Eris’ SASAII raises R865million in capital
Eris Property Group is excited to announce that it has successfully raised `an additional R365 million for its social impact student accommodation company from a stellar consortium of domestic and international investors including Momentum Metropolitan Life, Eskom Pension and Provident Fund, International Finance Corporation and the Danish Sustainable Development Goals Investment Fund, managed by IFU. Several other investors have also expressed an interest to participate and are at various levels of obtaining approvals, however the company is still targeting raising up to R2 billion.
“Eris has been leveraging on its existing skills within property developments and management to alleviate the need for student accommodation shortages in SA. Our RISE Student Living property management service is completely tech-driven, whereby the entire leasing process, encompassing every stakeholder involved, happens digitally”, says Johan van Vuuren, Executive Head – Student Accommodation.
The platform’s first investment Units on Park, Hatfield, a 988-bed student accommodation property developed and managed by Eris Property Group was completed in November 2019, is performing well since its first intake in 2020. Eris’s dynamic approach to private student accommodation 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, laundry as an all-inclusive rental. The company’s new projects that are underway are Units on Jorissen, Braamfontein, which is targeting Wits University with 998 beds. (potential to increase this to 1071, subject to council approval), and Units on Station Square, Cape Town CBD which is targeting Cape Peninsula University of Technology and surrounding academic institutions, with 3085 beds.
“We have had great success attracting international investors because of the platform’s compelling investment return profile and would therefore like to receive more support from local investors” says Vuyani Bekwa, Eris Property Group’s Executive Head of Investments and Fund Management, “With the four international and local investors, another two or three substantial local investors will complete the picture. Though our minimum investment amount is R50 million, the minimum that we have received so far is R150 million per investor. The platform is targeting a minimum IRR of 16% after fees and taxes.”
The company is structured so that fees are only applicable to drawn capital during the deployment period, rather than all capital committed, ensuring that investors receive value for any fees charged by the manager,” says Bekwa. “The intention is to add to the number of beds available in the market, 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.”
“Our investment in Units on Park forms part of our responsible investing initiatives which provide quality, purpose-built student accommodation. This investment fully demonstrates the tangible effect our investments can have on real people and their lives.” says Sonja Saunderson, Momentum Alternative Investments’ Chief Investment Officer.”
The platform will be converted into a REIT at listing or when regulations allow, adding to the number of listed companies on the JSE. This liquidity event releases any capital that these investors would have pumped into the platform.