1. Public Property Asset Management Models 22 August 2007 N. Mandindi

2. Intersite started as a property division of the SA Rail Commuter Corporation Limited in 1991; and, in 1992 established as a separate corporate entity to manage and develop the property portfolio of the SARCC. Background

3. MINISTER OF PUBLIC ENTERPRISES TRANSNET SAA SPOORNET PETRONET AUTONET PORTNET PROPNET Institutional Arrangement CONTRACTUAL AGREEMENT WITH METRORAIL TO OPERATE THE COMMUTER RAIL SERVICE

4. The critical success factor of Public Property is its ability to support service delivery through the provision of “ fit for purpose ” facilities PUBLIC PROPERTY PURPOSE

5. PRINCIPLES TO DEAL WITH 1) OWNERSHIP 2) MANAGEMENT FUNDAMENTAL DECISIONS

6.  Establishment of Property Agencies (SPV)  Government holds 100% equity  Assets transferred to entities  Asset controlled by financial instruments  Government provide policies & guidelines  Creation of value a requirement  Return expected STATE PROPERTY OWNERSHIP

7.  Owner/Manager separation – international trend  Ownership/Management duties transferred to and vest in specialists  Government representation – Agency Boards  Reporting requirements – Annual Statements  Specific Performance Parameters  Structuring of entities – Private Sector principals STATE PROPERTY MANAGEMENT

8. Finland Norway Sweden Queensland - Australia International Models

9. Finland Model State Real Estate Strategy  Decision on Real Estate Strategy in 1998  Objectives : Efficiency, yield on capital, reduction on facilities costs, increase on property value  Real Estate divided into two groups A) Core, B) non core  Group A transferred to Senate Properties  Group B transferred to Kapiteeli OY

10. GOVERNMENT OF FINLAND TRANSFER OF PROPERTIES (NON TITLE) 8.1m sqm (11300 buildings) AGENCY SENATE PROPERTIES Defence Premises 1074 000 sqm Turnover R687.6m Net Income 6.6% Special Premises 1312 000 sqm Turnover R1.2billion Net Income 7.5% Office Premises 1289 000 sqm Turnover R1.3billion Net income 7% Development Premises Development and Selling of vacant land PORTFOLIO ANALYSIS of AGENCY (5 DIVISIONS) 100% EQUITY IN AGENCY FINNISH MODEL Universities 18 in total 1794 000 sqm Turnover R1.7billion Net income 7.4% Book value R49.5billion

11. Kapiteeli OY  Real Estate Investment Company  Property Value 1,2 bn Eu  Portfolio : Business premises, hotels

12. Senate Properties  Corporatised Entity owned by Ministry of Finance  Property transfers from Department of Education, Justice & Defence  State Budget Reform  Increased attention to Capital Costs  User of Properties responsible for costs (space & facilities)  Concentrated & effective management of property  Economies of scale resulting in cost reduction  Real Estate Investment increase

13. Senate Properties Portfolio  University Premises  Office Premises  Special Premises  Defence Premises  Developments

14. Norway 1960 - Directorate of Public Construction and Property was established 1992 - Reorganisation of the directorate – introduction of rent (lease) payment 2000 – Commercial property was separated from Statsbygg The remaining properties of Statsbygg consists of ”purpose” buildings (infrastucture)

15. GOVERNMENT OF NORWAY TRANSFER OF PROPERTIES (Titles) 2.1m sqm AGENCY STATSBYGG/ENTRA Commercial ENTRA EIENDOM 952 000sqm Book Value R16billion Non- Commercial STATSBYGG 2.1m sqm Book Value R21billion PORTFOLIO ANALYSIS OF AGENCY 100% EQUITY IN AGENCY NORWEGIAN MODEL Regional Colleges 800 000 sqm Administration buildings 660 000 Special Schools 100 000 Road Stations 75 000 Museums & History blds 54 000 Research Buildings 120 000 Embassies 94 000 Others 197 000 Book Value R37billion Police Colleges/Universities Municipalities Revenue offices Customs Revenue Roads Courts of Justice Norwegian Petroleum Post

16. Norway - Statsbygg  Statsbygg is an administrative body, responsible to the Ministry of Modernisation  Building projects are financed by reinvestment of rent income or by government subsidy  Property management and maintenance is financed by rent income.

17. Norway - Statsbygg  Statsbygg acts on behalf of the government as consultant and manager in construction and property affairs.  Statsbygg construct buildings for own administration, but also universities, prisons and other ” not-rented ” buildings  Statsbygg offers governmental organisations advice suited to their needs, in either new or existing buildings.

18. Norway – Statsbygg Political directions in the budget  In the Chapter for Statsbygg  Political objectives in the areas of architecture, the environment, cultural heritage and universal design  Initiate and participate in R&D projects inter alia by using its own building projects as pilot projects to assist in gradually introducing and using digital building models in the construction and property industry throughout a building ’ s entire lifecycle

19. Norway - Statsbygg Category Square meter % Regional colleges800 00038 % Adm. buildings660 00031% Spec. schools (child welf.) 100 0005% Road stations75 0004% Mus./Hist. build.54 0003% Research build.120 0006% Embassies94 0004% Others (unspecified)197 0009% Total2,100,000100

20. Norway - Entra  Established July 1st, 2000  Wholly-owned by the Norwegian Government  The property portfolio is, per Q2 2006, approximately 52.000 m ², of which approximately 20% are development projects  The focus segment is office  120 properties concentrated in the 7 biggest cities in Norway  Approximately 70% of the portfolio is in the Oslo-area  Market value is approximately 15 NOK billion ( € 1,87 billion) (December 2005)  Annual rental income is approximately 1 NOK billion ( € 125 million)  Approximately 120 employees, of which 70% are operational staff who manage the properties

21. Norway - Entra MARKET POSITION

22. Norway Entra Portfolio To maximise the long term recurring income and investment on the portfolio.

23. Sweden Fragmentation and specialised focus State property Transferred to Enties : Akademiska Hus - Universities Vassakronen - Defence Jernhusen – Rail properties SFV – National Property Board – Forests, Forts & Foreign Affairs

24. GOVERNMENT OF SWEDEN TRANSFER OF PROPERTIES ( Titles) 2.15m sqm 1800 buildings AGENCY NATIONAL PROP BOARD (SFV) Profitable Properties Non Profitable Properties PORTFOLIO ANALYSIS OF AGENCY 100% EQUITY IN AGENCY SWEDISH MODEL Book value R10.5billion 1800 own buildings 320 State owned buildings Free Land (6.5m hectares) Castles and Royal Estates Theatres Museums Embassies Forest and land State owned historical buildings

25. National Property Board  SFV owns 1,800 properties in Sweden, totalling 2 million m ².  SFV manages 6.5 million hectares (around 16 million acres) of land – one seventh of Sweden ’ s surface area.  SFV administers state-owned property and land at 73 locations in 69 countries around the world. In 44 of these countries we manage a Swedish Embassy.  SFV manages four items on the UNESCO list: Drottningholm Palace and parts of the Naval Port of Karlskrona; the agricultural landscape in southern Ö land; and World Heritage Laponia.

26. Queensland - Australia Whole of Government approach Q Build Q Fleet User Pay model Strong emphasis on efficiency and high level of maintenance and facilities management

27. Queensland - Australia

28. Property Agency - Rationale  Efficiencies  Accountability  Focus on delivery  Business/private sector principles  Introduction of User Pay principle Market related or Controlled system

29. BENCHMARKING The Nordic Countries vs South Africa Property Agency Concept Implemented more than a decade ago in Norway, Sweden, Finland  Public Works model with overarching mandate over state property

30. Capacity building thro institutions of higher learning Design philosophy Role of Public works within Government User pay system ?? Budgeting for Capital works implementations Property Agencies Provincial piloting Develop a critique – Relevance to South Africa – analysis of SA public property including capacity building mechanisms QUESTIONS

31. THANK YOU