Proposal

Tenancy relationship management

seminar

For

Landmark Group
by

August 2018
© Taleo Retail Advisory August 2018

Copyright

Copyright © 2018

Taleo Retail Advisory (Pty) Ltd

All rights reserved

Please note that no part of this document may be sent, copied, stored in a retrieval system, or translated into any other
language in any form or by any means (including, but not limited to: manual, mechanical, electronic, magnetic, optical, or
chemical) without prior written permission being obtained from the copyright holder.

This document and all content therein are the property of Taleo Retail Advisory. Its content has been developed, produced, and
distributed to specific people who need this information to carry out their business. If you have found this document and are not
an intended recipient, kindly return it to the office of Taleo Retail Advisory (Pty) Ltd or forward it to:

Taleo Retail Advisory (Pty) Ltd

35 Chloe Circle, The Plover
518 Harry Galaun Ave
MIDRAND
1685
South Africa

ii
 Proposal – Tenancy relationship management seminar

Table of contents
1 Introduction .......................................................................................................... 1
2 Why Taleo Retail Advisory? ................................................................................. 1
2.1 Transformation by design .............................................................................. 1
2.2 Retail sector credentials ................................................................................ 1
2.3 Current focus................................................................................................. 2
2.4 Skills/HR development needs analysis and programme creation.................. 2
2.5 B-BBEE rating ............................................................................................... 2
3 Proposed mall tenancy relationship management seminar ................................. 3
3.1 Understanding the complexities of the shopping centre ecosystem .............. 3
3.1.1 How are malls supposed to create value in theory? ........................................................... 3
3.1.2 In the experience of store managers, do mall management teams achieve this value
add? 4

3.2 The other side of the story: what are the functions of mall management
teams? .................................................................................................................... 4
3.3 The proof of the pudding: mall management performance indicators and how
retailers can both impact on and benefit from these ............................................... 7
3.4 Gauging management team performance by key result areas ...................... 7
3.4.1 Tenants ............................................................................................................................... 7
3.4.2 Landlord .............................................................................................................................. 7
3.4.3 Customers ........................................................................................................................... 2
3.4.4 Financial Performance Reporting ........................................................................................ 2
3.4.5 Budget Projections .............................................................................................................. 2
3.4.6 Capital Expenditure ............................................................................................................. 2
3.4.7 Tenant Retention ................................................................................................................. 2
3.4.8 Leasing Management .......................................................................................................... 2
3.4.9 Strategic Business Planning ............................................................................................... 2
3.4.10 Operating Cost Management .......................................................................................... 2
3.4.11 Property Facts and Asset Management Planning ........................................................... 2
3.4.12 Historical Tenancy Overview and Trend Analysis ........................................................... 3
3.4.13 Marketing Management .................................................................................................. 3
3.4.14 Rentals ............................................................................................................................ 3
3.4.15 Vacancy Management .................................................................................................... 3
3.4.16 Risk Management ........................................................................................................... 3
3.4.17 Retailer Sales Tracking and Growth ............................................................................... 3
3.4.18 Maintenance Planning ..................................................................................................... 3

iii
© Taleo Retail Advisory August 2018

4 Costing ................................................................................................................ 3
4.1 Once-off items ............................................................................................... 3
4.2 Recurring interventions ................................................................................. 3
4.3 Success-fee based research/advisory services ............................................ 2

iv
 Proposal – Tenancy relationship management seminar

1 Introduction
The core of Taleo Retail Advisory’s proposed Mall Tenancy Relationship
Management Seminar is an exploration of the complex shopping centre ecosystem
and how proactive, constructive engagement between retailers and mall
management teams can lead to strongly improved outcomes for all.

The seminar will be structured as a facilitated peer learning session, where the
reported experience of store managers with their respective mall management teams
will form the launchpad for a guided discussion on the following three broad areas:

 Understanding the complexities of the shopping centre ecosystem

 The other side of the story: what are the functions of mall management
teams?
 The proof of the pudding: mall management performance indicators and how
retailers can both impact on and benefit from these

2 Why Taleo Retail Advisory?

2.1 Transformation by design
In brief, Taleo Retail Advisory (Pty) Ltd is an accredited skills development-based
social impact startup, designed specifically to explore and bring to fruition potential
job creation opportunities and sector-wide upskilling, thereby accelerating
transformation in society. As a stated social impact startup, the specific educational
principles and project approaches used by Taleo Retail Advisory have been adopted
to create measurable impact for all stakeholders. These principles and approaches
inform Taleo’s development programme designs at a fundamental level.

2.2 Retail sector credentials

Taleo Retail Advisory was founded and is headed by Sash Padayachee, widely
regarded within the retail industry as a consummate retail management professional
and management trainer. With several successful startups attesting to his deep
understanding of the fashion retail sector, as well as his strong business acumen,
Sash Padayachee has spent three decades as an entrepreneur, manager, and
industry thought leader.

His extensive working knowledge of the industry is grounded in his experience in

fashion design, garment construction/manufacturing, chain store buying,
merchandise planning, as well as store/area and divisional operations management.
As an entrepreneur and corporate executive, his marketing and general
management experience includes strategic planning, team building, and people and
business development.

He currently holds advisory positions as:

1
© Taleo Retail Advisory August 2018

 Board Member of the Global Council of Corporate Universities, based in

Paris
 Advisor to the Industrial Cluster – Retail, Government of Abu Dhabi
 In the South African context, he collaborates with the W&R SETA on job
creation initiatives

2.3 Current focus

Taleo Retail Advisory provides a wide range of advisory and development services
promoting the design and implementation of innovative skills development initiatives
geared towards sustainable, meaningful job-creation in the retail and related sectors.
To do so, Taleo identifies and marries together the abundant support opportunities
available for small retail business owners and the enterprise and skills development
incentives present for large corporates.

2.4 Skills/HR development needs analysis and programme creation

As an entrepreneur and corporate executive, Sash’s career has allowed him to pivot
from fashion design to manufacturing; from general retail management to his current
area of sectoral skills and HR advisory, including areas such as:

 Retail marketing skills development initiatives

 Strategic planning, including sectoral skills development facilitation planning
 Retailer personal development initiatives, as well as team building activities
(store/department/division/area, amongst others)
 People development (HR, management and executive coaching, and
facilitating a broad spectrum of workshops and longer skills programmes)
 Business development
 Retail customer relationship management (CRM) and experience
management (CX)
 SETA course approval and institutional accreditation liaison and advisory
 Change management initiatives
 Community stakeholder engagement and relationship management

2.5 B-BBEE rating

Taleo Retail Advisory is rated as a Level 1 Contributor, and being 100% black-
owned, is considered an empowering supplier with recognition given to 135% of
procurement spend.

2
 Proposal – Tenancy relationship management seminar

3 Proposed mall tenancy relationship management

seminar
3.1 Understanding the complexities of the shopping centre ecosystem
3.1.1 How are malls supposed to create value in theory?
A shopping centre is a dynamic entity, co-created by many and varied stakeholders,
including:

 Property development funds

 Asset and property portfolio management organisations
 Shopping centre management and operation teams
 Facilities management and operations vendors
 Large retail chains, national or international, in all categories
 Small and medium independent specialty stores
 The paying customers, whose disposable income supports the whole edifice
Given that all of the stakeholders mentioned are ultimately competing for the same
limited pool of customer spend, it is unsurprising that relationships between the
parties can become adversarial and grudging.

However, the nature of shopping centres is such that by concentrating the competing
activities of different retailers into close proximity, and creating a safe, controlled
social environment that prioritises customer satisfaction above all else, significantly
more value is created for the customer. This added value is the reason that the co-
opetion model has been proven to work. The reduced cost of living and greatly
improved quality of life that a well-run shopping centre brings to members of the
surrounding community is the driver behind the current relentless malling of
developing economies.

In this context, it is easy for shopping centre stakeholders to lose sight of the simple
fact that strongly performing individual stores will by definition contribute to strongly
performing centres. Strongly performing centres, in turn, are able to provide more
consistent and effective support to their tenants. A positive feedback loop is the
result, where the perceived benefits to all parties tend to reinforce the reciprocal
positive behaviours. (See the example below.)

3
© Taleo Retail Advisory August 2018

And thus the positive

feedback loop starts
becoming
Mall management is entrenched in mall
therefore able to management/tenant
secure early-bird relations.
payment on an
intensive social media
Retailer footfall campaign, massively
benefits from opening increasing campaign
2 days early; manager reach, with retailer
is able to release launch specials
payment on rental, prominently displayed.
utilities, and 5%
Mall management marketing fee
completes leasing timeously.
process and
shopfitting
assistance ahead of
schedule.

In other words, the relationship between retailers and centre management teams
should be viewed as fundamentally mutually beneficial. However, poor stakeholder
relationship management and a general lack of transparency between management
teams and retailers often leads to friction, resentment, and underperformance by
both groups.

3.1.2 In the experience of store managers, do mall management teams

achieve this value add?
A facilitated and dispassionate discussion of the experiences had by participating
store managers will allow for a general view of how mall management teams are
impacting on store performance. Patterns of destructive behaviour or widespread
knowledge gaps may be identified, and these will be incorporated into the third part
of the seminar.

3.2 The other side of the story: what are the functions of mall
management teams?
To manage a retail shopping centre successfully, a good degree of knowledge and a
lot of systems are required. These systems reflect the functions and key result areas
of the management teams, and are directed at key retail property management focus
areas.

In the course of working with several regional and superregional mall management
teams in South Africa to enhance their strategy development processes, Taleo has

4
 Proposal – Tenancy relationship management seminar

developed the following high-level breakdown of mall management functions and key
result areas.

5
 © Taleo Retail Advisory August 2018

• Co-ordinate the work of the leasing team to execute new and renewal leases to meet or exceed
objectives regarding minimizing vacancy rates
• Negotiate proposed lease amendments
• Participate in the development of tenant business plans and direct special projects to enhance
tenant sales productivity and centre profitability
Leasing
• Enforce all tenant lease requirements
• Co-ordinate the participation of the development and maintenance teams in construction projects
directly or indirectly related to tenant finish
• Develop and maintain an objective and credible customer and tenant sentiment mapping system to
provide data to support strategic leasing decision-making
• Develop, implement, and administer the annual budget including quarterly re-forecasting and
monthly variance reporting, and recommend capital expenditures
• Prepare financial reports according to established reporting requirements
• Monitor the achievement of the budgeted net operating income for property
• Direct the preparation and distribution of all annual financial reports including budgets, centre
strategic plan, and annual report
• Direct the preparation and submission to asset manager of all monthly/quarterly financial reports,
Financial forecasts and sales reports
• Monitor the collections of all rents and execute appropriate collection processes
• Direct and assist in billing and collection of all monies, rents, CAM and charges
• Approve all procurement-related disbursements for work orders, purchase orders and invoices
according to centre procurement policy
• Manage CAM reconciliation and related communications
• Oversee and direct the day to day AP and AR functions
• Co-ordinate all shopping centre and landlord construction/redevelopment projects
• Direct new tenant build-outs on behalf of the landlord and liaise with related representatives
• Oversee the analysis and management of the property capital budget
• Monitor all development-related expenditures and oversee preparation of related monthly reports
Development/Construction
• Manage the tenant coordination and construction contracting process
• Review letters of intent and lease drafts, providing/coordinating accurate estimations and
scheduling
• Oversee construction projects related to capital improvements
• Oversee the maintenance of safety, cleanliness and integrity of all areas of all buildings, systems and
equipment for all property users
• Prepare team to respond in emergency and crisis situations
• Manage the physical plant functions of the property by overseeing all aspects of facility
maintenance, housekeeping and security
Operations/Maintenance
• Manage tenant relations by inspecting and observing daily operation of all tenant spaces to ensure
conformance to lease provisions, property policies and governmental regulations
• Establish and maintain relationships with external vendors, including security, cleaning, construction,
and maintenance contractors
• Implement and enforce service level agreements with all vendors
• Build and maintain thorough business intelligence of market catchment, including all competitive
properties and area demographics
• Develop and maintain an appropriate level of involvement in community affairs and activities
representing the centre
• Establish and maintain positive community relations by attending various functions as a
Marketing representative of the centre
• Review and approve requests for tours, information and public appearances
• Establish effective working relationships with all store managers and other key merchants, including
specialty tenants, to understand and drive centre-wide sales
Co-ordinate
• Maintain sponsorship,
a professional marketing
and technicaland special events
knowledge with theeducational
by attending marketing workshops,
team reviewing
professional publications, and establishing personal networks
• Maintain staff by recruiting, selecting, orienting, and training employees
• Direct and supervise the activities of all property employees
• Direct staff job results by coaching, counselling, and disciplining employees, and planning,
monitoring and appraising job results
• Appraise the performance of employees via annual performance objectives, mid-year reviews,
Management annual reviews, personal development plans and other communication mechanisms
• Coordinate appropriate training for property personnel
• Function as the primary point of contact to asset manager for all issues relating to the property,
interacting frequently with property ownership’s asset management team
• Assist in the development, implementation, monitoring and evaluation of the centre’s annual
strategic plan
• Be the primary point of contact for all owner, government, and tenant communications
• Fulfill Manager-on-Duty rotation and manage day-to-day activities as necessary

6
 Proposal – Tenancy relationship management seminar

Many store managers are often unaware of the complexities of mall management.
This can lead to the development of unrealistic expectations and the hardening of
adversarial stances. As the seminar is designed to promote relationship-building
between stakeholders, it is important for the attending store managers to gain
empathy with the mall management team and the broad range of business results
they are required to obtain.

Attendees will then be asked to consider their own performance as managers, and
how their store reflects on their mall. Are they a credit to the mall and a drawcard for
crowds? Or do they have a problem with customer service that is bringing the mall
into disrepute? In other words, which of their own key result areas should be
improved, and what impact would this in-store improvement have on the mall
management’s results?

This self-reflection serves to reinforce the closed loop that is the mall ecosystem,
and is intended to spur attendees to self-improvement as a means of facilitating
improved relationships with mall management teams.

3.3 The proof of the pudding: mall management performance indicators

and how retailers can both impact on and benefit from these
The first two sessions of the seminar are focused on giving attending store
managers insight into how functioning within the shopping centre ecosystem is not a
simple transactional-type of relationship. The unavoidable fact of being located within
a built environment managed by another team means that a store manager will
never be fully in control of how customers experience his store. This means that
developing a positive, constructive relationship with the mall management team is
not a nice-to-have – being able to manage this relationship effectively is a strong tool
to optimize how the overall mall customer experience impacts on his own customers’
satisfaction.

The following list of mall management performance indicators is derived from the
types of information either released or inferable from close observation of the mall
environment. It will serve as a tool that store managers can use in their analysis of
their mall environment. More importantly, understanding how the mall management
team functions and why they make the decisions the way they do will allow store
managers to use their relationship with them to the benefit of their store.

3.4 Gauging management team performance by key result areas

 Lease and occupancy
3.4.1 Tenants management
 Tenant types  Expiry profiles over the next 2
 Permitted use years
 Clustering of tenants
 Tenant meetings 3.4.2 Landlord
 Reporting strategies

7
© Taleo Retail Advisory
 Investment requirements
 Fund and income requirements
 Lease and tenant guidelines
 Communications systems
 Asset plan
3.4.3 Customers
 Demographics
 Shopping requirements
 Shopping patterns
 Customer surveys
 Community involvement
3.4.4 Financial Performance
Reporting
 Gross income
 Net income
 Expenditure
 Maintenance
 Capital works
 Vacancies
 Lease management
 Tenant mix and management
 Lease compliance
 Risk management
3.4.5 Budget Projections
 Income
 Expenditure
 Capital works
 Incentives
 Maintenance
3.4.6 Capital Expenditure
 Plan of works
 Current works
 Budget
3.4.7 Tenant Retention
 Important tenants
 Important retail types
 Upcoming lease expiries
 Tenant retention plan
3.4.8 Leasing Management
 Documentation check
2
August 2018
 Leases
 Licences
 Lease types
 Lease terms and conditions
 Compliance report
 Rent review rules
 Option and renewal rules
 Legal facts pertaining to all
leases
 Landlord covenants
 Tenant covenants
3.4.9 Strategic Business Planning
 Annual business plan
 Quarterly updates
 Vacancy allowances and
projections
 Lease planning
 Tenant planning
 Maintenance planning
 Capital works plan
3.4.10 Operating Cost Management
 Costs by category
 Comparisons by property type
 Recovery ratios
 Benchmarks
 KPIs' for property performance
 Budget establishment
 Historic operating costs
 Approval processes
3.4.11 Property Facts and Asset
Management Planning
 Common area
 Leased areas
 Maintenance plan
 Renovation and refurbishment
plans
 Car parking
 Plant and equipment
 Structural
 Risks identified
 Proposal – Tenancy relationship management seminar

3.4.12 Historical Tenancy Overview  Vacancy marketing

and Trend Analysis  Vacancy reduction plan
 Tenant mix
3.4.16 Risk Management
 Clustering
 Vacancies  Assessment
 Product offering  Emergency responses
 Missing tenant types  Tenant generated risk
 Full tenant mix review  Property generated risk
 Priority tenants  Public protection
 Anchor tenants  Training for fire and safety
 Specialty tenants  Signage for emergencies
 Natural environmental events
3.4.13 Marketing Management  Risk management plan
 Signage rules  Insurance system and
 Tenant marketing contributions responses
 Annual marketing plan
3.4.17 Retailer Sales Tracking and
 Annual marketing report and
Growth
review
 Naming rights  Sales by tenant
 Sales by merchandise group
3.4.14 Rentals  SWOT the sales patterns by
 Market rent benchmarking tenant
 Net versus Gross rents  Seasonal sales results and plan
 Incentive structures
3.4.18 Maintenance Planning
 New tenant rents
 Contractors
 Existing tenant rents
 Essential services
3.4.15 Vacancy Management  Preventative maintenance
 Upcoming vacancies  Breakdown management
 New vacancies  Emergency responses
 Pop up tenants

4 Costing
4.1 Once-off items
Description Qty Rate Total

Total (excl. VAT)

4.2 Recurring interventions

Description Frequency Rate

3
© Taleo Retail Advisory August 2018

4.3 Success-fee based research/advisory services

Description Rate