Integrated Property Investments Ltd (‘IPIL’) is pleased to invite a select group of qualified investors to participate in a land investment opportunity. The project concept envisages acquisition, sub-division and servicing of beach plots located in Dar es Salaam, Tanzania. IPIL has acquired two plots of land with total area of 51 acres at Ununio beach, a clean white beach situated near Bahari beach on the northern outskirts of Dar es Salaam, the commercial capital of Tanzania.
The business concept is to sub-divide the land into individual plots, obtain necessary licenses, enable the land and sell the plots to individual buyers. This is probably the first time such service is offered in Tanzania by a private developer.
The basic terms and conditions of the project are as detailed below:
| Investment Sponsors | Integrated Property Investments Ltd 1 Park Terrace, Luton, Bedfordshire, LU1 3HN, United Kingdom. |
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| Entity Buying the land | Integrated Quality Housing Ltd Plot no. 27 P.O. Box 33007, Bahari Beach Area, Dar es Salaam, Tanzania |
| Nature of Offer to Investors | Common shares in the Integrated Quality Housing ltd, the entity buying the land. By subscribing to the shares, the Investors will co-own the Entity Buying the Land with other shareholders. |
Breakdown of the Cost:
| Land | $ 5,000,000 |
|---|---|
| Architects, surveying, permits | $750,000 |
| Roads, electricity, water, drainage | $3,500,000 |
| Marketing and sales | $500,000 |
| Total cost | $9,750,000 |
Financing Structure
| IPIL share | $3,300,000 |
|---|---|
| Investors’ share | $6,450,000 |
| Total financing | $9,750,000 |
| Investment | Acquisition of 51-acre beach plot near Ununio village, Dar es Salaam, subdividing according to government permits, enabling it with the provision of necessary infrastructure and selling the units to individual buyers. |
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| Investment term | 24 months including the sale period. Therefore the Maturity Date of the Investment will coincide at the end of the 24th month of the start of the project. |
| Proposed Development | IPIL envisions building a total of 270 beach houses and flats and a supermarket on the plot. Each plot will have an average area of 500 sqm. |
Sale Revenue
The sale revenue expected to be generated is as given below:
| 270 plots of 500 sqm each @ $60k | $16,200,000 |
|---|---|
| Sale of supermarket of 10,000 sqm | $ 1,000,000 |
| Total | $17,200,000 |
| Net Returns | $16,200,000 Based on the above, the project is expected to generate pre-tax returns of $7,450,000 over a term of 18 months.
We sought and received a tax opinion suggesting that we should set aside 30% of the earnings as corporation tax, which is leaving net returns of US$ 5,215,000 before Promoters’ Profit Participation as shown below |
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| Net Distributable Profit | Based on the above, we project net returns for investors on total investment of US$ 9.75 Million will be 53.5% for 24 months or 26.75 % annualized return. |
| Profit Participation | The Investors will be entitled to 100% of the net realized profit up to 15% p.a. which will the threshold rate. For any profit above the 15% threshold, the Promoters will be entitled to 20% Profit Participation (‘PP’).
For example, if the Investment generates total returns of 26.75% pa as expected, the net return to the Investors will be calculated as follows: |
| Threshold Profit | 15.00% |
|---|---|
| Excess Profit | 11.75% |
| Less 20% of PP On excess profit | 2.35% |
| Net Profit payable to Investors | 24.4% |
| Shares on Offer | The Company will be issue 9,750 common shares of $1’000 per shares. IPI has already promised to subscribe to 3’300 shares but the balance of 6’450 shares are the shares on offer.
The minimum subscription of any one investor is 20 shares carrying nominal value of $20,000. |
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| Restrictions | The project will not utilize bank financing. Integrated Quality Housing will be liquidated at the end of the Investments Term after which all capital and profits will be distributed to the Investors at the end of the 18-month term. Any partial sale prior to the Maturity Date will be reinvested in easily realizable investments and will not be distributed before the Maturity.
IPIL will manage the investment on behalf of Investors. There will be no interim income distributions until the Investment matures within 24 months. |
| Risks | The investment is subject to market conditions. Although these conditions are presently favourable, there is no guarantee they will remain so. However, given the short-term nature of the investment and the shortage of quality housing, it is unlikely that something drastically bad could happen within the next 24 months.
Investments in developing countries can be subject to political and/or macro-economic risks. However, Tanzania has enjoyed political stability and economic growth for a long time and there are no simmering tensions and political changes that are expected to affect investments in the medium term. There may be currency risks as the Tanzanian shilling can fluctuate against the dollar. To minimize this risk, we will quote the price of the plots in US dollars. |
| Qualified Investors | IPIL is soliciting investors who will not need their cash investment for 2 years, have sufficient market knowledge about the investments of this nature, and willing to take inherent risks. |
| Governing Law | The law of the United Republic of Tanzania |
| Investment Deadline Date | This investment is open to Qualified Investors up to September 30th, 2009, after which new investors will NOT be accepted. |
Designated Investment Receiving Account
| Account name | Ascot Palace Ltd |
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| Bank Name | HSBC |
| Bank Address | 19 Grosvenor Place, Hyde Park Corner, London, SW1X 7HT |
| Sort Code | 40 05 15 |
| Account number | 59783886 |
| More Information | Investors who wish to participate in the Investment should contact Suleiman Dualeh of Integrated Property Investments Ltd.
1 Park Terrace, Tel 00 44 1582 730 411 Fax 00 44 1582 482 842 |
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