate industry.
“This proposed acquisition of Freedom Property Fund will add significant value to our business by accessing the strong pipeline of strategically located land opportunities which all have been identified as future residential affordable housing developments matching our business model. As SAHIF, we are here to create something that is extraordinary in the (real estate) sector; something unusual without losing our focus of contributing to the shortfall of serviced stands in South Africa,” says Keshav.
The land fund, SAHIF, is interested in Freedom’s large parcels of land, which are said to be suitable for the development of affordable housing.
These land parcels include the Tweefontein Residential Estate in Steelpoort, Limpopo, and the Tubatse Residential Estate in Burgersfort, Limpopo, which comprises around 337 hectares, according to Freedom’s website.
Freedom Property also trades at a large discount to its asset value.
The company currently has a market cap of ZAR 72m (USD 4.7m) relative to a portfolio value of ZAR 1.5bn (USD 99m), according to a SAHIF press release.
“This is just the first of many bold moves planned for SAHIF over the coming years. We continue to be a company that will enter into the right opportunities to enhance the value of our business. This acquisition will bolster our consolidated land pipeline geographically allowing us to delivered on serviced stands in new areas of the country and ultimately addressing the housing crisis in South Africa,” says Rali Mampeule, CEO of SAHIF.
The South African Housing and Infrastructure Fund
SAHIF was officially launched on the 2nd of July 2019 with the aim to fast track the delivery of serviced stands for poor and middle-class South Africans.
The fund is a unique initiative that focuses on increasing and accelerating delivery of affordable housing units (serviced stands) through acquisition of vacant and unused land near cities, town centres, shops, parks, schools, public transport, public health care and places of work (all within the urban edge).
SAHIF’s objective is to assist government and private sector to address the shortfall of promised homes to South Africans that have not yet been built, which exceeds 1.7m homes.
SAHIF has a target of 108,160 service stands units to be delivered over the next 3 years, which will impact over 430 000 lives with a fund size of R15.3 Billion.
The roll-out of this fund has previously created 4,731 jobs and will provide an additional 6,953 jobs in the future. This will essentially create a total of 11,684 jobs by the end of the 3 year term.