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Tank Container Investment Specialists - Providing Management Excellence and Unique Investor Tank Solutions
Invest Rands in South Africa, Accumulate Dollars Offshore
Tank Containers - Your Personal Tool to Externalise Wealth -
Legal, Efficient, Secure!

What can Tank Containers do for You?

An investment in stainless steel tank containers provides you with a unique, legal and unlimited financial instrument to convert your Rands to foreign currency, which can be retained in the offshore account of your choice. This process does not require special authorisation of the South African Rserve Bank nor clearance from the South African Revenue Services.

This is still the only legal and effective mechanism to externalise any amount of your wealth (for instance, assets swaps provide this in terms of income, but the capital eventually has to be reconverted back to Rand).

Of importance, this investment is not related to nor tied to your R4 million foreign investment allowance. Your potential is unlimited.

Some History of Tank Investments and the Unique PTS Structure

Investment in tank containers was approved as an offshore investment in the 1980's by the South Africa Authorities (SA Reserve Bank, Dept of Trade and Industry, and SA Revenue Services) as it achieved various essential national objectives:

1.  Ability for South African residents to earn foreign currency income legally through a unique Rand-hedge offshore investment, the Reserve Bank maintaining control of the asset, by approved management companies managing the investment in toto in accordance with the-then strict Exchange Control regulations.
2. Promotion of an ideal export product, a sought-after high-specification finished product, being the ultimate in value-added processing of South Africa's raw materials (stainless steel, carbon steel, aluminium, paint, etc) with an international market.
3. Achievement of specific enhancements to the South African economy, through much needed expansion of heavy metal industry, increased employment of skilled labour, and non-trade related foreign currency inflows of tank rentals over a period of years.

In July 1993, the Exchange Control Department of the South African Reserve Bank granted PTS approval to set up a tank container investment management operation, and we have since managed nearly 800 tank containers for 160 South African investors.

Unlike other investment managers, we have always offered a unique niche-market investment, one in which traditional variables and unknowns have been removed, where at all possible. Thus a lease with a specific lessee for specific tanks is signed, providing for:

  • a known fixed period of lease (the period of investment).

  • a known daily Dollar income during this period, irrespective of utilisation by lessee.

  • all known operating costs to be borne by the lessee.

In practice, under this arrangement...

...PTS identifies tank container operators, located overseas, having a specific need of newbuild tanks,

...determine the operators' tank specification and delivery timing,

...establish production capability, capacity and best pricing with local tank container manufacturer Welfit Oddy,

...negotiate lease terms with the tank operator for a specific quantity of tanks for a known period and daily rental (365 days p.a.), with all operating costs, maintenance and repairs being for the tank operators' account.

Based on these lease terms, this investment product is then offered to South African investor clients like yourself.

Thus, you would purchase the tank containers through Premier Tank Solutions (PTS), and then enter into a Management Agreement with us to manage your investment in toto - in accordance with the requirements of our Exchange Control Approval - specifically, to manage the lease of the tank containers offshore, to collect rental income and distribute it to you on a quarterly basis, to provide quarterly and annual reports to you and to ensure strict compliance with regulatory requirements in terms of the Exchange Control authority given to PTS.

Changes which have made Accumulation of Wealth Offshore Possible

Two important developments since the launch of PTS's business have taken place, which have permitted this long-term Rand-hedge investment to be transformed into a unique financial instrument, enabling you to externalise unlimited, unrestricted Rands - legally, efficiently, and securely:

  • Until July 1997, all foreign-earned income of South African residents had to be repatriated and converted from Dollars to Rand. Rental income earned by a tank container investment was subject to this restriction. However, exchange controls for these individuals were relaxed in July 1997 to allow direct foreign investment up to R250 000 (now R4 million). Concurrently, another important relaxation also took place - all income earned abroad could now be retained in foreign currency.

    This meant that tank container income could now be received and retained in foreign currency offshore!

  • Secondly, in April 2000, PTS obtained approval from the Reserve Bank to structure an investment based on a lease purchase, whereby the ultimate user/lessee of the tank containers could acquire ownership at the end of the lease purchase period for a stated fixed sale price.

    This now provided our investors with an extra special opportunity - all rental income could be retained offshore in foreign currency, and only the final sale price being repatriated into Rand. In brief then, you could now invest Rands, and earn a Dollar income stream that handsomely equates to your initial investment, plus a fair return in Dollar terms, with all rentals now being legally retained offshore!

So, to summarise then, you have the ideal opportunity through this unique financial instrument to benefit from the following:

  • an ideal tool to externalise your Rand wealth - legally, efficiently, and securely. And more than that, an open-ended one - not limited in any way by your R10 million offshore investment allowance

  • the underlying security through ownership of a hard asset with an international value (not a piece of paper!) - until you have received the full amount of your Dollar rental income stream.

  • the financial terms of the lease purchase known at inception, set out in a signed legal agreement (approved by the Reserve Bank), securing a known dollar income for a specified period - no hidden costs.

And then, we also have been able to achieve the following:

  • An extremely secure Dollar income stream for the period of the lease (normally 7-10 years).

  • A competitive return on the Dollar capital value over the period of the investment.


INDICATIVE PRICING, CASHFLOWS & RETURNS

With a view to giving you an overview of the basic elements of what is achievable, the table below provides indicative price, lease and investment structure on an investment of 3, 5, 10 and 20 tank containers, based on the assumptions in the table and the lease terms expected to be negotiated, based on these assumptions (firm investment details would depend on tank specification, prevailing stainless steel and other input pricing, the exchange rate as well as tank lease and finance market conditions).

The breakpoints we have shown illustrate the benefits of the fleet discounts offered and therefore the improved return through optimising the number of tanks invested in, as reflected in the summarized investment table below:

Quantity of Tanks 3 Tanks 5 Tanks 10 Tanks 20 Tanks
Discount per Tank R0 R3 000 R5 000 R7 000
Investment Period 10 Years
Remittance Frequency & Timing Quarterly mid-Feb, mid-May, mid-Aug, mid-Nov
Total Net Outlay (incl. discount) R810 000 R 1 335 000 R 2 650 000 R 5 260 000
Dollar Equivalent @ R12.00/$ $67 500 $111 250 $220 833 $438 333
Quarterly Income Receivable $2 127 $3 545 $7 090 $14 180
Total Net Rental Income $86 651 $144 419 $288 838 $577 676
Total Sale Price $1,500 $2,500 $5,000 $10,000
Total Dollar Return $88 151 $146 919 $293 838 $587 676
Returns on Investment (Cash Investment)
Dollar Basis Returns
Net Inflow p.a. as % on Capital 12.7% 12.9% 13.0% 13.1%
Total Inflow as % on Capital 128.4% 129.8% 130.8% 131.8%
Internal Rate of Return (IRR) - p.a. 5.0% 5.2% 5.4% 5.5%
Rand Basis Returns
Net Inflow p.a. as % on Capital 17.8% 18.0% 18.1% 18.3%
Total Inflow as % on Capital
- Rentals paid in Rands
- Rentals held in USD & revalued at lease end

179.3%
245.9%

181.3%
248.7%

182.6%
250.6%

184.0%
252.5%
Internal Rate of Return (IRR) - p.a.
- Rentals paid in Rands
- Rentals held in USD & revalued at lease end

11.4%
17.0%

11.7%
17.2%

11.9%
17.4%

12.0%
17.6%

Of importance, the Total Net Dollar Rental Income highlighted in RED can all be legally retained offshore.

Furthermore, the returns indicated above do not recognize any interest that would be earned on rentals received and invested during the investment period, which significantly increases the net return.

The Rand - And How You Can Benefit from its Strength

You too, no doubt, have been asking questions about the Rand's level at present and whether it is time now to hedge your hard-earned Rand wealth or not.

We have followed the Rand closely over the past couple of decades - from the R3.30s in 1994 ... up to R13.85 in 2001 ... down to R5.60 in 2005 ... and back up to 11.85 in 2008 ... and then back down below 7.00 before rising back above 8.00, and we often had the same questions, understandably.

So, back in 2003/2004, we initiated an in-depth study to determine the true value of the Rand - and as set out in our resultant and now updated report, entitled Rand Exposť - the Fundamental Truth, it is clear that the Rand needs to depreciate at least 6% per year in order to remain competitive, and any periods of strength are merely pullbacks within this long term trend

Chart of South African Rand against the Dollar (USD/ZAR) from 1995

The most recent quarterly update of this study (March 2015) reveals that the Rand's true competitive level is between R10.05 - R12.35 to the Dollar, at present.

While there can be expected to be periods of Rand strengthening in the medium term towards the lower end of this fair value range, overall (recognising international trade competitive fundamentals), this weakening trend is likely to continue into the future.

We believe you would find this fundamental analysis invaluable -
click here to get your FREE copy.

Recognizing this, you need to act in order to protect your hard-earned wealth and converted it into a Dollar-based asset with a hard currency return, whereby you are able to benefit from the Rand's weakening - instead of having the value of your capital eroded in real terms as the Rand weakens.

Contact us now to find out more - we look forward to assisting you in protecting your wealth.


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