Announcement

GENERAL: SPG: Covid-19 Business Update 03:20pm 
SPG
27/03/2020 15:20
GENERAL
PRICE SENSITIVE
REL: 1520 HRS Stride Property Ltd & Stride Investment Management Ltd (NS)

GENERAL: SPG: Covid-19 Business Update

Following the announcement from the New Zealand Government that New Zealand
will move to Covid-19 Alert Level 4, Stride Property Group (Stride) is
providing the market with an update on a range of issues, as follows:

Committed sales

Stride has two committed portfolio sales currently in process:
o The sale of the three large format retail assets to Investore Property
Limited (Investore) for $140.75 million; and
o The completion of the establishment of Industre Property Joint Venture
(Industre), a joint venture between Stride and a group of international
institutional investors, through a special purpose vehicle, and advised by
J.P. Morgan Asset Management.

These two transactions are both subject to conditions which were set out in
previous announcements, including Overseas Investment Office approval. The
Overseas Investment Office has advised that its operations will continue
during the Covid-19 response. Stride expects both transactions to complete in
the next quarter.

Financing

As at 30 September 2019, Stride Property Limited's (SPL) Loan to Value Ratio
(LVR) was 35.0%. On the completion of these two portfolio sales, SPL's LVR is
expected to fall to approximately 20% based on current valuations, well
within banking covenant levels of 50%. After completion of the two
transactions, SPL expects to have approximately $110 million of drawn
facilities and total available facilities of $340 million, leaving
approximately $240 million of undrawn banking facilities available. SPL has
no banking facilities expiring within the next financial year.

Diversified revenue sources

Also following completion of these sales, Stride's diversified business will
continue to provide investors with revenues from a variety of sources. On a
"look-through" basis which includes Stride's holdings in its investment
management products (Investore, Diversified NZ Property Trust (Diversified)
and Industre), the composition of Stride's revenue sources (Note 1) comprise:
17% from office property, 17% from industrial, 14% from large format retail,
29% from retail, and 23% from SIML management fee income.

Contractual rental abatement position resulting from Alert Level 4

Similar to other property owners, Stride has reviewed its current
directly-held portfolio of leases to understand the implications of the
unprecedented decision by the Government to move the country to Alert Level
4. Based on the New Zealand Government's current guidelines, approximately
28% of Stride's gross rental income of its directly-held portfolio can be
classified as "Essential Businesses" under Alert Level 4. Excluding these
Essential Businesses leases, across SPL's directly-held portfolio of retail,
large format retail, industrial and office tenants, only a small number of
leases provide a contractual right to suspend rental payments if the premises
are inaccessible, including because of the Government order. Over the
four-week close shutdown period, this would amount to a loss of gross rental
income of $0.4 million, which represents approximately 0.5% of gross rental
income. Annualised, these leases represent approximately $4.7 million or
approximately 5.8% of gross rental income. These figures exclude any lease
expiries over the period.

Stride's directly-held portfolio had a WALT of 5.7 years as at 29 February
2020.

In addition to this, for Investore, in which Stride owns a 19.4% stake,
approximately 90% of tenants by gross rental income can be classified as
Essential Businesses.

Stride owns a 2% interest in Diversified and therefore any impact from
investment returns from Diversified is expected to be minimal.

Management fee income and valuations

With regards to management fee income, it is expected Stride will continue to
receive recurring fees, such as asset and building management fees. Activity
based fees, such as leasing, development and performance fees, may be
impacted by the shutdown. In this case, it is expected that receipt of most
activity fees would be delayed, rather than lost.

Stride (as well as other property investors) is working with its valuers and
auditors to finalise property valuations as at 31 March 2020 for inclusion in
its annual financial statements and will advise the market further when this
matter has been finalised.

Conclusion

Stride and its investment management products, Investore and Diversified,
will continue to operate a number of properties across New Zealand with
tenants that are Essential Businesses under the Alert Level 4 guidelines.
Stride continues to implement its Business Continuity Plan to protect the
health and wellbeing of its people, and to ensure the continued critical
service of these properties to the communities of New Zealand.
While the negative impacts from the Covid-19 pandemic on Stride's business
are not yet clear, Stride's diversified business and significant headroom to
covenant levels provide Stride with a strong balance sheet position.

Stride expects FY20 earnings to be materially in line with previous guidance.

Note 1: Stride's revenue comprises Stride Investment Management Limited
(SIML) management fees and SPL income, being income received from its direct
property investments and investments in its managed products. SIML
management fees are calculated as the fees for the six months ended 30
September 2019 (HY20) on an annualised basis. SPL income is calculated based
on Net Contract Rental (as defined in Stride's Interim Financial Report for
HY20) as at 30 September 2019, calculated on a committed, weighted look
through basis and on the assumptions set out on page 29 of Stride's Interim
Results Presentation for HY20, including assuming that the Industre Property
Joint Venture is completed and the committed developments at 318 East Tamaki
Road, Auckland, and The Concourse, Auckland, are completed, and assuming that
the divestment of three large format retail assets by SPL to Investore is
completed. For further information please see page 29 of Stride's HY20
Results Presentation.

End

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 Officer, 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
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:00350830 For:SPG Type:GENERAL Time:2020-03-27 15:20:34

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