Laylaa Okike

22 April 2022 The Chief Executive Officer Anglo American Anglo Corporate Services South Africa Dear Sir REQUEST FOR PROPOSAL: RFP – AA_ReP_Dev_001 RE-PURPOSING OF THE ANGLO AMERICAN JOHANNESBURG CBD CAMPUS Further to the abovementioned RFP we take pleasure in submitting our proposal relating to the re-purposing project. Included herewith please find our overall motivation and business plan relating to the proposed Innovation Precinct to incorporate a catalytic development earmarked to achieve social, educational and economic change not only for Johannesburg but South Africa, through incorporating a Student Accommodation And Virtual Campus Precinct. We trust our proposal will meet with your favourable consideration. Should there be any items that require clarification kindly advise us accordingly and we will assist. Yours faithfully George Smith PhD Chief Executive Officer Ms Namhle Sambudla Director: Developments & Investments Ms Dineo Siziba Broll Broker 1 1. INTRODUCTION The Bayete Capital and Broll joint venture (hereinafter referred to as Bayete) have been shortlisted and invited to participate in an RFP process relating to the re-purposing of the Anglo American Johannesburg CBD Campus/Repurposing Project. This document is the formal RFP submission in the format as required. An in-depth exercise has been undertaken by Bayete with all documentation being reviewed and carefully assessed in order to fully understand Anglo Americans objectives and preferred scenario. Furthermore, the comprehensive precinct plan together with detailed mix of uses for the various buildings, not to mention the urban design considerations linking the buildings, public spaces, active spaces, adjoining facilities, transportation, green generation, security, inclusivity and the like have all been carefully considered. The land use scheme developed by Anglo American seeks to create a mixed community through the inclusion of both residential and commercial activity as well as recreational uses to support intensive use of the precinct geared towards 24-hour use. It is further mentioned that a residential component will not only include students but also permanent residential communities that supports a stronger sense of ownership that is advised to be required in order to bolster safety and sense of place. Furthermore, the land use scheme proposed by Anglo American has furthermore sought to maximize revenue generation opportunities focusing on robust segments of the inner-city property market as well as including the potential for retail opportunities of various scales. Lastly, both Bayete and Broll are have Level 1 BEE status. Furthermore, Bayete is 70% black owned. As mentioned during our initial submission to Anglo American, Bayete own commercial properties within the CBD and Braamfontein. We have recently acquired a further property in Braamfontein measuring 33 000sqm which will increase our investment in the inner city and Braamfontein to in the order of R800m. Bayete has drawn on it’s lessons learned when undertaking it’s own mega-city integrated developments which has incorporated the full real estate development offering comprising mixed-use, commercial, retail, residential, social and affordable housing, hospitality, healthcare and social amenities in prime transport orientated nodes. Bayete has carefully considered the vision and has embarked on an exercise to carefully consider the need for financial sustainability and inner city rejuvenation on the one hand and the far reaching impact of meeting a greater social and economic requirement which will positively impact job creation, enterprise development and poverty alleviation for generations on the other hand. 2 2. THE ESTABLISHMENT OF AN INNOVATION PRECINCT – THE ANGLO AMERICAN PREFERRED SCENARIO It has been noted that Anglo American has a preference to establish an Innovation Precinct which should comprise a future-proofed campus for Jo-burg, highly connected to the international airport via BRT and train. In addition, digital and innovative ecosystems would thrive on each other’s success and share common indoor and outdoor spaces. Such will take the form of a living workplace integrating technology, spaces and the people that live in and frequent the precinct. Hence, the innovation precinct will incorporate technology hubs, green ecosystems and promote access to facilities to accommodate digital nomad market opportunities. In order to accommodate an innovation precinct the buildings in question are envisaged to incorporate a broad mix of uses spanning offices, co-working spaces, innovation hub, education, retail, restaurants, sports facilities, medical suites, co-living spaces, residential apartments, storage, cycle hub and the like. 3 3. ANGLO AMERICAN VISION AND OBJECTIVES FOR ITS CBD CAMPUS Prior to responding directly to the requirements of the RFP relating to amongst others, Part 11 incorporating Instructions To Bidders along with Part 12 covering the Proposal Index providing guidance on the structure and scope of submission of the “Request For Proposal For The Re-Purposing Of the Anglo American Johannesburg CBD Campus / Repurposing Project” as contained in RFP Number – AA_ReP_Dev_001, it was imperative that Anglo Americans ‘Enable the Future’ vision and three prime objectives namely “Anglo Legacy, Anglo Liability And Anglo Heritage” be carefully considered and fully understood. Anglo American’s deep roots in South Africa and seeing South Africa’s success as an intrinsic part of its success is also important to consider when proposing solutions to meeting its objectives for its CBD campus which is incorporated into the Bayete proposal, namely:• ANGLO LEGACY | Leave a lasting and sustainable legacy in the CBD • ANGLO LIABILITY | Solution to the repurposing should leave a limited / no ongoing financial liability to Anglo American, and protect Anglo American’s reputation • ANGLO HERITAGE | Protect the contribution that Anglo American made to mining, Johannesburg and South Africa The challenges and opportunities of the inner city which are required to be considered on the one hand and development of a resilient and flexible proposal to adapt to the changing environment on the other hand, are not an academic exercise but require a solution tailored to our unique Johannesburg CBD and more so, South Africa’s unique history and circumstances. 4. IMPACTFUL STATEMENTS BY ANGLO AMERICAN FOUNDERS, CEO, HEAD OF TRANSFORMATION, FORMER PRESIDENT NELSON MANDELA AND PRESIDENT CYRIL RAMAPHOSA During Bayete’s broader research phase to develop a proposal that will meet Anglo Americans vision to ‘Enable the Future’ and ensure that the prime objectives relating to Legacy, Liability and Heritage a number of statements made by Anglo American founders, CEO & Head of Transformation, former President Nelson Mandela and President Cyril Ramaphosa guided our ultimate ‘Education/Student Accommodation Precinct And Virtual Campus’ proposal for the Anglo American CBD campus/precinct. It is important that such statements by Anglo American founders and leaders together with those of former President Nelson Mandela and President Cyril Ramaphosa, is suitably documented as it will display Bayete’s desire to meet the Anglo American objectives but so too be mindful of the significant social and economic impact that is required to be made through private and public sector collaboration and interventions in our country. 4 4.1. Anglo American Founders, CEO & Head of Transformation “The aim of this group is, and will remain, to make profits for shareholders, but to do it in such a way as to make a real and lasting contribution to the communities in which we operate.” Sir Ernest Oppenheimer, 1953 “The driving philosophy of the family, and, by extension, Anglo American, was that there had to be more to the business of making money than just making money. You had to have a commitment to where you operated and a moral ethic in the way you operated.” – Nicky Oppenheimer “On behalf of Anglo American, I would like to express my sincere condolences to the family of Dr Nelson Mandela …….. He was integral to the ushering of democracy in South Africa, and led the country with distinction, stature and humility during his presidency……… Anglo American will continue to do its utmost to shadow Madiba’s legacy by making a real and lasting difference to the prosperity, health and well-being of all our stakeholders in South Africa.” – Mark Cutifani, regarding the passing of former President Nelson Mandela “Across our operations, there is an understanding that transformation is much more than simply a compliance requirement, it is a business imperative” - Lindiwe Zikhali, 29 Nov 2017. “The mining industry in South Africa has an important role to play in driving socio-economic transformation and redressing historical and social inequality.” https://southafrica.angloamerican.com/our-difference/hidden-transformation 4.2. Former President Nelson Mandela “Education is the most powerful weapon which you can use to change the world” “The power of education extends beyond the development of skills we need for economic success. It can contribute to nation-building and reconciliation.” “As long as poverty, injustice and gross inequality exist in our world, none of us can truly rest.” “To be free is not merely to cast off one’s chains, but to live in a way that respects and enhances the freedom of others,” he wrote in his autobiography. “The true test of our devotion to freedom is just the beginning.” How Nelson Mandela fought apartheid-and why his work is not complete. https://www.nationalgeographic.com/history/article/nelsonmandela-fought-apartheid-work-not-complete 5 4.3. Address By Then Deputy President, And Now President, Cyril Ramaphosa At The Opening Of The Higher Education Transformation Summit, Durban – 15 October 2015 https://www.politicsweb.co.za/politics/apartheid-rulers-denied-educationto-black-majorit The address by President Ramaphosa re-affirmed the transformational role of Higher Education in South Africa. Hereunder are extracts from the address at the opening of the Higher Education Transformation Summit in Durban, 15 October 2015. Ladies and Gentlemen, Accessible, quality higher education is critical to economic competitiveness in an increasingly knowledge-driven economy. It is a driver of social development and social cohesion. It is a requirement for prosperity and greater equality. No country in history has achieved sustained, transformational development without a meaningful investment in higher education. Though we have made a decisive shift from the fragmented, inefficient and inequitable higher education system of the apartheid era, we still feel its effects. Had the apartheid rulers not been so thorough, so methodical, so malevolent in the denial of education to the black majority, then South Africa would today be on a completely different developmental trajectory. We would be a more equitable nation, a more prosperous nation. We would have an advanced, diversified, more inclusive economy. 5. SOUTH AFRICA HAS A UNIQUE HISTORY AND THEREFORE SOLUTIONS NEED TO BE TAILORED TO OUR HISTORICAL CIRCUMSTANCES - IT CANNOT BE A BUSINESS AS USUAL APPROACH From a pure property perspective one could easily structure urban design frameworks, architectural designs, green electricity generation, mixed-use precincts which require conversion / re-purposing of existing buildings which are no longer in demand. So too could one package a commercial property portfolio to a particular commercial user requirement and offer incentives to ensure transaction success in the short to medium term. However, Anglo American has called for innovation and wishes to create a legacy. Does this not warrant the time and effort of dealing with South Africa’s history of inequality? An inequality that persists despite 27 years of democracy? Careful consideration needs to be afforded as to how to have the most impact on not only the Johannesburg CBD but South Africa as a whole. Is it not through education, as we have already noted from the leaders of our country, that South Africa will progress economically and uplift our disadvantaged population? 6 We fully understand the commercial viability of any project is a key element of success. Therefore, Bayete has applied its mind and wishes to put forward our proposal that we open our minds to innovation and creativity and use education to be the catalyst for change within the Innovation Precinct / Education / Student Accommodation & Virtual Campus Precinct and leave lasting legacies in South Africa that Anglo American is so well known for. 6. BAYETE PROPOSAL – REPOSITIONING OF THE ANGLO AMERICAN PROPOSED INNOVATION PRECINCT TO THAT OF AN EDUCATION / STUDENT ACCOMMODATION AND VIRTUAL CAMPUS PRECINCT It is important to note that Bayete’s proposal, detailed hereunder, has been developed after taking various additional non-property related factors into consideration. We have taken note of, and further been guided by, statements and comments made by Anglo American founders and CEO’s together with statements made by former President Nelson Mandela and President Cyril Ramaphosa. Furthermore, during the apartheid era Anglo American undertook many actions in opposition to apartheid policies and in support of anti-apartheid campaigners. This reflects Anglo American’s position to be catalysts of change and to bring about democracy, transformation and equality required in South Africa. Despite all our best efforts and 27 years of democracy, South Africa remains as the most unequal country in the world. Bayete’s proposal to ‘reposition’ the Innovation Precinct to be an education/student virtual campus focused precinct through affording the National Student Financial Aid Scheme (NSFAS) student population, which caters for the largely historically disadvantaged students who would otherwise have been deprived of a tertiary education, will most certainly meet the Anglo American vision of leaving behind and continuing a legacy of nation building in the true sense of the word. Insofar as NSFAS students are concerned, a ‘cap’ is set on allowances for student accommodation which, due to a chronic shortage of student accommodation and despite National Dept of Higher Education minimum norms and standards being required to be met, results in sub-standard accommodation being provided to students (in many instances overcrowded rooms or shared back-yard rooms). This has resulted in the very students who require the assistance who are often from rural areas, being further prejudiced, due to lack of quality student accommodation in good locations, thereby reducing chances of academic success. 7 Our proposal is therefore to re-position the ‘Innovation Precinct’ to be an education/student accommodation virtual campus precinct with its primary objective being to accommodate NSFAS students / historically disadvantaged offering all the amenities associated with student life and precinct. Of importance to note is that Bayete owns a student accommodation portfolio comprising in excess of approximately 650 beds, most, if not all, of which are occupied by NSFAS students. Where in South Africa has a student accommodation precinct been developed, in a strategic location close to all amenities including transport, universities, social and related facilities not to mention a secure, safe walkable environment, specifically for the benefit of the disadvantaged students to thrive and be afforded the best opportunity of academic success? Is this not what the Anglo American Legacy is seeking to achieve, a just and equitable economy for all, which will have the biggest impact on South Africa, through higher education? 6.1. Higher Education As A Contributor To Poverty Reduction, Development And Transformation In South Africa It is common knowledge that higher education has a significant impact on poverty reduction, economic growth, individual earnings and personal growth and prosperity, productivity, enterprise development, knowledge transfer, job creation etc. Hence, the importance of and access to higher education and an enabling learning environment, especially for the historically disadvantaged NSFAS students cannot be left unattended. 6.2. Bayete Proposal To Support Provision Of High Quality, Safe And Accessible Affordable Student Precincts In Strategic Locations Geared Towards NSFAS Students From Less Fortunate Backgrounds NSFAS supports access to, and success in, higher education and training for students from poor and working class families who would otherwise not be able to afford to study. However, fixed amounts per annum are applicable to student accommodation and in many instances there is a shortage of quality, safe and affordable student accommodation in good locations. The student and virtual campus precinct proposed is intended to create an education precinct environment in a prime location offering a safe, secure, quality and accessible student living and learning experience thereby affording students the best opportunities for success. Furthermore, to cater for the attending of ‘virtual classes’ in a private setting, Bayete has introduced ‘virtual campus pods’ which offer students the opportunity to attend virtual / remote lectures in individual, private wi-fi connected ‘pods’ which have been included in the overall design and will be located in one of the buildings. 8 The Bayete proposal seeks to meet not only a higher educational need but more so provide an enabling environment in which the students from less fortunate backgrounds can prosper and in so doing stimulate the economy, alleviate poverty and take the country forward. However, at some point we all need to acknowledge that we have benefitted at the expense of the majority and that we have a real contribution to make in terms of achieving the equality that is still lacking in our country. Unfortunately, the majority of properties in prime locations are in private sector hands. The private sector, by their very nature, are capitalists who stimulate and drive an economy with a view to maximizing shareholder returns. Bayete, whilst a private company also for gain, acknowledges that one need not maximize profits at every opportunity but create ‘shared value’ thereby creating mechanisms to unlock value for all. 6.3. Bayete Private Sector Led Initiative In Collaboration With Public Sector JOSHCO During Bayete’s conceptualisation and packaging of the proposed Education / Student Precinct we determined the need to identify stakeholders within the Johannesburg CBD who would not only add value but who also have an interest in, and a mandate to, provide both social housing and student accommodation. In this regard we approached the City of Johannesburg’s Social Housing Company (JOSHCO) to be a significant stakeholder who had an interest in not only the inner City rejuvenation but also focused on meeting social housing and student accommodation needs of the City. In this regard we have already engaged with JOSHCO regarding the potential of an Education / Student Accommodation Precinct and enquired whether JOSHCO would be interested in pursuing the opportunity with Bayete, in the event that Bayete is successful. JOSHCO have confirmed that they would be supportive of the initiative. This confirmation was of significant importance as the City of Johannesburg was a key stakeholder who would assist with facilitating regulatory approvals insofar as town planning, EIA, rezoning and the like were concerned not to mention the securing of bulk services should such be required. In addition, JOSHCO may well have access to various funding sources which are not available to private sector developers; thereby improving financial viability and in the process achieving a social objective. However, this could only be pursued further upon the outcome of our proposal being made known. Included herewith please find a copy of the letter received from JOSHCO confirming their interest in participating in the Student Accommodation Virtual Campus development with Bayete. 9 10 7. FINANCIAL VIABILITY, FUNDING & ECONOMIC SUSTAINABILITY – EDUCATION / STUDENT ACCOMMODATION VIRTUAL CAMPUS PRECINCT Following the student precinct concept being finalised Bayete engaged the services of RLB Pentad Quantity Surveyors to undertake the initial Order of Magnitude costings on which the financial due diligence would be determined. An exercise has been undertaken whereby total development cost VERSUS nett income is determined in order to establish initial financial viability. In the event of total development cost impacting adversely on nett income and required yields; financial viability then requires development value engineering, negotiations and/or means of cross-subsidization to support the development. For ease of reference two schedules have been produced and provided hereunder to reflect building gross lettable areas and parking and indicative financial viability:• Building Gross Lettable Areas & Parking. • Total Development Cost VS Estimated Nett Income VS Current Estimated Nett Yield; 11 RLB PENTAD QS ORDER OF MAGNITUDE COSTING IRO CONVERSION 12 7.1. Value Engineering Based on initial financial feasibility and assumptions made insofar as land input costs are concerned there is still a considerable misalignment between total development cost, nett revenue and the initial yield of 7,28%; indicating the project is not financially viable and would require value engineering and negotiations with Anglo American if we are all to contribute towards the Anglo American legacy project. As is the case with all socially focused impactful and catalytic projects of this nature, value engineering of the total development cost, operating costs and identification of means of increasing of nett revenues and/or cross subsidisation of the Innovation Precinct / Education & Student Precinct is crucial, in order to support the development to achieve long term far reaching economic and social transformation in our country. We are confident that, with the buy-in and will of all stakeholders to bring the Innovation Precinct / Education & Student Precinct to fruition, the value engineering and financial modelling required will be favourable and result in a successful precinct being established. 7.2. Revenue Generation Beyond Typical Education & Student Precinct Revenues Are Required To Cross Subsidise Development And Operating Costs Due to the high educational, social, economic and catalytic nature of the Education / Student Accommodation And Virtual Campus Precinct Bayete will engage with stakeholders in both the private and public sector to negotiate various means of revenue generation to cross subsidize the precinct. It is only upon a successful outcome that Bayete would be in a position to engage further with stakeholders in order to exceed the requirements for a financially viable project being undertaken. What is key is the fact that this private sector led initiative is to address the social and economic inequalities that still exist in our democracy due to our unique history. Furthermore, Bayete and the stakeholders who are to participate in this journey will recognise the need to overcome the obvious initial ‘loss making’ nature of the initiative and rise to the occasion to ensure the catalytic development proceeds and flourishes into a profit generating venture achieving the social, economic and equality goals so needed in our country. 13 8. BAYETE EXIT STRATEGY Given the nature of the transaction at hand and the negotiations that are still required to take place there is no clear exit strategy at this point. However, there are a few basic principles that would apply as we are assuming that, in the event of Anglo American maintaining their position i.e. introducing the assets to the transaction at an agreed value or method of valuation initially whereafter Anglo American would liquidate its position in the Innovation Precinct / Education & Student Precinct upon certain agreed criteria or profit objectives having been met. 9. CONCLUSION We trust our Student and Education Precinct proposal will be well received and we believe that the impact that can be made through creating an educational environment, in a strategic location, especially for the historically disadvantaged students, will have a profound impact on achieving the social and economic justice for not only the individuals themselves, the economy but South Africa as a whole. ANNEXURE ‘A’ – PRESENTATION : IKUSAS ‘elihle Student Living Precinct 14