1. 1 Towards the Establishment of the Special Purpose Vehicle for Land PORTFOLIO COMMITTEE (TRANSNET/PROPNET/SPOORNET LAND) 13 September 2006

2. 2 Structure of Presentation 1.Ministerial Engagements a)Disposal of Non-Core Assets b)Consultative Processes 2.Process of Negotiations (Propnet) 3.Incidental Processes 3.Way Forward

3. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 13 RE A LEBOGA