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investors
do inner cities,” explains Jackson.
“We buy debt as cheaply as possible,
add on 3,5% and take the risk, and
hopefully give a return to investors.
You have to understand, you could
live downtown for nothing in derelict
and hi-jacked buildings, where land-
lords provided no services. Into that
market comes TUHF, and the muscle
behind it, which was prepared to risk
effectively R60 million in those days
and ICHUT’s R11 million in equity.”
Jackson has worked in downtown
Braamfontein since 1996, and what
had dawned on the TUHF team was
that the city was not just about crime
and grime. There was an economy.
“It’s really about what you see. When
we saw what landlords were provid-
ing we realised that if we offered
decent accommodation and good
service, we could become a national
organisation.” Jackson quotes TUHF
Board member Taffy Adler, former
CEO of the Housing Development
Agency and the Johannesburg Hous-
ing Company, who once said, ‘We
have to get impact through scale’.
As long as we stayed in the market
we wanted to be big. Our board was
always unequivocal about the fact
that we wanted the business to grow
through scale. We set up a really well
run businesswith a national presence
and we wanted to be independent.
The second thing, says Jackson,
was the funding model. He visited a
number of countries looking for the
best operating model for TUHF. Hav-
ing accessed various operating prin-
ciples and procedures he finally took
a leaf out of ShoreBank, a Chicago
based mortgage financier funding
mom and pop stores. ”We owe them
a lot, since we have retained a lot of
what made them successful. Mary
Houghton of ShoreBank grappled
with development impact.” She said,
‘no money, no mission and get slo-
gans that encapsulate the company’.
“We started as a ‘not for profit’ Sec-
tion 21 company, but we were actu-
ally a company not for loss. We were
paranoid about breaking ever since
December 2004, and have been a
profitable, hard-nosed commercially
run company since then. We worry
about the bottom line and returns
for our shareholders,” says Jackson.
TUHF’s businessmodel was toborrow
from the debt capital markets, lend
to lots of people, whether on or off
balance sheet or corporate bonds,
secure investments, find deals and,
if they were too big for TUHF, do joint
finance. We would do the work and
take a fee for it. We essentially trade
in debt capital.
TUHF was open for business with
financing from the NHFC and other
Development Finance Institutions, ,
and looking forward to relationships
with ShoreBank, ICHUT, and board
members Cas Coovadia, Taffy Adler,
Jill Strelitz and Cedric de Beer from
Nurcha – all the usual suspects.
The impact of access to finance,
urban land reform and scale of hous-
ing supply saw the NHFC make loans
totalling R330 million. “We maxed
out with them, I guess,” says Jackson.
TUHF has only been constrained
by its ability to borrow and to date
had lent a total of R4,3 billion to
inner city property entrepreneurs.
However, to attract funding from
various commercial banks, asset
managers, and international govern-
ment funded agencies, TUHF had
to change from a Not for Profit to
a public company. Debt financiers
are uncomfortable lending to a NGO.
TUHF’s main shareholders include
NHFC, PIC and Futuregrowth. TUHF
established a commercial arm, TUHF
Ltd. Essentially TUHF NPC sold its
loan book to TUHF Ltd and sought
shareholding from NHFC and others.
“In June 2012, we brought on
board new strategic shareholders
who had attributes such as capital
patient, a developmentmandate and
debt financing capabilities.” Hence
the shareholding was put together
and TUHF has grown the book to
R2,3 billion. “In total we have
lent over R4 billion, financed 360
entrepreneurs and 34 500 units. We
11
inner city
Paul Jackson
Continued
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