Kiwi Property Group Ltd. · NZX:KPG
Kiwi Property — H1 FY2018 Earnings Presentation
74 slides from Kiwi Property's earnings presentation, Nov 20, 2017
Slide 1: uoneueseid ynses wiaqyur O| Aqedosd ime
uoneueseid ynses wiaqyur O| 2 Aqedosd ime I HOIUL S| imp}
Slide 2: Interim result presentation
t interim result nf it presentation, interim result x FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 indicated, all of the numeric Not [pr ET Refer to Photography | ogan West terms.
Slide 3: Creating a world-class town centre at Sylvia Park
creating a world-class town centre at Sylvia Park LP? 220 sii Park sevlonment ‘The Grove’ central carpark - fully leased - on budget and on - tenants trading programme for from Dec-17 completion in Nov-18 - will provide ~600 carparks - on target to deliver original investment returns * 6.5% initial
Slide 4: Creating exceptional places to shop
creating exceptional places to shop LP VS rexalsles by centre 1.14 retail sales by category 2.11 ‘Langdons Quartet , Northlands ‘Langdons Quarter’ focus on better Northlands customer experiences - we're creating a - customer service vibrant new dining improvements and entertainment precinct below th
Slide 5: Creating exceptional places to work
creating exceptional places to work Vero Centre 44 The Terrace - on programme and budget to refresh the Suncorp - ground floor redevelopment complete with new space to create a smart, modern and agile workspace retail tenancies enhancing both tenant amenity and that will allow for a new way of worki
Slide 6: Recycling capital to fund future growth
recycling capital to fund future growth The Majestic Centre post reporting date, secured an unconditional agreement for sale at $123.2 million settlement will occur in Dec-17 proceeds will be used to reduce bank debt and provide further flexibility to fund value-enhancing opportunities * pro-forma g
Slide 7: Building long-term investment opportunities
building long-term investment opportunities DP 2X mur loncholdings 4.04 Sylvia Park landholdings Drury land - settled acquisition of 30.6 hectares - total landholdings now 42.7 hectares - acquired for $39.8 million - third parcel of 8.6 hectares secured by way of first right of refusal, with price t
Slide 8: Continuing to lead in sustainability achievements
continuing to lead in sustainability achievements LP \'® sssenably achievements - Memorandum of Understanding entered into with Meridian Energy 4 - seeking to roll out New Zealand's largest combined solar installation at four of our retail centres * when complete, the new arrays » are expected to de
Slide 9: Our strategy is delivering robust financial results
our strategy is delivering robust financial results $47.9m profit after tax +$2.3m +5.0% $54.2m funds from operations +$6.5m +13.6% 3.821 cps funds from operations +0.12 cps +3.1% we've delivered record funds from operations, assisted by increased rental income from development and acquisition activ
Slide 10: We've maintained a strong balance sheet
we've maintained a strong balance sheet $3.1b property assets +$92m +3.1% 31.2” gearing! -330 bps $1.39 net asset backing per share FY17: $1.39 we’ve increased the size and quality of the portfolio following the acquisition of our strategic landholdings in Drury, together with the progression of our
Slide 11: We're delivering on our capital management strategy
we're delivering on our capital management strategy 4.84” weighted average cost of debt FY17: 4.61% 3.5 years weighted average term to maturity of debt FY17: 3.5 years BBB (stable) corporate credit rating we've diversified our sources of bank debt with the addition of China Construction Bank and HSB
Slide 12: We've created a stronger portfolio
we've created a stronger portfolio 3.1” rental growth from new leasing and rent reviews FY17: +3.3% 99.4” occupancy FY17: 98.8% 5.3 years weighted average lease term FY17: 5.6 years the successful execution of our investment strategy has resulted ina stronger portfolio - rental growth >3% has been a
Slide 13: The bricks and mortar story
the bricks and mortar story why New Zealand is not the United States New Zealand has one-quarter of retail floorspace per capita’ USA Australia NZ population (milion) aa1 243. +47 ~~ ‘the retail floorspace per capita retail floorspace (million sqm) 708.1 25.2 25 when compared to the USA and retail f
Slide 14: The bricks and mortar story
the bricks and mortar story in-store sales are growing in-store vs online sales growth 2013 to 2017 80% 60% 40% 20% 22% 0% in-store online between 2013 and 2017 online sales grew at nearly three times the rate of in-store sales Source: BNZ Marketview statistics. in-store vs online sales proportion o
Slide 15: The bricks and mortar story
the bricks and mortar story how we're keeping our centres relevant better stores better food better experiences vem ae we’re enhancing the social experience aspect of shopping by increasing the range and quality of food outlets, with a focus on placemaking and a curated mix of operators eet 4 ny Kiw
Slide 16: The bricks and mortar story
the bricks and mortar story D1 ctcaen cane evolving our retail mix 1.15. retail sales history specialty sales productivity our retail mix evolution has helped comparable centres Sep-12 to Sep-17 . we drive sales productivity over the 11,000 . . . % five-year period, with 4.1% per annum +0000 growth
Slide 17: Annual sales continue a positive trajectory
annual sales continue a positive trajectory LP Ve reraisales by cone 1.14 retail sales by category 1.15. retail sales history total sales of $1.75 billion have been recorded across our shopping centre portfolio, with strong growth in total sales growth discretionary spend categories excl. supermarke
Slide 18: We will continue to deliver on our strategy
we will continue to deliver on our strategy - advance our town centre vision at Sylvia Park we have aclear focus for the * successfully open ‘The Grove’ dining precinct balance of 2018 * advance construction and leasing of the No. 1 Sylvia Park office building * advance construction of the central c
Slide 19: Outlook and dividend guidance
outlook and dividend guidance FY18 cash dividend guidance Kiwi Property remains in great shape. The successful implementation of 6 85 our strategy has provided a solid e platform for the future cents per share! - increased rental income from recent acquisitions and developments cash dividend (cents
Slide 20: Property
property
Slide 21: Property appendices: index
property appendices: index oO property portfolio review oe development update oO market update 1.01 our portfolio 22 2.01 development pipeline 38 3.01 New Zealand economic overview 49 1.02 property portfolio summary 23 2.02 Sylvia Park ground floor 39 3.02 Auckland CBD office market 50 1.03 portfoli
Slide 22: Our portfolio
our portfolio JA retail portfolio [Westgate Lifestyle office portfolio 44 The Terrace Kiwi Property 2018 interim result presentation | 20 November 2017 | 22
Slide 23: Property portfolio summary
property portfolio summary JA 1.02 30-Sep-17 31-Mar-17 retail office total retail office total number of assets @ 1.03 9 5 14 9 5 14 value ($000)'2 @ 1.03 2,061.9 894.3 2,956.2 2,019.4 879.1 2,898.5 proportion of total portfolio by value @ 1.07 67* 29% 96% 68% 30% 98% weighted average capitalisation
Slide 24: Portfolio statistics
portfolio statistics Lp 1.03 adopted value $m capitalisation rate % NLA sqm. occupancy % WALT years as at 30-Sep-17 31-Mar-17 30-Sep-17 31-Mar-17 30-Sep-17. 31-Mar-17 30-Sep-17. 31-Mar-17 30-Sep-17. 31-Mar-17 Sylvia Park 787.4 755.0 ~ 5.88 73,852 73,852 99.9 100.0 3.5 3.6 Sylvia Park Lifestyle 70.8
Slide 25: Rental income
rental income 30-Sep-17. 30-Sep-16 variance like-for-like variance six months ended $m $m $m % $m % Sylvia Park 21.4 18.4 43.0 +16.1 +1.0 45.4 Sylvia Park Lifestyle 24 24 LynnMall 92 9.0 +0.2 +15 +0.2 +15 Westgate Lifestyle 3.0 15 41.5 +96.7 The Base 5.9 3.8 42.1 +56.0 Centre Place- North 2.9 27 +0.
Slide 26: Capitalisation rate history
capitalisation rate history 1.05 9.00% 8.48% 8.50% 7.99% 8.00% 71A% 7.50% 7.00% 6.50% 6.52% 6.40% 6.13% 6.00% S S 3 2 i = 2 = 2 2 = a 2 rus a c s a js a A a = = $s S = = = = 2 = 2 key: Jj etait JJ ottice Birvestment portfolio Kiwi Property 2018 interim result presentation | 20 November 2017 | 26
Slide 27: Geographic diversification
geographic diversification 1.06 ( geographic diversification by investment portfolio value gan 2 x shopping centres 2 x large format retail centres 2 x office buildings 1x 34 party management mandate ($266m) Hamilton... 900 ¢ 6 } 2.x shopping centres 2.x 3" party management mandates 2% 0 1x shopping
Slide 28: Sector and grade diversification
sector and grade diversification sector diversification by investment portfolio value retail 67* office 29% other 4% A107 retail diversification by retail portfolio value f regional centres 89% large format centres 8% sub-regional centres 3% office diversification by office portfolio value \__ Premi
Slide 29: Retail portfolio diversification
retail portfolio diversification 21.08 property type geographic diversification tenant diversification by retail portfolio value by retail portfolio value by retail portfolio income ao a f” regional centres 89% Auckland 59% specialty 66% large format centres 8% Hamilton 13% mini-majors 16% sub-regio
Slide 30: Office portfolio diversification
office portfolio diversification 21.09 property type geographic diversification tenant diversification by office portfolio value by office portfolio value by office portfolio income ~) ( } en Premium 43% Auckland 65% government 28% A-grade 30% Wellington 35% banking 21% A-grade campus 22% legal 15%
Slide 31: New leasing and rent reviews
new leasing and rent reviews A1AO rent reviews retail office total retail office no. 323 vA 344 +- performance underpinned - uplift from rent NLA (sqm) 77819 24092 101911 by predominance of annual reviews ahead of CPI % investment portfolio NLA 16 5 21 structured Seocina wateames . eel long rental m
Slide 32: Lease expiry profile
lease expiry profile JA 1.11 lease expiry profile retail % of investment portfolio gross income - acyclical expiry peak occurs at Sylvia Park in 2019, coinciding with our retail expansion plans 70% 60% 57.5% office - the completion of long-term Government leases in Wellington and retention of anchor
Slide 33: ● ● ● ● ● ● ● ● ● ● ● ● ● ●
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Slide 34: Retail sales by centre
retail sales by centre JA 1.13 shopping centre pedestrian count? MAT $m % var. from Sep-16 specialty sales? millions per annum twelve months ended 30-Sep-17 total like-for-like $/sqm GOC% 30-Sep-17 total sales growth by centre Sylvia Park 546.7 +192 43.6 12,400 12.8 14.3 5 . ylvia Park a Sylvia Park
Slide 35: Retail sales by category
retail sales by category PP 1.14 MAT $m % var. from Sep-16 twelve months ended 30-Sep-17 total like-for-like total sales growth by category e@ supermarkets 314.5 -0.2 -0.2 supermarkets | e department stores / DDS 251.2 +0.6 +0.6 department stores / DDS 1 e cinemas 36.4 43.0 41.2 cinemas = e home imp
Slide 36: Retail sales history
retail sales history shopping centre AAAS specialty sales MAT $/sqm Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Sylvia Park 8,300 8,600 8,800 8,900 9,000 9,400 9900 10,800 11,600 12,000 12,400 LynnMall 7,000 700 7500 7,900 8,400 8,300 8,600 8,400 8,900 9,800 10100 Th
Slide 37: Sustainability achievements
sustainability achievements JA 1.16 as at 31 March 2017 e 6 @ S - in October 2016, included - 22 electric car charging - support of NABERSNZ to - 7,700 new LED lights in the Carbon Disclosure stations have now been promote energy efficient installed in the common Project’s Carbon installed across th
Slide 38: Development pipeline
development pipeline A 2.01 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Beyond hy Sylvia Park dining lane and pavilion ($8.9m) (SE NE NNN Northiands tanadons auerter(6i.8nn Sylvia Park galleria and south carpark Northlands retail extension (various stages) The Base redevelopment and expa
Slide 39: Sylvia Park
Sylvia Park ground floor redevelopment H&M and Zara |) COMPLETE the first ever NZ stores for H&M and Zara dining lane and pavilion 7 UNDER CONSTRUCTION _ contemporary, landscaped ¥ alfresco dining experience and upgrade of the existing dining lane central carpark office building UNDER CONSTRUCTION 1
Slide 40: Sylvia Park
Sylvia Park P2.03 first floor redevelopment galleria and south carpark ADVANCED PLANNING anew galleria level providing a department store, a new concept café court, an expanded retail offer including international brands new to NZ along with a new ~900 space carpark building a Kiwi “> Property 2018
Slide 41: 'The Grove', Sylvia Park
‘The Grove’, Sylvia Park dining lane and pavilion project overview 5 2 - acontemporary alfresco dining experience - 100% leased to a range of restaurants Lf + Better Burger + Hawker & Roll! . 4 * Birdie’s Bar and Deli +* Mexico Xi a 4 * Casablanca * The Coffee Club a Wm — * Cleaver & Co! * The Littl
Slide 42: 2018 interim result prese!
2018 interim result prese! - zs > > WM iL 20 November 2017 | 42 OE te Rete hy w\ mh N re) ~ Ol
Slide 43: No. 1 Sylvia Park
No. 1Sylvia Park office building project overview - new 10-level building + nine levels of offices (11,370 sqm) * ground floor dining precinct (800 sqm) leasing status - 50% leased by income * office floors anchored by IAG and BizDojo * ground floor retail tenancies fully leased - strong enquiry for
Slide 44: No. 1 Sylvia Park
No. 1 Sylvia Park office building progress at 19 October 2017 2018 interim result presentation | 20 November 2017 | 7 “4
Slide 45: Sylvia Park central carpark
Syivia Park central carpark project overview - new five-level carpark building * ~600 carparks * vehicle management system * welllocated between Zara and H&M * will improve parking ratio to 6.0 per 100 sqm of retail NLA and relieve current parking pressures * enhanced customer amenity financial metr
Slide 46: 2018 intérimyesult p
2018 intérimyesult p <S=.2) a2 of ee
Slide 47: Sylvia Park galleria and south carpark
Sylvia Park galleria and south carpark project overview new galleria retail level * ~20,000 sqm * department store * newconcept café court * an expanded retail offer with exciting new brands and concepts * additional multi-deck carpark (~900 spaces) leasing - secured a lease commitment from Farmers!
Slide 48: 'Langdons Quarter', Northlands
‘Langdons Quarter’, Northlands; a vibrant food and entertainment precinct project overview - active response to customer demands - new food and entertainment precinct below the existing cinema complex * 12 tenancies including two new external restaurant structures * undertaking required seismic stre
Slide 49: New Zealand economic overview
New Zealand economic overview Ha 3.01 gross domestic product (GDP)! 4% GDP trend we 300 are GDP growth pa Gep-17 est.) —_ 25% 3% re? 250 GDP (2018 est.) — _ $275 billion 2% 200 GDP per capita (2018 estimate) $57,263 % 150 & os e se e22e 2 £ E ee Bg} 100 inflation! {eB Ss es F< S<RRRRAS 2% 50 annual
Slide 50: Auckland CBD office market
Auckland CBD office market Ha 3.02 outlook key points Premium and A-grade accommodation) our Auckland office exposure > supply - nochange to Premium-grade stock until the 2019 completion of the 39,000 sqm PwC Tower ~50,000 sqm of new A-grade space added over 2017, including 17,000 sqm at the refurbi
Slide 51: Wellington CBD office market
Wellington CBD office market A 3.03 outlook key points (A-grade and B-grade accommodation) our Wellington office exposure a supply - in 2018 and 2019, over 50,000 sqm of A-grade space is expected to re-enter supply, predominantly the return of buildings withdrawn for repair post the 2016 earthquake
Slide 52: Group
group
Slide 53: Group appendices: index
group appendices: index @ strategy @ financial review @. ther information 4.01 our vision, objectives and goals 54 5.01 profit after tax 58 6.01 glossary 70 4.02 our investment strategy 55 5.02 interest and finance charges 59 6.02 calendar of key dates 72 4.03 Drury landholdings 56 5.03 management e
Slide 54: Our vision, objective and goals
our vision, objective and goals our vision our goals to deliver New Zealand s best retail and workplace experiences our objective to provide investors with a reliable investment in New Zealand property, targeting superior, risk-adjusted returns over time through the ownership and active management o
Slide 55: Our investment strategy
our investment strategy our investment strategy PAO our core portfolio we invest in a diversified portfolio of retail and office assets that are expected to outperform by consistently attracting high levels of tenant demand Auckland we have a strong bias to Auckland given its superior prospects for
Slide 56: Drury landholdings
PAOS | — —— State Highway 1 Drury landholdings we've assembled a mixed-use town centre development site, 35km south of Auckland’s CBD Possible new road corridi ta hoa, ey Not to scale. Actual boundary locations may key transaction and property metrics acquisition price investment rationale @ zoned’
Slide 57: Sylvia Park landholdings
Sylvia Park landholdings we've further consolidated our landholdings adjacent to the centre ref property land hectares 1 Sylvia Park 20.41 Sylvia Park Lifestyle 3.12 77 Carbine Road 2.83 79 Carbine Road/1O Clemow Drive 3.20 2 3 4 8) Carbine/Clemow block 1.63 key: === existing holding total holdings
Slide 58: Profit after tax
profit after tax 30-Sep-17. 30-Sep-16 variance six months ended $m $m $m % property revenue @ 1.04 123.1 14.2 +8.9 47.7 property management income 08 04 40.4 +1031 interest and other income 0.2 0.2 total income 124.1 114.8 +9.3 +8.1 direct property expenses @ 1.04 -28.0 -27.3 -0.7 -2.5 interest and
Slide 59: Interest and finance charges
interest and finance charges 30-Sep-17. 30-Sep-16 variance six months ended $m $m $m % interest on bank debt 16.9 -18.0 1 +6.1 interest on bonds -6.6 4.2 -2.4 57.1 interest expense incurred -23.5 -22.2 1.3 5.9 interest capitalised to Sylvia Park O7 02 +0.5 +250.0 Westgate Lifestyle 13 13 -100.0 The
Slide 60: Management expense ratio (MER)
management expense ratio (MER) JA 5.03 30-Sep-17 31-Mar-17. 80-Sep-16 twelve months ended $m $m $m employment and administration expenses 18.9 18.0 17.3 less expenses recovered through property management fees -8.4 79 -6.6 net expenses 10.5 10.1 10.7 weighted average assets under management 2,933.8
Slide 61: FFO
FFO 75.04 30-Sep-17. 30-Sep-16 variance six months ended $m $m $m % profit after tax 5.01 47.9 45.6 42.3 +5.0 adjusted for loss on disposal of investment properties @ 5.01 - 11 11 -100.0 net fair value loss on interest rate derivatives 5.01 1.9 2.6 -0.7 -26.3 straight-lining of fixed rental increase
Slide 62: Dividends
dividends 30-Sep-17. 30-Sep-16 30-Sep-17. 30-Sep-16 six months ended $m $m cps? cps? funds from operations (FFO)! 54.2 47.7 3.821 3.705 amount retained -5.6 -43 -0.396 -0.330 cash dividend 48.6 43.4 3.425 3.375 imputation credits 13.0 12.1 0.920 0.940 gross dividend 61.6 55.5 4.345 4.315 cash divide
Slide 63: AFFO
AFFO 5.06 30-Sep-17. 30-Sep-16 variance six months ended $m $m $m % funds from operations (FO)! 25.04 54.2 47.7 465 +13.6 adjusted for maintenance capital expenditure -2.6 3.8 41.2 431.6 tenant incentives provided -8.5 -6.2 -2.3 37.1 adjusted funds from operations (AFFO)’ (non-GAAP measure) 43.1 37.
Slide 64: Balance sheet
balance sheet 25.07 30-Sep-17 31-Mar-17 movement asat $m $m $m % investment properties investment properties L? 5.08 3,061.4 2,969.4 +92.0 43.1 . - increased due to cash G5.08 8.2 98 16 163 * acquisition of Drury land deferred tax assets AT 42 +0.5 N19 * capital expenditure, other assets 13.5 16.5 3
Slide 65: Investment properties movement
758.08 t (gm) ies movemen estment propert Inve LI-das je se yeyo LP 5.07 balance sheet 2018 interim result presentation | 20 November 2017 | 65 slasse aoyjo 180 e0e8! OUL py +$2.3 +$29 020d OUL Q 3 syasse |e}21 1ay}0 Ae led RIAAS pue| Auniq Ley ye se 3,100 4 x Kiwi Property
Slide 66: Net finance debt movement
net finance debt movement ¢~) a 5.09 asat 31-Mar-17. 30-Sep-17 bank debt 782.5 711.0 bonds 247.9 248.1 cash on deposit -98 8.2 net finance debt 1,020.6 950.9 acqu 1100 5 +$59.1 $003 1,000 4$227 +$10.2 OS | | +$438 +9165 ——— — 900 | $157.0 800 $ vee) $1,020.6 600 500 400 r : r r r r S ® 8 @ 8 5 5 2 =
Slide 67: Finance debt facilities
finance debt facilities ¢) A510 debt maturity profile debt sources as at 30-Sep-17 $m % FY18 FYI9 ele 133.0 10 FY20 258.0 20 FY21 292.0 22 FY22 359.0 28 FY23 33.0 3 7 FY24 225.0 7 |e total facilities 1,300 100 facilities drawn 961 74 undrawn facilities 339 26 key: | ANZ | BNZ | CBA Bcce | HSBC Westp
Slide 68: Capital management metrics
capital management metrics finance debt metrics as at 30-Sep-17 31-Mar-17 weighted average term to maturity 3.5 years 3.5 years weighted average interest rate ; Agd% A6% (incl. of bonds, active interest rate derivatives, margins and line fees) covenants- gearing as at 30-Sep-17 31-Mar-17 gearing [mu
Slide 69: Fixed-rate debt profile
fixed-rate debt profile fixed-rate profile (inclusive of bonds on issue Gep-17: $250 million, Mar-17: $250 million) 30-Sep-17 31-Mar-17 percentage of drawn finance debt at fixed rates 70% 65% weighted average interest rate of active fixed-rate debt (excl. fees and margins) 3.78% 3.76% weighted avera
Slide 70: Glossary
glossary 76.01 adjusted funds from operations (AFFO) AFFO is an alternative non-GAAP performance measure used by Kiwi Property. AFFO is a measure used by real estate entities to describe their underlying and recurring cash flows from operations. Broadly, AFFO adjusts FFO by deducting the cost of lea
Slide 71: Glossary continued
glossary continued 76.01 gross occupancy cost (coc) total gross occupancy costs expressed as a percentage of moving annual turnover (excluding GST). like-for-like rental income excludes assets purchased, disposed of or undergoing development in either year of comparison. like-for-like retail sales o
Slide 72: Calendar of key dates
calendar of key dates OP 6.02 interim dividend payment (for the six months ended 30 September 2017) + exdate 4 December 2017 * record date 5 December 2017 * payment date 20 December 2017 KPGO10 bond interest payment 20 February 2018 KPGO20 bond interest payment 7 March 2018 FY18 annual result announ
Slide 73: Disclaimer
disclaimer 76.03 Kiwi Property Group Limited (‘Kiwi Property’) has prepared this presentation (the ‘Presentation’) and the information contained in it is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. It is not in
Slide 74: Ayedold
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Kiwi Property Group — H1 FY2018 Earnings Presentation on 6ix