Slide 1: Stride Property Group Interim Results and Capital Raising
Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1
Slide 2: Disclaimer and Important Notice
Disclaimer and Important Notice This presentation has been prepared by Stride Property Limited (SPL) and Stride Investment Management Limited (SIML) (SPL To the maximum extent permitted by law, each Specified Person disclaims and excludes all liability whatsoever for any loss, damage or other and SI
Slide 3: Contents
Contents 4 Execution of Strategy 9 HY21 Highlights 22 COVID-19 Update 23 Sustainability 24 Interim Results 29 Capital Management 32 Capital Raise 42 Conclusion 44 Appendices 52 Glossary Capitalised and technical terms are defined in the glossary on page 53. Stride Property Group Interim Results for
Slide 4: Execution of Strategy
Execution of Strategy Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4
Slide 5: Strategy
Strategy Stride’s strategy is to invest in places with enduring demand, which attracts strong demand in all market conditions. This supports our strategy of establishing a group of investment management products (or Stride Products) in specific commercial property sectors to provide growth in our in
Slide 6: Execution of strategy
Execution of strategy During the six months to 30 September 2020, SPL has undertaken a number of transformative transactions, which significantly advance its strategy Commencement and growth of Industre Stride’s latest investment management product, Industre Property Joint Venture (Industre), commen
Slide 7: Capital raise and acquisitions
Capital raise and acquisitions Acquisition of Grant Thornton House, Capital raise to partly fund acquisitions Wellington • Capital raise2 launched today for $220m • $84.5m • Additional $100m bank facility arranged • Unconditional agreement, settlement expected • $139m bank debt facility available pr
Slide 8: SIML assets under management
SIML assets under management $3,322m $115m4 $113m5 $2,898m $196m6 $1,016m $337m3 - $901m $564m2 $58m $1,997m $1,914m $26m1 $518m $518m $518m $460m $612m $473m $499m $499m $1,176m $980m $980m $980m External AUM as at Industre Diversified Pro forma external Stride office and Acquisitions and Total pro
Slide 9: HY21 Highlights
HY21 Highlights Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 9
Slide 10: Performance
Performance Stride Property Group (Stride) - Consolidated Earnings • Net rental income of $20.5m (HY20: $24.6m), down $4.1m, of which $3.4m relates to the sale of three Profit after income tax from large format retail assets to Investore Property Limited on 30 April 2020 continuing operations • Mana
Slide 11: Places
Places Stride Property Limited (SPL) Office Acquisitions • 34 Shortland Street, Auckland – acquired in September 2020 for $67.5m (including an allowance of between $3-$3.5m for certain capital upgrades1) • 215 Lambton Quay, Wellington (Grant Thornton House) - SPL has an unconditional agreement to pu
Slide 12: Acquisition overview: Lambton Quay, Wellington
Acquisition overview 215 Lambton Quay, Wellington (Grant Thornton House) • SPL has an unconditional agreement to acquire a quality office asset located at 215 Lambton Quay, Wellington, with settlement expected to occur 30 November 2020 • Grant Thornton House is a 16-level, grade A office building in
Slide 13: Acquisition overview: Customhouse Quay, Wellington
Acquisition overview 20 Customhouse Quay, Wellington • SPL has a conditional agreement1 to acquire a premium grade office asset located at 20 Customhouse Quay, Wellington • The building was completed in 2018, and is a unique office building, being base isolated, located in a prime central location,
Slide 14: People
People • Stride has established a Sustainability Committee that reports to the Stride Boards to set sustainability initiatives and focus areas • Stride’s people continue to go to great lengths to support our tenants and the business of Stride and its Products, particularly during COVID-19 • During t
Slide 15: Products
Products Since 31 March 2020, Stride’s Assets Under Management (AUM) has grown from $2.17b to $2.48b ($2.90b following completion of contracted acquisitions and committed developments), with external AUM increasing from $1.18b to $1.91b. SPL will continue to own an interest in each of the Stride Pro
Slide 16: Products
Products Active Portfolio Management • WALT1 of 10.2 years • 57 lease extensions and renewals completed, including COVID-19 related deals, with a weighted average lease extension of seven months across all COVID-19 deals Targeted Growth • Portfolio valued2 at $980.3m, a 9.4% net revaluation gain3 fo
Slide 17: Products
Products • Total portfolio value of $460.2m, representing a $19.1m or 4.6% net valuation increase for HY21 • COVID-19 rental relief arrangements completed for approximately 70% of tenants resulting in a weighted average lease extension of 10 months across all COVID-19 relief arrangements • The redev
Slide 18: Products
Products • Stride’s latest product, Industre, commenced operations from 1 July 2020. Industre is a joint venture between SPL and a group of international institutional investors, through a special purpose vehicle and advised by J.P. Morgan Asset Management (together, JPMAM) • SPL and JPMAM have stro
Slide 19: SPL office and retail portfolio
SPL office and retail portfolio SPL Lease Expiry Profile3 by Contract Rental3 Pro forma1 Pro forma2 as at As at as at As at Overview 30 Sept 20 30 Sept 20 31 Mar 20 31 Mar 20 31-Mar-20 Pro forma 30-Sep-20 Properties (no.) 14 12 11 26 30-Sep-20 Pro forma 22% 23% 18% 16% 15% Tenants (no.) 343 311 310
Slide 20: SPL office and retail portfolio
SPL office and retail portfolio Pro forma1 as As at As at Office Highlights Office Overview at 30 Sept 20 30 Sept 20 31 Mar 20 • Net valuation movement of +$7.2m or +2.9% for HY21 Properties (no.) 10 8 7 • Acquisition of 34 Shortland Street, Auckland for $67.5m, which includes an allowance of betwee
Slide 21: SPL portfolio metrics
SPL portfolio metrics SPL’s property interests • Stride’s strategy is to establish a group of Products in specific commercial property sectors to provide growth in its investment management business. SPL will continue to take an ownership interest in each of the Stride Products. SPL’s property inter
Slide 22: COVID-19 update
COVID-19 update Stride Property Group (Stride) • Stride has worked hard to minimise the financial impact of Updated estimated Previously COVID-19 on its business, and based on rent abatement impact on FY21 estimated2 impact arrangements agreed to date, as well as expected distributable on FY21 Impac
Slide 23: Sustainability
Sustainability Stride Property Group (Stride) Stride is committed to developing its sustainability practices, including understanding the impact of climate change on Stride’s business and the businesses of the Stride Products. Following completion of a gap analysis and materiality assessment which i
Slide 24: Interim Results
Interim Results Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 24
Slide 25: Financial Performance
Financial Performance Stride – Consolidated Unaudited Unaudited Change 30 Sep 2020 30 Sep 2019 $m $m $m % Net rental income 20.5 24.6 (4.1) (16.5) Management fee income 13.1 9.2 +3.9 +42.7 Corporate expenses (9.4) (10.2) +0.8 +7.9 Profit before net finance expense, other income/(expense) and income
Slide 26: Distributable Profit
Distributable Profit1 Stride – Consolidated Unaudited Unaudited Change 30 Sep 2020 30 Sep 2019 $m $m $m % Profit before income tax (including discontinued operations) 57.0 44.8 +12.2 +27.2 Non-recurring, non-cash and other adjustments: - Net change in fair value of investment properties (21.1) (24.8
Slide 27: AFFO Distributable Profit
AFFO Distributable Profit Stride – Consolidated Unaudited Unaudited Change 30 Sep 2020 30 Sep 2019 $m $m $m % Distributable profit after current income tax 21.1 19.3 1.8 +9.4 Adjustments to funds from operations: - HY21 Maintenance capital expenditure (1.0) (3.8) +2.7 +72.5 Adjusted Funds From Opera
Slide 28: Financial Summary
Financial Summary Stride – Consolidated Pro forma1 31 Mar 2020 v as at 30 Sep As at As at 30 Sep 2020 2020 30 Sep 2020 31 Mar 2020 Change Investment Properties2 ($m) 1,038.8 726.3 996.1 (269.8) Bank debt drawn ($m) 265.7 163.7 386.2 (222.5) Equity ($m) 948.3 732.9 698.2 34.7 Shares on issue (million
Slide 29: Capital Management
Capital Management Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 29
Slide 30: Capital Management – Debt Facilities
Capital Management – Debt Facilities SPL (excl. Industre properties and debt) Highlights • $135m extended by three years to June 2024 Pro forma1 As at As at Debt facilities 30 Sep 2020 30 Sep 2020 31 Mar 2020 • Next debt facility maturing is $170m in August 2022 (FY23) • $200m facilities cancelled o
Slide 31: Capital Management – Cost of Debt
Capital Management – Cost of Debt SPL (excl. Industre unincorporated joint venture assets and debt) Highlights Cost of debt As at 30 Sep 2020 As at 31 Mar 2020 • Cost of debt at as 30 September 2020 has increased primarily as a result of holding relatively more facility headroom to fund growth Weigh
Slide 32: Capital Raise
Capital Raise Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 32
Slide 33: Offer Overview
Offer Overview • Stride is seeking to raise $220m through a $180m underwritten Placement and a $40m non-underwritten Share Purchase Plan (SPP) (with the ability to accept Raise1 $220m additional applications at Stride’s discretion) (the Placement and the SPP together are the Offer) • SPL has an unco
Slide 34: Use of Proceeds
Use of Proceeds • The net proceeds of the Offer received by SPL will be used to Pro forma SPL LVR (%) partly fund the acquisitions of Grant Thornton House and 20 Customhouse Quay, which total $312.5m • The remainder of the aggregate purchase price will be funded +9.2% through bank debt +24.5% • Foll
Slide 35: Offer Details
Offer Details Structure • Underwritten Placement to eligible investors • Non-underwritten Share Purchase Plan offer to all eligible shareholders with a registered address in New Zealand on the Record Date, under which each eligible shareholder can apply for up to $50,000 of new stapled securities •
Slide 36: Offer Timetable
Offer Timetable Placement Announcement of Offer and cleansing notice released to the NZX Wednesday 25 November 2020 Stride enters trading halt and bookbuild undertaken Wednesday 25 November 2020 Announcement of results of Placement and trading halt lifted Thursday 26 November 2020 Placement settleme
Slide 37: Key risks
Key risks This section outlines the key risks which Stride has identified in connection with the Offer. Stride’s business activities are subject to a number of risks which may, individually or in combination, affect the future operating and financial performance of Stride and the value of an investm
Slide 38: Key risks (cont.)
Key risks (cont.) Key Risk Details Key risks relating to COVID-19 (cont.) Rent abatements affect financial • While many of Stride’s leases do not provide for a contractual right to abatement of rent where premises cannot be accessed, Stride has approached performance each lease on a case by case bas
Slide 39: Key risks (cont.)
Key risks (cont.) Key Risk Details Key risks relating to the portfolio (cont.) Property valuation risk • This presentation includes valuations of SPL’s portfolio as at 30 September 2020 as assessed by SPL's external independent valuers, which have been reviewed by auditors, PwC and approved by the S
Slide 40: Key risks (cont.)
Key risks (cont.) Key Risk Details Other key risks relating to the business (cont.) Risk of changes in • More tenants are requiring sustainable environments, including buildings that have a specific Green Star or equivalent rating. Green Star is a rating system environmental requirements administere
Slide 41: Key risks (cont.)
Key risks (cont.) Key Risk Details Funding risks (cont.) Risks relating to completion • Failure to complete the Placement is likely to result in Stride being unable to satisfy the equity funding condition contained in the agreement to purchase of the Offer 20 Customhouse Quay by the relevant conditi
Slide 42: Conclusion
Conclusion Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 42
Slide 43: Conclusion
Conclusion • Stride will continue to pursue growth in its investment management business, including through the establishment of a group of Products in specific commercial property sectors, while also supporting the growth of its current Products, in line with the activity seen in the first half of
Slide 44: Appendices
Appendices Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 44
Slide 45: Appendix 1: About Stride Property Group
Appendix 1: About Stride Property Group Stride Property Group Our people Specialist real estate Investment investment manager philosophy • A fund manager and investor, • Auckland based head office Managing one of New Zealand’s • Places, People, Performance listed on the NZX largest property portfoli
Slide 46: Appendix 2: Stride Fund Structure
Appendix 2: Stride Fund Structure Stride Property Group (NZX:SPG) NZX’s only SPL and SIML SPL stapled security SIML shares are stapled and trade together Stride Property Limited Stride Investment Management on the NZX under (property / investment holding entity) Limited (property management entity)
Slide 47: Appendix 3: Portfolio by Sector
Appendix 3: Portfolio by Sector Overview Total Portfolio Office Industrial Large Format Retail Shopping Centres Office and retail portfolio1 Properties (no.) 14 10 44 Net Contract Rental3 ($m) 54.6 31.9 22.7 WALT3 (years) 5.8 6.6 4.5 Occupancy Rate (% by area) 96.7 97.8 95.5 Portfolio Valuation ($m)
Slide 48: Appendix 4: SPG Pro Forma Balance Sheet
Appendix 4: SPG Pro Forma Balance Sheet Acquisition of Acquisition of Grant Thornton Placement and Share 20 Customhouse Pro forma post Offer $m 30 September 2020 House Purchase Plan3 Quay and acquisitions Cash and cash equivalents 15.6 +4.9 20.5 Investment properties1 748.1 +84.5 +228.0 1,060.6 Othe
Slide 49: Appendix 5: Shareholder returns
Appendix 5: Shareholder returns Stride continues to outperform the S&P/NZX All Real Estate Index • Stride has outperformed against the S&P/NZX All Real Estate index since inception • Outperformance highlights the defensive nature of Stride’s broad direct and indirect property asset class exposure St
Slide 50: Appendix 6
Appendix 6 Profit before other income and income tax from continuing operations $0.8m $16.7m $15.5m $3.9m $1.2m $0.2m $0.2m $0.6m $3.4m $2.3m 30 Sep 19 Net rental Net rental Capitalised Lease Rental income Net rental increase Lower Higher management Lower corporate 30 Sep 20 reduction from increase
Slide 51: Appendix 6 (cont.)
Appendix 6 (cont.) Net Tangible Assets per share $0.06 $0.04 $0.012 $2.01 ($0.01) $2.00 $0.051 $0.05 $1.91 As at Profit before other Net change in fair Share of profit in Income tax Dividends paid As at Placement and Pro forma NTA 31 Mar 2020 income and value of equity accounted expense 30 Sep 2020
Slide 52: Glossary
Glossary Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 52
Slide 53: Glossary
Glossary Contract Rental is the amount of rent payable by each tenant, plus other amounts payable to SPL (or the relevant landlord) by that tenant under the terms of the relevant Contract Rental lease as at the relevant date, annualised for the 12-month period on the basis of the occupancy level for
Slide 54: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new stapled securities (New Stapled No advertisement, invitation or document relating to the New Stapled Securities Securities) of Stride in any jurisdiction in which it would be unlawful. In particular, has been or will
Slide 55: Thank you
Thank you Stride Property Group Level 12, 34 Shortland Street Auckland 1010, New Zealand PO Box 6320 Victoria Street West Auckland 1142, New Zealand P +64 9 912 2690 W strideproperty.co.nz Stride Property Group Interim Results for the six months ended 30 September 2020 and Capital Raising NOT FOR DI