Mergence Investment Managers invests in innovative affordable rental housing project
Live Easy provides a “cool factor” accommodation rental solution for a price-sensitive yet aspirational resident profile
Kasief Isaacs, Senior Investment Principal: Private Markets at Mergence Investment Managers
Mergence Investment Managers, through its Infrastructure and Development Equity Fund, has acquired a controlling equity stake in a portion of the innovative affordable rental housing group, Live Easy.
Live Easy is one of SA’s largest affordable housing and lifestyle brands with a current ca 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: Private Markets at Mergence Investment Managers, said: “ We identified Live Easy as a first-of-its-kind initiative in South Africa, a true trailblazer 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 per month and a further 40% earning less than R20,000 per month. They need accommodation which matches their aspirations and has easy access to their place of work.
Mr 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 18 m2 home, with a kitchenette and bathroom, at an average rental of R3,250 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.
In line with the environmental, social and governance (ESG) investing ethos within the private markets business of Mergence Investment Managers, the Live Easy investment has both a social and an environmental impact.
Social – Live Easy has already impacted the lives of thousands of tenants. There is a long waiting list for units, with upwards of 300 queries per month at some properties.
Environmental – By deliberately focusing on the conversion of existing buildings, Live Easy has a smaller environmental impact than constructing apartment blocks from the ground up. It further plays a key role in revitalising buildings that otherwise may have gone into severe decline.
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.
The investment sits in the Mergence Infrastructure & Development | Equity Fund I. This fund has outperformed its benchmark of CPI + 7% , delivering a return of 16,94% to investors since inception in 2015.
The Live Easy deal pushes the Fund to near-closing the Mergence Infrastructure & Development | Equity Fund I. Mergence is raising capital for a sequel fund, the Mergence Infrastructure & Development | Equity Fund II.
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.