The primary function of the Property Asset Management Division is to drive Ithala's property strategy through defining an appropriate return, cost structure, investment plan, disposal criteria, acquisition strategy and maintenance plan for each property under management, and the portfolio as a whole.
Key to the success of Ithala's development mandate is the application of commercial property principles and practices in pursuit of economic upliftment of local communities in the Province.
The portfolio of properties that are collectively under management, is made up of 1 million square metres of industrial property and 177 000 square metres of commercial shopping facilities, across 22 shopping centres spread throughout the province.
The key challenge facing Ithala's property portfolio during 2009/2010 was the economic downturn. The impact of difficult economic times was first felt in the industrial portfolio, where large established industrial tenants, particularly in the mining, clothing and textile, and manufacturing industries, were severely affected. The textile sector which represents 30% of the portfolio, also continued to suffer under import pressures from China and the Far East. A number of large industrial tenants closed down, and others went into short-time shifts. Within the retail portfolio, the smaller retailers were hardest hit, whilst large national and anchor tenants took advantage of the downturn by looking for more affordable space. The majority of our anchor national tenants renewed their lease agreements.
In terms of key initiatives undertaken during 2009.2010, the Property Asset Management division produced a business plan highlighting the main objectives and goals of the portfolio over the next three years. The focus is on increasing the return generated from the portfolio, by disposing of underperforming assets, reducing operational costs, improving risk management, increasing the maintenance spend and hence improving the income generating potential of performing assets. The goal is to improve the competitive advantage of Ithala properties and create a portfolio to rival the private sector in terms of returns, yet maintain a direct focus on developing and contributing towards the local economy.