14.6. Capital Funding Projection for 2021/22- 2023/24

14.6. Capital Funding Projection for 2021/22- 2023/24

The CAPEX requirements for the period 2021/22-2023/24 is set out in Table 9. The CAPEX requirements for the development of the Landside and ultimately the Airside include undertaking the following:

• Further development of the CAV Landside Phase 1a, 1b and 2 Bulk Earthworks and

Infrastructure (BEWI) which include inter alia bulk utility services’ infrastructure, surveys, township establishment, design work, etc.; • Park design fees for facilities for interested parties as potential new tenants; • Specific Tenant Building design and development, including SMME, common area and sub-tier supplier and service provider tenant facilities and buildings; and • Construction of SMME and other CAV common area (e.g. the intended business centre) buildings.

The financial planning philosophy underpinning the capital expenditure requirements and any other future buildings that will be constructed in the CAV is that:

• Rental levels for buildings financed by the CAV should be able to service at least 50% of a 10- year bond on the building, covering the building costs not included in the infrastructure definition. The balance of the building cost should be funded with equity funding, which initially will be state funding and in subsequent years when the balance sheet has been strengthened, from the balance sheet; • This principle dictates that the balance sheet of the Centurion Aerospace Village should be built in the first number of years to enable CAV to operate independently from year 6 onwards; • The preferred Return on Investment (ROI) is 7.5%, which translates to a rental level for a typical industrial use building consisting of up to 30% office space. The rental is based on a Triple A net lease. The tenants are therefore responsible for all operational cost including insurance, rates and short-term maintenance of buildings; and • Should the building cost per m² increase due to tenant requirements, such as a higher office component, special foundations required for equipment, special installations, etc., then the rental will have to be increased to maintain the 7.5% ROI level.