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 19 th August 2005

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

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

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