Announcement

INTERIM: SPG: HY20 Interim Report and Results 08:30a.m. 
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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