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1
Towards the Establishment of the Special Purpose Vehicle for
Land
PORTFOLIO COMMITTEE(TRANSNET/PROPNET/SPOORNET LAND)
13 September 2006
2
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
3
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
4
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
5
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.
6
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
7
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
8
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…
9
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…
10
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.
11
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.
12
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
13
REA
LEBOGA