Eris Property Group says it has raised an initial R500 million for its social impact student accommodation fund from a consortium of domestic and international investors including Momentum Metropolitan Life, Eskom Pension and Provident Fund and the International Finance Corporation.
The property development, services and investment group, said it has been leveraging on its existing skills within property developments and management to alleviate the need for student accommodation shortages in South Africa
The company recently unveiled its sub-brand RISE Student Living.
The investment vehicle’s first investment was Units on Park, Hatfield, a 988-bed student accommodation property developed and managed by Eris Property Group.
“This transaction marks the first of a pipeline of assets currently under consideration for development and inclusion in the fund. Units on Park was completed on 1 November 2019 ready for the first intake of students in January 2020.
“The fund is considering various projects with the objective of aggregating a quality portfolio of prime assets in select cities across South Africa,” it said.
Eris said it will endeavour to commit to projects that house a minimum of 70% of the beds at the NSFAS (National Student Financial Aid Scheme) rates or below, ensuring that students are receiving Wi-Fi, water, electricity, as an all-inclusive rental.
“Our intention is to seek further capital in the next 12 months as we have a number of exciting opportunities for the fund,” said Vuyani Bekwa, Eris Property Group’s executive head of investments and fund management.
“The minimum investment amount is R50 million, and the fund is hoping to attract the attention of fund managers and pension funds, or those investors with long-term investment horizons.”
The company is expected to contribute to the significant shortage of quality student accommodation in South Africa, with the added benefits of job creation and additional work in the construction sector, which we regard as essential in these times.
The company is structured so that fees are only applicable to drawn capital, rather than all capital committed, ensuring that investors receive value for any fees charged by the manager,” said Bekwa.
“We are targeting a 14% internal rate of return after tax (CPI plus 8%), so we believe our investment proposition is very attractive over the long term. The intention is to add to the number of beds available, and not to acquire existing projects, however that will be dependent on the ability to deploy the funds, which we have been working on for the past three years.”