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REALCOR  CAPE

PROPERTY BASED INVESTMENT  OPPORTUNITY

Afrikaans Weergawe Hier...

BLAAUWBERG BEACH HOTEL

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.

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