Sustainability of Income

Adverse economic conditions due to current crisis (COVID-19) resulting in a drop in trading density, pressure on rent to income turnover ratio and difficulty in sustaining income.

• Extension of Bagatelle Mall with new entrance & parking lots, Decathlon, 42 Market Street and new international brands.
  
• Successful negotiation with Metro Express in Phoenix Mall.
  
• Tenant Relief plan proposed to tenants following the
  two national lockdowns.
• Improvement in Customer Service through digitalisation of operations and upgrading of properties (painting, waterproofing, landscaping).

Competition

The increase in the level of current and expected competition may lead to supply of space rented exceeding demand, and a decrease in footfall.

• Constant review of tenant mix and introduction of new brands to maintain the attractiveness of Malls.

Disruptive Technology

Shoppers’ expectations and behaviours are evolving and partly shaped by developments in technology such as e-commerce. Should these expectations not be met, this may result in a decline in footfall, which would in turn, impact on tenants.

• Launch of an e-commerce marketplace is currently underway.

Valuation

Weakening economic conditions could lead to poor financial performance of Tenants, resulting in an adverse movement in valuation.

• Independent valuation specialists determine fair value of investment properties, and same is reviewed by the RMAC and external auditors.
• Review of all assumptions with regards to key parameters.
• Regular events organised in Malls to attract shoppers.
• Maintaining engagement with shoppers via publications and regular interactions on social media.

Credit / Default (Tenants)

Inability of tenants to sustain their financial performance leading to:

• cash flow issues;
• default or delay in payment of rent; and
• long void periods, high vacancy rates and high level of arrears.

The above will in turn, impact the Company’s ability to meet financial obligations and dividend payments.

• Tenant Relief Plan to manage recoveries.
• Constant follow-up and review of high-risk debtors to identify tenants‘ casualties as early as possible by reviewing their financial performance, developing specific/targeted initiatives to boost performance, and ensuring continuous communication.
• Ensure adherence to lease agreements, adequate deposits, bank guarantees and sureties.

Debt Obligations

Inability to meet Debt covenants may lead to loss of confidence fromproviders of finance and decreasepotential to raise finance.

• Successful bond issue and obtention of CARE rating.

Business Continuity

Breakdown in operations as a result of:

Catastrophe

• Pandemic - lockdown.
  
• Effects of climate changes and other natural calamities.

Social Unrest

Protests and unemployment may lead to riots and looting.

Catastrophe

• Crisis committee has been set up to monitor impact of the situation.
  
• Green and sustainable initiatives across the malls will help to reduce negative impact of climate change

Social Unrest

Development and deployment of emergency preparedness plans across Malls.

Fire

• Failure to provide a safe environment in the malls for shoppers and tenants exposes the Group to compensation liabilities, loss of business, reputational risk and other costs.

Fire

• Development and deployment of emergency preparedness plans across Malls and training sessions conducted as per an agreed plan.
  
• Health and safety inspections performed by Group Health & Safety Officer, professional consulting firm and management.
  
• Internal audits carried out on a regular basis.
  
• Insurance cover in place.

Information Security

• Cyber threats such as fraudulent phishing attempts, spoofing e-mails, malware and/or ransomware.
• Inadequate security of data and privacy issues.
• Breakdown of IT system.

• Group cybersecurity plan in progress with external consultants.
  
• Regular penetration and vulnerability assessments.
  
• Constant monitoring of network traffic for suspicious activity.
  
• Internal audit carried out and recommendations implemented.

Policy Decisions

Impact on the business as a result of:

• Compulsory acquisition of land by authorities resulting in disturbed access to Phoenix Mall.
• New legislations and changes in existing legislation, e.g. COVID-19 Act 2020, Public Health Act (amendments).

• Negotiation with authorities to improve access to Phoenix Mall.
  
• Safe shopping measures with access control, disinfection, health measures, testing facilities and amendment of house rules.

Lease Expiry/Renewal

Non-renewal of lease at expiry date or renewal over a shorter period may increase vacancy.

• Leasing plan in place to ensure renewals target achieved.
  
• Strong pipeline in place. Compiling the lease strategy’s per mall that is going through the renewal process.

Compliance

• Lack of compliance with respect to current or new legislations such as Data Protection Act, Quarantine ("COVID-19") Regulations 2020 and AML/CFT guidelines.
  
  Non-compliance with internal controls leading to theft and frauds.

• Audits planned for AML/CFT and Data Protection.
• Safe shopping measures implemented.
• Code of Ethics and Whistleblowing policy in place.
  
• Strengthen internal controls and ensure proper segregation of duties in place.

Service Providers

Property & Asset Manager and Fund Manager

• Staff retention and attraction.
• Poor relationship / communication with regards to ethics and controls with employees of service provider.

Other service providers (suppliers)

• Failure to manage subcontractors.
• Poor relationship with suppliers and the latter not aligned to our values.

Property & Asset Manager and Fund Manager

• Learning & Development personnel appointed and plan put in place.
• Ethics policy communicated and implemented.
• First phase of the culture and engagement journey already completed.

Other service providers (suppliers)

• Contract administration with Key Performance Indicators (KPIs) set and monitored on a regular basis.
• Regular communication with service providers.
• Sound vendor management practices in place.