TUHF Limited has secured a R700-million investment from Standard Bank through the bank’s Debt Capital Markets team.
This development follows TUHF’s successful execution of the Mortgage backed Securitisation of R650-million in December 2018. This new facility will be invested through the Vuselela Warehouse SPV, a special purpose vehicle, through which TUHF will continue its securitisation programme.
Speaking on this announcement, TUHF CEO Paul Jackson, said, “Our successful asset securitisation programme demonstrated two things for us. Firstly, that a securitisation product is something that the capital markets have an appetite for and, secondly, the strength of market confidence in our business.”
“TUHF offers commercial property finance loans funded through a combination of bilateral facilities and off-balance sheet securitisation structures. Asset securitisation structures form an important part of our funding architecture going forward. The Standard Bank warehouse facility gives us great impetus on the securitisation front. The assets funded by the warehouse facility will exit into the next securitisation programme. New assets will then come through the warehouse facility as we look to repeat this performance in the coming years.” adds Jackson.
The warehouse will be refinanced by the sale of the assets to the next securitisation and the process will be repeated as TUHF grows its loan book.
In 2019 TUHF’s loan book performance calculated since inception (over 17-years) was assessed in line with IFRS 9, an accounting standard on adequacy of loan loss provisions focusing on three crucial measures including probability of default, loss given default and exposure default. The outcome shows a low expected credit loss ratio indicating that TUHF’s commercial performance over time is extremely competitive.
“Standard Bank has been TUHF’s transactional commercial bankers since 1993, showing a long-term and successful relationship with the bank, where the bank remains impressed with our loan book performance and have expressed a keen interest in our property market niche.” says Jackson.
Inner-city property investment and development is based on multi-sector economies and high demand for well-located accommodation. This is a key driver for urban regeneration, neighbourhood revitalisation, urban diversification and local economic development, which have a knock-on impact on improving further local socioeconomic activity and inclusion.
“This deal not only demonstrates the confidence that Standard Bank has placed in our business – but shows that the inner-city property market is a solid and sustainable investment. It vindicates the inner-city as our investment destination which is consistent with our business growth objectives,” says Jackson.