Real Estate Investor Magazine South Africa August 2016

G iven the skyrocketing prices, the tenuous supply, and the irregular and chaotic administration by municipalities, utilities have become a major risk for property owners. For Commercial property owners, a satisfied tenant is their greatest asset, assuring ongoing income and underpinning the value of the property. And since your tenant is the end user of utilities, utilities hassles – from inflated or incorrect utility bills to service interruptions – represent a significant risk to your relationship with your greatest asset, significantly increasing the possibility of strained relations, legal wrangling and even vacancy. the risk by outsourcing utilities management to an expert third party that understands the industry, keeps abreast of constant changes, and have over many years built up systems and relationships to ensure they can deliver results. The absolute key to success in managing utilities risk is in choosing the right utilities managing company to manage and mitigate the risk. The team of experts at JVR Utilities shared their impressive 40 years of combined experiences in the industry to provide these seven tips for selecting the right partner to manage your pressing utilities risk. How pressing is your utilities Risk? Over and above averting potential business catastrophes, intelligent risk management can reveal opportunities, allowing property owners to reap the rewards that are inherent in any risk. Utilities risk, when well managed, becomes an opportunity to reap the rewards of satisfied tenants who are pleased to renew their leases, along with reduced costs and improved productivity. In fact, if you select the right utilities manager that allows you to offer your tenants fair, accurate utility bills and excellent service, while ensuring your utilities are managed professionally, saving time and money, you have turned a clear and pressing threat to your commercial property investment into a competitive advantage. According to risk management principles, a risk is evaluated and prioritised according to two factors: probability and the exposure or consequences. Utilities risk is no longer a probability but a reality, evidenced by Eskoms regular blackouts and recent water restrictions. It is also evident in the fact that in recent years the bulk tariff payed by commercial property owners has increased at a much higher rate than end consumers (tenant) tariffs, placing severe strain on property owners ability to recover the management cost. It is further reflected in the timeconsuming and frustrating process of trying to sort out queries and errors at municipal level. Furthermore, the consequences of this risk are severe because dissatisfied tenants threaten not only the probability and sustainability of a commercial property, but could even result in a financially devastating vacancy. Given that utilities risk represents a clear and present threat, with severe consequences, immediate and decisive action is required to manage this risk. Since the risk can neither be accepted nor avoided, the most effective risk management strategy is to transfer the risk Managing the Risk Since the risk can neither be accepted or avoided, the most effective risk management strategy is to transfer The Upside of Risk: Reward THE RIGHT UTILITIES PARTNER OFFER 1 A solid track record, with the right expertise and experience in utilities management 2 Professional maintenance of your utilities infrastructure (including metering) 3 Access to quality metering solutions and cutting-edge utilities management systems 4 A no cost service by covering their own management fees 5 Turnkey utilities management, from metering to invoicing tenants, collecting payments and handling tenant queries and municipal interactions quickly and professionally. 6 Professional management of future risk by building up a contingency fund for future maintenance and replacement costs 7 Honest and ethical dealings, protecting you from reputational risk RESOURCES Forbes AUGUST 2016 SA Real Estate Investor 27

Real Estate Investor Magazine South Africa August 2016 | Page 29