30 Oct 2012
Heuwelsig Estate in Centurion recently enlisted the help of Propell with their levy funding products in dealing with the debt of replacing a deficient security access system left behind by the developers.
As the Estate was still new and did not have reserve cash, the access system was originally financed in an unfavourable way via a different company in 2010.
According to Marko van Wyk, general manager of Heuwelsig Estate, this financing transaction saw the assets on an operational lease over 10 years, with a 10 percent escalation annually.
This would have seen equipment with a cost of approximately R4 million costing the estate R13 million after the 10 years.
“To add insult to injury, the assets would never become the property of the estate and the estate would have to insure and maintain this asset which, coincidentally, only has a 5 year life expectancy,” he explains.
Earlier this year estate management met with Mariaan Sieberhagen from Propell who was able to supply a re-financing proposal.
This was approved by the Board of Directors during August of 2011 and resulted in the unscrupulous operational lease, installation and maintenance contract being settled with funds from Propell based on a project loan of 36 months at decent interest rates.
The settlement meant a significant increase in fixed assets for the estate and immediately strengthened the balance sheet significantly.
Propell’s loan repayment terms of three years has had the added advantage that the owners’ levies were only being increased by levels below the inflation rate as opposed to the anticipated 15 to 20 percent levy increases if the estate had not been able to settle the detrimental contracts, says Mariaan Sieberhagen from Propell.
“We are now the proud owners of our access system and as a result, our security incidents have drastically decreased and we have the lowest levies of similar estates in the Pretoria area,” says Van Wyk.
He says it has become clear that commercial banks are just not ready for the financing requirements of legal entities such as the Bodies Corporate and Home Owners Associations (HOA).
Banks still base their creditworthiness analysis for these entities on the creditworthiness of the directors or trustees who are not liable in terms of the Articles of Association or Scheme rules - they are, after all, only elected officials.
As a multi-layered HOA with 44 Bodies Corporate within the fold, we have also been able to point our Bodies Corporate to Propell, who have been instrumental in assisting a large number of these complexes with financing products.
This has contributed greatly toward alleviating some of the impact of the fraudulent manner in which the previous managing agent conducted the central trust funds of all these complexes, resulting in a R4 million collective loss for our Bodies Corporate, he adds.
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