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F E A T U R E
Keeping the house in order
www.deniprop.co.za
www.deniprop.co.za
Keeping the house in order
Established in 2004 to centralise the management of Denel's property portfolio, Denel Industrial Properties (DeniProp) provides bespoke infrastructure solutions for both Denel's operating divisions and external tenants. General manager Rentia Geldenhuys tells us about the company's role within the Denel Group and the wider property management industry in South Africa.
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enel provides turn-key solutions of defence equipment to its clients by designing, developing, integrating and supporting artillery, munitions, missiles, aerostructures, aircraft maintenance, unmanned aerial vehicle systems and optical payloads based on high-end technology. Its defence capabilities date back more than 70 years when some of Denel's first manufacturing plants were established. “We're currently managing 11 sites in South Africa,” begins Geldenhuys. “We have different types of lease agreements, ranging from triple net leases to full leases. One of our biggest tenants is Rheinmetall Denel Munitions, which is situated mainly in the Cape region.”
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One of the toughest challenges that DeniProp has had to deal with is that of remediation. Some sites owned by the company were contaminated in the past, and the process of determining the specifics and levels of these contaminations has been a complicated one for DeniProp. “It's been a long process, and has involved talking to a lot of previous employees to get the facts,” says Geldenhuys. “But we have recently completed the remediation of the Philippi site, which is 517 hectares, and it is now ready to be sold.” Registering servitudes on title deeds have also proven to be challenging. “We've been dealing with numerous agreements that 2
were made previously in an era of trust,” says Geldenhuys. “These agreements were not in writing and they now need to be put on paper, to ensure we have access to pipelines and roads in the future.” Elsewhere,DeniPropfaces risks as a result ofa number of large properties on whichammunition is manufactured and stored. These facilities have very large explosive circles, meaning that the land surrounding them cannot be occupied. “This is not readily known to the public,” says Geldenhuys, "and some people think they can illegally occupy vacant land without realising that they are putting their lives in danger. We recently experienced problems with illegal occupations at our Philippi property and had to get a court order to remove them. Most sites owned by Denel are classified as National Key Points, which implies that the higher levels of security are enforced.”
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Introduced during apartheid, the National Key Points Act is a law designed to safeguard sites of national strategic importance in South Africa. The intention of this legislation was to enable the state to compel owners of facilities that presented security risks to secure their facilities at their own cost. Despite the obscurity of the legislation, for DeniProp, it remains a very real part of their business. “We also struggle with mining rights and issuing of permits,” says Geldenhuys. "Sometimes we need to stop these being issued as some of our sites are classified as National Key Points and mining activities will affect our manufacturing processes.” At the same time, there are broader challenges to be faced. The commercial property market has recently struggled in South Africa, with a tough environment for
manufacturers exasperating the issue. According to the latest Rode's Report on the South African property market, office rentals in Sandton, the country's financial hub and premier office district, are falling — a clear sign that the sector is under severe pressure. “There's an oversupply of commercial property in South Africa. Many buildings are vacant and new ones get built on a regular basis,” says Geldenhuys. Commercial rentals in Sandton were down
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by 4% in the last quarter of 2014, yet new developments are being completed every day. The property boom has also spread to neighbouring countries such as Botswana, with Gaborone's commercial property supply also beginning to exceed demand. “My view is that the market in South Africa is currently saturated, and the older buildings remain vacant,” says Geldenhuys. “We as property managers need to look at how we can transform our buildings to become more green and efficient.” 4
DeniProp is currently running the energy project for the Denel Group and has managed a saving of more than 10% per annum to date. Plans are in place to effect a further 5 to 10% saving in the next couple of years. This comes as part of a corporate rebranding of Denel, with premises being upgraded to meet a more uniform corporate standard. “This is a mammoth task, as we have the 11 sites with their own management and everyone wants to put their own stamp on the site,” says Geldenhuys. “Managing this portfolio can be a difficult job, as the tenants often want to effect structural and other changes without getting prior written approval from the Landlord. This has huge implications for me as the property manager on compliance issues,” she 5
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DeniProp is currently running the energy project for the Denel Group and has managed a saving of more than 10% per annum to date. Plans are in place to effect a further 5 to 10% saving in the next couple of years. This comes as part of a corporate re-branding of Denel, with premises being upgraded to meet a more uniform corporate standard.
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Managing this portfolio can be a difficult job, as the tenants often want to effect structural and other changes without getting prior written approval from the Landlord. This has huge implications for me as the property manager on compliance issues,” she continues. “I am inspecting the sites as often as I can and discussing issues with my own managers, but also with the tenants to make them aware of the consequences of their actions.”
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continues. “I am inspecting the sites as often as I can and discussing issues with my own managers, but also with the tenants to make them aware of the consequences of their actions.” DeniProp has recently introduced a helpdesk system so that all propertyrelated repairs and maintenance issues may be reported, repairs done and progress monitored, with the data being used for trend analysis and developing more effective maintenance plans and schedules. “This information assists us in evaluating certain products to ensure that whatever item we replace will be a long term solution,” says Geldenhuys. “This helps us to get the best value for money for Denel group and our tenants.” 7
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Contact Details Contact our office in South Africa Astro Park Atlas Road Bonaero Park Kempton Park 1619 Gauteng, South Africa Postal Address: PO Box 11 Kempton Park 1620 South Africa Email: marketing@denelaero.co.za
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