QUANTTTYSURVEYORS

PROPERTYVALUERS

DRAFTFORDISCUSSION
PURPOSES

FINANCIAL
VIABILITYFORA LETTING
SCHEME

Development : SDCHeadOffice

Report : I

Date : 17 February2Q17

Reference .8J142511710212017
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QUAN'nTY SURVEYORS
PRAPERT'Y VALUERS
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GENERALINFORMATION

Development SDC HeadOffice

Report 1

Date 17 February2017

Reference BJ1425t17
t02t2017

ueveroper(s) To be advised

Principal
agent Boogertman& Partners

Architects Boogertman& Partners

Projectlocation Acca,Ghana

Methodof estimating Simplifiedsquaremetreestimate

constructioncost

Drawingnumbers 4238drawings1000- 1003

Levelof drawings Conceptdrawings

Qualification

The estimateof constructioncost is computedutilisinga methodnot consideredto be sufficientlyaccurate.In

orderto improvethe accuracyit shouldbe replaced witha detailedelemental
or similarestimateof construction
costas soonas timeallowsand sufficient information is available

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CONTENTS

Page No

Executive
summary 1

Section1 Capitalinvestment J

Section2 Net income(firstyear,fullylet)

Section3 (ROl)
Returnon investment 7

AnnexureA Construction
cost B

AnnexureB Construction
cashflow Y

AnnexureC Development
cashflow 12
EXECUTIVE
SUMMARY

DEVELOPMENT

Officedevelopmentcomprisingtwo levelsof structuredparkingand two levelsof offices

PROGRAMME

Construction
tender 15tO6t2017
Construction
start o3to712017
Construction
comoletion 28t09t2018
Opening 28tO9t2018

EXTENTAND OVERALLEFFICIENCY
OF DEVELOPMENT

Constructionarea(excluding parking) 2 , 4 1 Qm 2
Constructionareaof parking 2,503 m2
Totalconstruction
area 4 , 9 1 3m 2
Rentablearea 2 , 2 1 4m 2
excludingparking)
Rentableefficiency(rentableto construction 91.87 o/o
Parkingbays 87 no
Parkingratio(baysper 100m2of rentablearea) 3.93no
Parkingbay areaefficiency(constructronareaper bay) 28.77 m'

VAT)
ESTIMATEOF CAPITALINVESTMENT(EXCLUDING US$ 9,821,628

Co{lttruetio{r co3!

Othorco€b
. 42%' '

Dcvelopment inteFsl
8.9%
..',,...1
-'ii

DeYelopment costs, etc

ESTIMATEOF NET INCOME(FIRSTYEARIF FULLYLET)(EXCLUDING

VAT) US$ 1,018,440

FIRSTYEARAVERAGENET RENTALRATEPERMONTH
Offices US$ 3 7 . 2 9p e rm '
Parking US$ 26.63 per bay

Executivesummary
EXECUTIVE (continued)
SUMMARY

DEVELOPMENT
COSTPERM'

Per Per rentablearea

construction (excluding
dtYd parking)
US$/m' US$/rn'
Constructioncost 955.14 2,119.52
.l .t ^A
Escalationin construction
cost 25.63
Professionalfees 142.48 316.17
Propertycosts 528.60 1,172.99
Localauthoritycharges JY.OY 88.08
Development, pre-openingand marketing
costs 58.94 130.78
Tenantingcosts 34.55 76.67
Financingcosts 41.34 91.75
Costof capital 178.85 396.89
Otherexpenditure 7.96 17.67

ESTIMATEOF CAPTTAL (EXCLUDTNG

TNVESTMENT VAT) 1,999.1
1 4,436.15

(ROl)
RETURNON TNVESTMENT

Initialreturn(firstyeariif fullylet) 1037%

Internalrate of return(lRR)over 6 years 12.64%
Internalrateof return(lRR)over20 years 14.05%

INITIALRETURNSENSITIVITY
ANALYSIS
a
o

: ,:- :.i.;:r1.it;:r.;

s ili )!wE"ft 4 Lki*L:;:r!*!!Ei

i:b
cc ;€
06 0
OE ;

o-

s
rt

Oa/o 3'/o 5o/o look 13Vo

- 1 0 . Q % -7 5% -5,0% -2 SYo 0.0% 2.5% 5.0% 7.5% 10.QYo

:,:lncome 9 33o/, 9.59% 9 85% 10j1% 10.37% 10.63% 10.89% 11.15% 11.410k
Operatingexpenses 10.37o/o10.370k 10.37o/o10.37o/o10.37o/o10.37% 10.37o/o10.37% 10,37o/o
* Constructioncost 10.90% 10.76% 1 0 . 6 3 % 1 0 . 5 0 % 10.37% 10.25% 10.120/o10.01% 9.89%

Executivesummary
SECTION1 . CAPITALINVESTMENT

US$

1. Constructioncost 4,749,369

1.1 cost (as al 1710212017

Estimatedconstruction ) 4,692,616
(AnnexureA)

1.2 Pre-tenderescalationin constructioncost 21.148

Numberof months
per month
Average% escalation 0.15

1.3 Post-tender in construction

escalation period)
cost(duringconstruction 35,605

Numberof months to
Average% escalationper month 0.05

1.4 Directconstruction
costs

1.5 Othercosts

2. Professionalfees 700,000

21 fees (11 58% of escalatedconstructioncost)

Professional 550,000

22 Disbursements 150,000

2.3 Otherfees

3. Propedy costs 2,597,000

?1 Landor propertyvalue(as at 1011112016)

(per developer) 2,442,000

3.2 Registrationcosts

Townand regionalplanner'sfees 50,000

3.4 Environmental
impactassessment
costs

Rezoningcosts

Land surveyor'sfees 25,000

3.7 lnvestigationcosts(archaeological,
soil,etc) 30,000

J.6 Legalfees (otherthan registrationcosts) 50,000

Othercosts

CapitalInvestment
 1 - CAPITALINVESTMENT
SECTION (continuad)
o

US$

4. Local authoritycharges 195,000

4.1 Planscrutinyfees 45,000

4.2 Localauthoritytax on property

4.3 Bulkservicecharges 150,000

4.4 Othercharges

5. Development,pre-openingand marketingcosts 289,552

Development
fees(2.50%of capitalinvestment) (Developer
to confirm) 239,552

c.z Pre-opening
and openingcosts

5.3 Marketingcosts 50,000

E.A
Othercosts

6. Tenantingcosts '169,740

6.1 Leasingcommissions
(Basedon 2 month(s)grossrental) 169,740

6.2 Legalfees

Non-recoverable
tenantrequirement
costs(otherthanincludedin construction
cost)

6.4 Furnishings,
fixturesand equipment
costs

6.5 Othercosts

7. Financingcosts 203,127

a1
Financeraisingfee (1.50%of mortgage) 103,127

7.2 Mortgageregistrationcosts(70% of capitalinvestment) 100,000

I.J Guaranteecosts

1^
Other fees/costs

CapitalInvestment
SECTIONI - CAPITALINVESTMENT
(continued)

US$

8. Developmentinterest 878,709

Intereston equityand/orinterimintereston mortgage, monthly

compounded

Numberof months l-o I - tz 1 3 - 1 8 19-24 Remainder

Intereston own capitalperannum 9.00% 9.00% 9.00% 9.00% 9.00%
Intereston loanfinanceperannum 9 . 0 0 % 9 . 0 0 % 9 . 0 0 % 9.00% 9.00%

8.1 On propertyvalue/costs 498,025

82 On improvements 363,672

8.3 Fromdevelopment
completion
to opening

8.4 (eg intereston ValueAddedTax)

OtherinteresVcosts 17,012

L Otherexpenditure 39,130

91 Development
contingency 3 9 , 13 0

Y.Z Otherexpenditure

9,821,628
10. lnterimincome

9,821,629
11. Valueaddedtax (VAT)

ESTIMATEOF CAPITALINVESTMENT(EXCLUDINGVAT) 9,821,628

(OPENING:28109124181

Note: lt is assumedthat the developerls in a positionto recoverVAT

Capitallnvestment
sEcTloN 2 - NETTNCOME
(FTRST
YEAR,FULLYLET)

Rentable
space Quantity UnitRentalrate Escalation First year Net
in current up to rental rate income per
terms opening month
(net) 'lo per (net)
US$per montl" annum US$per month US$
Offices 2,214 m2 35.00 4.00% 37.29 82,553
Parking 87 No 25 00 4.OO% 26.63 2,317

Net monthlyincome 84,870

Netannualincome 1,O18,440

Firstyearoperating
expenses(netrentals)

Per m2 of rentableareaper month(excluding

parking)
Percentage of grossannualincome

ESTTMATE (FtRSTYEARXEXCLUDTNG
OF NETTNCOME VAT) 1,018,440
(START: 28/09/2018)

periodis 1.61years
Note: The rentalescalation
The aboveestimateof net incomeexcludesVAT as it is assumedthatanvVATwillbe paidoverto the tax
authorities

Rentablearea

The rentablearea is computedin accordancewith the Methodfor MeasuringFloorAreasin Buildings(effective1

August2005)as publishedby the SouthAfricanPropertyOwnersAssociation

Net Income(firstyeao
sEcTtoN 3 - RETURN (ROr)
ON TNVESTMENT

7oPer annum

lNlTlALFIRSTYEARRETURN(if fullylet) 10.37

INTERNALRATEOF RETURN(lRR) 6 Years 12.64

20 Years 14.05

Assumptions

Escalation
for IRRcalculations

SubsequenttoYear 1 2 3 4 5 6 Thereafter
Rental 4.00oh 4.00o/o 4.00% 4.OOYo 4.OOo/o 4.OO% 4.OOo/o
Operatingexpenses 4.00o/o 4.OQYo 4.00% 4.00% 4.OOo/o 4.QOo/o 4.00%

(as percentage
Maturityfor IRRcalculations of estimatedfullylet net income)

Year123456Thereafter
Net incomeachieved 95.00% 95.00% 97.00o/o g7.OOo/o 97.00o/o 97.00o/o 97.004/o
7oPerannUm

Captilisationratesfor end value After6 years 11.00

. After20 years 9.00

Generalqualifications

L All expenseshavebeenescalatedto the firstyear of operation

2. lncomereceivedpriorto the openingdatehas beendeductedfromthe capitalinvestmentafteradjusting

interest
for operatingexpensesand develo[rment

3. Returnon investmentdoes not take intoaccountintereston longterm loans,redemptionthereofand

vacancies.Referto the executivesummaryfor a sensitivityanalysisindicatingthe effectof construction
cost and incomefluctuations(eg the effectof vacancies)and to the relevantannexure(if provided)
for returnon equity(ROE)and the effectof corporateincometax

4. No allowancehas been made for incometax otherthan if a specificannexureis providedto indicatethe

effectof corporateincometax

Qualificationsrelatedto initialreturn

1. lt has beenassumed,for initialreturnpurposes, willreachfullmaturityduringthe first

thatthe development
year of operation

2. for the recoupment

No allowancehas beenmadein the initialreturncalculations of capitalduringthe
incomebearingperiodof the investmentorforthe valueof the investmentatthe
realisation end of the
investmentperiod

Glualificationsrelatedto internal rate of return

1. of eachmonth
havebeentakenintoaccountat the beginning
Incomeand expenditure

2. The annualnet incomeachievedhas beentakenas statedabove

3. The end valuehas beendetermined the projected

by capitalising rates
net incomeat the capitalisation
indicatedabove

ReturnOn lnvestmenl
 A - CONSTRUCTION
ANNEXURE COST

SQUAREMETRECONSTRUCTTON
SIMPL|F|ED (17tg2t2v17l
COSTAT DATEOF ESTTMATE

Construction Construction Total

area cost constructron
cost
m' US$im' US$
Offices 2,410 1,330 3,205,300
Semibasement 2,503 447 1,118,841
Externalwork 4,913 75 368,475

Estimateof constructioncost (excludingVAT) 4,692,616

Escalationup to tenderdate (excludingVAT) 21,148

Estimateof construclioncost at tenderdate 4,713,764

(excluding
V AT)(15106120 17)

Escalation period
duringthe construction

Estimateof constructioncost at completion 4,749,369

(excludingVAT)(28/09/201B)

Valueaddedtax (maybe recoveredif developeris a VAT vendor) 831,140

ESTIMATEOF CONSTRUCTION
COSTAT 5,580,509
coMPLETTON(TNCLUDTNG
VAT)(28/09/2018)

. Construction area measurementin termsof the Gurdeto ElementalCost Esimating2016 publishedby the Association
of Africa Associationof QuantitySurveyors
" Basicitems,specialitemsand alterationsincludinga pro rata allocationof otheritems
** Externalworksincludinoa Drorata allocationof otheritems

EXCLUSIONS

The estimateof construction tendermarketconditions

costis basedon rulingcompetitive and excludes
the following:

Abnormalfoundations
Professionalfees
Furnishings,
fixturesand equipment

Constructioncost
ANNEXUREB - CONSTRUCTIONCASH FLOW

5,000,000

4,s00,000
ili
4,000,000t l
o r'1".-,'
3,500,000ii :- l- _
t
_ _
:
o i .

ill
3,000,000

o 2,500,000
x
o
o
o 2,000,000
o

o 1,500,000

o
1,000,000
o
o
500,000

Valuation date
**'Construction cashflow *Upper probabilitylimit -Lower probabilitvlimit

Construclion cash fow

ANNEXUREB - CONSTRUCTION
CASHFLOW (continued)

QUALIFICATIONS

1. The "average" cash flow is predicted

2. No allowance for VAT
3. Valuations are computed as follows:
3.1 Taken on the valuation date
3.2 No valuations in the first month if the valuation date is within 15 calendar days of the start date
3.3 Where year end builders' holidays are selected, 14 calender days are deducted for both the months of December and of January
3.4 The last valuation is taken as being on the date ot practical completion
4. No allowances for index based fluctuations in cost
5. Distortionsdue to subcontracts wiih'different base months than that of the principal contract are not catered for
6. No retention taken into consideration as retention may be dealtwith in several differentways
7. There is a 9570 statistical probabilityof completion on time if the actual construction cash frow curue falls within lhe envelope formed by the upper and lower
probabiiitylimits

CONSTRUCTION CASH FLOW TABLE

Certificate Valuation Payment Payment Escalationduring Payment including Progressivepayment Progressivepaymsnl

number date date construction escalation excludingescalation including escalation
US$ US$ us$ us$ US$

rOTAL 4,713,764 35,605 4,749,369 4,713,764 4,749,369

1 30t07t20 3/04t2017 21,430 to 21,446 21,430 21,446

2 30/08/20 7 3t09t2017 82,899 124 83,023 104,329 104,469
3 30/09/20 4t10t2017 146,786 330 147,116 251,115 251,585
30/10t?07 3t1'il2017 201,895 605 207,500 453,010 454,085
5 30/11t207 4t12t2017 268,178 1,005 83
269,1 7 2 1, 1 8 8 723,268
'161,056
o 301121207 310112018 724 161,780 482,244 885,048
7 30to1t20 3/O2t2018 187,228 983 188,211 1,069,472 1,073,259
8 28t02/20 4t03t2018 355,548 2,134 357,682 1,425,020 1,430,941
9 30t03/20 3/04/20't8 4 1 1. 7 0 2 2,780 414,482 1,836.722 1.845.423

Construdion cash flow

ANNEXUREB - CONSTRUCTIONCASH FLOW (continued)

Certificate Valuation Payment Payment Escalationduring Paymentincluding Progressive paymenl Progregsive payment
number date date construction escalation excludingescalation including escalation
us9 US$ us$ us3 ltss
10 30t04t2018 14t05t2018 466,083 3,499 469,582 2,302,5O5 2,315,0O5
11 30/05/201I 13t06t2018 482,715 3,988 486,703 2,785,520 2,801,708
12 30/06/2018 1410712018 520,940 4,697 525,637 3,306,460 3,327,3/15
13 30t07t2018 1310812018 511,041 4,993 516,034 3,817,501 3,8,$,379
14 30/08/201I 1310912018 509,387 5,362 514,749 4,326,888 4,358,128
't5 30t09t2018 14t10t2018 386,876 4,365 391,241 4.713.764 4,749,369

Construclion €sh flN

ANNEXUREC . DEVELOPMENT
CASHFLOW

10,0@,o@

9,000,m0

8,000,@o

7,000,@0

6,OOO,@O

5,000,m0

Derelopment.osts, elc

I local authority charges

4,OOO,@

'' '
'n': ir'-ti;
3,OOO,@0
i;:i

'
2.OOO.{O
'a':"..'

:r.:;,.:':

1,m,@o
i it
:: ,
]

R R :R
ANNEXUREC - DEVELOPMENT
CASHFLOw (contlnued)

OEVELOPMENT CASH FLOW TABLE

Construclbn Pbpe.b, cB Laal auhority DevcloEnt, Ttranting Financiru Olher Interim inco@ Oevelopftnl Sub-tobl Value rdded rOTAL
charges mrlctang anbFst bx (VAT)

lst uat ust il31

IOTAL 4J49,$9 700,00o 2,597,000 t05,000 ?f9,562 i69,?aO mt.1n 39.130 078,709 9t21,62r 0,621,021

13t12t2016 1,630 18,329 19,960 20,216

1XtO1t201l 1,630 18,481 m,112 m,112
13n?,2011 1,630 18,632 20,262 20,42
13t'3t2011 1,630 18,7U m,414 ut,11a
1lMng11 1,630 18,937 20,$8 20.68t
131O5t2011 151,S7 1,630 19,00i 172344 26,512 t98,930
13162011 151,ffi7 1,630 20,583 173,880 28,542 200,4u
13tO1t?O11 t3I,CC7 43,00; 1,530 z,Ubl 423,511 12.517 486,068
13108Q011 21,46 16,333 155.000 150,000 15,970 1,630 25.582 s5,962 36,239 422,2O1
13togno11 83,023 16,333 15,970 1,630 2A,744 145,705 (16,9071 t€,736
13t10t2017 117.116 16,333 15,970 1,630 29,171 210,821 (31.3821 170,1/rz
13t11t2011 202,500 16,333 15,970 1,630 30,8r8 x7,252 20,s09 2E0,161
13112m11 269,183 16,333 15,970 1,630 32,979 336,096 21,361 3E7,a5l
13t0112018 16t,780 16,333 r5,970 I,630 35,660 231,374 l7 ,126 221216
1Jt02r2018 184.211 16,333 15,970 1,630 37,312 259,87 (14,1701 ?,5,!11
13/03201 I 357,A2 16,333 15,970 1,630 39,182 €0J98 34,283 $5,la1
13r01no18 114,4a2 16,333 15,970 1,630 12,670 491,086 39,598 530,88{
r3/05201I 69,582 16,333 15,970 1,630 46,650 550,166 t9,542 509,74E
13/06/201I 486,703 t6,333 15,9?0 1,630 50,923 57t,560 12,638 5ta,t98
13n712018 525,637 16,333 15.370 1,630 55,305 614r76 9,810 624,886
r 3/08/20r I 516,0y 16,333 15,970 1,630 609,958 5,133 616,Oel
13/09/201 8 511,719 16,333 15,970 1,630 64,603 613,2E6 (r.905 6l I,ttl
13i 10201 6 391,241 16,333 65.970 169,71; 1,630 69.188 714,10{ 16,616 f30,f20
1311112018 74,669 7{,68t (96,020 (r1,3al
1311212018 (112,E60 (r'r2rE{)