PFI Lodges Product Disclosure Statement for Bond Offer
NZX and media
announcement
—
2 November 2017
PFI LODGES PRODUCT DISCLOSURE
STATEMENT FOR BOND OFFER
NZX listed industrial property landlord Property for Industry Limited (PFI) has announced an offer of up
to $75 million (with the ability to accept up to an additional $25 million in oversubscriptions at PFI’s
discretion) of senior secured fixed rate 7-year bonds, to institutional and New Zealand retail investors.
The offer is expected to open on Monday, 13 November 2017 and to close on Friday, 24 November
2017. The indicative margin range above the 7-year swap rate for the bonds is 1.65% to 1.80% per
annum, subject to a minimum interest rate of 4.55% per annum. The margin and interest rate will be set
following a bookbuild process on Friday, 10 November 2017 and will be announced by PFI via NZX
shortly thereafter. The bonds are expected to be quoted on the NZX Debt Market.
Details of the offer are contained in the Product Disclosure Statement (PDS) which was lodged today.
The PDS is attached and available through www.pfibondoffer.co.nz or by contacting a Joint Lead
Manager, and must be obtained by investors before they decide to acquire any bonds.
Copies of PFI’s roadshow presentation and indicative terms sheet are also attached and available
through www.pfibondoffer.co.nz.
There is no public pool for the offer, with all of the bonds being reserved for clients of the Joint Lead
Managers, NZX participants and other approved financial intermediaries.
Interested investors should contact a Joint Lead Manager as listed below, or their financial advisor, for
more details.
Arranger and Joint Lead Manager
Forsyth Barr
Phone: 0800 367 227
Joint Lead Managers
Bank of New Zealand Deutsche Craigs
Phone: 0800 284 017 Phone: 0800 226 263
ENDS
NZX and media
announcement
—
2 November 2017
ABOUT PFI & CONTACT
PFI is New Zealand’s only listed company specialising in industrial property. PFI’s portfolio of 92 properties located in Auckland,
Hamilton, Mount Maunganui, New Plymouth, Napier, Wellington, Nelson, Blenheim and Christchurch is leased to 148 tenants.
For further information please contact:
SIMON WOODHAMS CRAIG PEIRCE
General Manager Chief Financial Officer and Company Secretary
--- ---
Phone: +64 9 303 9652 Phone: +64 9 303 9651
Email: woodhams@pfi.co.nz Email: peirce@pfi.co.nz
---
Property for Industry Limited
Shed 24, Prince’s Wharf, 147 Quay Street, Auckland 1010
PO Box 1147, Shortland Street, Auckland 1140
—
www.propertyforindustry.co.nz
ATTACHMENTS
Product disclosure statement
Indicative terms sheet
Roadshow presentation
---
Property
For
Industry
Limited
OFFER OF SENIOR SECURED FIXED RATE 7 YEAR BONDS
ISSUED BY PROPERTY FOR INDUSTRY LIMITED
DATE: 2 NOVEMBER 2017
This document gives you important information about this investment to help you decide whether you want to
invest. There is other useful information about this offer on www.companiesoffice.govt.nz/disclose.
Property for Industry Limited has prepared this document in accordance with the Financial Markets Conduct
Act 2013. You can also seek advice from a financial adviser to help you to make an investment decision.
PRODUCT
DISCLOSURE
STATEMENT
JOINT LEAD
MANAGERS:
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
01
WHAT IS THIS?
This is an offer (Offer) of senior secured fixed rate bonds (Bonds). The Bonds are debt securities issued by Property for Industry
Limited (PFI). You give PFI money, and in return PFI promises to pay you interest and repay the money at the end of the term. If
PFI runs into financial trouble, you might lose some or all of the money you invested.
ABOUT THE PFI GROUP
PFI and the companies it owns make up the PFI Group. Currently the only company owned by PFI is P.F.I. Property No. 1 Limited
(PFI Property).
The PFI Group specialises in direct investment in industrial property. Its strategy is to deliver strong and stable returns through
investing in quality industrial properties in attractive locations and developing relationships with strong tenants. As at the date
of this product disclosure statement (PDS) the PFI Group has 92 properties, with a weighting toward the Auckland industrial
sector. The PFI Group has recently completed a $69.5 million acquisition of nine properties (the Acquisition) and is completing
a corresponding renounceable rights issue of approximately $70 million (the Equity Raising). PFI is listed on the NZX Main
Board and, as at the date of this PDS, has a market capitalisation of approximately $737 million (not including the Equity Raising,
which is expected to be allotted on 7 November 2017).
PURPOSE OF THIS OFFER
The proceeds of this Offer are expected to be used to repay existing bank debt of the PFI Group.
01
KEY INFORMATION SUMMARY
KEY TERMS OF THE OFFER
Issuer
Property for Industry Limited.
Description of the
Bonds
Senior secured fixed rate bonds.
Term
7 years maturing on 28 November 2024.
Offer amount
Up to $75 million (with the ability to accept oversubscriptions of up to $25 million at
PFI’s discretion).
Interest Rate
The Bonds will pay a fixed rate of interest until the Maturity Date.
The Interest Rate will be determined by PFI in conjunction with the Joint Lead Managers
following a bookbuild, and announced via NZX on or about the Rate Set Date.
Interest payments
Quarterly in arrear on 28 February, 28 May, 28 August and 28 November each year (or if that
day is not a Business Day, the next Business Day) until and including the Maturity Date, with
the First Interest Payment Date being 28 February 2018.
Early bird interest will also be paid on application money received in respect of accepted
applications. It will be paid as soon as practicable, and, in any event, within 5 Business Days of
the Issue Date. More information on how early bird interest is calculated can be found in
section 3 of this PDS (Terms of the Offer).
Further payments,
fees or charges
Taxes may be deducted from interest payments on the Bonds. See section 7 of this PDS (Ta x)
for further details.
The Offer is subject to certain selling restrictions and you will be required to indemnify certain
people if you breach these. More information on this can be found in section 5 of this PDS (Key
features of the Bonds).
Offer Opening Date
13 November 2017.
Offer Closing Date
24 November 2017.
Minimum application
amount
$5,000 and multiples of $1,000 thereafter.
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
02
WHO IS RESPONSIBLE FOR REPAYING YOU?
PFI as Issuer is responsible for repaying, and paying interest
on, the Bonds.
PFI Property has guaranteed the payments due on the Bonds.
The guarantee is contained in a cross guarantee and indemnity
dated 1 May 2015 from PFI and PFI Property (Guarantee).
PFI Property is a company owned by PFI and a member of the
PFI Group. As at the date of this PDS PFI Property holds all of
the property assets of the PFI Group.
More information on the Guarantee can be found in section 5
of this PDS (Key features of the Bonds).
HOW YOU CAN GET YOUR MONEY OUT EARLY
Neither you nor PFI are able to redeem the Bonds before the
Maturity Date. However, PFI may be required to repay the
Bonds early if there is an Event of Default (see section 5 of
this PDS (Key features of the Bonds)).
PFI intends to quote these Bonds on the NZX Debt Market.
This means you may be able to sell them on the NZX Debt
Market before the end of their term if there are interested
buyers. If you sell your Bonds, the price you get will vary
depending on factors such as the financial condition of the
PFI Group and movements in the market interest rates. You
may receive less than the full amount that you paid for them.
HOW BONDS RANK FOR REPAYMENT
On a liquidation of PFI as Issuer the Bonds will rank as
unsubordinated obligations of PFI as Issuer (and rank after
liabilities which are secured over assets of PFI or preferred
by law, and rank equally with all other unsubordinated
liabilities of PFI).
Further important information on the ranking of the Bonds
on the liquidation of the PFI Group can be found in section 5
of this PDS (Key features of the Bonds).
WHAT ASSETS ARE THESE BONDS
SECURED AGAINST?
The Bonds are secured by first ranking mortgages
(Mortgages) granted by PFI Property as Guarantor over
various properties (Mortgaged Properties).
More information on the Mortgages and Mortgaged Properties
can be found in section 5 of this PDS (Key features of the Bonds).
KEY RISKS AFFECTING THIS INVESTMENT
Investments in debt securities have risks. A key risk is that PFI
does not meet its commitments to repay you or pay you interest
(credit risk). Section 6 of this PDS (Risks of investing) discusses
the main factors that give rise to the risk. You should consider if
the credit risk of these debt securities is suitable for you.
The interest rate for these Bonds should also reflect the degree
of credit risk. In general, higher returns are demanded by
investors from businesses with higher risk of defaulting on
their commitments. You need to decide whether the Offer is
fair. PFI considers that the most significant risk factors are
changes in property market conditions (and most particularly
in its areas of sector or geographic concentration) which have
a negative impact on market rental returns from, or the market
value of, properties. These risks are of particular relevance to
the PFI Group because it is a specialist property investment
group, with its returns highly dependent on rental income
generated from its property assets. In addition its property
assets are concentrated by both sector and geography. As at
31 October 2017 its property investments were concentrated:
• in the industrial sector (86% of the property assets by value);
and
• in the Auckland region (82% of the property assets by value).
This summary does not cover all of the risks of investing in the
Bonds. You should also read section 6 of this PDS (Risks of
investing) and section 5 of this PDS (Key features of the Bonds).
NO CREDIT RATING
PFI’s credit worthiness has not been assessed by an approved
rating agency. This means that PFI has not received an
independent opinion of its capability and willingness to repay
its debts from an approved source.
WHERE YOU CAN FIND OTHER MARKET
INFORMATION ABOUT PFI
This is a short-form offer document that PFI is permitted to
use because these Bonds rank in priority to existing quoted
financial products of PFI. The existing quoted financial
products are ordinary shares in PFI, which are traded on the
NZX Main Board. PFI is subject to a disclosure obligation that
requires it to notify certain material information to the NZX
for the purpose of that information being made available to
participants in the market. PFI’s page on the NZX website,
which includes information made available under the
disclosure obligation referred to above, can be found at
www.nzx.com/companies/PFI.
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
03
TABLE OF CONTENTS
01
KEY INFORMATION
SUMMARY
PAGE 01
05
KEY FEATURES OF
THE BONDS
PAGE 08
02
KEY DATES AND
OFFER PROCESS
PAGE 04
06
RISKS OF INVESTING
PAGE 14
09
HOW TO COMPLAIN
PAGE 17
07
TA X
PAGE 15
08
WHO IS INVOLVED?
PAGE 16
03
TERMS OF
THE OFFER
PAGE 05
04
PURPOSE OF
THE OFFER
PAGE 08
10
WHERE YOU CAN FIND
MORE INFORMATION
PAGE 18
12
CONTACT
INFORMATION
PAGE 18
GLOSSARY
PAGE 19
11
HOW TO APPLY
PAGE 18
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
04
Rate Set Date
Friday, 10 November 2017
Opening Date
Monday, 13 November 2017
Closing Date
Friday, 24 November 2017 at 5.00 pm
Issue Date and allotment date
Tuesday, 28 November 2017
Expected date of initial quotation and trading
of the Bonds on the NZX Debt Market
Wednesday, 29 November 2017
Interest Payment Dates
28 February, 28 May, 28 August and 28 November in each year
First Interest Payment Date
28 February 2018
Maturity Date
28 November 2024
The timetable is indicative only and subject to change.
PFI may, in its absolute discretion and without notice, vary
the timetable (including by opening or closing the Offer early,
accepting late applications and extending the Closing Date).
If the Closing Date is extended, the Rate Set Date,
the Issue Date, the expected date of initial quotation and
trading of the Bonds on the NZX Debt Market, the Interest
Payment Dates and the Maturity Date may also be extended.
Any such changes will not affect the validity of any
applications received.
PFI reserves the right to cancel the Offer and the issue of the
Bonds, in which case all application monies received will be
refunded (without interest) as soon as practicable and in any
event within 5 Business Days of the cancellation.
Who may apply under the Offer?
The Offer will be open to institutional investors and members
of the public who are resident in New Zealand.
All of the Bonds offered under the Offer (including any
oversubscriptions) have been reserved for subscription by clients
of the Joint Lead Managers, Primary Market Participants and
other approved financial intermediaries, invited to participate in
a bookbuild conducted by the Joint Lead Managers.
There will be no public pool for the Bonds.
If you wish to invest in the Bonds you should contact your
usual authorised financial adviser or a Primary Market
Participant for details as to how you may acquire the Bonds.
You can find a Primary Market Participant by visiting
www.nzx.com/investing/find_a_participant.
02
KEY DATES AND OFFER PROCESS
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
05
Issuer
Property for Industry Limited.
Description of the
Bonds
Senior secured fixed rate bonds.
Term
7 years, maturing on 28 November 2024.
Offer amount
Up to $75 million (with the ability to accept oversubscriptions of up to $25 million at
PFI’s discretion).
Issue price
$1.00 per Bond, being the Principal Amount of each Bond.
Interest Rate
The Bonds will pay a fixed rate of interest until the Maturity Date.
The Interest Rate will be determined by PFI in conjunction with the Joint Lead Managers
following a bookbuild, and announced via NZX on or about the Rate Set Date.
Interest Payment
Dates
Quarterly in arrear on 28 February, 28 May, 28 August and 28 November each year (or if that day
is not a Business Day, the next Business Day) until and including the Maturity Date, with the First
Interest Payment Date being 28 February 2018.
Interest payments
and entitlement
Payments of interest on Interest Payment Dates will be of equal quarterly amounts. Any interest
on the Bonds payable on a date which is not an Interest Payment Date (including the early bird
interest discussed below), will be calculated based on the number of days in the relevant period
and a 365-day year.
On Interest Payment Dates interest will be paid to the person registered as the Bondholder as at
the record date immediately preceding the relevant Interest Payment Date.
The record date for interest payments is 5.00pm on the date that is 10 days before the relevant
Interest Payment Date. If the record date falls on a day which is not a Business Day, the record
date will be the immediately preceding Business Day.
Early bird interest
You will receive interest calculated on a daily basis at the Interest Rate on application money you
paid, in respect of accepted applications, from (and including) the date that application money is
received into the bank account for the Offer to ( but excluding) the Issue Date. Early bird interest
will be paid (less any withholding tax required to be deducted) to you as soon as practicable and,
in any event, within 5 Business Days of the Issue Date.
Offer Opening Date
13 November 2017.
Offer Closing Date
24 November 2017.
Scaling
PFI may scale applications at its discretion, but will not scale any application to below $5,000 or
to an amount that is not a multiple of $1,000.
03
TERMS OF THE OFFER
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
06
Refunds
If PFI does not accept your application (whether because of late receipt or otherwise) or accepts
it in part, all or the relevant balance of your application money received will be repaid to you as
soon as practicable and, in any event, within 5 Business Days of the Issue Date.
No interest will be paid on refunds.
Minimum
application amount
$5,000 and multiples of $1,000 thereafter.
How to apply
Application instructions are set out in section 11 of this PDS (How to apply). An application form
is attached at the back of this PDS.
PFI reserves the right to refuse all or any part of any application for Bonds under the Offer
without giving a reason.
No underwriting
The Offer is not underwritten.
Brokerage
You are not required to pay brokerage or any other fees or charges to PFI to purchase the Bonds.
However, you may have to pay brokerage to the firm from whom you receive an allocation of Bonds.
Quotation
Application has been made to NZX for permission to quote the Bonds on the NZX Debt Market and
all the requirements of NZX relating to that quotation that can be complied with on or before the
date of distribution of this PDS have been duly complied with. However, the Bonds have not yet
been approved for trading and NZX accepts no responsibility for any statement in this PDS. NZX is
a licensed market operator, and the NZX Debt Market is a licensed market, under the FMCA.
NZX ticker code PFI010 has been reserved for the Bonds.
Transfer restrictions
PFI may decline to accept or register a transfer of the Bonds if the transfer would result in the
transferor or the transferee holding or continuing to hold Bonds with a Principal Amount of less
than $5,000 (if not zero) or if the transfer is not in multiples of $1,000.
NZX approval
NZX has provided PFI with approval under Listing Rule 11.1.5 to enable PFI to decline to accept
or register a transfer of the Bonds if the transfer would result in the transferor or the transferee
holding or continuing to hold Bonds with a Principal Amount of less than $5,000 (if not zero) or if
the transfer is not in multiples of $1,000.
Guarantee
and Security
PFI Property has guaranteed the payments due on the Bonds.
The Bonds are secured by the Mortgages granted by PFI Property as Guarantor over the
Mortgaged Properties.
More information on the Guarantee and Mortgages can be found in section 5 of this PDS (Key
features of the Bonds).
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
07
Ranking
On a liquidation of PFI as Issuer the Bonds will rank as unsubordinated obligations of PFI as
Issuer (and rank after liabilities which are secured over assets of PFI or preferred by law, and rank
equally with all other unsubordinated liabilities of PFI).
Further important information on the ranking of the Bonds on the liquidation of the PFI Group
can be found in section 5 of this PDS (Key features of the Bonds).
Financial covenant
PFI agrees to ensure that the total principal amount of all outstanding borrowed money secured
by the Mortgages is not more than 50% of the total value of all Mortgaged Properties. See section 5
of this PDS (Key features of the Bonds).
Early redemption
Neither you nor PFI are able to redeem the Bonds before the Maturity Date. However, PFI may be
required to repay the Bonds early if there is an Event of Default (as described below).
Events of Default
If an Event of Default occurs and is continuing the Supervisor may in its discretion, and must
upon being directed to do so by an Extraordinary Resolution of Bondholders, declare the Bonds to
be immediately due and payable.
The Events of Default are set out in condition 18.1 of the Bonds (as set out in Schedule 1 of the
Trust Deed, a copy of which is contained on the Disclose Register) and are summarised in section
5 of this PDS (Key features of the Bonds).
Further payments,
fees or charges
Taxes may be deducted from interest payments on the Bonds. See section 7 of this PDS (Ta x) for
further details.
The Offer is subject to certain selling restrictions and you will be required to indemnify certain
people if you breach these. More information on this can be found in section 5 of this PDS (Key
features of the Bonds).
Governing law
New Zealand.
Supervisor
Public Trust.
Security Trustee
New Zealand Permanent Trustees Limited.
Securities Registrar
Computershare Investor Services Limited.
Documents
The terms of the Bonds, and other terms key to the Offer, are set out in:
• the Trust Deed, as supplemented by the Supplemental Deed;
• the Guarantee; and
• the Security Trust Deed.
You should read these documents. Copies may be obtained from the Disclose Register at www.companiesoffice.govt.nz/disclose.
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
08
A number of key features of the Bonds are described in section
3 of this PDS (Terms of the Offer). The other key features of the
Bonds are described below.
THE SUPERVISOR
A Supervisor is appointed to act as supervisor and trustee for
the Bondholders on the terms contained in the Trust Deed.
You can only enforce your rights under the Bonds, or under the
guarantee and security arrangements, through the Supervisor
(although you can enforce your rights under the Bonds against
the Issuer directly if the Supervisor is obliged to enforce, but
has failed to do so within a reasonable period).
GUARANTEES
PFI as Issuer is responsible for repaying, and paying interest
on, the Bonds. PFI Property has guaranteed the payments due
on the Bonds. The guarantee is contained in the Guarantee.
PFI Property is a company owned by PFI and a member of the
PFI Group. Other companies owned by PFI may be added as
Guarantors under the Guarantee. Currently there are no other
companies owned by PFI.
PFI Property guarantees ( jointly and severally with any other
company which is added as a Guarantor) the payment of all
amounts owed by PFI to you in respect of the Bonds. The
Guarantee is not subject to any limits or conditions.
The Guarantee is a cross guarantee. A cross guarantee is a
document under which each guarantor guarantees each other
guarantor’s liabilities.
The obligations of PFI Property under the Guarantee are
secured by the Mortgages (and more information on the
Mortgages can be found below in the section headed Ranking
and Security under the sub-heading Mortgages). There is no
limit on the amount secured by these Mortgages. PFI believes
that the Mortgaged Properties are sufficient and are
reasonably likely to be sufficient to:
• repay the liability under the Guarantee; and
• pay all other liabilities that a security interest over any of the
Mortgaged Properties secures and that rank in priority to, or
equally with, the liability under the Guarantee.
The proceeds of the Offer are expected to be used to repay existing bank debt of the PFI Group and 100% of the net proceeds of
the Offer will be provided to PFI Property for this purpose. This will not change, irrespective of the total amount that is raised.
The Offer is not underwritten.
05
KEY FEATURES OF THE BONDS
04
PURPOSE OF THE OFFER
RANKING AND SECURITY
Mortgages
Through the Guarantee (noted above) the Bonds are secured by
the Mortgages granted by PFI Property as Guarantor over the
Mortgaged Properties. The Mortgages are first ranking security
in respect of the Mortgaged Properties. As noted above, there is
no limit on the amount secured under the Mortgages.
The Bonds are not the only amounts secured by the Mortgages.
The Mortgages also secure amounts owed to other creditors
under certain other financing documents. This currently includes
bank facilities, and in the future is likely to extend to other
amounts. All creditors secured by the Mortgages rank equally.
PFI estimates that as at 30 June 2017:
• The amount secured by the Mortgages (which includes
outstanding borrowed money and other liabilities, such as
accrued interest and derivative liabilities) was approximately
$386,500,000. The issue of the Bonds will not impact this
amount, as the proceeds of the issue are expected to be used to
repay existing bank debt which is secured by the Mortgages.
The Acquisition and Equity Raising is expected to result in
approximately $2.0 million of additional amounts secured
by the Mortgages.
• The total value of the Mortgaged Properties was
approximately $1,062,700,000. The Acquisition is expected
to increase the total value of the Mortgaged Properties by
approximately $72.7 million.
A Security Trustee (currently New Zealand Permanent
Trustees Limited) holds the Mortgages for all creditors
entitled to their benefit. The creditors entitled to the benefit of
the Mortgages currently include (in addition to the Supervisor
and the Bondholders) the PFI Group’s banks and their facility
agent. It is likely that further creditors will become entitled to
the benefit of the Mortgages in the future.
The Security Trustee may release Mortgaged Properties
without the consent of Bondholders, provided that this will not
cause a breach of the Loan to Value Ratio (or any other term of
the Bonds or any other relevant financing documents). The
Loan to Value Ratio is contained in the Trust Deed, and under
it PFI agrees to ensure that the total principal amount of all
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
09
outstanding borrowed money secured by the Mortgages is not
more than 50% of the total value of all Mortgaged Properties.
The basis on which the Security Trustee holds the Mortgages, and
otherwise acts for the creditors entitled to the benefit of the
Mortgages, is set out in the Security Trust Deed. More information
on the Security Trust Deed can be found below in the section
headed Security Trust Deed.
The diagram below summarises the effect of the guarantee and
security structure described above.
Diagram outlining effect of Guarantee and security structure
Notes to diagram:
While PFI as Issuer is responsible for paying the Bonds, the Bonds
rank as secured obligations of PFI Property as Guarantor by virtue
of the Guarantee and Mortgages.
The Supervisor acts as trustee for the Bondholders.
The Bondholders can only enforce the Bonds and the guarantee
and security arrangements through the Supervisor (although a
Bondholder can enforce its rights under the Bonds against the
Issuer directly if the Supervisor is obliged to enforce, but has failed
to do so within a reasonable period).
The Security Trustee holds the Mortgages for the Bondholders and
other creditors entitled to their benefit. The Supervisor acting on
behalf of the Bondholders may only enforce the Mortgages through
the Security Trustee
PFI
(ISSUER)
PFI
PROPERTY
(GUARANTOR)
OWNS
BONDS
GUARANTEE
AND MORTGAGES
PFI GROUP
BONDHOLDERS
PROPERTY
ASSETS
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
10
HigherRanking on LiquidationType of Liability/EquityAmount
Liabilities that rank in
priority to the Bonds
Liabilities preferred by law
(for example, Inland Revenue).
$nil
Liabilities that rank
equally with the Bonds
Liabilities secured over assets other
than the Mortgaged Properties.
$nil
All liabilities secured by the Mortgages
(including Bonds and bank facilities).
$386.5 million
Other unsubordinated liabilities not
referred to above (e.g. trade and general
creditors).
$15.4 million
Liabilities that rank
below the Bonds
Subordinated liabilities.$nil
Lower
EquityShares, reserves and retained earnings.$733.3 million
Ranking on Liquidation
On a liquidation of the PFI Group the Bonds will rank as secured obligations of PFI Property as Guarantor, as described above.
The ranking of the Bonds on a liquidation of the PFI Group is summarised in the diagram below.
Notes to diagram:
Amounts shown above are indicative based on the financial position
of the PFI Group as at 30 June 2017. They are subject to rounding
adjustments.
Liabilities preferred by law include amounts owing to Inland Revenue
for unpaid taxes and goods and services tax. There are typically
other liabilities which are secured or preferred by law which arise
when a company is in liquidation which are not possible to foresee
and cannot therefore be quantified.
The liabilities secured by the Mortgages include outstanding
borrowed money and other liabilities, such as accrued interest and
derivative liabilities. The Bonds rank equally with all other liabilities
secured by the Mortgages.
For the purposes of these calculations an issue size of $100 million
of Bonds has been assumed. If the issue size is less this will not
impact these calculations, as the proceeds of the issue are
expected to be used to repay existing bank debt which ranks
equally with the Bonds.
The amount of equity stated above includes an amount in relation
to PFI’s existing quoted financial products (i.e. PFI’s shares).
Since 30 June 2017, PFI has completed the Acquisition and expects
allotment for the corresponding Equity Raising to occur on
7 November 2017. This is expected to result in approximately
$67.7 million of additional equity, and $2.0 million of additional
borrowing under the bank facilities secured by the Mortgages.
In summarising the ranking of the Bonds and other liabilities, the
table (for the sake of simplicity) does not reflect the fact that the
ranking of liabilities may change, depending on the source of
payment. As a result the ranking of the Bonds and other liabilities
secured by the Mortgages is understated, where the source of
payment is sale proceeds of the Mortgaged Properties:
• Where the source of payment is sale proceeds of the
Mortgaged Properties, there are no other liabilities which rank in
priority to or equally with the Bonds and other liabilities secured
by the Mortgages.
• Where the source of payment is sale proceeds of PFI Group assets
(other than the Mortgaged Properties) which secure other
liabilities, those other liabilities effectively rank in priority to the
Bonds in respect of those sale proceeds.
• Other unsubordinated liabilities are shown as ranking equally
with the Bonds and other secured liabilities because, although they
are not secured by the Mortgages (or other assets), they are not
legally subordinated to the Bonds (or other secured liabilities).
For instance, to the extent sale proceeds arise from assets that
are not subject to any security, liabilities secured by the Mortgages,
liabilities secured over other assets and other unsubordinated
liabilities rank equally in respect of those sale proceeds.
Ranking of the Bonds on liquidation of PFI Group
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
11
Further Borrowing and Security
After the issue of the Bonds, the PFI Group may (without the
consent of Bondholders) borrow money or otherwise incur
liabilities from time to time that:
• rank equally with the Bonds on a liquidation of the PFI
Group. This may include, for example, further bank loans
to the PFI Group or further bonds issued by PFI; or
• rank in priority to the Bonds on a liquidation of the PFI
Group. This may include, for example, borrowings by the
PFI Group secured over assets other than the Mortgaged
Properties, other permitted instances of security as
described below or liabilities preferred by law.
The financial covenants and other terms described below
limit the ability of the PFI Group to:
• borrow money that ranks equally with, or in priority to,
the Bonds; or
• grant security which ranks equally with, or in priority to,
the Mortgages.
Restrictions on Borrowing
The Loan to Value Ratio limits the ability of the PFI
Group to borrow money which is secured by the Mortgages.
Under the Loan to Value Ratio PFI agrees to ensure that the
total principal amount of all outstanding borrowed money
secured by the Mortgages is not more than 50% of the total
value of all Mortgaged Properties.
In addition to the Loan to Value Ratio, certain terms contained
in the Bank Facility Agreement limit the ability of the PFI
Group to borrow money (although you do not have the benefit
of these, and they may be amended or waived by the PFI
Group’s banks). These terms are:
• An “Interest Cover Ratio”. Under this, PFI agrees to ensure
that (when calculated at the end of each financial year and
half year) EBIT of the PFI Group is at least two times
interest expense of the PFI Group for the 12 months then
ending. For this purpose, “EBIT” is profit before income tax
and interest expense ( but adjusted to exclude certain gains
or losses, including those resulting from fair value
adjustments on assets and those derived from sales of
assets or investments).
• A “Secured Borrowings Ratio”. Under this, PFI agrees to
ensure that the total principal amount of all outstanding
borrowed money secured by the Mortgages is not more
than 50% of the total value of all Properties owned by the
Guarantors.
• A “Mortgaged Property Value Undertaking ”. Under this,
PFI agrees that the total value of all Mortgaged Properties
will be at least twice the aggregate of (x) the total facility
limit under the Bank Facility Agreement; plus (y) the total
limit for all other borrowings secured by the Mortgages.
Restrictions on Granting Security
Under the Trust Deed PFI agrees that it will not grant or allow
security over its assets (or further security over the Mortgaged
Properties), except in certain permitted instances. The
permitted instances include:
• security to the Security Trustee;
• security which the PFI Group’s banks otherwise agree to;
• security arising by operation of law;
• netting and set off arrangements entered into in the ordinary
course of banking arrangements; and
• any other security provided that the total amount secured
under this particular category (ignoring the categories
above) does not exceed 10% of the PFI Group’s total
tangible assets.
This summary does not cover all of the permitted instances.
For full details see condition 13(a) of the Bonds (as set out in
Schedule 1 of the Trust Deed) and the definition of Permitted
Security Interest in condition 22 of the Bonds.
The Bank Facility Agreement also contains terms that limit
the ability of the PFI Group to grant security (although these
are not terms of the Bonds so you do not have the benefit of
these, and they may be amended or waived by the PFI Group’s
banks). These are undertakings from each of PFI and PFI
Property that they will not grant or allow security over their
assets, except in certain permitted instances. The permitted
instances include:
• security to the Security Trustee;
• security which the PFI Group’s banks otherwise agree to;
• security over an asset which already exists at the time the
asset is acquired (and certain other tests are satisfied);
• security over any asset to its supplier, to secure any unpaid
purchase price; and
• security in respect of a permitted joint venture.
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
12
SECURITY TRUST DEED
As noted above, a Security Trustee (currently New Zealand
Permanent Trustees Limited) holds the Mortgages for all
creditors entitled to their benefit. The creditors entitled to
the benefit of the Mortgages currently include (in addition
to the Supervisor and the Bondholders) the PFI Group’s
banks and their facility agent. It is likely that further
creditors will become entitled to the benefit of the
Mortgages in the future.
In most circumstances the Security Trustee must act in
accordance with instructions of the majority of those creditors
who have the benefit of the Mortgages. As a majority of
creditors is determined by respective credit exposures (which
depending on the circumstances may be based on principal
amount lent, or facility limits) the PFI Group’s banks currently
constitute the majority creditors for the purpose of giving
instructions to the Security Trustee.
The Security Trust Deed contains a number of other
important terms. These include:
• The role of the Security Trustee, and the powers and duties
of the Security Trustee.
• The rule that Bondholders may only enforce their rights
under the Guarantee and Security Trust Deed through the
Supervisor.
• The rule that the Supervisor (acting on behalf of the
Bondholders) may only enforce the Mortgages through the
Security Trustee.
• The rules as to distribution of proceeds received by the
Security Trustee on enforcement. After paying costs
(including those of the Security Trustee or any receiver)
creditors secured by the Mortgages rank equally.
• The procedure by which the PFI Group may extend the
benefit of the guarantee and security arrangements
(including the Mortgages) to new creditors, who would then
rank equally with the Bonds. The PFI Group may do so
provided a material default does not exist.
• The obligation of the Security Trustee (without the consent
of Bondholders) to release a Mortgage where the relevant
property is being sold by the PFI Group, provided that this
will not cause a breach of the Loan to Value Ratio (or any
other term of the Bonds or any other relevant financing
documents).
• The ability of the majority creditors to require the Security
Trustee to enforce the Mortgages. In certain circumstances
individual creditors or groups of creditors also have this
right (even if the majority creditors disagree). An example of
this is that where there is a Major Bond Default Event, the
Supervisor can require the Security Trustee to enforce the
security (even if the majority creditors disagree).
• The ability of the majority creditors to waive obligations
under, or agree changes to, the Security Trust Deed (though
if a waiver or change would have a material adverse effect on
Bondholders as compared to its effect on other creditors,
then approval of the Bondholders will be required).
• The process for replacement of the Security Trustee.
The majority creditors have the right to remove and replace
the Security Trustee.
• The right of the Security Trustee to be indemnified.
• The payment of fees, expenses and other amounts owing to
the Security Trustee.
EVENTS OF DEFAULT
The Events of Default are contained in the Trust Deed.
They include:
• A failure by PFI to make a payment on the Bonds.
• A breach by PFI of a material term of the Trust Deed or the
Bonds, or by a Guarantor of an undertaking in the Guarantee.
• A material misrepresentation by PFI under the Trust Deed
or the Bonds, or by a Guarantor under the Guarantee.
• Indebtedness of more than $10 million in respect of other
borrowed money of PFI or a Guarantor is not paid when due
(or within any applicable grace period), or is called up as a
result of a default.
• A breach of the Loan to Value Ratio which is not remedied
within (approximately) 13 months of that breach being
disclosed to the Supervisor in a director’s report.
• Insolvency events that affect PFI or a Guarantor.
• Termination of the Guarantee.
This summary does not cover all of the Events of Default. For
full details of the Events of Default see condition 18.1 of the
Bonds (as set out in Schedule 1 of the Trust Deed).
If an Event of Default occurs, the Supervisor may in its
discretion, and must upon being directed to do so by an
Extraordinary Resolution of Bondholders, declare the
Principal Amount and any accrued interest on the Bonds due
and payable. If this occurs, PFI will need to repay you the
Principal Amount of your Bonds and any outstanding interest
due on your Bonds. Outstanding interest will be calculated
based on the number of days since the last Interest Payment
Date and a 365-day year.
If an Event of Default occurs the Supervisor may enforce the
Guarantee against PFI Property. However, any enforcement of
the Mortgages must be by the Security Trustee, not the
Supervisor.
DISTRIBUTION STOPPER
Under the Trust Deed PFI is not permitted to make any
distribution if an Event of Default is continuing or if it would
result in an Event of Default.
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
13
OTHER RELEVANT INFORMATION
ABOUT THE TRUST DEED
The Trust Deed also contains a number of standard terms,
including relating to:
• The role of the Supervisor, and the powers and duties
of the Supervisor. The Supervisor will not be responsible
for monitoring the application by PFI of the money paid by
the subscribers of the Bonds.
• The process for replacement of the Supervisor.
• The right of the Supervisor to be indemnified.
• The payment of fees, expenses and other amounts
owing to the Supervisor (including that amounts owing
to the Supervisor are, on a default, paid from the proceeds
of enforcement before payments to Bondholders).
• Holding meetings of Bondholders.
• The process for Bondholders to sell or transfer their Bonds
(including that such sales and transfers are subject to the terms
of the Trust Deed and applicable securities laws, in particular
that transfers that would result in the transferee holding Bonds
with a total Principal Amount of less than $5,000, or in an
amount that is not a multiple of $1,000, will not be allowed).
• The process for amending the Trust Deed. To summarise,
the Trust Deed can be amended:
–with the consent of the Supervisor; or
–by the Financial Markets Authority under section 109
of the FMCA; or
–under section 22(7) or 37(6) of the Financial Markets
Supervisors Act 2011 or any other enactment.
The Supervisor must only consent to an amendment if:
–the amendment is approved by an Extraordinary
Resolution of the holders of the debt securities (or each
class of holders that is or may be adversely affected by the
amendment); or
–the Supervisor is satisfied that the amendment does not
have a material adverse effect on the Bondholders.
You should read clause 11 of the Trust Deed for further
information.
SELLING RESTRICTIONS
PFI does not intend that the Bonds be offered for sale,
and no action has been taken or will be taken to permit a public
offering of Bonds, in any jurisdiction other than New Zealand.
You may only offer for sale or sell any Bond in conformity with
all applicable laws and regulations in any jurisdiction in which
it is offered, sold or delivered. This PDS may not be published,
delivered or distributed in or from any country other than
New Zealand.
By subscribing for or otherwise acquiring any Bonds, you
agree to indemnify, among others, PFI, the Supervisor and
the Joint Lead Managers for any loss suffered as a result of
any breach by you of the selling restrictions referred to in
this section.
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
14
INTRODUCTION
This section 6 describes the following potential key risk
factors:
• general risks associated with an investment in the Bonds;
and
• specific risks relating to the PFI Group’s creditworthiness.
Key risks outlined in this section are based on an assessment
of the probability of a risk occurring and its potential impact
(individually or in combination with other key risks) at the
date of this PDS. There is no guarantee or assurance that key
risks will not change, alter in their significance or that other
risks will not emerge.
You should carefully consider these risk factors (together with
the other information in this PDS) before deciding to invest in
the Bonds.
Before making any investment decision it is important that
investors consider the suitability of an investment in the
Bonds in light of their own individual risk profile for
investments, investment objectives and personal
circumstances (including financial and taxation issues).
The risks described in this section do not take account of
the personal circumstances, financial position or investment
requirements of any particular person other than the
PFI Group.
GENERAL RISKS
An investment in the Bonds is subject to the following
general risks.
Credit Risk on PFI
The risk that PFI becomes insolvent and is unable to meet its
obligations under the Bonds. If the Mortgages are insufficient
to repay you in these circumstances, you might not recover the
amount of your investment in the Bonds or receive the returns
you expect.
Secondary Market Risk
The risk that, if you wish to sell your Bonds before maturity:
• you may be unable to find a buyer; or
• the price at which you are able to sell them is less than the
amount you paid for them.
These outcomes may arise because of factors related to PFI
Group’s creditworthiness, or because of other factors. These
other factors may include the following:
• The fact that a trading market for the Bonds never
develops, or if it develops is not very liquid. Although
permission is expected to be granted to quote the Bonds on
the NZX Debt Market, this does not guarantee any trading
market in the Bonds.
• The level, direction and volatility of market interest rates.
For example, if market interest rates go up, the market value
of the Bonds would typically be expected to go down and vice
versa.
• The fact that Bondholders seeking to sell relatively small or
relatively large amounts of Bonds may not be able to do so at
prices comparable to those available to other Bondholders.
SPECIFIC RISKS RELATING TO PFI’S
CREDITWORTHINESS
PFI considers that the circumstances which could
significantly affect, either individually or in combination, the
PFI Group’s future financial position and financial
performance, and therefore significantly increase the risk that
PFI may default on its obligations under the Bonds are as set
out below. These circumstances, either individually or in
combination, may affect the PFI Group’s ability to pay interest
on, or repay, the Bonds.
Specialisation and concentration risk
The PFI Group is a specialist property investment group, with
its returns highly dependent on rental income generated from
its property assets. In addition its property investments are
concentrated by both sector and geography. As at 31 October
2017 its property investments were concentrated:
• by sector, in industrial property (86% of the property assets
by value); and
• by geography, in the Auckland region (82% of the property
assets by value).
This specialisation and concentration exposes the PFI Group
to the risk of changes in property market conditions (and most
particularly in its areas of sector or geographic concentration)
which have a negative impact on market rental returns from,
or the market value of, properties.
Changes in property market conditions may arise as a result of
the cyclical nature of property markets, changes in economic
and credit conditions, changes in regulation, and changes in
business conditions leading to tenant defaults. Changes of this
nature may be specific to either of its areas of sector or
geographic concentration, or more general. Significant
changes to property market conditions specific to Auckland
(as an area of geographic concentration) could also arise from
a natural disaster event in Auckland (e.g. earthquake or
volcanic eruption) however remote that risk.
06
RISKS OF INVESTING
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
15
A reduction or interruption in rental income from PFI Group’s
property assets could materially negatively impact financial
performance (and as an individual property’s value is
significantly influenced by the net rental return from that
property, PFI Group’s net worth). A reduction in the market
value of the PFI Group’s property assets (whether resulting
from reduced rental returns or other market factors) could
negatively impact PFI Group’s net worth. In the context of a
natural disaster, the PFI Group maintains insurance cover for
material damage to its properties and for business interruption,
which would mitigate some of the impact of any such event.
If such changes are sustained and significant, they could also
put the PFI Group at risk of breaching its borrowing
covenants, which could limit the availability of funding to the
PFI Group or cause a default under those arrangements.
Refinancing risk
The PFI Group has a high degree of dependency on
external funding sources. This exposes the PFI Group to
the risk that funding may not be available (or available on
commercially acceptable terms) to refinance existing debt
as and when required.
The availability of sufficient external funding depends
on a number of factors which may be out of the PFI Group’s
control, including international economic conditions,
regulations that affect the availability and cost of funding for
property investment companies, and lenders’ perception of the
PFI Group’s creditworthiness. The PFI Group is seeking to
further manage this risk by diversifying its sources of funding
(including through the Offer), however such diversification
cannot eliminate this risk.
If the PFI Group is unable to refinance existing debt as and
when required, it may be forced to sell properties to repay
that debt, and its financial condition may be significantly
negatively affected.
07
TA X
If you are tax resident in New Zealand or otherwise receive
payments of interest on the Bonds that are subject to the
resident withholding tax rules, resident withholding tax will be
deducted from payments of interest to you, unless you produce
to the Securities Registrar a valid certificate of exemption on
or before the record date for the relevant payment date.
If you receive payments of interest on the Bonds subject to the
non-resident withholding tax rules, an amount equal to any
approved issuer levy payable (AIL) will be deducted from
payments of interest to you in lieu of deducting non-resident
withholding tax (except where you elect otherwise and PFI
agrees, or it is not possible under any law, in which case
non-resident withholding tax will be deducted).
If the AIL regime applies, PFI will apply the zero rate of AIL if
possible, and otherwise pay AIL at the applicable rate.
If the AIL regime changes, PFI reserves the right not to pay
AIL. See the Trust Deed for further details.
INDEMNITY
If, in respect of any of your Bonds, PFI becomes liable to make
any payment of, or on account of, tax payable by you, then you
will be required to indemnify PFI in respect of such liability.
Any amounts paid by PFI in relation to any such liability may
be recovered from you by withholding the amount from further
payments to you in respect of Bonds. See the Trust Deed for
further details.
GENERALLY
There may be other tax consequences from acquiring or
disposing of the Bonds. If you have any queries relating to the
tax consequences of the investment, you should obtain
professional advice on those consequences.
The above generalised summary is based on the taxation laws
in force in New Zealand as at the date of this PDS. Future
changes to these or other laws may affect the tax consequences
of an investment in the Bonds.
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
16
NameRole
Issuer
Property for Industry LimitedIssuer of the Bonds.
Supervisor
Public TrustHolds certain covenants on trust for the
benefit of the Bondholders, including the
right to enforce PFI’s obligations under the
Bonds.
Organising Participant
Forsyth Barr LimitedIs responsible to the NZX in relation to the
quotation of the Bonds.
Arranger
Forsyth Barr LimitedProvides advice and assistance to PFI in
arranging the Offer, and assists with
quotation of the Bonds.
Joint Lead Managers
Forsyth Barr Limited, Bank of New
Zealand and Deutsche Craigs Limited
Assist with the bookbuild for the Offer, and
marketing and distribution of the Offer.
Securities Registrar
Computershare Investor
Services Limited
Maintains the register of Bondholders.
Security Trustee
New Zealand Permanent
Trustees Limited
Holds the Mortgages for all creditors
entitled to their benefit (including the
Supervisor and the Bondholders).
Solicitors to Issuer
Chapman TrippProvides legal advice to the PFI Group in
respect of the Offer.
Solicitors to Supervisor
Lowndes Ltd Provides legal advice to the Supervisor in
respect of the Offer.
ROLE OF THE ARRANGER AND JOINT LEAD MANAGERS
This PDS does not constitute a recommendation by the Arranger, any Joint Lead Manager, or any of their respective directors,
officers, employees, agents or advisers to purchase, any Bonds.
The role of the Arranger in relation to the Offer is solely to provide professional assistance to PFI with arranging the Offer and
assisting with quotation of the Bonds. The Joint Lead Managers will assist with the bookbuild for the Offer and with the
marketing and distribution of the Offer. Except as described above, the Arranger and Joint Lead Managers are not otherwise
involved in the Offer.
None of the Arranger, the Joint Lead Managers and their respective directors, employees, agents and advisers have
independently verified the content of this PDS.
You must make your own independent investigation and assessment of the financial condition and affairs of PFI before
deciding whether or not to invest in the Bonds
08
WHO IS INVOLVED?
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
17
Complaints about the Bonds can be directed to:
Property for Industry Limited at
Shed 24, Prince’s Wharf
147 Quay Street
Auckland 1010
PO Box 1147
Shortland Street
Auckland 1140
Telephone: +64 9 303 9450
Facsimile: +64 9 303 9657
Email: info@pfi.co.nz
The Supervisor at
Senior Manager Client Services
Corporate Trustee Services
Public Trust
Level 9
34 Shortland Street
Auckland 1010
Telephone: + 64 9 985 5300
Facsimile: + 64 9 302 3696
Email: cts.enquiry@publictrust.co.nz
The Supervisor is a member of an external, independent
dispute resolution scheme operated by Financial Services
Complaints Limited (FSCL) and approved by the Ministry
of Consumer Affairs. If the Supervisor has not been able to
resolve your issue, you can refer the matter to FSCL by
emailing
info@fscl.org.nz, or calling FSCL on 0800 347 257, or
by contacting the Complaint Investigation Officer, Financial
Services Complaints Limited, Level 12, 45 Johnston Street,
Wellington 6145.
The scheme will not charge a fee to any complainant to
investigate or resolve a complaint.
Complaints may also be made to the Financial Markets
Authority through their website
www.fma.govt.nz
09
HOW TO COMPLAIN
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
18
There is no public pool for the Bonds. This means you can only
apply for Bonds through a Primary Market Participant or
approved financial intermediary who has obtained an
allocation. You must return a completed Application Form
(with payment) to the office of the Primary Market Participant
or financial intermediary in time to enable it to be forwarded
to the Securities Registrar before 5.00pm on the Closing Date.
An application cannot be withdrawn or revoked by the
applicant once it has been submitted.
Additional instructions on how to apply for Bonds are set out
with the Application Form contained at the back of this PDS.
Issuer
Property for Industry Limited
Shed 24, Prince’s Wharf
147 Quay Street
Auckland 1010
PO Box 1147
Shortland Street
Auckland 1140
Telephone: +64 9 303 9450
Facsimile: +64 9 303 9657
Email: info@pfi.co.nz
Securities Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna
Auckland 0622
Private Bag 92119
Auckland 1142
Telephone: +64 9 488 8777
12
CONTACT INFORMATION
11
HOW TO APPLY
Further information relating to PFI and the Bonds is available
on the online offer register maintained by the Companies
Office known as ‘Disclose’. The offer register can be accessed at
www.companiesoffice.govt.nz/disclose.
A copy of the information on that register is also available
on request to the Registrar of Financial Service Providers at
registrar@fspr.govt.nz. The information contained on that
register includes a copy of the Trust Deed and Supplemental
Deed (including the conditions of the Bonds), a copy of the
Security Trust Deed, a copy of the Guarantee and any other
material information.
PFI is subject to a disclosure obligation in relation to its shares
that requires it to notify certain material information to the
NZX for the purpose of that information being made available
to participants in the market. PFI’s page on the NZX website,
which includes information made available under the
disclosure obligations referred to above, can be found at
www.nzx.com/companies/PFI.
10
WHERE YOU CAN FIND MORE INFORMATION
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
19
$
New Zealand dollars.
Acquisition
The nine properties acquired by the PFI Group on 31 October 2017.
Application Form
The application form contained in this PDS relating to the Offer.
Bank Facility
Agreement
The committed cash advance facilities agreement dated 1 May 2015 (as subsequently amended
and restated) made between (among others) PFI Property (as borrower), PFI (as parent) and
ANZ Bank New Zealand Limited as facility agent.
Bondholder or you
A person whose name is entered in the Register as a holder of a Bond.
Bonds
The bonds constituted and issued pursuant to the Trust Deed and offered pursuant to this PDS.
Business Day
A day (other than a Saturday or Sunday) on which registered banks are generally open for
business in Auckland and Wellington, except that in the context of the Listing Rules it means a
day on which the NZX Debt Market is open for trading.
Closing Date
24 November 2017 at 5.00pm.
Disclose Register
Means the online offer register maintained by the Companies Office known as ‘Disclose’.
Equity Raising
The renounceable rights issue of approximately $70 million that is being completed by PFI, with
allotment expected to occur on 7 November 2017.
Event of Default
Each event set out in condition 18.1 of the Bonds (as set out in Schedule 1 of the Trust Deed),
which are summarised in section 5 of this PDS (Key features of the Bonds).
Extraordinary
Resolution
Means a resolution passed with the support of Bondholders holding not less than 75% of the
aggregate Principal Amount of Bonds held by those persons voting.
First Interest
Payment Date
28 February 2018.
FMCA
Financial Markets Conduct Act 2013.
Guarantee
The Cross Guarantee and Indemnity dated 1 May 2015 from PFI and PFI Property (as
Guarantors). A cross guarantee is a document under which each guarantor guarantees each
other guarantor’s liabilities.
Guarantors
Each person who is a party to the Guarantee as a guarantor. As at the date of this PDS, PFI and
PFI Property are the only Guarantors.
Inland Revenue
The New Zealand Inland Revenue Department.
Interest Payment
Dates
28 February, 28 May, 28 August and 28 November, in each year (or if that day is not a Business
Day, the next Business Day) until and including the Maturity Date, with the First Interest
Payment Date being 28 February 2018.
Interest Rate
The rate of interest per annum payable on the Principal Amount of the Bonds as announced by
PFI through NZX on or about 10 November 2017.
Issue Date
28 November 2017.
Joint Lead Managers
Forsyth Barr Limited, Bank of New Zealand and Deutsche Craigs Limited.
Listing Rules
The listing rules applying to the NZX Debt Market, as amended from time to time.
Loan to Value Ratio
The undertaking in condition 14.2 of the Bonds (as set out in Schedule 1 of the Trust Deed) under
which PFI agrees to ensure that the total principal amount of all outstanding borrowed money
secured by the Mortgages is not more than 50% of the total value of all Mortgaged Properties.
Major Bond Default
Event
Means the following Events of Default:
• A failure by PFI to make a payment on the Bonds.
• Indebtedness of more than $10 million in respect of other borrowed money of PFI or a
Guarantor is not paid when due (or within any applicable grace period), or is called up as a
result of a default.
• A breach of the Loan to Value Ratio which is not remedied within (approximately) 13 months
of that breach being disclosed to the Supervisor in a director’s report.
GLOSSARY
PROPERTY FOR INDUSTRY LIMITED
PRODUCT DISCLOSURE STATEMENT
20
Maturity Date
28 November 2024.
Mortgages
First ranking mortgages given by PFI Property to the Security Trustee.
Mortgaged Properties
The Properties subject to the Mortgages.
NZX
NZX Limited.
NZX Debt Market
The debt security market operated by NZX.
NZX Main Board
The main registered market for trading equity securities operated by NZX.
Offer
The offer of Bonds made by PFI under this PDS.
Opening Date
13 November 2017.
Organising
Participant
Forsyth Barr Limited.
PDS
This product disclosure statement for the Offer dated 2 November 2017.
PFI Property
P.F.I. Property No. 1 Limited (a company owned by PFI and a member of the PFI Group).
PFI or Issuer
Property for Industry Limited.
PFI Group
PFI and the companies it owns.
Primary Market
Participant
Has the meaning given to that term in the NZX Participant Rules as amended from time to time.
Principal Amount
$1.00 per Bond.
Property
Freehold or leasehold real property.
Rate Set Date
10 November 2017.
Register
The register in respect of the Bonds maintained by the Securities Registrar.
Security Trust Deed
The security trust deed dated 1 May 2015 made between (among others) PFI Property (as a
borrower and Guarantor), PFI (as a Guarantor), and ANZ Bank New Zealand Limited (as
original Security Trustee).
Security Trustee
New Zealand Permanent Trustees Limited or such other person as may hold office as security
trustee under the Security Trust Deed from time to time.
Securities Registrar
Computershare Investor Services Limited.
Supervisor
Public Trust or such other supervisor as may hold office as supervisor under the Trust Deed
from time to time.
Supplemental Deed
The Supplemental Deed dated 2 November 2017 between PFI and the Supervisor setting the
terms and conditions of the Bonds (as amended or supplemented from time to time).
Trust Deed
The Master Trust Deed dated 2 November 2017 between PFI, and the Supervisor pursuant to
which certain bonds may be issued (as amended or supplemented from time to time), and where
the context requires includes the Supplemental Deed.
APPLICATION FORM
This application form is issued with the product disclosure statement dated 2 November 2017 (PDS) for
an offer of senior secured fixed rate 7 year bonds (Bonds) by Property for Industry Limited (PFI). You
should read the PDS carefully before completing this application form. A copy of the PDS and other useful
information about this offer may also be obtained from www.companiesoffice.govt.nz/disclose.
Terms defined in the PDS have the same meaning in this application form.
Your application form must be received by your Primary Market Participant or financial intermediary in time
to be forwarded to Computershare Investor Services Limited (Securities Registrar) before 5.00pm on
24 November 2017. Please complete this application form using BLOCK LETTERS.
A. APPLICANT DETAILS
Applications must be made in the name(s) of natural persons, companies or other legal entities, up to a maximum of three names per application.
First Name(s):Last Name:
First Name(s):Last Name:
First Name(s):Last Name:
Company or Designated Account Name (if applicable):
Postal Address and Postal Code:
Phone Number:Mobile:Home:
B. APPLICATION AMOUNT AND PAYMENT
Applications must be accompanied by payment in full, in New Zealand currency based on $1.00 per Bond. Applications must be for a
minimum of $5,000 and, thereafter, in multiples of $1,000. PFI may accept or reject all or part of this application without giving reason.
Principal Amount of Bonds applied for:$
You may choose only ONE of the options below for payment of your application moneys.
Please tick the box (
) next to your selected option.
OPTION 1: Direct Debit Please direct debit my/our bank account stated below for the amount of Bonds applied for above
(or any lesser amount as determined by PFI). By ticking this box and signing this application form, I/we agree that PFI or the
Securities Registrar is authorised to direct debit my/our account for the full amount of Bonds applied for (or any lesser amount
as determined by PFI). Future interest payments will be direct credited to this account unless a different account is
specified in section C below.
NEW ZEALAND DOLLAR BANK ACCOUNT DETAILS FOR DIRECT DEBIT:
Name of Bank:Name of Account:
–––
BankBranchAccount NoSuffix
OPTION 2: Cheque Please find attached my/our cheque payable to “PFI Bond Offer” and crossed “Not Transferable”. I/we have
supplied my/our bank account details under section C below for the purpose of direct crediting any future interest paid by PFI.
OPTION 3: NZClear System Payment by DVP (Delivery versus Payment) may be made by NZClear members as arranged with the
Registrar (authorised institutional investors only). I/we have supplied my/our account details under section 4 below for the purpose
of direct crediting any future interest paid by Property for Industry Limited.
NZClear Mnemonic:
C. COMMON SHAREHOLDER NUMBER (CSN)
Please note that the application must be in the same name as the CSN below, otherwise the application will be deemed to be made
without a CSN and a new CSN will be allocated.
If you currently have a CSN, please enter it here:
Broker Stamp
Advisor Code
Property
For
Industry
Limited
D. INTEREST AND REDEMPTION PAYMENTS
NEW ZEALAND DOLLAR BANK ACCOUNT DETAILS FOR FUTURE PAYMENTS:
Name of Bank:Name of Account:
–––
BankBranchAccount NoSuffix
OR for the purpose of interest payments only, direct credit to my cash management account:
Name of NZX Participant where cash management account held
Cash management account client account number
If you wish to have your future interest payments direct credited to a different bank account you need to advise the Securities Registrar in writing.
E. ELECTRONIC CORRESPONDENCE AND REPORTING
To enable PFI to provide you with your investor correspondence in relation to your holding of Bonds electronically (where possible), please
complete your email address below. If you do not provide an email address, investor correspondence will be mailed to you at the postal
address provided on this application form.
Email Address:
F. IRD NUMBER, WITHHOLDING TAXES AND TAX RESIDENCY
Provide your IRD number (only one IRD number is required in respect of a joint application):––
Please select a resident withholding tax (RWT) rate by ticking the box (
) next to your selected option (or confirm that you are non-
resident and indicate your country of tax residence below).
Please note that a New Zealand company (other than a company which is acting as a trustee or a company which is a Maori authority)
does not need to tick any box unless it holds an RWT exemption certificate. Tax will automatically be deducted at 28%.
10.5%17.5%30%33%
Exempt (If you are exempt from RWT, attach a copy of your RWT exemption
certificate for noting).
Please tick the relevant box (
) if any of the below apply to you or your application.
I am a non-resident for New Zealand tax purposes.
I am a non-resident for New Zealand tax purposes and I am engaged in business in New Zealand through a fixed establishment in
New Zealand and either (1) will hold the Bonds for the purpose of that business or (2) am a registered bank in New Zealand. (Please
note that you should provide your IRD number and rate of RWT above.)
My country of tax residence is:
G. YOUR APPLICATION FORM MUST BE RETURNED IN SUFFICIENT TIME BEFORE THE OFFER CLOSES.
Your completed application form must be returned to the office of your Primary Market Participant or financial intermediary in time to be
forwarded to the Securities Registrar before 5.00pm on 24 November 2017.
Deliver to (broker use):
PFI Bond Offer Physical Address: Level 2, 159 Hurstmere Road
Computershare Investor Services Limited Takapuna
Private Bag 92119 Auckland 0622
Auckland 1142
Investor phone number: (09) 488 8777
H. AGREEMENT OF TERMS
I/We hereby confirm that I/we have received and read the PDS for the Bonds, and apply for the Principal Amount of Bonds set out above and
agree to accept such Bonds (or such lesser number as may be allotted to me/us) on, and subject to, the terms and conditions set out in the PDS.
Please read the terms and conditions below before signing as it sets out specific terms and conditions which are accepted by an applicant
upon signature of this application form.
All applicants on the application form must sign.
Date:
Applications lodged by individuals must be signed personally or by their attorney or agent. If this application form is signed by an attorney,
the attorney must complete the certificate of non-revocation of power of attorney set out in the application form. If this application form is
signed by an agent, the agent must complete the certificate of agency set out in the application form.
I. TERMS AND CONDITIONS
By signing this application form, I/we:
(a) apply for the Principal Amount of Bonds on, and subject to, the terms and conditions set out in the PDS, the Trust Deed, the
Supplemental Deed, the information in connection with the Offer lodged on the Disclose Register and this application form and
I/we agree to be bound by the provisions thereof;
(b) declare that all details and statements made by me/us in this application form are complete and accurate;
(c) certify that, where information is provided by me/us in this application form about another person, I/we are authorised by such
person to disclose the information to you and to give authorisation;
(d) acknowledge that this application form was distributed with the PDS;
(e) acknowledge that an application cannot be withdrawn or revoked by the applicant once it has been submitted;
(f) acknowledge that PFI reserves the right to decline any application, in whole or in part, without giving any reason and may decide
not to accept any applications whatsoever; and
(g) acknowledge that the offer is only made in New Zealand, and by applying for the Bonds, I/we agree to indemnify, among others,
PFI and the Supervisor for any loss suffered as a result of any breach by you of the selling restrictions applicable to the Offer.
The information in the application form is provided to enable PFI and the Securities Registrar to consider and process your application, and
to administer your investment, and to help and enable PFI or the Securities Registrar to comply with (or determine what it needs to do to
comply with) any applicable laws, rules or regulations in New Zealand or any other country or the requirements of any governmental,
judicial or regulatory entity or authority in any jurisdiction. By signing this application form you authorise PFI and the Securities Registrar
to disclose information in situations where PFI or the Securities Registrar consider it is required or permitted to do so by any applicable
laws, rules or regulations or by any governmental, judicial or regulatory entity or authority in New Zealand or any other jurisdiction. If you
are an individual under the Privacy Act 1993, you have the right to access and correct any of our personal information.
J. CERTIFICATE OF NON-REVOCATION OF POWER OF ATTORNEY/AGENCY
(Complete this section if you are acting on behalf of the applicant on this application form for whom you have power of attorney or
are acting as agent).
I,
( full name)
of ( place and country of residence),
(occupation),
CERTIF Y:
• THAT by deed/agreement dated ( date of instrument creating the power of attorney/agency),
( name of person/body corporate which granted the power of attorney/agency)
of
(place and country of residence of person/body corporate which granted the power of attorney/agency*)
appointed me his/her/its attorney/agent;
• THAT I have executed the application for the Bonds printed on this application form under that appointment and pursuant to the
powers thereby conferred on me; and
• THAT I have not received notice of any event revoking the power of attorney/agency.
Signed at this day of (month/year)
Signature of attorney/agent
* If donor is a body corporate, state place of registered office or principal place of business of donor and, if that is not in New Zealand,
state the country in which the principal place of business is situated.
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insight
creative.co.nz
PFI090
www.propertyforindustry.co.nz
---
Property
For
Industry
Limited
JOINT LEAD
MANAGERS:
UP TO $75,000,000 SENIOR SECURED FIXED RATE 7 YEAR
BONDS (PLUS UP TO $25,000,000 OVERSUBSCRIPTIONS)
DATED: 2 NOVEMBER 2017
IND I CAT I V E
TERMS
SHEET.
PROPERTY FOR INDUSTRY LIMITED
INDICATIVE TERMS SHEET
02
INDICATIVE TERMS SHEET.
for an offer of up to $75,000,000 senior secured fixed rate 7 year bonds
(plus up to $25,000,000 oversubscriptions)
This terms sheet should be read together with the Product Disclosure Statement (PDS) dated 2 November 2017 for the offer of
senior secured fixed rate 7 year bonds by Property for Industry Limited, which is available at www.pfibondoffer.co.nz and can also
be obtained from the Joint Lead Managers or your usual financial adviser. Investors must obtain a copy of the PDS before they
apply for Bonds.
Issuer
Property for Industry Limited (PFI)
Description
Senior secured fixed rate bonds (Bonds)
Guarantee and
security
P.F.I. Property No. 1 (PFI Property) has guaranteed the payments due on the Bonds.
The Bonds are secured by first ranking mortgages (the Mortgages) granted by PFI Property
as Guarantor over various properties (the Mortgaged Properties).
The Security Trustee holds the Mortgages for all creditors entitled to their benefit, which
currently includes (in addition to the Supervisor and the Bondholders) the PFI Group’s banks
and their facility agent, on an equal ranking basis.
Financial covenant
PFI agrees to ensure that the total principal amount of all outstanding borrowed money
secured by the Mortgages is not more than 50% of the total value of all Mortgaged Properties
(the Loan to Value Ratio).
A breach of the Loan to Value Ratio which is not remedied within (approximately) 13 months of
that breach being disclosed to the Supervisor in a director’s report will be an Event of Default.
Refer to the PDS and the Trust Documents for more detail on covenants.
Purpose
The proceeds of the offer are expected to be used to repay existing bank debt.
No credit rating
The Bonds will not be rated.
Offer amount
Up to $75 million (with the ability to accept oversubscriptions of up to an additional $25 million
at PFI’s discretion).
No public pool
All Bonds (including any oversubscriptions) have been reserved for subscription by clients
of the Joint Lead Managers, Primary Market Participants and other persons invited to
participate in the bookbuild.
Issue price
$1.00 per Bond, being the Principal Amount of each Bond.
Interest Rate
To be determined by PFI in conjunction with the Joint Lead Managers following a bookbuild,
and announced via NZX on or about the Rate Set Date.
The Interest Rate will be equal to the sum of the Swap Rate and the Issue Margin, subject to a
minimum Interest Rate of 4.55% per annum.
Indicative Issue
Margin
The indicative Issue Margin is 1.65% to 1.80% per annum. The final Issue Margin (which may be
above or below the indicative Issue Margin, subject to the minimum Interest Rate mentioned
above) will be set by PFI in conjunction with the Joint Lead Managers following completion of
the bookbuild process and announced via NZX on or about the Rate Set Date.
Swap Rate
The mid-market swap rate for an interest rate swap from the Issue Date to the Maturity Date
(adjusted to a quarterly basis as necessary) as calculated by PFI in conjunction with the Joint
Lead Managers on the Rate Set Date.
Interest Payment
Dates
Quarterly in arrear in equal amounts on 28 February, 28 May, 28 August and 28 November each
year (or if that day is not a Business Day, the next Business Day) until and including the Maturity
Date, with the first Interest Payment Date being 28 February 2018.
PROPERTY FOR INDUSTRY LIMITED
INDICATIVE TERMS SHEET
03
Early bird interest
PFI will pay interest calculated on a daily basis at the Interest Rate on application money, in
respect of accepted applications, from (and including) the date that application money is
received into the bank account for the offer to ( but excluding) the Issue Date. Early bird interest
will be paid (less any withholding tax required to be deducted) as soon as practicable and, in any
event, within 5 Business Days of the Issue Date.
Record Date
5.00pm on the date that is 10 days before the relevant Interest Payment Date or, if that is not a
Business Day, the immediately preceding Business Day.
Distribution stopper
PFI is not permitted to make any distribution if an Event of Default is continuing or if it would result
in an Event of Default. Full details of the Events of Default are set out in the Trust Documents.
Brokerage
0.50% brokerage plus 0.50% on firm allocations paid by PFI.
ISIN
NZPFIDT010C2
Quotation
Application has been made to NZX for permission to quote the Bonds on the NZX Debt Market
and all the requirements of NZX relating to that quotation that can be complied with on or before
the date of distribution of the PDS have been duly complied with. However, the Bonds have not
yet been approved for trading and NZX accepts no responsibility for any statement in the PDS.
NZX is a licensed market operator, and the NZX Debt Market is a licensed market, under the
Financial Markets Conduct Act 2013.
NZX ticker code PFI010 has been reserved for the Bonds.
Minimum application
amount and
denominations
$5,000 and multiples of $1,000 thereafter.
Governing law
New Zealand.
Business Days
Auckland and Wellington.
Arranger and
Organising Participant
Forsyth Barr Limited
Joint Lead Managers
Bank of New Zealand, Deutsche Craigs Limited and Forsyth Barr Limited
Supervisor
Public Trust
Security Trustee
New Zealand Permanent Trustees Limited
Securities Registrar
Computershare Investor Services Limited
Selling restrictions
PFI does not intend that the Bonds be offered for sale, and no action has been taken or will be
taken to permit a public offering of Bonds, in any jurisdiction other than New Zealand. Bonds
may only be offered for sale or sold in conformity with all applicable laws and regulations in any
jurisdiction in which they are offered, sold or delivered. This terms sheet may not be published,
delivered or distributed in or from any country other than New Zealand.
By subscribing for or otherwise acquiring any Bonds, each Bondholder agrees to indemnify,
among others, PFI, the Supervisor and the Joint Lead Managers for any loss suffered as a result
of any breach by the Bondholder of these selling restrictions.
Documentation
The terms of the Bonds, and other terms key to the offer of the Bonds, are set out in:
• The Product Disclosure Statement dated 2 November 2017 for the offer of the Bonds;
• The Master Trust Deed, as supplemented by the Supplemental Deed, each dated 2 November
2017 between PFI and the Supervisor (Trust Documents);
• The Cross Guarantee and Indemnity dated 1 May 2015 from PFI and PFI Property
(as Guarantors); and
• The Security Trust Deed dated 1 May 2015 (as amended) made between (among others)
PFI Property and PFI.
You should read these documents. Copies may be obtained from the Disclose Register at
www.companiesoffice.govt.nz/disclose. Bondholders are bound by, and are deemed to have notice
of, the Trust Documents.
The dates set out in this terms sheet are indicative only and are subject to change. PFI may, in its absolute discretion and without
notice, vary the timetable (including by opening or closing the offer described in this terms sheet early, accepting late applications
and extending the Closing Date). PFI reserves the right to cancel the offer described in this terms sheet and the issue of the Bonds,
in which case all application monies received will be refunded (without interest) as soon as practicable.
Capitalised terms used but not defined in this Terms Sheet have the meanings given to them in the PDS.
10.00AM
F R IDAY
10 NOVEMBER
2017
T U E S DAY
28 NOVEMBER
2017
F R IDAY
10 NOVEMBER
2017
WEDNESDAY
29 NOVEMBER
2017
M O N DAY
13 NOVEMBER
2017
THURSDAY
28 NOVEMBER
2024
F R IDAY
24 NOVEMBER
2017
BOOKBUILD DATE
ISSUE DATE
RATE SET DATE
EXPECTED QUOTATION
OPENING DATE
MATURITY DATE
CLOSING DATE
IMPORTANT DATES.
PROPERTY FOR INDUSTRY LIMITED
INDICATIVE TERMS SHEET
04
---
DISCLAIMER
2
This presentation has been prepared by Property For Industry Limited (PFI or the Issuer) in
relation to the offer of bonds described in this presentation (Bonds). The offer of the Bonds is
made in the product disclosure statement dated 2 November 2017 (PDS),which has been
lodged in accordance with the Financial Markets Conduct Act 2013 (FMCA).
The PDS is available through www.companiesoffice.govt.nz/disclose or by contacting
a Joint Lead Manager or any other Primary Market Participant, and must be given to
investors before they decide to acquire any Bonds. No applications will be accepted or
money received unless the applicant has been given the PDS.
Capitalised terms used but not defined in this presentation have the meanings given to them
in the PDS.
The information in this presentation is of a general nature and does not constitute financial
product advice, investment advice or any recommendation by the Issuer, the Supervisor, the
Arranger, the Organising Participant, the Joint Lead Managers or any of their respective
directors, officers, employees, affiliates, agents or advisers to subscribe for, or purchase, any
of the Bonds. Nothing in this presentation constitutes legal, financial, tax or other advice.
The information in this presentation does not take into account the particular investment
objectives, financial situation, taxation position or needs of any person. You should make your
own assessment of an investment in the Issuer based on the PDS and should not rely on this
presentation. In all cases, you should conduct your own research on the Issuer and analysis
of any offer, the financial condition, assets and liabilities, financial position and performance,
profits and losses, prospects and business affairs of the Issuer, and the contents of this
presentation.
PROPERTYFORINDUSTRY DISCLAIMER
This presentation contains certain forward-looking statements with respect to the Issuer. All
of these forward-looking statements are based on estimates, projections and assumptions
made by the Issuer about circumstances and events that have not yet occurred. Although
the Issuer believes these estimates, projections and assumptions to be reasonable, they
are inherently uncertain. Therefore, reliance should not be placed upon these estimates or
forward-looking statements and they should not be regarded as a representation or
warranty by the Issuer, the directors of the Issuer or any other person that those forward-
looking statements will be achieved or that the assumptions underlying the forwarding-
looking statements will in fact be correct. It is likely that actual results will vary from those
contemplated by these forward-looking statements and such variations may be material.
The information in this document is given in good faith and has been obtained from sources
believed to be reliable and accurate at the date of preparation, but its accuracy, correctness
and completeness cannot be guaranteed.
None of the Joint Lead Managers or Supervisor nor any of their respective directors,
officers, employees, affiliates or agents have independently verified the information
contained in this presentation.
The offer of Bonds is being made only in New Zealand. The Bonds may not be offered or
sold directly or indirectly, and neither this presentation nor any other offering material may
be distributed or published, in any jurisdiction other than New Zealand.
Application has been made to NZX for permission to quote the Bonds on the NZX Debt
Market and all the requirements of NZX relating thereto that can be complied with on or
before the distribution of this presentation have been duly complied with. However, NZX
accepts no responsibility for any statement in this document. NZX is a licensed market
operator, and the NZX Debt Market is a licensed market under the FMCA.
Unless otherwise stated, all figures are given as at and for the period ended 30 June 2017.
▪PFI is offering up to $75m (plus up to $25m in oversubscriptions) of senior secured fixed rate 7 year
bonds (the “Bonds”) (the “Offer”)
▪The proceeds of the Offer are expected to be used to repay existing bank debt of the PFI Group and
result in PFI having a more diversified funding base with a longer debt maturity profile
▪The Bonds will be secured by the Mortgages granted by P.F.I. Property No. 1 Limited (“PFI Property”, a
subsidiary of PFI) as Guarantor over the Mortgaged Properties which will have a total value of
approximately $1.14bn
1
▪The interest rate on the Bonds is expected to be set on 10 November 2017, and will not be less than
4.55%, with an indicative margin range of 1.65%-1.80%
▪The Bonds are expected to be quoted on the NZX Debt Market on 29 November 2017
OVERVIEW OF THE OFFER
5
PROPERTYFORINDUSTRY OVERVIEW
Fletcher Building Products, 30-32 Bowden Road
1.The total value of the Mortgaged Properties was approximately $1,062.7m as at 30 June 2017. The total value of the Mortgaged Properties is expected to increase to $1,135.4m on registration
of the Mortgages over the nine properties recently acquired by PFI (the “Acquisition”). Registration is expected to occur beforethe Issue Date
INTRODUCTION & CREDIT STRENGTHS
6
PROPERTYFORINDUSTRY OVERVIEW
Fisher & Paykel Appliances, 78 Springs Road, East Tamaki
686 Rosebank Road, Avondale
78 Springs Road, East Tamaki
Note: all statistics pro forma as at 30 June 2017, adjusted for the Acquisition and the corresponding $70m renounceable rights issue expected to complete on 7 November 2017 (the “Equity
Raising”)
▪Established in 1993, PFI is the only NZX listed property vehicle focused on industrial property
▪$1.17bn portfolio withan 82% weighting to Auckland, New Zealand’s gateway and commercial hub
▪Experienced internalised management team supported by a strong governance framework
▪Proven track record with a history of stable earnings and 99.6% occupancy
▪Sound risk management and portfolio metrics with company gearing of 32.3% and a 5.4 year WALT
▪Liquid assets with an average size of $13m
Founded
Listed
Managed by AMP
Managed by
PFIM
Merger
Rights Issue
Internalisation
-
200
400
600
800
1,000
1,200
Investment Properties $m
Rights Issue
7
MANAGEMENT & GOVERNANCE
▪The management of PFI was internalised in June 2017
▪The management team is widely regarded and has extensive experience in the ownership,
management and development of industrial property
▪The board comprises five directors: four independent, including the Chair, and one Managing Director
PROPERTYFORINDUSTRY OVERVIEW
PFI’s growth in Investment Properties since listing
STRATEGY
8
▪PFI’s strategy has always been to invest in quality industrial property in prime locations, believing that this
investment focus has the potential to deliver attractive returns to shareholders with a low level of
volatility: our average annual return to shareholders since inception has been ~9.6%
1
▪The group aims to drive returns by:
•Active asset management: Managing vacancy
and upcoming lease expiries
•Acquisitions: Opportunistically pursuing both core
and value-add industrial acquisitions
•Development: Maximising utilisation of surplus
land
•Divestments: Divesting when value has been
maximised and an opportunity to recycle capital
into industrial property arises
232 Cavendish Drive, Manukau
PROPERTYFORINDUSTRY OVERVIEW
1.As at 30 June 2017
PORTFOLIO SNAPSHOT & CHARACTERISTICS
10
▪PFI’s portfolio is diversified across 92 properties and 148 tenants, with 99.6% occupancy and a WALT of
5.4 years, weighted towards Auckland industrial property
PROPERTY FOR INDUSTRY PORTFOLIO & MARKET
▪Industrial property is a unique asset class, assets are typically:
•Smaller (PFI average: ~7,700 sqm) and consequently more
liquid (PFI average: ~$13m)
•Genericand occupied by a single or small number of tenants
(PFI average: 1.6 tenants per property), making them less
management intensive
•Requiring lower levels of capex and present a reduced
seismic risk
Note: all statistics pro forma as at 30 June 2017, adjusted for the Acquisition
11
TENANTS & LEASES
▪PFI’s smooth lease expiry profile supports low volatility of rental income
▪Since 30 June 2017, a further 3.8% of 2017 expiries and 0.3% of vacancy has been leased, leaving just
1.4% through to 31 December 2017
▪PFI’s top 10 tenants (featuring leading local and international companies) lease 25 properties and pay
~35% of the company’s rent
PROPERTYFORINDUSTRY PORTFOLIO & MARKET
Note: all statistics pro forma as at 30 June 2017, adjusted for the Acquisition, unless otherwise stated
12
PROPERTYFORINDUSTRY PORTFOLIO & MARKET
HISTORICAL OPERATIONAL PERFORMANCE
▪Since 2007, PFI has achieved a year end average occupancy of 98.6% and WALT of
4.8 years
MARKET UPDATE
13
▪CBRE’s August 2017 report showed high levels of occupier demand for industrial property, with
Auckland industrial vacancy of just 1.6% or 196,900 sqm
▪Colliers International October 2017 “Commercial Property Investor Confidence Survey” showed a
high level of investor confidence in industrial property
▪ANZ’s “Truckometer” (see graph on right) illustrates a
strong correlation between Prime Industrial Yields and
the Heavy Traffic Index, and the Truckometer“direction
of travel” suggests yields could tighten further
▪A mix of strong economic growth, favourable occupier
supply and demand dynamics and high levels of
investor market confidence has seen industrial property
yields falling a further ~30 basis points (0.3%) in the
past year (CBRE, October 2017)
PROPERTYFORINDUSTRY PORTFOLIO & MARKET
1H17 RESULTS SUMMARY
15
▪Successful internalisation of the management of PFI while ensuring the continuity of the highly experienced
management team
▪Including the impact of the internalisation,PFI recorded a loss after tax for the six months to 30 June 2017 of $5.6 million
or 1.25 cents per share and net tangible assets of 155.6 cents per share
▪Excluding the impact of the internalisation, PFI recorded profit after tax for the six months to 30 June 2017 of $25.2
million or 5.58 cents per share (up 12.2% on the prior period)
▪Distributable profit for the six months to 30 June 2017 up 2.4% on the prior period to 3.86 cents per share
▪Increased guidance: distributable profit of between 7.70 and 7.90 cents per share, cash dividend of 7.45 cents per share
▪$6.0 million uplift from independent revaluation of seven properties, independent desktop review of remainder of the
portfolio
Notes: extracted from PFI’s interim results announcement, refer https://www.nzx.com/companies/PFI/announcements/305229for more detail. The internalisation of management is a significant one-
off event. In order to provide a basis for comparison, some measures have been presented excluding the impact of internalisation. Further, distributable profit is non-GAAP financial information used
by the PFI Board to assist in determining dividends to shareholders (calculated in note 4.1 of the 30 June 2017 financial statements).Please refer to the interim results announcement for more detail
as to how these measures were calculated.
PROPERTYFORINDUSTRY FINANCIAL RESULTS & CAPITAL MANAGEMENT
PFI TOTAL SHAREHOLDER RETURN
1
(“TSR”)
16
▪PFI’s average annual
return to shareholders
since inception has been
~9.6%
2
▪10 year TSR
outperformed NZX50 &
Property indices
PROPERTYFORINDUSTRY FINANCIAL RESULTS & CAPITAL MANAGEMENT
1.Cash dividends plus change in share price, assuming dividends are reinvested. Source: IRESS
2.As at 30 June 2017
PFI TSR relative to NZX 50 Gross Index and Property Gross Index (Rebased to 100)
17
FIVE YEAR FINANCIAL SUMMARY
($m, unless noted)
Dec-12Dec-13Dec-14Dec-15Dec-16
Operating revenue
29.4
48.163.866.971.1
Total operating earnings
17.2
26.936.936.643.1
Total comprehensive income after tax
26.9
40.559.972.8123.4
Total assets
384.6
877.0906.91,027.21,121.8
Total liabilities
134.5
341.8341.9369.2365.7
Totalequity
250.1
535.2565.0658.0756.1
Banking covenants:
Company gearing (threshold 50%)
29.9%
37.4%35.8%33.3%30.1%
Interest cover ratio
3.1x
3.2x3.0x2.9x3.4x
PROPERTYFORINDUSTRY FINANCIAL RESULTS & CAPITAL MANAGEMENT
▪The last five years has seen strong growth in rents and valueswhilst keeping gearing at low levels
and maintaining a high ratio of interest cover
CAPITAL MANAGEMENT
18
30 June 2017
Drawn debt
$375.6m
1
Facilities limit
2
$415.0m
Facilities headroom
$39.4m
1
Weighted average debt term to expiry (“WATE”)
3.1 years
Facilitiesbanks
ANZ, BNZ, CBA, Westpac
Company gearing
32.3%
1
Interest cover ratio
3.6 times
Weightedaverage cost of debt
4.78%
▪PFI enjoys strong banking relationships in the NZ
market but values diversification, tenor and
optionality
PROPERTYFORINDUSTRY FINANCIAL RESULTS & CAPITAL MANAGEMENT
▪Mortgaged Properties are mortgagedin favour of
a non-bank security trustee, who holds mortgages
for the benefit of all secured lenders
1.Pro forma as at 30 June 2017, adjusted for the Acquisition and Equity Raising
2.Excludes the $70m short-term institutional credit facility established for the Acquisition which is expected to be cancelled upon allotment of the Equity Raising
PFI’s swap cover and swap interest rate
187.5187.5
75.0
25.0
0
50
100
150
200
FY17FY18FY19FY20FY21FY22FY23FY24FY25
Bank facilitiesBonds
▪Proceeds of the Offer are expected to be used to repay existing bank debt of the PFI Group, resulting in PFI having a
more diversified funding base with a longer debt maturity profile
▪PFI currently has a WATE of debt facilities of 3.1 years. Post the completion of the Offer, the WATE is expected to
increase to 4.0 years
1
on a pro forma basis
DEBT FACILITY MATURITY PROFILE
19
PROPERTYFORINDUSTRY FINANCIAL RESULTS & CAPITAL MANAGEMENT
Pro forma debt facility maturity profile ($m)
1
1.Assumes $100m (including oversubscriptions of $25m) of Bonds are issued and the existing $40m institutional credit facility is cancelled. The calculation excludes the $70m short-term
institutional credit facility established for the Acquisition which is expected to be cancelled upon allotment of the Equity Raising
KEY TERMS OF THE OFFER
21
Full details of the offer are contained in the Product Disclosure Statement (PDS) which was lodged 2 November 2017
1.Refer to Section 5 of the PDS for more details
IssuerProperty for Industry Limited
Description of the BondsSenior secured fixed rate bonds
Guarantee and Security
Guaranteed by PFI Property No. 1 Limited (“PFI Property”), which holds all property assets of the PFI Group.
Secured by Mortgages granted by PFI Property as Guarantor over the Mortgaged Properties
Term7 years, maturing 28 November 2024
Offer amountUp to $75 million (with the ability to accept oversubscriptions of up to $25 million at PFI’s discretion)
Interest Rate
Set following the bookbuild on 10 November 2017 as the higher of the sum of the applicable swap rate and
issue margin, and the minimum rate, as determined by the Issuer and the JLMs, and announced via NZX shortly
thereafter
Minimum rate4.55%
Indicative issue margin1.65%-1.80%
Interest payments
Quarterly in arrear in equal payments on 28 February, 28 May, 28 August and 28 November each year until the
Maturity Date
Bond financial covenant
(LVR)
Outstanding borrowed money secured by Mortgages is not more than 50% of the value of Mortgaged
Properties
1
PurposeProceeds are expected to be used to repay existing bank debt of the PFI Group
Minimum application amount$5,000 and multiples of $1,000 thereafter
Brokerage0.50% brokerage plus 0.50% firm fee
QuotationIt is expected that the Bonds will be quoted on the NZX Debt Market under the ticker code PFI010
Credit ratingPFI and the Bonds are not rated
PROPERTYFORINDUSTRY BOND OFFER
SECURITY
22
▪The Bonds will be secured over the Mortgaged Properties, via the Guarantee granted by PFI Property
▪PFI estimates that (based on pro forma 30 June 2017 financial position
1
):
▪The amount secured by the Mortgages is approximately $388.5m
2
including borrowings of $375.6m
▪The Mortgaged Properties will have a total value of approximately $1,135.4m
3
Bond financial covenant (LVR)
1
Total borrowings$375.6m
Mortgaged Properties
3
$1,135.4m
Bond financial covenant (LVR)33.1%
1.Based on PFI’s pro forma financial position as at 30 June 2017 adjusted for the Acquisition and Equity Raising
2.Includes interest rate swap liabilities of $10.8m and accrued interest and bank fees of $2.1m
3.The total value of the Mortgaged Properties was approximately $1,062.7m as at 30 June 2017. The total value of the Mortgaged Properties is expected to increase to $1,135.4m on registration
of the Mortgages over the Acquisition properties. Registration is expected to occur before the Issue Date. It is PFI’s policytomortgage all properties except in exceptional circumstances. As at
30 June 2017 there were $31.1m of properties not mortgaged
4.The property portfolio for gearing calculations is calculated using the most recent independent valuation of the property portfolio, plus the value of the Acquisition at cost
PROPERTYFORINDUSTRY BOND OFFER
Company gearing
1
Total borrowings$375.6m
Property portfolio
4
$1,163.6m
Company gearing32.3%
COVENANT AND DEFAULT
23
▪The bond financial covenant (LVR) limits the ability of the PFI Group to borrow money secured by the Mortgages
▪Restricts total borrowings secured by Mortgages to no more than 50% of the total value of Mortgaged Properties
▪PFI will have approximately 13 months to remedy a breach of the bond financial covenant (LVR) before it will be an
Event of Default, reflecting:
▪6 months to correct breach
▪If breach not corrected, 20 business days to
give notice of breach, including plan to remedy
▪Further 6 months to remedy before event of
default occurs
▪Other events of default include:
▪Failure to make payments on the Bonds
▪Insolvency
▪Cross-acceleration
PROPERTYFORINDUSTRY BOND OFFER
124 HewlettsRoad, Tauranga
KEY DATES
24
EventDate
PDS lodgedThursday, 2 November 2017
Firm bids due10am, Friday, 10 November 2017
Rate Set DateFriday, 10 November 2017
Opening DateMonday, 13 November 2017
Closing DateFriday, 24 November 2017 at 5.00pm
Issue Date and allotment dateTuesday, 28 November 2017
Expected date of initial quotation and trading of the Bonds on the
NZX Debt Market
Wednesday, 29 November 2017
Interest Payment Dates28 February, 28 May, 28 August and 28 November
First Interest Payment Date28 February 2018
Maturity Date28 November 2024
PROPERTYFORINDUSTRY BOND OFFER
26
▪Key credit strengths include:
✓NZX listed property vehicle focused on industrial property
✓$1.17bn portfolio with82% weighting to Auckland
1
✓Experienced internalised management team supported by a strong governance framework
✓Proven track record with history of stable earnings and high occupancy
✓Sound risk management and portfolio metrics
✓Liquid assets
PROPERTYFORINDUSTRY SUMMARY
SUMMARY
1.As at all statistics pro forma as at 30 June 2017, adjusted for the Acquisition
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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