This redevelopment involves the erection of
modern buildings in place of the old ones owned by the
NHC in the Central Business District(CBD)of all our
urban centres.Such projects are co-financed by NHC and
other parties, private as well as public institutions.
NHC owns more than 50 plots which are now due for redevelopment.
Partial
sale of High Value Properties :
In such ventures, NHC sells not more than 50%
of its interest in a building , proceeds of which are
utilized in rehabilitating and increasing value of such
building.
For effective consideration by NHC,
prospective partners are required to
submit project Proposals which
include, inter alia; design
impressions, cost
Estimates, financing plans and the
project. Importantly, the Designs
have to meet the statutory
requirements imposed by the Local
Authorities.
Expenses for preparing the above
submission are born by the partners.
These expenses are non-refundable in
case the proposal does not meet the
approval of the Board of Directors.
In encouraging the participation of
partners from The public sector, NHC
could consider to share costs.
Stake-holding:
Stake-holding in joint venture
project has evolved overtime.
However, to a greater extent NHC has
in the past settled for a minority
stake on grounds of attracting
investors and in consideration of
its inability to adequately
contribute to every project.
When the joint venture strategy was
initiated, stake-holding In projects
was rather holistic, without
clear-cut conditions on
stake-holding- but not going beyond
50% for NHC. NHC
was comfortable with a 40%
constituted by the project land
value and an interest free loan.
The 20th Board of Director’s Meeting
held 16th June, 1995 Approved that
NHC will have to hold between 40 and
49 percent of total project shares.
However, NHC was also allowed to
consider to holding lesser shares of
not less than 25% of the total
shares, under the following
circumstances:
• The other party has more than one
partner
• The other party is a public
institution.
• Project outlay is USD 2 million or
above.
In accordance with the 1998
stake-holding amendments, in
every joint venture project NHC
shall hold a 50% shares
within the time frame agreed upon by
both parties.
Credibility of Partner:
The prospective partner has to
justify to NHC that she/he is
Creditable and financially sound to
undertake a project of the envisaged
magnitude. In this regard the
prospective partner has to present
to NHC either credible guarantee
e.g. banker’s statement, performance
bond or insurance bond. Above all,
the partner has to be engaged in
legal business undertakings.
The partner is required to pay a
commitment fee of TAS 20 Million or
10% of the total project cost
whichever is smaller. This condition
is instituted with a view of
ascertaining the seriousness and
commitment of prospective partners.
In addition to the above commitment
fee the following conditions apply:
• The fees is payable to NHC at the
time of signing the joint venture
agreement or within one mount
following a consensus by both
parties. Failure to abide to this
warrants the termination of
understandings on the project.
• The paid fee is deposited by NHC
in a special account.
• The sum is reimbursed as soon as
the construction works start.
However, the Director General is
mandated by the Board of Directors
to use discretion in enforcing the
commitment fee condition.
