Property developer Frank Gormley and a US partner are planning to raise a total of €780 million to fund affordable housing projects in South Africa, the Middle East and other regions.
International Housing Solutions (IHS), a joint venture between Irish investors headed by Mr Gormley and specialist US financier Munimae are establishing a fund to invest in affordable housing in various locations around the world.
The venture has won a €77 million affordable housing tender from Overseas Private Investment Corporation (OPIC), a US government-sponsored agency that channels private finance into projects in emerging markets and developing countries.
Mr Gormley and Munimae are seeking to raise additional funding to add to OPIC's €77 million. This will bring the total fund to €231 million. According to IHS chief executive, Cathal Conaty, it is hoping raise about €80 million from Irish investors.
"That will then be leveraged to provide a total of €780 million for affordable housing for low- and middle-income households in Africa and the Middle East," IHS said yesterday. "A significant portion of the investments will target South Africa."
Mr Gormley is chairman of property developer Howard Eurocape, which is already active in South Africa. The company has invested €40 million in a block in central Cape Town.
IHS will operate by building reasonably-priced homes for low- and middle-income families in regions where demand outstrips supply. Local developers will build the houses.
As the houses are sold it will be repaid before the local partner is paid. The pair will split the profits from the sale.
Along with new developments, IHS will also buy and renovate residential properties in major cities. Mr Conaty said this approach delivered cash flow faster than new developments.
"The demand for rental apartments in these areas tends to be very high," he said. "The objective will be to amass a significant portfolio of these properties with a view to either a listing on the local stock exchange or a portfolio sale towards the end of the term of the fund."
The fund will have a 10-year term. IHS predicted yesterday that the investment would deliver returns of over 20 per cent a year after local taxes have been paid in the countries where it carries out the work.
Mr Conaty said cash invested by Irish investors could be put to use quickly as IHS already has a strong pipeline of potential projects, particularly in South Africa, a market with which it is already familiar.
Howard Eurocape is a major property developer in Ireland, the UK, Poland and South Africa, while Munimae is one of the world's largest funders of affordable housing.
Munimae has assets under management exceeding $18 billion, including investments in more than 320,000 housing units in 49 US states.
Munimae and its subsidiaries provide debt and equity financing for developers and owners of real estate and clean energy projects.
