MALAYSIAN PROPERY MANAGEMENT STANDARDS

GUIDELINE 1 - RETAIL ASSET MANAGEMENT

1.1.0 INTRODUCTION
1.1.1

The principal objectives of retail asset management are to achieve the delicate
balancing of the needs of the retailers, consumers, investors and developers.

1.1.2

It is important to understand the difference between Retail Asset Management

and Property Management as more often than not, the latter is the more visible
and physical aspect of shopping centre management.

1.1.3

Property Management is typically managing the physical environment of

shopping centres. It is predominately a cost-side function and is driven by year
cost budgets with periodic reporting and day-to-day physical management
functions.

1.1.4

Retail Asset Management on the other hand is a much more comprehensive

management platform with the objective of optimising the net income from a
shopping centre asset. These include incorporating functions such as asset
positioning, tenant mix, capital expenditure, common area maintenance, lease
management, marketing promotion, security and car park management.

1.1.5

The nuts and bolts of delivering Retail Asset Management fall on major
vertical functions. These functions strive to deliver the long-term objectives of
a shopping centre asset. The functions are not only performed independently
but are also linked with each other in the pre-occupancy and post-occupancy
stages of the development process, forming a matrix like operating framework.

1.2.0 PROVISION OF SERVICES AND OBLIGATIONS

Principal Objectives
The principal objectives of the Property Manager in providing the services are:
1.2.1

to manage and operate the Property in the most efficient manner;

1.2.2

to conduct the management in an orderly, professional and business-like

manner and protect the Owners interest in the Property;

1.2.3

to maximise the Owners financial return from the Property in both the short
term and the long term, at all times subject to any restraints, constraints,
directions or strategy that the Owner may impose upon the Property Manager.

1.3.0 TENANCY AND LEASE MANAGEMENT

Tenancy and Lease Management are important aspects of retail asset management. A
tenancy is a leasing arrangement for a period of not more than 3 years. A lease is for a
period beyond 3 years and may be registered in the document of title.
1.3.1. Tenancy
The Property Manager must:

1.3.2

(a)

formulate strategies to identify and determine the nature of businesses

preferred for the centre, tenancy mix, and the types of tenants suitable
for the centre;

(b)

formulate prequalification criteria for tenant selection;

(c)

formulate letting policies, tenancy terms and conditions and drawing up

legal tenancy documentation;

(d)

implement market activities to attract and secure tenants identified for

the centre;

(e)

negotiate with potential tenants on optimal letting terms and conditions;

(f)

coordinate solicitors on execution of tenancy agreements;

Registers
The Property Manager must:

1.3.3

(a)

maintain and keep updated a register of tenancies/leases containing a

summary of all lease and tenancy details;

(b)

maintain and keep updated a register of the tenants insurance

obligations under their tenancies/leases; and

(c)

annually check to ensure that tenants/lessees hold current, adequate

insurance cover as required by their tenancies/leases, but the Property
Manager is not liable in the event that any tenant/lessee fails to effect
adequate insurance cover in accordance with his or her tenancy/lease.

Tenancy/Lease Management
The Property Manager will:
(a)

control the assignment of lease and the granting of any sub-leases in

consultation with the Owner;

(b)

negotiate the exercise of any option for the renewal of a lease and
implement rent reviews in accordance with any relevant provisions
contained in leases;

1.3.4

(c)

recommend to the Owner, from time to time, and at least two months
prior to the relevant rent review dates, appropriate rentals for the
respective premises;

(d)

monitor all new and modified tenancy fit-outs including alterations to

partitions and services.

(e)

monitor performance of tenancy/lease terms and conditions;

(f)

liaise and holding regular meetings with tenants/lessees to understand

their needs and problems, obtaining feedback, and assisting them where
reasonable in order to foster good landlord-tenant-lessee relationship;

(g)

keep abreast of and taking into account current market rental levels and
trends, upon tenancy/lease renewal/review, as well as giving cognisance
to long term relationship; and

(h)

keep abreast of market practices and trends in tenancy/lease

management.

Dealings with Tenants/Lessees

The Property Manager must, when required by the Owner, represent the
Owner and act on its behalf, in all dealings with disputes with tenants and
enforce all obligations of the tenancy/lease to ensure compliance by tenants
with the terms and covenants of their tenancies/leases.

1.4.0 MARKETING MANAGEMENT

The Property Manager must take all reasonable steps to increase customer traffic at
the centre, assist retailers in increasing sales and continually strive to achieve a
pleasant shopping environment at the centre, by adopting marketing strategies
including:
1.4.1

1.4.2

Pre-Occupancy Stage
1.4.1.1

Preparing the strategic marketing and branding plan so as to

maximise the eventual revenue opportunities as well as achieve
appropriate positioning of the centre.

1.4.1.2

Designing a brand strategy, advertising, public relations and

communication plans pegged to the catchment of the centre through
consistent consumer research.

Post-Occupancy Stage
1.4.2.1

Planning and implementing events and promotions in line with the

shopping centre calendar, to increase awareness of the shopping

centre as well as bring retail stores onto a common and collaborative

marketing platform.
1.4.2.2

Identifying and generating revenues through other avenues such as

temporary/casual leasing, promotions and advertising programs.

1.4.2.3

Promoting the centre and the business of the tenants to maximise the
volume of customers and sales for the tenants.

1.4.2.4

Constant monitoring of footfalls to understand its dynamics and

thereafter, devise strategies to optimise it over the long term.

1.4.2.5

Undertaking footfall benchmarking.

1.4.2.6

Advising the client on marketing and public relations, planning

preparation of and contracting advertising and promotion
programmes for the property to increase visitor numbers and further
strengthen the image and popularity of the centre.

1.4.2.7

Developing and fostering a spirit of co-operation amongst tenants in

the centre;

1.4.2.8

Co-operating with appropriate civic and social events and activities

which will assist in raising the business profile of the centre;

1.4.2.9

Where appropriate, providing and training, direction and

development to retailers in the interest of providing customer
service and increasing sales (Costs in relation to provision of
training & development being payable from the Promotions Fund or
by the Owner);

1.4.2.10 Maintain or causing to be maintained, a Promotion Fund for the

centre according to a budget;
1.4.2.11 Controlling and administering, or causing to be controlled or
administered, the Promotion Fund for the centre and any other
marketing fund established for the marketing of the centre, including
the recovery of contributions from tenants at the centre;
1.4.2.12 Publish a promotion, advertising and marketing calendar with an
agreed budget.
1.4.3 Promotion Fund
The Property Manager will:
(a)

issue tax invoices to tenants on behalf of the Owner and collect amounts
payable by the tenants of the centre as contributions to the Promotion
Fund;

(b)

establish and maintain a separate trust account for the Promotion Fund
(which must be operated in accordance with the requirements of all
relevant legislation):
(i) into which are paid all contributions made by tenants and the Owner

in relation to the centre; and

(ii) from which the Property Manager must pay the marketing and

promotion expenses for which contributions have been made;

(c)

during each accounting year, keep proper books of accounts and records
showing:
(i) the contributions to the Promotion Fund received from the tenants;
and
(ii) all marketing and promotion expenses paid by the Property Manager
from the Promotion Fund;

(d)

preserve the books and records relating to the Promotion Fund for
whichever is the longer of:
(i) seven years; or
(ii) a term (if any) prescribed by any relevant legislation;

1.5.0 FINANCIAL MANAGEMENT AND REPORTING

Financial Management with reference to a shopping centre project entails managing
the financial aspect of the project with a view to structure and optimise overall net
returns. At the very onset, it strives to set the direction and framework for the
financial management of a shopping centre asset.
1.5.1

Pre-Occupancy Stage
1.5.1.1 Preparing long-term capital budgeting with three-to-a five year time
horizon.
1.5.1.2 Undertaking project risk management and assessment, to ensure that
the financial risk aspect of the development is understood and
incorporated in the overall strategy of the project.
1.5.1.3 Providing effective forecasting, analysis and reporting of income and
cost streams for the developer/investor.
1.5.1.4 Estimating the Common Area Maintenance (CAM) charges so as to
arrive at a clear and accountable projection, an important recurring
cost component which has implication on store operative expenses
along with rents.

1.5.2

Post-Occupancy Stage
1.5.2.1 Income
The Property Manager will:
(a) issue tax invoices to tenants on behalf of the Owner and collect
amounts payable by the tenants of the centre including rent, licence
fees, other occupation fees, and all other amounts payable by
tenants under their tenancies/leases including contributions to the
Operating Expenses (Rents);
(b) if the relevant electricity authority does not read a tenants
electricity meter and render an account directly to that tenant, read
the meter or have it read, issue an account to the tenant and collect
the amount due;
(c) collect arrears of Rents and any other payables by a tenant by
means agreed in consultation with the Owner; and
(d) at Owners request, begin or discontinue an action to:
(i) re-enter or otherwise recover possession of any leased part of
the centre; or
(ii) recover a debt or sum due concerning the centre; or
(iii) enforce the Owners rights in connection with the centre or
under any tenancy/lease.
1.5.2.2 Operating Expenses
The Property Manager will:
(a) prepare an Operating Expenses budget each year.
(b) pay the Operating Expenses (other than those paid directly by the
Owner) from the Rents and other money collected by the Property
Manager in relation to the centre (other than contributions to the
Promotion Fund) and advances made by the Owner to the Property
Manager for that purpose; and
(c) where the Owner directs, appeal on behalf of the Owner against
charges, levies or valuations made concerning the centre which the
Owner considers unreasonable.
1.5.2.3 Common Area Maintenance (CAM) Benchmarking
The Property Manager will:
(a) create a framework in defining and optimising charges and its
components so as to provide the stakeholders with a detailed

benchmarking of property management data as well as a

comparative occupancy expense data which are required
to
evaluate the competitive operating efficiency of the centre; and
(b) procedures for monitoring budgetary performance and compliance
and annual reports and analysis of operation performance.
1.5.2.4 Managers Trust Account
The Property Manager must:
(a) establish and maintain a trust account (Managers Trust
Account) (which must be operated in accordance with the
requirements of all relevant legislation):
(i) into which are paid all Rents and other money collected by the
Property Manager in relation to the centre and advances made
by the Owner to the Property Manager to enable the Property
Manager to pay the Operating Expenses; and
(ii) from which the Property Manager must pay the Operating
Expenses, the Property Manager Fee and other expenses in
relation to the centre;
(b) during each accounting year, keep proper books of accounts and
records showing:
(i) the Rents and other money received from the centre; and
(ii) all Operating Expenses and other expenses paid by the
Property Manager in connection with the centre;
(c) preserve the books and records relating to the income and expenses
of the centre for whichever is the longer of:
(i) seven years; or
(ii) a term (if any) prescribed by the relevant legislation; and
(d) prepare and submit to the Owner on a monthly basis a statement of
the Rents and other money received and the Operating Expenses
and other expenses paid for the centre during the preceding month.

1.5.2.5 Surplus Amounts

The Property Manager will prepare and submit to the Owner on a
regular basis a statement of the Rents and other money received and
the Operating Expenses and other expenses paid for the centre during
the preceding month.
1.5.2.6 Reports
The Property Manager will:
(a) annually prepare and submit for the Owners approval:
(i) a detailed budget comprising a cash flow forecast of income
and expenditure
(ii) maintain a strategic oversight of financial flows as well as
undertaking ongoing functions such as annual budgeting,
accounts receivable management, accounts payable
management, tenant turnover monitoring, managing
delinquencies and debtors.
(iii) monitor operating budgets of a project encompassing all
operating expenses, including its capital costs e.g. cost
requirements for all divisions within a shopping centre project
are tracked and optimised on an ongoing basis to ensure that
budgets are met and that projected profits are generated.

1.6.0 CAR PARK MANAGEMENT

Car parking income may form significant revenue to the retail asset and the Property
Manager should be conversant in the following:
1.6.1 managing car park collection and payments, and to implement proper and
effective audit control over the cash handling;
1.6.2 monitoring car park traffic pattern and relocating car park bays to achieve high
efficiency and to report to the Owner; and
1.6.3 monitoring and managing safety and security issues of the car park.

1.7.0 SECURITY MANAGEMENT

Awaiting input ....

1.8.0 PROFESSIONAL SERVICE MANAGEMENT

A high degree of professionalism is expected from the Property Manager.
1.8.1 Seeking advice and consulting other expertise on capital value, assessment
value;
1.8.2 Seeking advice and consulting other professionals in legal, technical, financial
and accounting matters as and when the need arises; and
1.8.3

Advising on insurance for the centre and other related matters.

1.9.0 REPORTING SYSTEM

The Property Manager will submit the relevant report relating to the management of
the centre on a monthly, quarterly and annual basis, the frequency depending on the
nature and types of reports. Additional reports will be generated if warranted by
circumstances and/or to meet certain specific purposes.

1.10.0 PROPERTY MANAGEMENT AND MAINTENANCE

Essentially, the most physically visible aspect of Retail Asset Management practice,
Property Management involves the maintenance of building services to ensure the
smooth operation of a centre.
In pre-occupancy stages, Property Management includes the following: Procurement
and commissioning of systems and equipment, and thereafter, generating tendering
documents for vendors. In the post-occupancy stage, Property Management involves
several facets, key among which are the following:
1.10.1 Building Management: The ongoing maintenance and repair of the entire
physical space of centre, including faade, common areas, and parking lots,
collection and disposal of garbage and refuse as well as the maintenance of
various systems, including electrical and mechanical utilities, water, and fire
management systems.
1.10.2 Tenancy Works: Monitoring the design and fit-out activities of new stores
with a view to minimize disruption to centre operations. This also involves
monitoring existing tenancies that require minor construction, infrastructural,
and remedial works during the post-occupancy stage.
1.10.3 Landscape and Ambience Management: Management of elements such as
flora, water bodies, public signage, and furniture as well as of the overall
aesthetic ambience.
1.10.4 Energy Management and Conservation Program: Aims to reduce the
overall energy cost for the centre, which in turn positively impacts net
operating expenses. The Energy Management Program tries to integrate
sustainable building principles right from the beginning of the life cycle of the
centre, with the objective of reducing the environmental impact of the centre.

1.10.5 Planned Preventive Maintenance Program: Establishes and manages a

planned preventive maintenance program for all equipment and machinery at
the shopping centre, including the keeping of records for each piece of
equipment and the frequency of their maintenance.
1.10.6 Safety and Security Management: Formulating procedures and
implementing the highest standards for the safety and security of the centre
and its occupants, thereby ensuring a secured shopping environment.
1.10.7 Customer Care Management: Involves evolving an efficient customer
interfacing strategy, which incorporates information dissemination, query
resolution, managing consumer feedback, and building loyalty through the
various channels of interaction throughout the centre.
1.10.8 Regulatory Compliance: Ensuring compliance with building and safety
regulation and liaising with all the relevant authorities to ensure that the centre
meets all statutory requirements and regulations.

1.11.0 RETAIL CONSULTANCY

In order to keep abreast and where feasible, ahead of market competition and
technological advances, the Property Manager will carry out regular reviews, analysis
and surveys relating to:
1.11.1 Project management practices adopted by other existing and new centres;
1.11.2 Trends in consumer buying behaviour;
1.11.3 Changes in demographic and psychographic characteristics of target
consumers;
1.11.4 Expenditure patterns and trends in the industry;
1.11.5 Trends in tenant- mix, and tenant requirements and expectations;
1.11.6 Changes in legal and statutory requirements relating to project management;
1.11.7 Cost structure and efficiency of the centre operation;
1.11.8 Design, layout and building trends for retail centres or office buildings; and
1.11.9 Social, cultural, political, government, technological, and environmental
changes affecting efficient and profitable operation and functioning of the
centre.
The eleven verticals of Retail Asset Management detailed above are weaved into the entire
length of a shopping centre asset life span. The convergence of all verticals and their
functions come about in the Strategic Asset Plan which is at the helm of the matrix model and
integrates the verticals throughout the lifespan development and operation processes of a
shopping centre.