Firms in season of alternative capital raise to build homes, create jobs

As bank credit continues to be elusive with high-interest rate where available, many real estate investors are, increasingly, taking to alternative sources to raise capital to build homes and create jobs for Nigerians. In this circumstance, bonds and Sukuk are soft targets.

Expectation is that when all these funds are secured and fully deployed, the housing market would be the better for it while homeownership would rise significantly, narrowing the housing gap and adding to the growth of the economy.

The latest in this league of fundraisers is Octo5 Holdings Limited, a real estate investment firm, which is planning to raise a minimum of $100 million intent on building and delivering 10,000 homes across Nigeria and also creating 100,000 jobs through its planned skills enhancement programmes.

Jide Odusolu, the firm’s Founder/CEO, who disclosed this in Abuja at the weekend, added that capacity building through technology and manpower development was a major gap the company was exploring.

Odusolu disclosed that the company has, over the years, made efforts to champion innovation in the real estate industry to provide affordable housing for all, adding that Octo5 prioritises every step of the development process from concept to completion and hand-over.

“Octo 5 was established as a leading player in Nigeria; it brings both affordable and middle-income developments to market and nurtures them into inclusive occupied communities,” he noted.

Read also: How Purple is leveraging Sukuk Bond to redefine property devt dynamics

He noted that despite the challenges slowing real estate sector growth in Nigeria, the sector remains, possibly, the largest and most transformational piece of the puzzle to unlock wealth for Nigerians.

“This sector has over $900 billion in dead capital, as stated by PWC, and a minimum annual GDP share of $50 billion, yet it remains largely unstructured, under-funded, and true demand outstrips supply; we believe that as more Nigerians become real investors in the economy, the system will of necessity become better. That vision is what has propelled us to date,” he said.

Earlier, Family Homes Funds Limited (FHFL) had successfully completed the issuance of N10 billion under its N30 billion Sukuk Issuance Programme, targeting affordable housing for low-income earners seeking homes to own.

The 7-Year 13 percent Series 1 Ijara Lease Sukuk due 2028, according to authorities of the Funds, is the first-ever certified corporate Sukuk issued in Nigeria and it is expected to provide the necessary support for FHFL’s goal of providing affordable homes across Nigeria.

It is expected that the net proceeds from this issue will finance new homes for Nigerians on low income across Nigeria. Femi Adewole, FHFL’s CEO, explained that this issue would contribute to their objective of developing up to 200,000 homes by December 2022.

Purple Group, another real estate investment firm with a strong bias for retail and mixed-use developments, had also raised an undisclosed amount of capital through Sukuk for purposes of adding to its portfolio of both residential and commercial real estate projects.

“Purple is looking to build on the success of its flagship mixed-use project, the Maryland Mall and other residential projects, to grow its real estate footprint by delivering similar assets within the next five years and up to 1000 residential units,” Laide Agboola, the firm’s CEO, disclosed in Lagos recently.

Determined to deepen monthly rent, which is rare in Nigeria, Alpha Mead had also raised a fixed-rate series one $1million private placement bond for its rental scheme called Rent4Less. The scheme is designed to support individuals and small businesses with flexible, monthly pay-as-you-use rent for homes and offices.

The senior secured Private bond issue is another milestone in the series of the company’s expansion strategies to increase access to shelter and establish the culture of monthly rent payment across Nigeria and Africa’s housing and office markets.

The $1million bond issue or funding is coming as a result of an outstanding early growth of the product and the trust that the investment community reposes in Alpha Mead,” explained Damola Akindolire, managing director of Alpha Mead Development Company (AMDC), a subsidiary of the group which oversees Rent4Less.