South Africa: Mergence invests in affordable rental housing group
Mergence Investment Managers, through its Infrastructure and Development Equity Fund, has acquired a controlling equity stake in a portion of the affordable rental housing group, Live Easy.
Live Easy is one of South Africa’s largest affordable housing and lifestyle brands, with currently about 2,500 units in six building complexes in prime locations between Johannesburg and Pretoria in Gauteng, and with an additional 1,000 units under development. The focus is on the affordable housing segment, aiming to close the gap between social housing and privately owned homes. Live Easy was co-founded seven years ago by entrepreneurs James Huff and Jeffrey Froom.
Kasief Isaacs, senior investment principal for private markets at Mergence Investment Managers said, “We identified Live Easy as a first-of-its-kind initiative in South Africa, a true trailblaser in transitioning people living in unsuitable or undesirable conditions into a safe, secure and well managed housing environment.”
The tenant age profile ranges predominantly between 21 and 30 years of age. Many are in their first jobs or professions, with around 30% earning less than R15,000 (c. $887) per month and a further 40% earning less than R20,000 (c. $1,180 per month). They need accommodation which matches their aspirations and has easy access to their place of work.
Isaacs said that Live Easy provides a solution to this segment of customers who are price sensitive but demand an upmarket look and feel lifestyle with quality finishes, a variety of amenities and 24-hour security. It is particularly attractive to young women who make up 59% of the tenant profile.
The Live Easy units are so-called “nanos”, comprising an average 18m2 home, with a kitchenette and bathroom, at an average rental of R3,250 (c. $192) per month. There is a strong “cool factor”, with on-site amenities which include shared workspaces, wi-fi, lounges, chill areas, playgrounds, open spaces, retail shops, laundromats, gyms and creches. This allows for a fully integrated affordable housing solution.
Mergence acquired the majority stake in Live Easy from funds advised by Stockdale Street, with one of South Africa’s largest commercial banks and Westbrooke Alternative Asset Management respectively providing senior and mezzanine debt. Mergence’s legal advisers were Webber Wentzel.
As an institutional investor, Mergence invests on behalf of its largely retirement fund clients into sectors aligned with the revised National Development Plan and recent government infrastructure initiatives, including via public-private partnerships (PPPs). Sectors include affordable housing, bulk infrastructure, digital connectivity, education, healthcare, renewable energy (16 projects across wind and solar) and water, where Mergence is invested via a PPP in the only two long-term private water concessions in South Africa.
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