Risk management is integral to our strategic management. We proactively manage risk to remain a competitive and sustainable business, enhancing our operational effectiveness and continuing to create value for the benefit of our employees, shareholders and other stakeholders in line with our growth strategy. The group’s risk management framework is overseen by the audit and risk committee, which has an ongoing responsibility to monitor risk management processes by:


1. Weak/negative economic growth

Risk: Macro-economic weaknesses could inhibit the self storage market’s growth in line with our projections, resulting in reduced demand and lower income.


  • A ’needs’ driven product for life-changing events which prevails in all economic cycles.
  • A prime portfolio of properties.
  • Focus on large economically resilient metropolitan cities where growth drivers are strongest and barriers to competition at their highest.
  • Strong operational management and platform.
  • Continuing innovation to deliver high levels of customer service.
  • Strong cash flow generation, high operating margins, low gearing and conservative hedging policies.
  • 18 500+ tenants spread across a geographically diversified footprint.
  • Tested strategy development processes drawing on internal analyses, independent research and global trends and best practice.
2. Treasury risk

Risk: Adverse interest rate movements could result in the cost of debt increasing.


  • The group’s policy is to fix approximately 80% of total borrowings, and we use swap instruments to hedge our interest rate exposure. At 31 March 2017, 82% of net borrowings were fixed for two-and-a-half years.
  • Gearing remains low at 11.9% on a net-debt basis as at 31 March 2017. Our total undrawn borrowing facilities amount to R397 million.
  • Executive management reviews our current and forecast projections of cash flow, borrowings, interest cover and covenants monthly.
  • We are highly cash generative, and debt is serviced by our strong operational cash flows.
3. Property investment and development

Risk: An inability to acquire or develop new self storage properties which meet management’s criteria may impact the growth of the portfolio.


  • The group has an acquisition pipeline through the Managed Portfolio.
  • We have a pre-emptive right of acquisition over properties in the Managed Portfolio.
  • We already earn management fees from 12 trading properties in the Managed Portfolio.
  • Six additional development opportunities have been secured in the pipeline.
  • The fragmented South African self storage market potentially provides acquisition opportunities.
4. Valuation risk

Risk: External market factors or poor performance may lower our properties’ values.


  • Independent valuations are conducted by experienced independent, professionally qualified valuers.
  • A diversified portfolio is let to a large number of tenants across a broad national footprint.
  • Low levels of gearing provide enhanced headroom on valuations and significantly reduce the likelihood of covenant breach.
5. HR risk

Risk: Our people are critical to our success. Failure to recruit and retain employees with appropriate skills may lead to high employee turnover and loss of key personnel and, consequently, lower performance.


  • Competitive remuneration packages and financial rewards.
  • Learning and development programme with performance reviews to develop employees to the highest potential.
  • A culture where management is accessible at all levels and employees are encouraged to improve and challenge the status quo.
  • Ongoing communication to ensure an engaged workforce.
  • A succession planning strategy including talent retention.
6. Utility costs

Risk: Significant increases in utility costs, particularly property taxes and electricity, may put pressure on operating margins.


  • Electricity and water usage is monitored monthly.
  • We use external professionals to assist with monitoring and objecting to valuation revisions where necessary.
  • We make use of energy efficient lighting, solar power and collect and re-use rain water for irrigation.
7. Credit risk

Risk: The group is exposed to tenants’ credit risk which may result in a loss of income.


  • Customers are required to pay a deposit on move-in.
  • Our diversified tenant base of 18 500+ tenants minimises any reasonably expectable material exposure risk.
  • 70% of our current customers pay by debit order (certain commercial customers are permitted to pay monthly in advance by EFT, and a segment of the customer base was inherited in previous acquisitions where payment by debit order was not required).
  • Clearly defined policies and procedures are in place to collect arrear rentals.
  • A central team of collection specialists assists each store with arrears.
8. Compliance risk

Risk: The volume and increasing complexity of new and amended legislation often requires the reallocation of financial and human resources. Non-compliance may result in penalties, sanctions or reputational damage.


  • We engage with external specialists with appropriate skills where necessary.
  • We hire suitably skilled and experienced employees.
  • Finance and HR employees attend relevant training on a regular basis.