REALCORCAPE
Primary Business: Realcor Cape’s primary business is development and construction of residential, commercial and light industrial properties. In the course of business Realcor Cape, from time to time, provides investment opportunities to the investing public.
HISTORY
Established in 1993 – Commercial Property Broker
1997 – Purple Rain Properties 15 (Pty) Ltd T/A Realcor Cape
Own construction company since 2004
Licensed with the Financial Services Board
Registered with the Estate Agency Affairs Board
Registered with the Instatute of Realtors
Building Projects
Chablis Security Residential Complex – Stellenbosch. (2004)
Crystal Creek (96 Flats) – Gordons Bay. (2006)
Marsh Rose Mall (Shopping Centre) – Grabouw. (2007)
Avignon Guest House – Gordons Bay. (2007)
Grabouw Industrial Park – 24 Factories. (2008)
Le Petit Village (Security Residential Complex) – Plettenberg Bay.
Blaauwberg Beach Hotel – 5 Star Hotel.
PROPERTY BASED INVESTMENT OPPORTUNITY
BLAAUWBERG BEACH HOTEL (BBH)
Only 5 star hotel in Milnerton
Reduce shortages in international demand
Completion prior to 2010 Soccer World Cup
R550 million project, 13 stories
192 rooms, restaurant, conference facility
Sufficient parking
Green development
Tourism Information
8.8% of GDP in 2005, 14% in 2014
2.3m foreign visitors in 3rd quarter of 2007 in SA, 9.4% growth
Arrivals at Cape Town Airport increased with 21%
BBH situated in fastest growing area in Cape Town
Active support from Western Cape Government
High occupancy predicted
Investment Options
Fixed short term interest rate on Loan Agreements
Longer Term Shares Option
Short term Loan Agreements
Fixed rate for 12 months
Option to purchase shares @ development costs
Capital Growth Option of 20% pa nominal interest
Income option of 19% pa, monthly payment of interest
Combine capital and income options
100% allocation, no initial costs
Growth on full investment
No current or exit costs
Minimum amount of R20 000
Longer Term Shares Option
Invest @ development cost
Debenture until issuing of shares in 2010
Minimum amount R100000
Class A and Class B Shares available
Short Term investors – first option
Debenture:
11% income pa, 8% capital growth pa
Annual Capitalisation: earnings on increased levels
Shares:
6 monthly tax free dividend income
Market related capital growth
Projected Dividend Payments
2010: R 19 935 477
2011: R 23 578 674
2012: R 28 081 376
2013: R 35 435 258
Source: Proforma Prospektus
Advantages of Buying @ Development cost
Increased capital growth on medium term
Budgeted development R550 million
Offers received exceed R770 million
Improved risk return ratio
Improved liquidity for first-time investors
WARNING
Improved risk/return ratio does not imply risk-free
Risk-free investments do not exist
BBH offers good returns at lower risks compared to similar returns/investments
INVESTMENT RISK
REALCOR CAPE & BBH DEVELOPMENT
Institutional Risk
Experience
Management Skills
Financial Control
Construction management and control
Solvency (Assets versus Liabilities)
Liquidity - Ability to maintain current and short term obligations
Decreased Institutional Risk
Good Solvency (R50 million Sep 2007)
Liquidity: Reserves, financing, lower building costs (Own Cons Comp)
Historic tendency of increased profitability
Financial statements: Up to date and constant monitoring
Excellent diversification in property sectors, areas
Limited number of projects & exposure
Management: finances, costs, quality, projects
Involvement of an international hotel operator
High profile with banks
Threefold registration with regulators
Property Related Risk
Location.
Successful zoning of the land.
Approval of building plans.
Power supply by Escom.
Increase of Prime lending rate.
Political Stability.
Management of the building: – occupancy levels.
Decreased Property Risk
Excellent location with easy accessible road network
Shortage of 5 star accommodations
Growing international demand
Increased demand: 2010 Soccer World Cup
International hotel operator - Knowledge, experience and involvement
Substantial interest from international investors
Competition between banks to fund project
Good financial control, own construction company
Internal electricity provision, decreased Eskom risk
Bus service to and from Cape Town
Escape/exit clause: alternative options and investments
INVESTMENT SECURITY
Investment Security on Short Term Investment
Contractual guarantee – sound track record
Approved financing @ prime -1.5 %
Property with increasing value – latest valuation R66 million
Option to obtain unlisted BBH shares
Remedy shares in any other development
Application of Short Term Loan Investment
Sustainable fixed income = budget security.
Income & growth @ excellent rates = combats inflation.
Sensible portfolio with diversity.
Sensible market hedge in uncertain times.
Good alternative for shares and government bonds.
Short term investment provides good flexibility.
Option to obtain unlisted shares in BBH.
Application of Longer Term Shares Investments
Good comparable income with capital growth
Development cost: excellent capital growth potential
Development cost: improved liquidity
Realcor Cape has 1st option: better liquidity
Dividend Income on shares must still be analyzed
Risk profile higher than short term investment
More suitable to long term investors
Timing of the Realcor Cape BBH Investment
Market timing to invest in listed shares is risky and not advisable
Share prices increased and is expensive
Historic share adjustments increases risk
Government bonds is weak due to interest rates
Rising interest rates does not protect against inflation
BBH Short Term and Shares investment is a good alternative.
|
