Integrated
Report

2019

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Key relationships

Our key relationships are with those stakeholders who have significant influence over how we do business, with whom we engage regularly. In FY19, our updated stakeholder engagement policy was approved by the transformation, social and ethics committee.

In line with King IV, we follow an inclusive approach and derive our strategy from understanding our stakeholders' needs, interests and expectations. These relationships enable us to identify risks and opportunities, and address these proactively to create trust with our stakeholders.

Key stakeholder profile

COMMUNITY

All communities in the retail catchment areas of each asset in our South African portfolio

EMPLOYEES

150 permanent and temporary employees

GOVERNMENT, MUNICIPALITY AND REGULATORS

National and local government departments, municipalities, regulators, industry associations

LANDHOLDER

Waterfall

10 funders, >6 400 shareholders, mainly in South Africa

EXISTING AND POTENTIAL PROVIDERS OF CAPITAL

>40 million shoppers

SHOPPERS

>700 existing and potential tenants

TENANTS

>80 product/service providers

SUPPLIERS

The quality of our relationships supports or hampers our ability to operate, as almost every issue raised by our stakeholders can be a risk or opportunity in achieving our strategy. We classify the quality of our relationships into five categories:

COMMUNITY

Stakeholder, quality of relationship, frequency and method of engagement

Developing relationship

Various outreach programmes

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • Interacting with our communities enables us to understand their needs and further align our business with those needs to remain relevant
  • Job creation, social upliftment and investing in our communities
Contribution to value creation
  • We benefit from the support of the community and we therefore want to invest back into the community
  • Small and medium enterprises in Midrand were not always included in procurement for the developments at Waterfall (see risks and opportunities)
  • We have implemented an online procurement tool to communicate opportunities to all small and medium enterprises
  • We are involved in the community through regional events and CSI projects
EMPLOYEES

Stakeholder, quality of relationship, frequency and method of engagement

Strong relationship

Daily, monthly, ad hoc

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • Healthy organisational culture that motivates employees to perform improves engagement, fosters collaboration and strengthens commitment to embrace our values and strategic objectives
Contribution to value creation
  • Provide talent, knowledge and skill by embracing company values
  • Advancement prospects within a¬†flat hierarchical structure
  • Engagement across all levels
  • Transformation and employment equity (see risks and opportunities)
  • Collaboration across all departments
  • Living our values
  • Personal growth is encouraged by promoting innovative thinking and collaboration with other teams and individuals as well as training
  • Monthly CEO update, including Q&A opportunity
  • Regular visits by senior management and executives to our regional malls
  • Transformation is a priority, with all non-equity appointments presented to the CEO for approval
GOVERNMENT, MUNICIPALITY AND REGULATORS

Stakeholder, quality of relationship, frequency and method of engagement

Developing and maintaining good relationships

Ad hoc, formal reports as required

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • Streamline approval process
  • Comply with laws and regulations to avoid fines and penalties
Contribution to value creation
  • Municipalities providing utilities and services as well as building approvals
  • Local council: timeous receipt of approvals
  • We remain committed to ensuring the highest levels of compliance to all legislation
  • We engage regularly with government, regulators and improvement districts to ensure our developments are supported by the appropriate infrastructure. This includes detailed traffic impact assessments
LANDHOLDER

Stakeholder, quality of relationship, frequency and method of engagement

Strong relationships

Regular interaction

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • Retain and build the relationship
Contribution to value creation
  • Land holder of our key driver, Developments at Waterfall and land holder to a majority of our assets in our South African portfolio
  • The roll-out and management of Waterfall precinct
  • Approvals for proposed new developments
  • Regular one-on-one meetings ensure proactive management of this vital relationship
EXISTING AND POTENTIAL PROVIDERS OF CAPITAL

Stakeholder, quality of relationship, frequency and method of engagement

Strong relationships with larger shareholders and principal financiers; one-sided to connected relationship with others

Ad hoc meetings, SENS announcements, meetings after results presentations, roadshows, integrated report

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • Create a larger shareholder base, increasing share liquidity and enhancing access to capital
  • Access to debt capital, existing funding structures support our business strategy
Contribution to value creation
  • Provide equity and debt capital
  • Our financial performance and position
  • Credit quality of our tenants
  • Implementation of the group's strategy
  • Retail environment
  • Developments at Waterfall and its pipeline
  • Investment in MAS
  • Regularly updates providing accurate information to demonstrate our continuing ability to meet obligations (debt covenants, loan-to-value, interest cover ratio)
  • Specific concerns raised were addressed by direct feedback (email/meetings/presentations)
  • In addition to regular engagement, we issued specific newsletters and notices/updates and hosted a site visit to Lynnwood Bridge precinct, specific developments and Ellipse show unit
SHOPPERS

Stakeholder, quality of relationship, frequency and method of engagement

Good relationship

Proactive engagement through appropriate mediums

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • Understanding shopping patterns, consumer experience and requirements, as well as the impact of online shopping and relevant retail competitors in each region
Contribution to value creation
  • Consumer behaviour affects the tenant's turnover and therefore future sustainability and potential rental income, with an indirect impact on the value of our buildings
  • Remaining relevant in a competitive environment
  • Changing the way in which we communicate to shoppers and the mediums used
  • Learn and improve campaigns, activities, initiatives based on shopper, customer or mystery-shopper feedback
TENANTS

Stakeholder, quality of relationship, frequency and method of engagement

Developing and connected relationships

Daily, monthly, ad hoc, twice-yearly roadshow, third-party tenant satisfaction surveys

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • Tenant retention and expansion
  • Implement early renewal strategy to improve retention and weighted average lease expiry
  • Convert potential tenants to actual tenants
Contribution to value creation
  • Tenants are our primary clients, providing the rental income that underpins our business
  • Cost of occupancy at tenant level and how to reduce the costs
  • Partnering with tenants to restructure leases and drive down cost of occupancy
  • Early renewals
  • We continually invest in cost-saving initiatives for electricity and water. We remain committed to using green building principles in our developments
  • Closer relationships with our clients to identify early-renewal potential and address client risk proactively where possible

Adding value for tenants

In the review period, our asset, property and development teams completed a comprehensive programme aimed at adding value for existing and new tenants. The programme was closely linked to the South African portfolio and Developments at Waterfall as key drivers.

We believe that if we build sustainable relationships with our clients while still delivering exceptional service, our understanding of their evolving needs will be a natural outflow of our connection. When the time comes to renew these contracts, we want to be the logical choice because of our established connection with these tenants.

SUPPLIERS

Stakeholder, quality of relationship, frequency and method of engagement

Good relationship

Performance evaluations, penalties and bonus where applicable, effective feedback loop created through monthly performance tracker

Benefits of engaging/risk of poor engagement
Main discussion points
Our actions
  • By maintaining good relationships and open communication with our suppliers and service providers, we benefit from high-service levels that enhance our service to tenants and shoppers
Contribution to value creation
  • High-service levels and quality products enhance our service to tenants and shoppers
  • Fair and transparent tender processes
  • Service level agreements
  • We ensure effective internal processes by selecting suppliers and service providers that support our strategy and values