Announcement
INTERIM: SPG: HY20 Interim Report and Results
08:30am
SPG
25/11/2019 08:30
INTERIM
PRICE SENSITIVE
REL: 0830 HRS Stride Property Ltd & Stride Investment Management Ltd (NS)
INTERIM: SPG: HY20 Interim Report and Results
Stride Property Group (note 1) (Stride) is pleased to announce that it has
released its Interim Report and Results presentation for the six months ended
30 September 2019 (HY20).
The six months to 30 September 2019 saw a strong result for Stride, which is
detailed below. Since 31 March 2019, Stride has announced two important
strategic initiatives in order to further develop its investment management
business, being:
o The creation of Industre Property with $265m of establishment properties,
and $102m of committed developments; and
o Investore Property Limited's (Investore) acquisition of three large format
retail properties from Stride Property Limited for $140.75m.
Stride Investment Management Limited (SIML) and Stride Property Limited (SPL)
are also pleased to announce a combined second quarter (1 July 2019 to 30
September 2019) dividend of 2.4775 cents per share to be paid on 10 December
2019 to all shareholders on the register as at the close of business on 3
December 2019, broken down as follows:
o SPL cash dividend for the second quarter of FY20 of 2.1575 cents per share.
o SIML cash dividend for the second quarter of FY20 of 0.32 cents per share.
The Dividend Reinvestment Plan remains suspended for the FY20 second quarter
dividends.
Highlights for HY20 include:
Earnings - Stride Property Group (HY19 figures in brackets)
o Net rental income of $28.4m ($27.9m), up $0.4m
o Profit before income tax of $44.8m ($44.0m), up $0.8m
o Profit after income tax of $37.4m ($40.2m), down $2.8m
o Distributable profit (note 2) after current income tax of $19.3m or 5.27cps
($19.6m or 5.37cps), in line with HY19
Capital Management - SPL
Loan to Value Ratio (LVR) 35.0% as at 30 September 2019 (34.4% as at 31 March
2019)
Performance Fee - SIML
SIML continues to deliver strong returns for shareholders in Investore,
earning SIML $1m in performance fees for HY20
Places - SPL (As at 31 March 2019 in brackets)
o $999.0 million total portfolio value (excluding land lease liability of
$22.5m)
o Net valuation gain of $25.0m or 2.6% (excluding land lease liability
movement), resulting in Net Tangible Assets (NTA) per share of $1.97
(excludes value of management contracts), up 5 cps from $1.92 as at 31 March
2019
o Portfolio occupancy 98.2% (97.6%), up 0.6%
o Weighted average lease term (WALT) 4.5 years (4.8 years)
o 127 leasing transactions, including rent reviews, renewals and new lettings
completed resulting in a +3.0% increase on previous rentals
o As at 30 September 2019, total sales (note 3) at NorthWest Shopping Centre
and NorthWest Two, and Silverdale Centre were up +4.3% and +5.8% (note 4)
respectively from the prior year
Transactions
o SPL has focussed on rationalisation of its office portfolio with the
disposal of 33 Corinthian Drive, Auckland, on 1 April 2019, for a gross sale
price of $50.5m, representing an initial yield of 5.9%
o Acquisition of The Concourse, Auckland, completed on 27 June 2019 for $35m
o On 19 November 2019, Stride announced the conditional sale of its three
remaining large format retail assets to Investore for $140.75m, consistent
with its strategy of holding its exposure to large format retail property
through Investore
Developments
Development projects totalling over $200m currently being managed by SIML.
For SPL, these projects include:
Industrial:
o 318 East Tamaki Road, Auckland (previously 11 Springs Road) - construction
of a new head office for Waste Management, with practical completion expected
late 2019
o The Concourse, Auckland - resource consent granted and construction has
commenced to develop 2.2ha of vacant land into an industrial facility for
Waste Management, with a pre-committed 25 year lease and anticipated
completion late 2020
Large format retail:
o Building extensions for both Rebel Sport and Briscoes at Bay Central
Shopping Centre, with new 10 year leases commencing from practical
completion, expected late 2019
People
Board refresh continues with:
o Appointment of Nick Jacobson to the Stride Boards in July 2019. Nick has
extensive international real estate advisory and capital markets experience
o David Van Schaardenburg retired as a director on 30 August 2019 after 9
years as a director
People continue to be a key focus for the Stride Boards and executive, as
attracting and retaining the best people is seen as essential to the
achievement of Stride's strategy
Products - Existing
Investore Property Limited (Investore)
o SPL owns a 19.9% shareholding
o Acquisition of Countdown New Brighton, Christchurch, completed in August
for $5.75m, at an initial yield of 7.2%
o Countdown Dunedin South disposal completed on 1 April 2019 for a sale price
of $19.3m representing a +5.6% premium to book value (31 March 2018)
o Share buyback programme concluded at an average cost of $1.53 per share,
compared to the 30 September 2019 share price of $1.90 and net tangible
assets per share of $1.70
o Investore has a conditional agreement to purchase three large format retail
properties from Stride for $140.75m. At settlement, Investore's portfolio
value will grow to $891m
o FY20 dividend guidance confirmed at 7.60cps
Diversified NZ Property Trust (Diversified)
o SPL owns a 2% interest
o 145 leasing transactions completed, including rent reviews, renewals and
new lettings, resulting in a total increase on previous rentals of +2.4%
o Significant development activity underway, including Queensgate Shopping
Centre carpark and cinema rebuild and seismic strengthening works. H&M opened
at Chartwell Shopping Centre on budget and ahead of schedule in July 2019
o As at 30 September 2019, Diversified's total investment property valuation
increased to $491.4m ($484.6m as at 31 March 2019) primarily due to the spend
on the earthquake rebuild at Queensgate Shopping Centre. If these works were
completed the value of the portfolio would be over $575m. Diversified is
making an insurance claim for the costs of the rebuild
Products - New - Creation of Industre
Stride's product strategy is to grow its directly-held portfolio of
commercial properties that may be used to establish new investment management
products, and to support and grow Stride's established products. This was
evidenced during the period in review with the establishment of Industre:
o Industre will be Stride's sector-specific investment management product
focussed on the industrial property sector in New Zealand, with a majority
weighting to the Auckland market. The vision for Industre is to grow a
significant portfolio of high-quality New Zealand industrial properties
o Industre is a joint venture with a group of international institutional
investors, through a special purpose vehicle and advised by J.P. Morgan Asset
Management (together, JPMAM)
o Initially JPMAM will commit approximately $70m to the establishment of
Industre and SPL will contribute 12 industrial properties owned by it, as
well as the agreement to acquire 439 Rosebank Road, Avondale, which SPL is
party to. SPL will initially have an approximately 70% shareholding in
Industre, with JPMAM holding the remainder
o JPMAM has additionally allocated a further $115m of capital to fund near
term growth initiatives, subject to meeting certain investment return and
approval thresholds, taking JPMAM's total equity committed to $185m. This
$115m of JPMAM committed capital will result in Industre having capacity to
fund initial portfolio growth of over $190m
o Over the long term, the strategy is for JPMAM to fund further portfolio
growth until the respective shareholdings in the portfolio are 75% / 25%
(JPMAM / SPL)
o The establishment of Industre is subject to Overseas Investment Office
approval
Conclusion - Looking Ahead
o Stride's strategy for its investment management business is to establish a
group of commercial property investment management products to provide growth
in our investment management business and continue to review opportunities in
markets adjacent to core commercial property sectors
o The recent growth of SPL's industrial portfolio and the establishment of
Industre, together with the growth of Investore, are important steps in our
delivery of this strategy
o Stride's FY20 cash dividend guidance remains unchanged at a combined
9.91cps
Notes:
1. Stride Property Group (Stride) comprises Stride Investment Management
Limited (SIML) and Stride Property Limited (SPL). A stapled security of the
Stride Property Group comprises one share in SIML and one share in SPL. The
stapled securities are quoted on the NZX Main Board under the ticker code
SPG. Information presented in this presentation is on a combined basis unless
otherwise specified.
2. Distributable profit is a non-GAAP financial measure adopted by Stride to
assist Stride and investors in assessing Stride's profit available for
distribution. It is defined as profit/(loss) before income tax, adjusted for
determined non-recurring and/or non-cash items, share of profits in
associates, dividends received from associates and current tax. Further
information, including the calculation of distributable profit and the
adjustments to profit before income tax, is set out in note 4.3 to the
consolidated interim financial statements for the six months ended 30
September 2019.
3. Total sales is the moving annual turnover (MAT) on a rolling 12-month
basis.
4. Sales data is not collected for all tenants at Silverdale Centre. Some
tenants are not obliged to provide sales data under the terms of their lease.
Ends
Attachments provided to NZX:
o Stride Property Group - HY20 Interim Results Announcement - 251119
o Stride Property Group - HY20 Interim Report - 251119
o Stride Property Group - HY20 Interim Results Presentation - 251119
o Stride Property Group - NZX Results Notice - 251119
o Stride Property Limited - NZX Distribution Notice - 251119
o Stride Investment Management Limited - NZX Distribution Notice - 251119
For further information please contact:
Tim Storey, Chairman, Stride Investment Management Limited / Stride Property
Limited
Mobile: 021 633 089 - Email: tim.storey@strideproperty.co.nz
Philip Littlewood, Chief Executive, Stride Investment Management Limited
Mobile: 021 230 3026 - Email: philip.littlewood@strideproperty.co.nz
Jennifer Whooley, Chief Financial Officer, Stride Investment Management
Limited
Mobile: 021 536 406 - Email: jennifer.whooley@strideproperty.co.nz
Louise Hill, General Manager Corporate Services, Stride Investment Management
Limited and Company Secretary of Stride Property Group
Mobile: 0275 580 033 - Email: louise.hill@strideproperty.co.nz
A Stapled Security of the Stride Property Group comprises one ordinary share
in Stride Property Limited and one ordinary share in Stride Investment
Management Limited. Under the terms of the constitution of each company, the
shares in each can only be transferred if accompanied by a transfer of the
same number of shares in the other.
Stapled Securities are quoted on the NZX Main Board under the ticker code
SPG. Further information is available at www.strideproperty.co.nz or at
www.nzx.com/companies/SPG.
End CA:00344810 For:SPG Type:INTERIM Time:2019-11-25 08:30:14
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