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Towards the Establishment of the Special Purpose Vehicle for

Land

PORTFOLIO COMMITTEE(TRANSNET/PROPNET/SPOORNET LAND)

13 September 2006

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Structure of Presentation1. Ministerial Engagements

a) Disposal of Non-Core Assets

b) Consultative Processes

2. Process of Negotiations (Propnet)

3. Incidental Processes

3. Way Forward

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Ministerial Engagements

Disposal of Non-Core Assets:1. Properties to be donated to NDoH

– Zero Value (Consumption costs to be borne by the NDoH managed SPV)

2. Properties to be Acquired:– Book Value Price (Includes pricing from R1-00 to

Book Value amount);

– Market Related Price – Location of Property;

3. Collaborative Development Initiatives– Facilitated and Managed by the Property Owner

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Ministerial Engagements

Follow-up Consultative Processes:• NDoH appointed Land Task Team;• Released List of Properties by DPE (Propnet);

• Desk-Top Exercise – Analysis of the Released List and identification Process;

• Property Verification – Task Team Members• Submitted Recommendations, to the Minister, on land and landed properties found suitable for integrated human settlement development

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Process of Negotiations

Department of Public Enterprises:• State Owned Entities (SOEs) under

DPE Management.• Properties to be disposed of by the

following SOEs:– Propnet – 607 listed properties;– Transnet – List outstanding;– Spoornet – List outstanding.

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Process of Negotiations…

Propnet Land and Landed Properties:

• Circulated list covered - 607 Non-Core Assets;• Total depicted extent – 8614, 3592 ha• Total Book Value – R928 997 564-00• Propnet Properties were verified by the Task

Team in December 2005 and January 2006;• Current Negotiation:

– Draft Deed of Sale Agreement is with NDoH– 127 Properties ready for acquisition by the SPV;– Total Book Value – R132 000 000-00– Propnet Evaluations - R210 496 638-00– Variance - R 78 496 638-00

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Process of Negotiations…

Propnet Land and Landed Properties:

• Offer to Purchase:– Letter of Offer was sent to Transnet CEO (cc DPE) – July

2006;– Minister’s directive:

• Propnet must still indicate extent of properties to be donated to the SPV

• Propnet must still indicate extent of properties to be sold at Book Value Price;

• Propnet must still indicate extent of properties to be sold at Market Price (The submitted Propnet quote of R201 496 638-00 is market related);

• Propnet Board is still expected to respond to NDoH request – Zero vs. Book Value vs. Market Price

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Propnet Land and Landed Properties:

• City Centre Properties have been largely shifted to the category of CORE Properties for DPE – SPV had limited access;

• Most of the 127 properties, although ideally located for integrated housing development, they are still in the periphery of places of work and/or City Centres

Process of Negotiations…

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Propnet Land and Landed Properties:• Deed of Sale:

– Draft Deed of Sale has been submitted to NDoH (Operating Costs – NDoH)

– Outstanding Valuations by NDoH (SPV)

• Capital Funding:– Motivations will now be submitted to DLA;– Compliances Issues will be met by SPV

Process of Negotiations…

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Process of Negotiations…

• Transnet Land and Landed Properties:– List to be submitted to the NDoH (SPV) before

end of September 2006;

• Spoornet Land and Landed Properties:– List to be submitted to the NDoH (SPV) before

end of September 2006;

• Process of verification and Negotiations will be embarked upon soon thereafter.

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Incidental Processes

• Confirmation offer Letter - Propnet: Zero Pricing – Donation of Property and incidental holding

management costs ; R1-00 to Book Value Costs; Market Related Costs

• Second Batch of well located land and landed properties: Propnet still busy with valuations and confirmations; NDoH verified further properties and submitted those to

Propnet;

• Collaborative Development Opportunities: Key Areas allowing NDoH participation is yet to be finalized by

DPE.

• Signed Deed of Sale Agreement – NDoH Date • Capital Programme and Transfer of Properties to the SPV.

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Way-Forward

• Noted Extent of Propnet Land to be disposed to SPV;• Book Value Pricing of 127 Properties – Comments;• Market Related pricing by Propnet – Comments;• NDoH SPV will be a wholly owned State Entity, so is

Propnet:– Desired Capital by Transnet to fund planned Capital

Projects over the next five (5) years;– Scarcity and/or expensiveness of well located land and

landed properties – Assistance by Propnet• Core to Both Public Entities:

– Off loading of Non-Core Assets – Core to NDoH– Purchasing of Non-Core Assets – Core to Propnet

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REA

LEBOGA