Managing public property

Posted On Tuesday, 09 April 2002 10:24 Published by
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SUCCESS in generating long-term income and unlocking commercial potential from state-owned land has highlighted the advantages of operating government assets on business principles
SUCCESS in generating long-term income and unlocking commercial potential from state-owned land has highlighted the advantages of operating government assets on business principles.

Intersite Property Management Services, an agency of government's transport department, was set up in 1992 as a company wholly owned by the South African Rail Commuter Corporation (SARCC).

Intersite has three client portfolios under its management: SARCC, the SA National Roads Agency and the City of Johannesburg, managed through Johannesburg Propcom, which was set up to dispose of public sector-owned property.

Intersite aims to become the preferred agency for managing and developing public sector property, says MD Jack Prentice.

'There were doubts in 1991-1992 that a company of this nature would be successful.

'We believe that after 10 years of growth, our business model based on a caring capitalist approach is both prevalent and successful in SA today.'

One of the focal points in the management of the SARCC portfolio is the generation of income from SARCC property through capital- investment projects and leasehold developments.

Prentice says the long-term result of these projects is additional income for SARCC, thus reducing the subsidy required from central government to operate commuter railways effectively.

In the 2000 financial year, he says, Intersite generated about R115m for SARCC. The average compound growth has been more than 20% since 1992, when income was around R18m.

The company's procurement practices ensure that black economic empowerment, the support of small and medium enterprises, and local skills development, are high on the agenda, Prentice says.

Particular success has been achieved in facilities management: cleaning, maintenance and security services. In the 1999-2000 financial year, from a total of R36,6m paid for facilities management, R30m 83% was awarded to black economic empowerment companies.

Thus far about 43% of professional appointments and 49% of construction contracts have been awarded to black-owned businesses, says Prentice.

In August 2000, Intersite conducted the first online auction of state-owned land in SA, generating a total of R21m from the sale of 23 properties belonging to the City of Johannesburg. Since then, two more auctions have been held. The next auction is scheduled for next month for property with an estimated market value of around R25m.

Business Day

Publisher: Business Day
Source: Business Day
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