KCT Mall

PROPERTY MANAGEMENT UNIT’S REPORT FOR ANNUAL REPORT 2023

Reporting period between 1 July 2022 and 30 June 2023

The Property Management Unit of KCT Group is an internally managed unit with the primary goal of growing and improving cash flow to deliver quality earnings that underpin sustained growth for KBD Retail Properties. Property is our commodity, but people are our business, and relationships that we create sustain meaningful value for our business.

Our focus is on delivering sustainable growth added to the volatile local socio-economic environment of Khayelitsha with the economy still grappling with a decline in commodity prices and the negative impact of the taxi strike during the reporting period. One clear thing is that there is no such thing as business and usual. We had to fend off negative approaches and challenges to continue providing opportunities to remain sustainable. Reporting period between 1 July 2022 and 30 June 2023 The graph below shows our average annual growth over the past three years with a 9% increase from 2022 to 2023. The improvement on the previous financial year is a result of the revised strategy of rental collections into a more aggressive approach of weekly reminders to late and slow-paying tenants including the issuing of letters of demand on a 60-day arrears period.

KCT MALL Tenant Mix has always benefitted Shoppers. The separation of the two sections of KCT Mall allows the Shoppers flexibility and variety of commodity offerings. KCT Mall remains 100% occupied by a fair tenant mix to Shoppers’ delight. The graph below indicates the split in terms of gross lettable area

We benefit from our efforts in the upkeep and maintenance of KCT Mall within its current layout and tenant mix. Consistent performance of preventative maintenance is one of our practical strategies to enhance the growth of KCT Mall. This consequently translated into an annual increase in its property valuation.

The year 2022/2023 challenged us to rethink the way we operate and to create opportunities after thoroughly examining what we offer to our Tenants and Shoppers to have a positive impact on the value of KCT Mall. We achieved this by aligning practical strategies to enhance growth and bringing our individual goals together to make KBD Retail aspirations of a transformed KCT Mall upgrade and facelift more credible with meaningful purpose.

Our operating strategy involves recruiting local service providers for day-to-day maintenance. As we honour KCT’s vision and mission full-heartedly, we recruited 65 local service providers with a total expense of R12 302 019 during the reporting period.

In addition to this, on 31 October 2022, a professional team of engineers undertook a compliance assessment of KCT Mall and provided us with a report on all matters relating to non-compliance. We managed to remedy the bulk of non-compliance work by recruiting local service providers for all categories of work. Our Centre Management Team managed to generate additional income to the amount of R231 975.50 by renting out the exhibition and promotional space in the centre core of KCT Mall which has been the focal point for Shoppers and the Public to enjoy pen air shopping, marketing, and promotions. During August 2022, our Centre Management Team also managed an open field cleaning project. We recruited a team of unemployed individuals from various wards in Khayelitsha to do bush cutting and cleaning of the open field earmarked for new development. This project created 16 job opportunities with a total expense of R61 000,00 for wages and resources. In addition to this, we recruited 11 unemployed youth to assist with a “foot count” survey during October 2022 with a total expense of R14 500,00 for wages. The data for this project was presented to our professional project team to factor into the project plan for the upgrading of KCT Mall. We progressed in our tenant engagements by having scheduled tasks for our Centre Management Team on collecting information and having weekly conversations with our tenants. The feedback on these engagements is captured on individual Centre Management’s monthly reports. We also enhanced our turnover rental reporting by tasking our Leasing Agent to enforce the strict implementation of turnover rental clauses and collections. The general upkeep of KCT Mall is our core function and is structured to align our priorities with scheduled tasks in Facilities Management. We have progressed beyond monitoring routine tasks. We focus on measuring the performance of each service contract to consistently advance improvement strategies within service-level agreements. The determination of our Centre
Management Team to accomplish their key performance indicators has been the motivation and result of overall improvement.

These inspiring values are ingrained in our daily engagements with Tenants, Service Providers, Shoppers and the Community of Khayelitsha. With such goals and internal alignment, KCT is in line with the national economy performance, where the average growth is bilateral with the National Economy, the table below details the years of performance.

Despite our Tenants slowly creeping out of the set-back caused by Covid-19, the fall in economic conditions in general not reviving retail trading and perpetual arrears from national retailers, we had an income growth of 4% from last year. We have since changed our strategy of rental collections to a more aggressive approach by im ploring weekly reminders to late and slow paying Tenants.

The interaction and consistent engagement with our Tenants on their rental account queries matured into solid relationships. To align the PMU to our brand promise, we introduced a “meet and greet” approach of our Tenants we have direct access. This was established to get to know them better and their accounts personnel, which we in turn deal with. Any rental arrears signify an action to be taken to get tenants to pay their outstanding amounts. We have also established relationships with COCT and Eskom on Utility Billing queries to ensure cooperation when required.

PMU plays and integral role in empowering the community of Khayelitsha by providing work opportunities

Local Economic Empowerment remains our key focus when procuring goods and services for planned, routine and reactive maintenance at KCT Mall. Our local service providers from the community are drawn from our database and collaboration with community structures. We support local economic empowerment by procuring all materials and providing certain equipment for the execution of work that is managed and the performance measured according to agreed services levels. These companies’ services are constantly monitored within the cost of their service.

THE GRAPH BELOW ILLUSTRATES OUR COMMITMENT IN THE REPORTING YEAR

Our Facilities Management operations continued to perform well on health and safety activities like deep cleaning, fumi gation and environmental control notwithstanding their daily repairs and maintenance operations. The average turn-around time to complete work orders were improved in the reporting period because of reactive maintenance being carried out by our in-house facilities team. New goals were set to achieve work completion within established priorities.

Emergency – Unscheduled corrective activities that require immediate attention to restore a critical piece of equipment or infrastructure whose failure could threaten the safety of Tenants and Shoppers or cause damage and more importantly, could negatively affect the trading of our Tenants.
Response Time – Immediate.

Urgent – Unscheduled corrective activities where the problem does not pose an immediate safety hazard but requires prompt response.
Response Time:1workday with completion within 3 working days.

Routine – Minor day-to-day repairs and maintenance jobs.
Response Time – Immediate

Scheduled – Recurring preventative maintenance actions, event related support, major repairs, minor alterations and renovations. By the nature of work and the environment we work in, to the satisfaction and appreciation of service level agreements. Notable improvement came about when we impressed monitoring and evaluation of onsite services carried out daily.
Response Time: As per Improved da Uy service delivery schedules and project plans