Information Memorandum for Insurance Broking And Risk Manage

KENNARDS SELF STORAGE

Operations

Management

Jeff Xanthos

Board Management/ Sam Kennard

Board

Board

Board

Operations

Management

Identification required to store Checked daily as per Atlas Page Daily CCTV Integrity Procedure

Cyber incident response in planning & development stage

Cyber education strategies implemented; effort ongoing. Vulnerability scans extended to cloud workloads

Unchanged September 2019

Reviewed September 2017 Brand Guidelines Set

Best Practice/ Skillbuilder training

Board Meeting Agenda item Board Meeting Agenda item

Board Meeting Agenda item Board Meeting Agenda item Board Meeting Agenda item

Board Meeting Agenda item

Reviewed 2019 – Update circulate by end of May 2019

- Continuous improvement and our own offering to differentiate and meet market. Risk Mitigation Practices and Strategies: - Hedging of interest rates with staggered expiry. - Debt reduction. Risk Mitigation Practices and Strategies: - Sound gearing ratio. - Some countercyclical customer types. - Broad geographic spread of assets. - Probability of refinance not being available is considered low. - Managing Covenants and future finance needs. - Refinance includes a 3 rd Lender and staggered Debt Tenor.

Sam Kennard. - Pursuit and adoption of ‘Best Practice’ for disposal of unpaid customer goods. - Execution of Brand look and feel. - Execution of customer service and reputation. - Social Media engagement

- Enforcing identification requirements of all customers deters criminal activity. - Comprehensive CCTV surveillance systems. - Training and development programs Risk mitigation and Actions:

- Recognition program to celebrate achievements of teams and team members. No action required.

Mitigating resilience factors: - Prime location selection of Kennards Self Storage Assets – high barriers to entry. - Multiple locations and multiple markets. - Strong employee engagement to customer service. - Capital intensive nature provides Barrier to Entry.

Risk mitigation practices and actions: - WH&S policies and practices in place and kept on our intranet. - Asbestos Registers kept on all properties with Asbestos. - Administrative nature of duties are low risk.

- Introduction of cyber security education programme and cyber incident response in progress. - New security foundation in Win10 and depreciation of legacy systems mitigates risk significantly.90% complete

- Forklifts do not require licence. Training provided to customers. Waiver required and utilised in centres. Risk mitigation practices and actions: - Fostering employee engagement and constructive culture. - pay higher industry wage levels to be an employer of choice. - Reward system that includes performance base bonuses.

- Annual Cyber Audits followed by remediation planning against evolving weaknesses and new exploits. - Asset Quality Maintenance. - Brand leadership position. - Strong operational team.

- Inner urban locations have highest Barriers to Entry due to land scarcity. - Sound investment metrics on returns - Remain aware of their benefits and features. - Market take-up/acceptance.

- Sale of delinquent’s goods, customer damage or theft. - Upset customers can activate negative media attention. - Customer property damage or loss (typically from water entry/ or break-in and theft) and resulting in upset customers. - Large scale break-ins and loss of goods (Wine cellars and safe

Kennards Self Storage significant borrowings mean the company is exposed to several finance risks; including: - Inability to secure refinance on maturity of debt facility. - Interest rate increases. - Asset Valuation impairment leading to debt covenant breach.

Kennards Self Storage is exposed to risk of economic slowdown. A widespread recession would see Kennards Self Storage income decline. - Self Storage has counter-cyclical attributes – with some customer types storing more in a slower economy.

deposits hold the highest concentration of values). Older ‘ranch style’ developments without door alarms are higher break-in risk, than ‘big box’ and enclosed storage centres. Non-alarmed spaces also higher risk. - Criminal activity on our properties (drugs, terrorist related). Breach of systems and/or customer data privacy

An enduring long term shift toward the “new minimalism” leading to reduction in demand for discretionary storage, could be a risk for our industry sector. Is this probable? Peer to peer and pickup and delivery (POD) type storage providers Aggregators storage compare websites

Technological innovation on leading to substitution of the service of self storage for an alternative is not considered likely.

Overbuilding and aggressive competition are a risk, and would be significantly detrimental if widespread. Oversupply would reduce occupancy, prices and income for Kennards Self Storage.

The Australian Finance culture is refinance on a 3 year cycle. Refusal by lenders to do this would damage both parties. Probability of this event is considered low.

Properties are a place that has visits by the public and employees. Kennards Self Storage undertakes general administrative duties. So risk is low. Use of forklift by customers/ staff represents highest risk activity.

High team turnover diminishes skill base. Recent turnover of people in 2019/20 circa 18.9%.

Kennards Self Storage customers pay in-advance so default credit and bad debt exposure is low.

Self Storage Market Risk • Competition Risk

• Substitution Risk

• Demand Reduction Risk • Disrupters

Operational Risk • WH & S

• Staff Turnover

• Consumer Credit Risk

• Internet & Social Media (You Tube, Twitter, Facebook, etc)

• Cyber Breach & Data Breach

Treasury/ Finance Risk

Economic Risk

Information Memorandum Kennards Self Storage June 2020 18