Commercial property finance provider at forefront of inner-city regeneration and empowerment

As a leading provider of commercial property finance with a specialised knowledge of the complexities of inner cities, TUHF's approach is underpinned by the founding principles "regeneration, empowerment and entrepreneurship" of SA's urban areas.

TUHF's core business is to raise bridging and mortgage finance from capital markets and commercial banks for entrepreneurs, from all walks of life, to purchase and subsequently convert or refurbish buildings in the inner cities to affordable residential units available for rental.

"We aim to stem urban decay and empower our clients to catalyse the regeneration of our neighbourhoods and communities," says Eastern Cape regional manager Velda Derrocks.

The finance provider raises a maximum of 80% of the funding needed for the completion of each project with a minimum equity requirement of 20% from the client.

When considering a loan application, TUHF follows a robust system, and looks at the collateral value of the building, only lending a maximum of 80% of the collateral value. The company works alongside the client on a feasibility document to ensure that the project will earn enough money to cover utilities, rates and taxes, bond and operating expenses. Therefore financing is not based on how much money prospective clients earn, but rather on whether or not the project will be able to cover all costs and expenses on its own.

The loan is at prime-linked rates, with no hidden fees and includes a once-off raising fee. A grace period during construction is also provided for to accommodate development and rent-up.

“We are essentially a do-good business,” says Eastern Cape regional manager Velda Derrocks who says the company goes the extra mile to provide support, guidance and risk management for new entrepreneurs. 

Since inception in 2003, TUHF has achieved a R3bn loan book, against its vision to achieve a R5bn loan book, and services every major city in the country.

“Our founding members and directors recognised at the peak of the exodus out of Johannesburg’s city centre in the 1990s, the potential of reviving the abandoned infrastructure of previously popular areas such as Hillbrow and Yeoville, which sadly turned into hotspots for crime.

“Their dream was to create a safe and secure environment for families to live in, and to unearth entrepreneurial capability to create well-run businesses, providing employment and multiplying our economy,” says Derrocks.

The TUHF pioneers’ vision has multiplied over the past 16 years into five branches, with the Port Elizabeth office - which also services Uitenhage and East London - having been established in 2011.

To date, TUHF Port Elizabeth has provided funding for 50 buildings in the inner-city for redevelopment and assisted 31 entrepreneurs in unlocking property investment as a long-term wealth creation tool.

“Our main focus areas in Port Elizabeth stretch from the Baakens Valley, Richmond Hill to Sidwell and Sydenham, and of course the entire CBD,” says Derrocks, adding that they currently have a loan book of about R103m in the Eastern Cape, servicing 646 units.

“We see it as an imperative to create decent living spaces. Of course, there is a commercial motive, but we are firstly passionate about making a positive impact on urban regeneration. Reviving the CBD area’s derelict buildings into residential rental spaces, also has the off-spin of people being closer to work, schools and shops.

“We also fund the conversion of inner-city buildings into student accommodation as we understand that universities are expanding,” says Derrocks. “But this is in exceptional cases where the landlord has access to diversified cash flow and cushion delayed payments by the universities – especially at the beginning of the academic year.

“Being a responsible character-based lender, I think it is very important to note that TUHF does not tolerate overcrowding and unsafe buildings. We are dedicated to the establishment of human settlements with sustainable living spaces.”

To this end, TUHF performs an annual review, which requires the physical inspection of the refurbished buildings to ensure that they comply with occupational health and safety regulations.

“We also maintain a good relationship with the municipality as service delivery stakeholder and we monitor the prompt payment of utilities, such as water and electricity.

“We engage in constant market research and perform a site inspection and feasibility study of the building that has been identified for redevelopment. We are streetwise!” says Derrocks.

For more information, contact the TUHF Port Elizabeth branch, BCX Building, 106 Park Drive, St. George's Park, or call +27 41 582 1450 or visit the TUHF website.

This article was paid for by TUHF.