The GPF was established by the Gauteng provincial government to address specific challenges in the social housing sector in terms of affordable rentals. The GPF’s mandate is to facilitate, through partnerships, delivery of affordable housing to income earners of below R15 000. The GPF has, over the last ten years, funded developments yielding over 20 000 housing units through partnerships with the private sector.

Two housing projects that were part-funded by the Entrepreneur Empowerment Fund (EEPF), which is administered by the Gauteng Partnership Fund (GPF), have successfully been completed both on schedule and within budget. The projects were given the go ahead after business plans were submitted and the prospective entrepreneurs underwent stringent approval process conducted by a panel established by the GPF.

The projects, based in Pretoria and Kempton Park, are rental housing developments. The project in Pretoria was a refurbishment and redesign of an existing apartment complex, while the Kempton Park project was a brand new development.

Speaking to Engineering News, GPF acting CEO Boni Muvevi said: “We are delighted to see the first two projects part-funded by the EEPF come to fruition. It is another milestone for the GPF in successfully supporting the development of affordable rental housing by entrepreneurs who cannot access funds from traditional financial sources for a first time property development initiative.”

“The EEPF was set up in 2010 to assist historically disadvantaged individuals (HDI’s) to enter and develop the affordable rental housing market. While our mandate is to leverage private sector funding by providing equity type loans to affordable housing projects, the majority of GPF’s funding is committed to projects that are undertaken by not-for-profit Section 21 companies, municipal entities and some non-empowered companies.

“Black applicants face a myriad of challenges or constraints. Therefore, we have adopted a holistic approach to promoting black economic empowerment (BEE) participation in the affordable housing market. Issues such as lack of equity to contribute towards projects, a lack of capacity to package bankable proposals, the inability to compete for stock, access to funding from the traditional banks and so forth,” explains Muvevi.

GPF considers BEE-driven affordable housing projects to have more flexibility than those undertaken by established companies. The aim is not to stop at one project but for entrepreneurs to complete a project, rent it out, pay back their loans and to continue to develop other rental housing projects successfully, he says.Last year, the GPF partnered with the National Housing Finance Corporation (NHFC) to establish the EEPF with a start-up fund of R200-million.

“Since 2010, we have processed 44 successful applications, 11 companies were identified in 2011, 20 companies in 2012, and, so far, this year 13 companies have been identified. Of the 44 companies, 26 projects have been approved for funding and the projects are in different stages of implementation, ” says GPF investment officer Vinolia Mashiane, who is specifically tasked with the administration of the EEPF. “Applicants are invited to participate yearly through public tender.

There has been substantial growth in the number of applications/proposals received and, as a result, we have decided to increase the number of in-takes for the EEPF programme from once to three times a year,” she highlights.Participants of the programme receive up to 40% project funding from

GPF, which includes a maximum interest free loan of up to R2-million, depending on the projects cash flows. “Our loan repayment terms are also flexible, between 15 and 20 years, depending on a projects financial feasibilities. Our undertaking is not restricted to part-financing – we also have four mentoring companies with different property industry expertise to assist with capacity building for our entrepreneurs,” Mashiane adds.

Pretoria CBD Development

Castle Crest Properties identified a dilapidated 23-unit apartment complex in the Pretoria Central Business District. The biggest obstacle was obtaining finance, with traditional outlets requiring unrealistic equity upfront. Upon approaching the GPF, a more open-door and proactive approach was offered.

Castle Crest Properties obtained a 36% loan on a R12-million project from the GPF, with 7% of the loan being interest-free. This enabled the developer to expand the apartments to include 43 units comprising 35 m² bachelor units and 40 m² one-bedroomed units. Three retail shops on the ground floor of the building were also renovated.

The GPF also afforded Castle Crest Properties bridging finance to acquire the property while waiting for senior funder approval. The development will be known as Joe’s Place and there is already a waiting list of interested tenants. The project was completed ahead of schedule and within budget.A Castle Crest Properties spokesperson says plans are in place to develop further rental accommodation with the GPF, which the developer believes the parnership to be mutually beneficial and positive. The assistance provided to Castle Crest Properties in the initial phase of its relationship with the GPF was invaluable, says the spokesperson.

Kempton Park Development

Tsebò Consumables Supplies’ Dennis Marodi found vacant land at 76 Kempton road, Kempton Park, that he thought suitable for a greenfield development. With his business plan assessed and restructured, and mentoring assistance from the EEPF, he sought to ensure that environment-friendly materials were used wherever possible.

Marodi said: “Without the hand-holding, mentoring and the finance offered by EEPF, I would never have got this project off the ground. The learning process was huge and has secured my success for future developments that are in the pipeline.”

In this 22-unit apartment complex, comprising 18 X 2 bedroom units and 4 X 1 bedroom units, aluminium window frames, energy saving electrical installations such as light-emitting diode light bulbs, granite counter tops and facebrick were used to keep maintenance costs low and ensure that the development is as green as possible.

The GPF provided the R8.1-million project with 40% funding of which R1.5-million is interest free. The project was completed within budget and on schedule. The site manager has already compiled a list of prospective tenants, as the demand for affordable accommodation is high in the area.

“I am inspired by the determination and efforts of the applicants to EEPF. They embrace and use all we have to offer them thoroughly and constructively. I am also delighted to report that 50% of the successful applications we receive are from women entrepreneurs,” concludes Mashiane.