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RISK MANAGEMENT
continued
Strategic
objective
Key risk
Probable effects
Severity
of risk
Acquisitions, developments
and disposals
Continuous
portfolio
improvement
Dilutionary acquisitions, developments and
disposals
Q
Lower growth in distributions
Medium
Capital budget exceeded for development/
redevelopment
Q
Project yield compromised
Q
Inefficient capital allocation
Medium
Ineffective progress monitoring for
development/redevelopment
Q
Project end date being compromised, escalating
project costs and the yield being compromised.
Medium
BBBEE
Attracting and
retaining the
best people
Current BEE level of 6
Q
Major tenants prefer landlord to have reasonable
BEE rating
Q
Potential impact on corporate activity in SA
Q
Potential for regulatory penalties
High
Negative impact of the new codes
Transformation required in ownership,
directors and senior management
Energy
efficiency
Operating an
environmentally
sustainable
business
Potential introduction of carbon tax
in 2016
Q
Increased operational costs
High
Failure to meet primary targets (for energy,
water, recycling and carbon consumption)
Q
Possible reputational damage with the investment
community
Electricity
Providing the
highest level
of service to
our tenants
Increased cost of occupancy due to electricity
price increases
Q
Unable to recover tenants’ portion of
consumption means lower distributable income
High
Negative impact of disruptive electricity
supply on the economy and at Hyprop malls
Q
Lower rentals to retain certain tenants
Q
Prolonged periods of power outages resulting in
sub-optimal trading conditions
Increase in capital cost to provide more
generators
Q
Increased electricity and diesel costs
Local councils
Providing the
highest level
of service to
our tenants
Increased cost of occupancy from rates, taxes
and utilities
Q
Cost and supply of electricity and water
Q
Excessive increase in cost of occupancy impacting
recoveries and renewals
Medium
Deterioration of municipal administration and
service delivery
Q
Incorrect utility billings
Q
Delays in transfer of acquisitions and disposals
Q
Inadequate services provided
Q
Billing errors
Q
Excessive lead times for town planning approval
High
Security
Providing the
highest level
of service to
our tenants
Increased levels of crime at shopping centres
Q
Hyprop forced to spend more capital on security
equipment
Q
Crime, robberies, theft, etc at shopping malls
Q
Negative impact on footfall
Q
Reputational damage for Hyprop and for its malls
High
Sub-Saharan Africa
Increase
portfolio and
geographic
diversification
Weakening of currencies placing local tenants
under pressure
Q
Unable to repatriate funds due to illiquid currency
markets or capital restrictions
Q
Reduced distributable income
Q
Excessive volatility in exchange rates
High
Slowdown in consumer spend
Q
Small line stores under pressure
Q
Leases not renewed
High
Internal risks (under the control of management)
External risks (able to be mitigated by management)
External risks (outside the control of management)
GROUP OVERVIEW
30
Hyprop Investments Limited
Integrated Report 2015