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Risks and opportunities

Effective risk management allows the balanced pursuit and execution of these opportunities in a way that delivers competitive, yet balanced, returns to our shareholders.

In line with King IV (principles 11, 12, 13 and 15), we have applied the revised ISO 31000: 2018 risk management principles to establish an integrated approach in managing our risks by embedding our combined assurance process with our enterprise risk management process.

Our risks are closely linked to our strategy and related objectives and key performance indicators (KPIs), which are monitored continuously to ensure proactive responses to positive and negative risk appetite and tolerance levels and cascaded down to the operational risk level. Risk management is embedded in our culture. Our view on risk appetite and risk tolerance is summarised below:

Risk appetite is the maximum risk we are willing to accept in implementing our business strategy while risk tolerance is the threshold variance in the level of risk mitigation (avoid, tolerate, accept) we are prepared to accept.

At a strategic level we have analysed each risk to identify possible opportunities. The magnitude of opportunities varies from risk to risk, for example some risk represents greater opportunities. We have ranked opportunities on a three-point scale of low, medium and high.

We are continually strengthening our risk management practices to manage shareholder value and support sound business practices and growth. We summarised our top risks and responses. We also link our top risks to our strategic objectives.

Assurance providers are monitored via the combined assurance forum (CAF). The board has delegated oversight of risk management to ARC. The board is ultimately responsible for risk management.

We believe that disclosing strategic and material operational risks assists our stakeholders in better understanding our risk landscape. We have therefore divided our risks into two sections following.


Exco, as the implementer of strategy, is responsible for designing and implementing risk management policies and processes

Our risk management process is applied equally across environmental, social, health and safety, governance, fraud and regulatory compliance matters

Our strategic and operational risks are well managed and reassessed against changes in the economy, property industry and our portfolio. This enables us to assess the potential impacts of risks on the value-creation process and prioritise critical risks

We respond to risk using a combined assurance approach whereby each risk is managed through three levels of defence

Risks and opportunities are interrogated quarterly at CAF, attended by exco members, senior management as well as internal and external auditors

At forum meetings, exco reports back on the effectiveness of current risk mitigation strategies and reassess risks in light of current internal and external factors. The forum formally reports to the audit and risk committee (ARC) on all potential and identified emerging risks, and mitigating actions taken within acceptable parameters

First line of defence (day-to-day operations):

  • Each employee including line managers and exco members

Second line of defence (day-to-day operations):

  • Risk managers

Third line of defence (CAF, ARC and board):

  • Internal auditors, external auditors and other independent assurance providers
  • A new legal application, Sentinel, was launched that customises legislation communication based on individuals' role profiles
  • During the FTSE/JSE Responsible Investment Index rating process our governance section were given a 5.0 out of 5.0 rating
  • Additional infrastructure cost to be spent on Waterfall, unlocking it's potential
  • Internal audit charter
  • Appointed PwC as our internal auditors
  • In terms of the group's risk maturity assessment, a minimum threshold target was approved
  • Expropriation of land without compensation added to the risk register
  • Risk appetite and tolerance levels were presented and approved

Ellipse, Waterfall City

High Medium Low


Risk increased Unchanged year on year New key risk
Meeting shareholder expectation
    Not meeting guidance provided on dividend per share (DPS) growth
  • Reputational damage
  • A decline in the share price
DPS growth Exceeded DPS growth guidance
  • Defensive mixed-use Waterfall development pipeline
  • Robust returns from our investment in MAS
  • Focusing on the delivering of strategic and operational property management KPIs
  • Disposal strategy of Africa investments

Through prudent capital allocation, active asset management and development of the Waterfall pipeline, there is an opportunity to deliver on and exceed the DPS growth targets
Transformation targets
    Not meeting the transformation targets according to the seven pillars of the B-BBEE scorecard
  • Potential sanctions by regulatory authorities
  • Failure to secure new tenants and/or retain existing tenants that rely on our rating for their B-BBEE scorecards
B-BBEE rating Level 3
  • Proactively managing and monitoring procurement spend
  • Appropriate allocation of resources to achieving targets for each pillar

Through meeting the requirements of the various scorecard elements, we have delivered tangible benefits to multiple beneficiaries. For more information see social and relationship resources in our sustainability report
Protection of property rights
    Not having the opportunity to derive benefit of purchased leasehold land and not complying with the development rights agreement in respect of the leasehold land
  • Loss of the rights to the land may trigger significant negative fair value adjustments
Forced disposal and/or expropriation of land and development rights No claims
  • Internal policies and procedures, driving compliance with the development rights agreement of the lease hold land
  • Staying abreast of changes in legislation, ensuring an appropriate and timeous response

Through the access to the development rights and the commercialisation thereof, we can unlock stakeholder value. The Waterfall leasehold land rights which provide a development pipeline for the next 21 years, allowing DPS and capital growth
Availability of capital

Not having access to equity and debt funding

  • Inability to roll-out and commercialise development bulk
  • Inability to capitalise on unexpected opportunities in-line with our investment strategy



  • The availability of committed undrawn facilities
  • We have strong funding relationships

There are various opportunities in the pipeline to recycle capital and reducing debt, thereby improving gearing and ICR

We have no interest-bearing debt allocated to our development rights and the Rest of Africa retail investments Exiting the Rest of Africa retail investments will generate cash



1.85 times

Impact disruptions of technology

Not maintaining the relevance of assets and responding to the needs of our tenants and shoppers in the context of online shopping, smart cities and modern construction techniques. Staying abreast of technology

  • Evolving/reducing space requirements both in size and time frames
  • Shopping pattern behaviour changes due to online shopping

Weighted average lease term (WALE)

6.5 years

  • Focus on property fundamentals
  • Focus on meeting tenant requirements and tenant retention
  • Focus on building green buildings in order to reduce cost of occupancy
  • Staying abreast of research, new trends and tenant/shopper behaviour in order to proactively respond

Waterfall, being a greenfield development has the ability to become a true smart city. Infrastructure, urban design and space planning are all centrally controlled. We have, for example, access to a high-speed fibre ring encircling the entire city, making Waterfall City attractive for potential tenants

Similar to water and electricity, large-scale connectivity becomes the enabler to supplying relevant data which means we have the competitive advantage to offer ancillary value-added services over and above the basic rental rate per square metre






    Insufficient cash resources to fulfil business as usual activities
  • Delays in meeting operational requirements such as payment of suppliers and employees
Access to capital on a monthly basis, forecast for the next 24 months A liquidity buffer of R1.4 billion
  • Cash buffer established
  • The availability of committed undrawn facilities

Flexibility and security in the day-to-day operations of the company
Emerging markets
    Volatile economic conditions impacting investment values, growth and revenue potential
  • Liquidity of our Rest of Africa retail investments
  • Underperformance of property portfolio
  • Increasing operational costs
  • Unfavourable currency movements
  • Negative fair value adjustments on the investment
Investments into Rest of Africa No further capital investment
  • Further investment curtailed
  • Existing shareholders actively supporting the asset management function
  • Management is open for opportunities to recycle assets

Strategically, all shareholders invested in the Rest of Africa retail investments are aligned in terms of wanting to exit these markets

This investment is currently generating a low-cash yield, therefore recycling into debt will be earnings accretive. If debt is settled with the proceeds, our gearing will decrease and our ICR will improve

Cost and availability of water supply
    Protracted drought conditions coupled with deteriorating municipal infrastructure increased strain on municipal bulk water supply
  • Potential loss of income if tenants cannot trade due to lack of water
  • Impact on future development roll-out
  • Interrupted business operations
  • Increased cost of occupancy for our tenants
Water resilience per OHS requirements OHS compliance
  • Water resilience is maintained by back-up tanks or water-shipping arrangements
  • Review and manage service level agreements with contractors to bring additional water, and the setup of water tanks

Water supply is continuously monitored for quality and availability. Our water-resilience plans ensure a reliable supply of potable water for operational continuity. This in turn ensures we maintain an outstanding customer and tenant experience, creating a competitive advantage. The South African portfolio currently has two days of water resilience, ie a property can operate normally for two days without municipal water supply
Delivery of development at Waterfall

Developments delivered

  • late
  • over budget
  • in contravention of applicable laws

All developments must adhere to generally acceptable quality and certified green sustainability requirements

  • Late delivery of developments may result in suboptimal returns due to penalties being imposed and/or loss of rental income
  • Reputational damage to us, leading to a loss of credibility and negative publicity from dissatisfied tenants
  • Potential for constrained cash flow arising from over-budget developments (see liquidity and availability of capital risks above)
  • Potential inability to recover proceeds from insurance companies due to contravening applicable laws, eg building approvals, in the event of unexpected damage

Project budget per development

Portfolio infrastructure budget

Legal and regulatory compliance

Significant reputational damage

KPIs met, except for the late delivery on Waterfall Point, which has no material impact
  • Regular meetings between development and asset management teams
  • Passing on financial loss to contractor through legal agreements

We are uniquely positioned as a REIT with a substantial development pipeline. This allows us to respond to new market trends and changes in tenant preferences and requirements such as flexible workspaces and smart city designs. Our sustainability strategy for Waterfall City is to obtain green certification for all new buildings and to develop an integrated transport plan for efficient access, parking and mobility

Legal and regulatory compliance

Non-compliance with legal
and regulatory requirements

  • Reputational damage
  • Reportable irregularities
  • Penalties, sanctions or fines
  • Business disruption
Imposition of

fines or penalties resulting in business disruptions

Significant reputational damage

No contravention detected Legal and regulatory compliant

  • Internal legal team comprising four staff members
  • Quarterly reporting through CAF, ARC and TSE committee
  • Implementation of technological tool (Sentinel Law Explorer) to continually monitor changes to existing legislation

The Sentinel Tool is assisting in keeping us abreast of regulatory requirements and enhance our ability to respond to changes

Cost and availability of electricity
    Inability of electricity providers to provide a dependable electricity supply at the required quality and reasonable cost. This includes available bulk supply for future developments
  • Increased infrastructure cost passed on to tenants due to back up electricity generation solutions
  • Failure to secure approval for new developments
  • Increased cost of occupancy for existing and new tenants
Electricity supply per OHS requirements OHS requirements met
  • Backup generators installed
  • Robust maintenance plan for generators
  • Installing a PV system at Garden Route Mall

Investments have been made to ensure minimal downtime, regardless of reliability at source

Being able to trade without service interruptions through precisely scheduled diesel deliveries gives our portfolio a competitive edge

Cyber security
    Consequential impacts of being in a highly connected environment from a cyber threat perspective
  • Prolific distribution of productivity destructive programs such as viruses
  • Leakage and/or theft of data by third parties
Zero days disruption
  • Proactively initiating and implementing cyber security measurements

High connectedness allows our employees greater freedom of movement and flexibility in their day-to-day tasks
Land invasion
    Land invasion
  • Delayed developments due to inability to remove illegal land occupiers
  • Potential decrease in land valuations
  • Potential loss of income
  • Additional operating cost to manage potential land invasion
Delays on Developments at Waterfall Zero projects delayed
  • Boundary demarcation
  • Legally enforced property rights
  • Regular proactive patrols
  • Operational control over our assets

The emergence of this risk has increased the working relationships with stakeholders such as the police and municipalities, giving us insight into their operations and allowing us to understand and more proactively plan for future challenges

Stakeholder activism

Increased community activism and pressure on business to provide more support to local suppliers and service providers

  • Delay in developments
  • Reputational damage
  • Threats and intimidation of employees

Delays on Developments at Waterfall

Tenants might not be able to trade and/or have access to their properties

Zero projects delayed

  • Actively engaging with parties and local communities
  • Co-ordinated actions with authorities, joint venture partners and parties proposing marches to engage and prevent these events
  • Procurement policy encourages spend on SMME enterprises
  • The roll-out of skills development programmes around Waterfall through the Attacq Foundation

Enrol local SMMEs on the procurement portal in order to push notifications of potential work

Ensure that contractors are made aware of the local community involvement from the onset of the project

Provide contractors with a database of trainees to be included on projects