Announcement
GENERAL: IPL: Covid-19 Business Update
03:08pm
IPL
27/03/2020 15:08
GENERAL
PRICE SENSITIVE
REL: 1508 HRS Investore Property Limited (NS)
GENERAL: IPL: Covid-19 Business Update
Following the announcement from the New Zealand Government that New Zealand
will move to Covid-19 Alert Level 4, Investore Property Limited (Investore)
is providing the market with an update on its current position and impact of
moving to Alert Level 4 on its operations.
Large Format Retail Focus
Investore occupies a unique position in the New Zealand publicly listed
property sector, with its investment strategy focussed on large format retail
properties. Almost all of Investore's tenants are "Essential Businesses",
based on the current advice from the New Zealand Government. These tenants
include supermarkets, hardware stores, pet stores and pharmacies. Investore
has reviewed its portfolio for the impact of the Government moving the
country to Alert Level 4 and advises that:
o Around 90% of Investore's portfolio by gross contract rental is categorised
as Essential Businesses, and accordingly are permitted to remain open and
trading during the Alert Level 4 shutdown. Some of these tenants may choose
to operate reduced hours or have restricted access, but are permitted to
remain open and operational.
o A small number of leases provide a contractual right to suspend rental
payments in the situation where their premises are inaccessible, including
because of the Government shutdown order. Excluding Essential Businesses,
which are permitted to remain open, those leases where the tenant has a
contractual right to suspend rental payments would represent a loss of rental
income of $0.02 million over the four week shutdown period, representing
approximately 0.03% of gross rental income. Annualised, these tenants
comprise only $0.2 million, or approximately 0.4%, of gross rental income.
The Investore portfolio had a WALT of 11.5 years as at 29 February 2020.
Acquisitions
As announced to the market in November 2019, Investore has agreed to acquire
three large format retail assets from Stride Property Limited (SPL) and its
wholly owned subsidiary, Stride Holdings Limited, for an acquisition price of
$140.75 million. This transaction remains conditional on the consent of the
Overseas Investment Office, with all other conditions having been satisfied.
The Overseas Investment Office has advised that its operations will continue
during the Covid-19 response, and Investore expects to complete the
acquisition of these properties during the next quarter.
Financing
As at 30 September 2019, Investore's Loan to Value Ratio (LVR) was 40.6%. On
the completion of the acquisition of the three large format retail assets
from SPL described above, Investore's LVR is expected to be approximately 42%
(Note 1) (prior to any valuation adjustment as at 31 March 2020), which is
well within the Board's stated maximum of 48% and Investore's bank and bond
covenant limits of 65%. Investore currently has $370 million of debt
facilities available, including bank facilities and bonds, with $240 million
drawn, leaving $130 million of undrawn headroom available. In addition to
this, Investore has a committed credit-approved $50 million, 5 year facility
and is currently finalising documentation for this facility with its banking
group. Investore has no indications that the term facility will not proceed
as expected. This will take Investore's total available debt facilities to
$420 million, leaving approximately $40 million of available headroom
following settlement of the acquisition from SPL. Investore has a weighted
debt maturity of 2.5 years, including the additional 5 year facility, with no
banking facilities expiring in the next financial year.
Valuations
Investore is working with its valuers and auditors to finalise property
valuations at 31 March 2020 for inclusion in its annual financial statements
and will advise the market further when this matter has been finalised.
Conclusion
Investore continues to operate a number of properties across New Zealand that
are Essential Businesses under the Alert Level 4 guidelines, and is well
placed to continue operations during the shutdown. Investore is in regular
contact with all of its tenants, and is providing additional support as
required to those tenants that continue to operate during the shutdown,
particularly supermarkets.
Based on the current situation and the proportion of Investore's portfolio
that are Essential Businesses, Investore does not currently consider that the
Covid-19 pandemic will have a materially negative impact on its business,
although the Board will continue to monitor the situation closely.
Investore expects FY20 earnings to be materially in line with previous
guidance.
Note 1: Calculated taking current drawn facilities of $240 million plus the
amount required to settle the SPL acquisition; the 30 September 2019
portfolio valuation of $750.6 million (excluding land lease liability of $7.6
million) has been adjusted for the purchase price of the three SPL properties
and the purchase price ($1.2 million) of land acquired during the period
since 30 September 2019.
Ends
For further information please contact:
Mike Allen, Chairman, Investore Property Limited
Mobile: 021 606 134 - Email: mike.allen@investoreproperty.co.nz
Philip Littlewood, Chief Executive Officer, Stride Investment Management
Limited as manager of Investore
Mobile: 021 230 3026 - Email: philip.littlewood@strideproperty.co.nz
Jennifer Whooley, Chief Financial Officer, Stride Investment Management
Limited as manager of Investore
Mobile: 021 536 406 - Email: jennifer.whooley@strideproperty.co.nz
Louise Hill, General Manager Corporate Services, Stride Investment Management
Limited as manager of Investore
Mobile: 0275 580 033- Email: louise.hill@strideproperty.co.nz
End CA:00350826 For:IPL Type:GENERAL Time:2020-03-27 15:08:53
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