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Welcome to the UDZ TAX INCENTIVE CONFERENCE Day 2 19 Aug 05

Welcome to the UDZ TAX INCENTIVE CONFERENCE Day 2 19 Aug 05. PROPERTY DEVELOPMENT IN JOHANNESBURG INNER CITY - IMPLICATION FOR BEE COMPANIES / CONSORTIUM. Presented by Hatla Ntene 19 th August 2005. DEVELOPMENT ORGANISATION STRUCTURE. PROFESSIONAL TEAM CONTRACTORS. DEVCO

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Welcome to the UDZ TAX INCENTIVE CONFERENCE Day 2 19 Aug 05

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  1. Welcome to the UDZ TAX INCENTIVE CONFERENCE Day 2 19 Aug 05

  2. PROPERTY DEVELOPMENT IN JOHANNESBURG INNER CITY- IMPLICATION FOR BEE COMPANIES / CONSORTIUM Presented by Hatla Ntene 19th August 2005

  3. DEVELOPMENT ORGANISATION STRUCTURE PROFESSIONAL TEAM CONTRACTORS DEVCO DEVELOPMENT COMPANY One Investor or Consortium Management Company INVESTOR/INVESTMENT COMPANY Outsourced Cleaning Security Maintenance etc Sales and Leasing

  4. Relationship between borrowed money and owner’s equity Equity Debt Gearing FUNDING • Property finance requires a balance of equity and debt • Equity is a limited resource • Gearing at right levels enhances returns

  5. EQUITY FINANCIERS • Investment is unsecured • Prefers lower risk • Seek to maximise their returns DEBT FINANCIERS • Debt is typically secured • Seek to minimise risk (property, interest rate, cashflow) • Requires sufficient return (margin, fees)

  6. DEVELOPMENT FINANCE Purpose for construction of a new property Characteristics • Short term • Approx. 80% of construction cost • Monthly construction draws • Interest capitalised • High risk/high return

  7. DEVELOPMENT FINANCE Purpose for construction of a new property Characteristics: • Short term • Approx. 80% of construction cost • Monthly construction draws • Interest capitalised • High risk/high return

  8. ACQUISITION FINANCE Purpose: • To finance the purchase of an existing property Characteristics: • Medium to long term • Approx. 70% of purchase price • One draw • Interest only or interest and capital • Medium risk/medium return

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