A local currency Real Estate Investment Trust (REIT), Housing Solution Fund (HSF) has successfully completed its series 1 issuance under its N100 billion funding programme.
The fund authorised by the Securities and Exchange Commission was established in collaboration with development partners to provide innovative market-based solution to stimulate housing demand and sustainably scale housing supply by investing in affordable and accessible long-dated home loans, which is offered to eligible homebuyers in partnership with participating lending institutions and pre-qualified housing developers in Nigeria.
The fund is managed by alternative investment management firm, FundCo Capital Managers and co-sponsored by pan-African housing development financial institution – Shelter Afrique, alongside domestic pension fund managers and insurance companies, including FCMB Pensions, Fidelity Pensions, Radix Pension, Norrenberger Pensions, and Leadway Assurance.
Nigeria has an estimated population of 213 million. By 2050, the United Nations estimates that 75 per cent of the population will be living in cities; this translates into an annual housing requirement over the coming decades of at least 700,000 units to keep up with growing demand and urban migration.
Currently production is estimated to be less than 100,000 units per year, resulting in an overall accumulated housing deficit of about 26 million units, increasing yearly by 900,000 units. The estimated yearly cost to bridge the housing gap is put at over N21 trillion ($23.4 billion).
HSF’s primary objective is to ensure liquidity, affordability, and accessibility of the home loan market for potential homebuyers.
HSF Chief Investment Officer, Maurice Okoli, said: “We are excited to have completed our first series under our programme with a mix of Direct Foreign Investment (DFI), pension funds and insurance investors. We are confident that our innovative business model will play a pivotal role in increasing the housing stock in the market through strategic collaborations with key partners such as InfraCredit, Shelter Afrique, Nigeria Mortgage Refinance Company (NMRC) and eligible developers. These partnerships are designed not only to enhance the fund’s impact but also to contribute significantly to alleviating the housing deficit.”
The diverse commitment underscores the industry’s recognition of the HSF’s potential and its critical role in reshaping Nigeria’s housing finance landscape.
The fund’s collaborative funding model seeks to address the fragmentation of housing demand and supply-side activities by ensuring that the demand and supply-side intervention occur in a symbiotic and complementary manner.
On the supply side, eligible developers will access sustainable construction funding from domestic institutional investors and DFIs like Shelter Afrique on the back of guarantees from credit enhancement institutions like InfraCredit, thereby creating a strong pipeline of completed housing projects for the fund.
On the demand side, the fund will identify, evaluate and invest in affordable home loans through participating institutions towards the purchase of their homes, in collaboration with refinancing institutions like the NMRC.
Okoli said the model creates a replicable and scalable first of its kind integrated and coordinated structure for addressing a seemingly intractable housing market problem. Renaissance Securities (Nigeria) Limited acted as the issuing house to the fund series 1 issuance.
