Alleyroads (or “the Group”), a leading affordable housing developer, has received funding from Jaltech, one of its Power Purchase Agreement (PPA) funders, to retrofit a portfolio comprising rental apartments and student accommodation recently onboarded as part of the R1.2 billion Pulse Property Group acquisition. Some of the Jaltech funding has also been allocated to install new energy saving systems at some of the Group’s current developments.
Alleyroads is the first affordable housing developer in South Africa to provide off-grid power solutions at its new developments and retrofitting existing assets forms part of the Group’s strategy to reduce reliance on the national power grid and save tenants money on electricity bills.
“Where feasible, we have earmarked the full Alleyroads portfolio including properties in Cape Town, East London and KwaZulu-Natal’s South Coast to be fitted with either grid-tied solar or full off-grid solutions.
“The Jaltech funding enables us to retrofit our newly acquired and existing portfolios to reduce energy consumption in buildings, save tenants money on energy bills and reduce the Group’s greenhouse gas emissions,” says Ivan Pretorius, Founder and Chief Operating Officer of Alleyroads.
Retrofitting refers to a significant energy upgrade on a building to make it more energy efficient. This includes the installation of solar panels, upgrading insulation and smart energy management systems, resulting in reduced energy costs for tenants or building occupiers.
Pretorius explains that the Group partnered with Jaltech as they are specialists in financing solar installations for businesses and solar installers offering Power Purchase Agreements. Jaltech is an alternative investment fund manager with approximately R2bn of retail investors’ capital under management.
“Jaltech's unique advantage lies in their ability to provide an off-balance-sheet funding solution with competitive rates and tenure compared to traditional financial institutions. A longer funding term makes investments in solar and off-grid solutions much more feasible.
“We hope to raise additional capital through Jaltech to expand our investment into solar,” says Pretorius.
According to Jonty Sacks, a Partner at Jaltech, solar financing with Jaltech provides a spectrum of funding solutions competing with traditional bank offerings to traditional power purchase offerings, but key across all solutions is that Jaltech distinctively eliminates the necessity for property owners to provide equity. Additionally, Jaltech offers terms extending up to 20 years, in contrast to traditional banks, which typically provide a 7-year term for solar asset financing.
Sacks emphasises that "the ability of Jaltech to provide solar financing for up to 20 years often leads to the system generating a higher Rand value of electricity than the annual capital payments to Jaltech.
“This translates into a positive cash flow position for the property owner right from the start. This competitive edge has been instrumental in Jaltech successfully financing hundreds of millions of Rands in solar projects during 2023."
In 2023, Alleyroads acquired Pulse Property Group and its portfolio of 2 200 student housing accommodation units and 1 100 affordable rental apartments across 46 developments in the Eastern Cape, Gauteng, and Western Cape provinces.
Including this acquisition, Alleyroads’ portfolio comprises over 6 500 affordable apartments and student accommodation. Rental prices range from R4 000 to R6 000 per month, catering to lower-to-middle income households with an average annual salary of about R238 000.
