2017 Annual Report

Property
for
Industry
Limited
Annual
Report
31 December
2017
FREIGHT
F O R WA R D
NEW ZEALAND TRANSPORT
AND LOGISTICS.
BONDS AND RIGHTS ISSUES.
ANTHONY BEVERLEY.
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE.
THE
TRANSPORT
ISSUE
+

THE ONLY NZX
LISTED PROPERTY
VEHICLE FOCUSED
ON INDUSTRIAL
PROPERTY

PFI.CO.NZ
The PFI team are New Zealand’s industrial property experts.
Collectively our team has decades of property experience
and extensive experience in the ownership, management
and development of industrial property. Our expertise is key.
Because we specialise in industrial property, we know the
market, we are known in the market, and we understand
industrial tenants’ needs. As a result, our portfolio is fit
and healthy and able to perform at its peak. PFI’s portfolio
is significant, its tenant quality is high, its portfolio is almost
100% occupied and it has an enviable lease expiry profile.

1
CONTENTS /
SNAPSHOT
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2017 REVIEW
Standout events for
the year, including
internalisation of
management.
LOADING ZONE
Industry relies on the
transport, logistics and
distribution sector.
LOGICAL
PFI’s acquisition of
nine properties from the
Transport Investments
Limited Group (TIL).
LONG HAUL
TIL’s long and continuing
story of growth.
This was the
PFI management
working as a team.
AUTHORISED
VEHICLES
How PFI financed the TIL
portfolio acquisition.
SECTION
342
SECTIONSECTIONSECTION
5
SECTION
In 2017, transport conglomerate TIL identified PFI
as its logical industrial property partner. In this
Annual Report, therefore, we learn more about TIL,
the agreement we reached with them and we look
at the fundamental importance of the transport,
logistics and storage sector.
THIS IS PFI’S WORLD. THIS IS PFI AT WORK.
02
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

MEET THE PFI TEAM
Profiles of our team members
can be found on our website at
pfi.co.nz/people
687
SECTIONSECTIONSECTION
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p.14
GREG REIDY
Managing Director
HUMPHRY ROLLESTON
Independent Director
PETER MASFEN
Chairman and

Independent Director
ANTHONY BEVERLEY
Deputy Chairman and
Independent Director
SUSAN PETERSON
Independent Director
SIMON WOODHAMS
General Manager
CRAIG PEIRCE
CFO and Company Secretary
TRAFFIC CAM
Key Performance
Indicators.
MARKET DRIVEN
Anthony Beverley,
Board member since 2001,
became Deputy Chairman
in May 2017.
IMPACT RATING
PFI assesses its
environmental, social
and governance impacts.
DAVID THOMSON
New Independent Director
NEW DIRECTOR

0
200
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1,200
1,400
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Founded
($000m)
Listed
AMP
PFIM
Merger
2015 Rights Issue
2017 Rights Issue
(Year)
INVESTMENT PROPERTIES
REVIEW
Internalisation of
management and a major
acquisition are the standout
events of 2017 for PFI.
The immediate impact of
internalisation is a contribution
to a 7.3% reduction in costs for
the year. The ongoing benefit,
however, is the retention of the
PFI team’s experience, knowledge
and capability: the industrial
property expertise that powers
shareholder returns.

In October, PFI acquired a
nationwide portfolio of nine
properties, seven of which are
leased to Transport Investments
Limited Group (TIL). At $70
million, the acquisition was PFI’s
largest to date and it helped lift
the overall value of the PFI
portfolio to around $1.2 billion.
A $100 million retail bond offer
and a $70 million rights offer
were successfully concluded,
so that – at year-end – PFI’s
Loan to Value Ratio was 30.8%,
in line with the prior year and
well within policy and covenants.
With other acquisitions and
disposals – the acquisition in
February of 11 Turin Place, East
Tamaki, for $14.3 million and the
sale in June of 65 Hugo Johnston
Drive, Penrose, for $14.0 million
– there were 92 properties in
PFI’s portfolio at year-end
(2016: 83), with 148 tenants
(2016: 143). Total operating
revenue was $73.5 million
(2016: $71.1 million), up 3%
on the back of the acquisitions
and a broad-based year of
successful leasing.
Distributable profit (cents per
share) for 2017 was 8.08
(2016: 7.58), a 7% increase.
1,211
2017
For more information
on our annual results,
please visit
pfi.co.nz/investor-centre/
results-centre/
04
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

11 Turin Place, East
Tamaki, for $14.3 million
and nine properties in
locations from Auckland

to Christchurch for
$70 million.
Around 2 0 % of PFI’s
tenants are directly involved
in the transport, logistics and
distribution sector.
(SEE STORY P. 06)
A 7% increase in distributable profit,
a substantial acquisition and the internalisation
of management all contributed to 2017 being

a significant year for PFI.
PORTFOLIO
01
The
immediate
impact of
internalis-
ation is a
contribution
to a 7.3%

reduction
in costs for
the year.
At the June annual meeting, shareholders
approved the internalisation of the
management of PFI.
92
83
2016
2017
A $100 million retail bond
offer and a $70 million
rights offer. (SEE STORY P. 12)
It’s not a one-off
transaction: it’ll be

a long-term
partnership.”
JIM RAMSAY,
MANAGING DIRECTOR, TIL
“PFI is well set to
respond to market-
driven change.”
ANTHONY BEVERLEY,
DEPUTY CHAIRMAN, PFI
“Opportunities like
this come PFI’s way
because we are the
recognised industrial
specialists.”
SIMON WOODHAMS,
GENERAL MANAGER, PFI
ACQUIRED
65 Hugo Johnson Drive for
$14.0 million
million
SOLD
AKL
CHCH
7%
A
P
P
R
O
V
E
D
A
P
P
R
O
V
E
D
14.0
$
GROWTH
OUR STANDOUT EVENTS
FOR THE 2017 YEAR.
COMPLETED
05

02
AN ECONOMY IS TRADE, AND TRADE
INVOLVES TRANSPORT. ONE IN FIVE
OF PFI’S TENANTS IS DIRECTLY
INVOLVED IN THE TRANSPORT,
LOGISTICS AND DISTRIBUTION
SECTOR AND ALL OF THEM RELY ON
IT TO KEEP NEW ZEALAND MOVING.
06
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

To appreciate the
significance of transport to
the New Zealand way of life,
consider this: 50 tonnes of
freight, per person, per year,
the Ministry of  Transport tells
us. Think of it as your own
freight shadow: your personal
B-Train following behind as
you wander out for a coffee.
What’s in that truck? Mostly,
milk  powder and logs going one
way, vehicles and machinery
going the other . Imports and
exports, commodities and
goods. Over 140,000 trucks and
half a million light commercial
vehicles, shifting everything
we grow and sell; delivering
everything we buy and consume.
An economy is trade, and
trade is transport: the more
prosperous a society, the more
stuff it moves. Or, paradoxically,
the more stuff we move, the
more prosperous we  become.
Of course, the people doing the
moving – the transport, logistics
and distribution sector – make
up a significant economy in
their own right: nearly 90,000
full-time equivalent staff across
New Zealand, producing around
5% of GDP (2014 figures). And
growing: the nationwide freight
task is expected to increase
by 48% in tonne-kilometres
in the period to 2042, most of
which will be taken by road.
No surprises, then, that around
one in five of PFI’s tenants
is in the business of moving,
storing and distributing stuff:
approximately 25% of rental
income. That transport,
logistics and storage are critical
to every PFI tenant. Or that
TIL has chosen to partner
with PFI, transferring the
ownership of their premises
to the industrial property
specialists, in order to free up
capital and allow their people
to concentrate on their role
keeping New Zealand moving.
The nationwide freight task
is expected to increase by
48% in tonne-kilometres
in the period to 2042.
07

THE $70 MILLION
ACQUISITION OF
NINE PROPERTIES
FROM TIL WAS THE
LARGEST TRANSACTION
IN PFI’S HISTORY.
LOGIC
—
AL
08
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

On 31 October 2017,
PFI completed the $70 million
acquisition of nine properties
from companies associated
with the Transport Investments
Limited Group (TIL): the largest
single transaction in PFI’s history
and one of New Zealand’s largest
industrial property deals for
the year.
“We’re in the transport business,”
says TIL Managing Director,
Jim Ramsay, “and yet, over the
years, as we’ve grown, we ended
up with all these buildings. We
reached a point where it made
sense to let the professionals
manage the buildings and let
us focus on our core business.”
TIL have leased back seven of
the properties on fifteen year
terms and existing tenants will
stay on in the other two.
“This is PFI at work,” says PFI
General Manager, Simon
Woodhams, “enabling
New Zealand’s industrial
economy. Not only were TIL
looking to release some capital
for other purposes, but they also
wanted our property expertise.
They could see the benefits of
partnering with the industrial
property specialists.”
The nine properties are located in Auckland, New Plymouth (TIL’s
home base), Napier, Nelson, Blenheim and Christchurch. “Consistent
with our strategy, they are all good quality,” says Simon Woodhams,
“well located, with relatively low site coverage. That means there’s
potential for future growth and development.”
The purchase price is $70 million and the portfolio rental is in
excess of $5 million per annum, with structured rent reviews and
rights of renewal. The transaction lifts PFI’s portfolio yield and
increases PFI’s portfolio Weighted Average Lease Term or WALT.
“Opportunities like this come PFI’s way,” says Simon Woodhams,
“because we are the recognised industrial specialists, with scale
and with the ability to act quickly. For TIL, we were the logical
choice and for our shareholders the transaction equally

makes sense.”
03
09

We never set out
to be property investors,” says
Jim Ramsay, Managing Director
of TIL. “But when you’ve got
trucks you need yards and when
you’re moving goods you need
storage. It was only when we
were restructuring the business,
that we realised what a large
business managing our premises
had become.”
TIL goes back a long way. Back to
1869, when young John Hooker
started working as a ‘bullocky’,
carting the stone being used to
build New Plymouth. Today,
Hooker Pacific is just one of
the transport, logistics and
distribution companies that
make up the Transport
LONG
HAUL
10
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Investments Limited Group. In total, over 1,700 dedicated employees
and contractors, over 900 trucks and 1,100 trailers, 310 forklifts and
170 light vehicles. More than 60 locations. Around 150,000 sqm of
storage space. Prior to the listing in late-2017, it was the largest private
company in the sector.
“It was time for a transition,” says Jim Ramsay. “My partners and
I would go on running this business forever if we could, but we have to
set it up to go forward; so we’ve established an independent Board and
we have listed on the sharemarket. We want to see it continue to grow
and we want the opportunity for staff to participate in the ownership.
“When we were talking about a sale and lease arrangement for all
these properties, I said we’ve got to have a proper landlord; someone
who’ll do things right for our people, forever. PFI is a listed company,
with the size and reputation, able to put something together on a
structured, commercial basis. Dealing with them, I found them to be
thoroughly professional. I expect this to be an ongoing relationship:
as we grow, we’ll go to PFI and say ‘we need some new premises for
this particular business: what have you got, or what can you organise?’
It’s not a one-off transaction: it’ll be a long-term partnership.”
LONG
HAUL
04
LEASING PREMISES FROM 
THE INDUSTRIAL PROPERTY
SPECIALISTS, PFI, MADE
BETTER COMMERCIAL SENSE
FOR TIL THAN CONTINUING

TO OWN AND MANAGE
THE PROPERTIES
THEMSELVES.
STATUS::
BUY
CATEGORY::
TRANSPORT
CASE STUDY
4
1
1
1
1
1
OUR ROLE::
PFI enabled TIL to free up
capital by purchasing
their premises and
leasing them back.
Number of properties
in each location
11

AUTHORISED
05
VEHICLES
12
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

$70m
Equity raised in
rights offer
$100m
Raised in bond offer
THE WAY IN WHICH
PFI FINANCED THE
TIL ACQUISITION WAS
JUST AS IMPORTANT
TO SHAREHOLDERS
AS THE TERMS OF THE
TRANSACTION ITSELF.
Acquiring the TIL
portfolio of properties – and then
leasing them back on favourable
terms – expanded the PFI
portfolio, increased revenue,
extended the Weighted Average
Lease Term and contributed to
increased distributable profit.
What’s more, however, the deal
was financed in a way that
lowered PFI’s Loan to Value
Ratio, extended its debt maturity
profile, as well as ensuring the
availability of capital for
committed development projects
and further portfolio activity.
A short-term loan facility from
the ANZ enabled PFI to respond
immediately to TIL’s off-market
approach. The financing plan for
the longer term was in two parts:
a rights offer and a bond offer.
Existing shareholders were given
the opportunity to purchase one
additional share for every ten
held and there was a high level
of take-up by those existing
shareholders: almost 80% of
the new shares available under
the rights offer. The offer closed
in November and realised an
additional $70 million in equity
– the purchase price of the
TIL portfolio – and this was
used to repay the extension
from ANZ. The bond offer
closed at the end of  November
and raised $100 million. This
replaced other bank debt.
“This was the PFI management
working as a team,” says Chief
Financial Officer and Company
Secretary Craig Peirce. “The
approach from TIL represented
a great opportunity to establish a
valuable long-term relationship
with a high-quality tenant, but
only if it didn’t stress the business
financially. We successfully
achieved the balance.”
13

06
A FORMAL REVIEW OF BUSINESS
IMPACTS HAS REINFORCED
PFI’S COMMITMENT TO BEING
A RESPONSIBLE CORPORATE
CITIZEN AND LANDLORD.
IMPACT
R AT I N G
14
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Given the nature of our
business, investors will not be
surprised that ensuring that the
properties we own are safe for
those who use them has to be a
high priority,” says PFI Chairman,
Peter Masfen.
During 2017, PFI undertook
a formal assessment of its
environmental, social and
governance (ESG) impacts.
To do that, we interviewed key
stakeholders to help identify all
of the material issues and the
matrix  later on in this Annual
Report presents the findings.
In addition to ‘Building Safety’
and ‘Health and Safety’,
‘Policies and Procedures’ and
‘Stakeholder Rights’ emerged
as the highest priorities.
“It’s been a worthwhile exercise,”
says Peter Masfen. “The objective
is greater transparency for
investors, but the process itself
has been useful. We’ve confirmed
that we are already addressing
ESG issues in various ways, but
we now have a structured way
of thinking and a more formal
process for setting targets and
assessing progress.
“Our ESG vision is ‘to be a
responsible and responsive
landlord in order to create
long term value for our key
stakeholders’. We think we’re
performing pretty well in that
regard – we certainly place
considerable emphasis on
“Building Safety” and “Health
and Safety” – and we’ll be looking
to improve our performance
across all the material issues.”
Our ESG vision
is ‘to be a
responsible
and responsive
landlord’.

Building
Safety
Policies &
Procedures
Health &
Safety
Stakeholder
Rights
15

What experience has reinforced to me over
the years is that the industrial sector is a really
good place to be invested.
ANTHONY BEVERLEY
16
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Independent Directors like
Deputy Chairman Anthony
Beverley help PFI maintain its
clear focus on shareholder returns.
“If you look at a number of our
recent transactions, particularly
the TIL transaction, and the
earlier Sistema transaction,”
says Anthony, “you see PFI
operating at a scale that for
a long time it didn’t have. And
yet strategically nothing has
changed: the yardstick has
always been maintaining and
growing earnings per share,
not portfolio growth.
“What experience has reinforced
to me over the years is that
the industrial sector is a really
good place to be invested. It
doesn’t have the volatility of
other property sectors and
so you can achieve more
consistent returns. PFI has
quality assets, is well governed
and well managed and has
always had this sole focus
on returns to shareholders.”
Anthony Beverley joined the PFI Board as a Director in 2001, became an Independent Director in 2012 and
became Deputy Chairman in May 2017. He is a professional director and consultant, consulting to both the
private and public sectors on a wide variety of property matters. Anthony was formerly head of property for
AMP Capital Investors (New Zealand) Limited and is a Chartered Fellow of the New Zealand Institute of
Directors, a Fellow of the New Zealand Institute of Valuers, a Fellow and Life Member of the Property
Institute of New Zealand, and a Fellow of the Financial Services Institute of Australasia.
“But having said that, what
those deals do signal is that
PFI is entrepreneurial and
secures a lot of its property
deals off-market. We’re not
speculators, but we have the
depth and the expertise to
respond to a changing market.
Distribution and logistics,
for example, are expected
to continue to evolve and
grow significantly, and PFI
is well set to respond to that
market-driven change.”
MARKET
DRIVEN
07
ANTHONY
BEVERLEY
17

TRAFFIC
CAM
SEVEN THINGS YOU
SHOULD KNOW ABOUT THE
INDUSTRIAL PROPERTY
SECTOR AND PFI...
08
KEY PERFORMANCE
INDICATORS
02. Auckland industrial land
values have increased at a 7%
average annual rate over the
past five years (CBRE).
7. 0%
INCREASE IN LAND
VALUES
04. Despite adding a net nine
properties to the portfolio in 2017,
occupancy is up even further: from
99.6% a year ago to 99.9% at year-end.
99.9%
OCCUPANCY
06.
The portfolio value
has increased by 12% on
a year ago and by 44% on
five years ago.
1.21B
PORTFOLIO VALUE
18
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

01. ANZ Bank estimates
annual growth to be nearing
3% by the end of 2018.
3.0%
ECONOMIC GROWTH
1. Cash dividends plus change in share
price, assuming dividends are
reinvested. Source: Datastream.
05. With all of the former Sistema
portfolio now tenanted and
favourable lease arrangements on
the TIL portfolio, WALT is up
from 4.79 years a year ago and the
highest it has been since 2013.
5.3YEARS
WEIGHTED AVERAGE
LEASE TERM (WALT)
07. Over the 23 years since PFI
listed in 1994, annual returns
to shareholders have averaged
9.7% per annum.
1
9.7%
P.A. ANNUAL RETURN
SINCE INCEPTION
03. Industrial building consents
issued in the year to Q2 2017
in New Zealand totalled
over $440 million in value, a 51%
increase from Q2 2016 (Colliers).
51%
INDUSTRIAL BUILDING
CONSENT INCREASE
19

FINANCIAL
STATEMENTS
Property
for Industry
Limited
Group
Financial
Statements
31 December
2017
20
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
ALL VALUES IN $000’SNOTE20172016
OPERATING REVENUE
Rental and management fee income2.2 73,450 71,086
Licence income6.8 50 –
Interest income 28 22
Total operating revenue 73,528 71,108
OPERATING EXPENSES
Non-recoverable property costs2.3 (2,357) (1,646)
Interest expense and bank fees (17,768) (17,839)
Administrative expenses6.1 (2,891) (1,230)
Management fees6.8 (2,919) (7,259)
Total operating expenses (25,935) (27,974)
Total operating earnings 47,593 43,134
NON-OPERATING INCOME AND EXPENSES
Fair value gain on investment properties2.1 43,595 88,214
Gain on disposal of investment properties 1,949 302
Material damage insurance income 504 –
Fair value (loss) / gain on derivative financial instruments (1,230) 433
Termination of management agreement5 (42,869) –
Total non-operating income and expenses 1,949 88,949
Profit before taxation 49,542 132,083
INCOME TAX BENEFIT / (EXPENSE)
Current taxation6.2 – (8,535)
Deferred taxation6.2 2,142 (136)
Total income tax benefit / (expense) 2,142 (8,671)
Profit and total comprehensive income after income tax
attributable to the shareholders of the Company4.1 51,684 123,412
Basic and diluted earnings per share (cents)4.2 11.25 27.42
The accompanying notes form part of these financial statements.
21

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
Cents
per Share
No. of
Shares
Ordinary
Shares
($000s)
Retained
Earnings
($000s)
Total
Equity
($000s)
Balance as at 1 January 2016– 447,692,460 485,688 172,326 658,014
Total comprehensive income–– – 123,412 123,412
Dividends and reinvestment
Q4 2015 final dividend - 9/3/2016 2.00 – – (8,954) (8,954)
Q4 2015 dividend reinvestment – 1,471,253 2,309 – 2,309
Q1 2016 interim dividend - 23/5/2016 1.75 – – (7,860) (7,860)
Q1 2016 dividend reinvestment – 1,230,441 2,002 – 2,002
Q2 2016 interim dividend - 1/9/2016 1.75 – – (7,882) (7,882)
Q2 2016 dividend reinvestment – 963,921 1,583 – 1,583
Q3 2016 interim dividend - 23/11/2016 1.80 – – (8,124) (8,124)
Q3 2016 dividend reinvestment – 1,100,517 1,638 – 1,638
Balance as at 31 December 2016– 452,458,592 493,220 262,918 756,138
Total comprehensive income–– – 51,684 51,684
Issue of shares
Rights issue – 45,337,280 67,690 – 67,690
Dividends and reinvestment
Q4 2016 final dividend - 8/3/2017 2.05 – – (9,275) (9,275)
Q1 2017 interim dividend - 29/5/2017 1.75 – – (7,918) (7,918)
Q2 2017 interim dividend - 1/9/2017 1.75 – – (7,918) (7,918)
Q2 2017 dividend reinvestment – 927,458 1,519 – 1,519
Q3 2017 interim dividend - 22/11/2017 1.80 – – (8,977) (8,977)
Balance as at 31 December 2017– 498,723,330 562,429 280,514 842,943
The accompanying notes form part of these financial statements.
22
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
ALL VALUES IN $000’SNOTE20172016
CURRENT ASSETS
Cash at bank 605 –
Accounts receivable, prepayments and other assets6.3 1,295 9,029
Taxation receivable 32 –
Total current assets 1,932 9,029
NON-CURRENT ASSETS
Investment properties2.1 1,210,805 1,083,300
Property, plant and equipment 95 –
Derivative financial instruments3.2 272 384
Goodwill6.5 29,086 29,086
Total non-current assets 1,240,258 1,112,770
Total assets 1,242,190 1,121,799
CURRENT LIABILITIES
Bank overdraft – 113
Derivative financial instruments3.2 372 242
Accounts payable, accruals and other liabilities6.4 8,261 8,669
Taxation payable – 2,579
Total current liabilities 8,633 11,603
NON-CURRENT LIABILITIES
Borrowings3.1 370,635 332,924
Derivative financial instruments3.2 11,095 10,108
Deferred tax liabilities6.2 8,884 11,026
Total non-current liabilities 390,614 354,058
Total liabilities 399,247 365,661
Net assets4.3 842,943 756,138
EQUITY
Share capital 562,429 493,220
Retained earnings 280,514 262,918
Total equity 842,943 756,138
These Group financial statements are signed on behalf of Property for Industry Limited and were authorised for issue on 12 February 2018.

Peter Masfen Anthony Beverley
Chairman Chairman, Audit and Risk Committee
The accompanying notes form part of these financial statements.
23

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
ALL VALUES IN $000’S20172016
CASH FLOWS FROM OPERATING ACTIVITIES
Property income received72,853 71,194
Material damage insurance income 504 –
Licence income 50 –
Net GST received 95 350
Interest received 28 22
Interest and other finance costs paid (19,244) (18,105)
Payments to suppliers and employees (6,801) (12,542)
Income tax paid (2,611) (8,120)
Termination of management agreement (42,869) –
Net cash flows from operating activities 2,005 32,799
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment properties 21,765 9,927
Acquisition of investment properties (84,283) –
Acquisition of assets relating to a business combination (106) –
Acquisition of property, plant and equipment (15)
Expenditure on investment properties (12,769) (19,903)
Capitalisation of interest on development properties – (190)
Net cash flows from investing activities (75,408) (10,166)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayment of) / proceeds from syndicated bank facility (61,000) 2,000
Proceeds from fixed rate bonds 100,000 –
Proceeds from the issue of new shares 67,690 –
Proceeds from institutional credit facility61,400–
Repayment of institutional credit facility(61,400)–
Dividends paid to shareholders (32,569) (25,288)
Net cash flows from financing activities 74,121 (23,288)
Net increase / (decrease) in cash and cash equivalents 718 (655)
Cash and cash equivalents at beginning of year (113) 542
Cash and cash equivalents at end of year 605 (113)
Cash and cash equivalents at end of year comprises:
ALL VALUES IN $000'S20172016
Cash at bank 605 –
Bank overdraft– (113)
Cash and cash equivalents at end of year 605 (113)
The accompanying notes form part of these financial statements.
24
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

RECONCILIATION OF PROFIT AFTER INCOME TAX
TO NET CASH FLOWS FROM OPERATING ACTIVITIES
FOR THE YEAR ENDED 31 DECEMBER 2017
ALL VALUES IN $000’S 20172016
Profit for the year after income tax 51,684 123,412
Non cash items:
Fair value gain on investment properties (43,595) (88,214)
Gain on disposal of investment properties (1,949) (302)
Fair value loss / (gain) on derivative financial instruments 1,230 (433)
Deferred taxation (2,142) 136
Depreciation26–
Provision for doubful debts67–
Movements in working capital items:
Accounts receivable, prepayments and other assets (1,250) 287
Accounts payable, accruals and other liabilities 545 (2,502)
Taxation receivable / payable (2,611) 415
Net cash flows from operating activities 2,005 32,799
The accompanying notes form part of these financial statements.
25

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
1. GENERAL INFORMATION27
1.1. Reporting entity27
1.2. Basis of preparation27
1.3. Group companies27
1.4. Basis of consolidation27
1.5. New standards, amendments and interpretations27
1.6. Critical judgements, estimates and assumptions28
1.7. Accounting policies28
1.8. Significant events and transactions28
2. PROPERTY29
2.1. Investment properties29
2.2. Rental and management fee income41
2.3. Non-recoverable property costs41
3. FUNDING42
3.1. Borrowings42
3.2. Derivative financial instruments43
4. INVESTOR RETURNS AND INVESTMENT METRICS44
4.1. Relationship of total comprehensive income to dividends paid44
4.2. Earnings per share45
4.3. Net tangible assets per share45
5. INTERNALISATION OF MANAGEMENT45
6. OTHER46
6.1. Administrative expenses46
6.2. Taxation47
6.3. Accounts receivable, prepayments and other assets49
6.4. Accounts payable, accruals and other liabilities49
6.5. Goodwill49
6.6. Financial instruments50
6.7. Financial risk management50
6.8. Related party transactions52
6.9. Operating segments53
6.10. Capital commitments53
6.11. Subsequent events53
26
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

1. GENERAL INFORMATION
IN THIS SECTION
This section sets out the basis upon which the Group’s Financial Statements are prepared. Specific accounting policies are described in the note
to which they relate.
1.1. Reporting entity
These financial statements are for Property for Industry Limited (the Company) and its subsidiary P.F.I. Property No. 1 Limited (PFI No. 1) (together,
the Group). The Company is a limited liability company incorporated in New Zealand and is registered under the New Zealand Companies Act 1993.
The Company is a FMC reporting entity under Part 7 of the Financial Markets Conduct Act 2013 and these audited consolidated financial statements
have been prepared in accordance with the requirements of the NZX Main Board Listing Rules. The Company is listed on the NZX Main Board (NZX: PFI).
The Group’s principal activity is property investment and management in New Zealand.
1.2. Basis of preparation
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP), the Financial
Reporting Act 2013 and the Financial Markets Conduct Act 2013. They comply with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and other applicable Financial Reporting Standards as appropriate to profit oriented entities. The financial statements also
comply with International Financial Reporting Standards (IFRS).
The financial statements have been prepared on the historical cost basis except where otherwise identified. All financial information is presented
in New Zealand dollars and has been rounded to the nearest thousand.
1.3. Group companies
As at 31 December 2017 and 31 December 2016, PFI No. 1 is the only controlled entity and is wholly owned.
1.4. Basis of consolidation
The consolidated financial statements comprise the Company and the entity it controls. All intercompany transactions are eliminated on consolidation.
1.5. New standards, amendments and interpretations
New standards, amendments and interpretations have been published that are not yet effective and have not been early adopted by the Group.
Those which may be relevant to the Group are explained below:
• NZ IFRS 9 ‘Financial Instruments’. This standard replaces NZ IAS 39 Financial Instruments - Recognition and Measurement and addresses the
recognition, measurement and classification of financial assets and financial liabilities. It is required to be adopted by the Group in the financial
statements for the year ending 31 December 2018. PFI has assessed the impact of this standard on the Group and no significant changes are
expected to the recognition, measurement, classification of financial assets and liabilities compared with the Group’s existing accounting policies.
• NZ IFRS 15 ‘Revenue from Contracts with Customers’. This standard addresses the recognition of revenue from contracts with customers and is
required to be adopted by the Group in the financial statements for the year ending 31 December 2018. It specifies the revenue recognition criteria
governing the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. PFI has assessed the impact of this standard on the Group and no significant changes are expected
to the recognition of revenue compared with existing accounting policies.
• NZ IFRS 16 ‘Leases’. This standard will replace the current guidance in NZ IAS 17. Under NZ IFRS 16, a contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Under NZ IAS 17, a lessee was required
to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). NZ IFRS 16 now requires a lessee
to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. Included is an optional
exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees.
For lessors, the accounting for leases under NZ IFRS 16 is almost the same. However, as the guidance on the definition of a lease has been updated
(as well as the guidance on the combination and separation of contracts), lessors will also be affected by the new standard.
The standard is effective for accounting periods beginning on or after 1 January 2019. Early adoption is permitted but only in conjunction with NZ
IFRS 15, ‘Revenue from Contracts with Customers. The Group intends to adopt NZ IFRS 16 on its effective date and has yet to assess its full impact.
27
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

1.6. Critical judgements, estimates and assumptions
In applying the Group’s accounting policies, the Board and Management continually evaluates judgements, estimates and assumptions that may have
an impact on the Group. The significant judgements, estimates and assumptions made in the preparation of these financial statements are as follows:
2.1. Investment properties Page 29
3.2. Derivative financial instruments Page 43
5. Internalisation of Management Page 45
6.2. Taxation Page 47
6.5. Goodwill Page 49
1.7. Accounting policies
No changes to accounting policies have been made during the year and policies have been consistently applied to all years presented.
Significant accounting policies have been included throughout the notes to the financial statements.
Other relevant policies are provided as follows:
Share capital
All shares on issue are fully paid, carry equal voting rights, share equally in dividends and any surplus on wind up and have no par value. All shares are
recognised at the fair value of the consideration received by the Company. Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction from the proceeds.
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values. The Board and Management have overall
responsibility for overseeing all significant fair value measurements and transfers between levels of the fair value hierarchy. The Group’s policy
is to recognise transfers into and out of fair value levels as of the date of transfer or change in circumstances that caused the transfer.
The carrying values of all balance sheet financial assets and liabilities approximate their estimated fair values, apart from the fixed rate bonds
(refer Note 3.1 (iii) for further details).
The Board and Management review significant unobservable inputs and valuation adjustments. If third party information is used to measure fair
values, then the Board and Management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet
the requirements of NZ IFRS, including the level of the fair value hierarchy in which such valuations should be classified.
Goods and services tax
These financial statements have been prepared on a goods and services tax (GST) exclusive basis except for the accounts receivable balance,
accounts payable balance and other items where GST incurred is not recoverable. These balances are stated inclusive of GST.
1.8. Significant events and transactions
The financial position and performance of the Group was affected by the following events and transactions that occurred during the reporting period:
Internalisation
On 22 June 2017, the Company’s shareholders approved the internalisation of management which was effective 30 June 2017. For further details,
refer Note 5.
Investment property acquisitions and disposals
On 2 February 2017, the Group purchased an investment property located at 11 Turin Place, East Tamaki for a net purchase price of $14.3 million.
On 21 June 2017, the Group disposed of an investment property located at 65 Hugo Johnston Drive, Penrose for a net sales price of $14.0 million.
1. GENERAL INFORMATION (CONTINUED)
28
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

1. GENERAL INFORMATION (CONTINUED)
1.8. Significant events and transactions (continued)
On 31 October 2017, the Group purchased a portfolio of nine investment properties comprising:
Property
Net Purchase
Price (million)
61 McLaughlins Road, Manukau$20.9
39 Edmundson Street, Napier $2.7
330 Devon Street East, New Plymouth$1.4
2 Smart Road, New Plymouth$4.1
20 Constance Street, New Plymouth$3.3
28 Paraite Road, New Plymouth$14.9
11 Sheffield Street, Blenheim$6.1
15 Artillery Place, Nelson$7.0
41 & 55 Foremans Road, Christchurch$9.6
$70.0
For further details, refer Note 2.
Capital Raising
On 7 November 2017, the Company completed a 1 for 10 rights issue, raising a total of $67.7 million (net of issue costs) through the issue of 45 million
shares at $1.54 per share.
Bond Issue
On 28 November 2017, PFI issued $100 million of fixed rate bonds with a 7 year term expiring 28 November 2024, paying an interest rate of 4.59%.
For further details, refer Note 3.1 (iii).
2. PROPERTY
IN THIS SECTION
This section shows the real estate assets used to generate the Group’s trading performance which are considered to be the most relevant to the
operations of the Group.
2.1. INVESTMENT PROPERTIES
ALL VALUES IN $000’S20172016
Opening balance 1,083,300 986,565
Capital movements:
Additions 84,283 –
Disposals (12,188) (7,993)
Capital expenditure 10,422 17,058
Capitalised interest
a
– 190
Movement in lease incentives, fees and fixed rental income 1,393 (734)
83,910 8,521
Unrealised fair value gain 43,595 88,214
As at 31 December 1,210,805 1,083,300
a
No interest was capitalised to investment properties in 2017. The effective interest rate applied to capitalised interest in 2016 was 5.17%.
29
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

2. PROPERTY (CONTINUED)
2.1. Investment properties (continued)
ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
Avondale:
15 Copsey Place Canterbury 100%100%
5.9%6.2% 751 732 6,878 CBRE 11,820 56 784 12,660
15 Jomac Place Southern Spars 100%100%6.7%6.6% 1,614 1,568 9,378 CBRE 23,600 (27) 427 24,000
61-69 Patiki Road Bidvest 100%100%7.0%7.4% 1,174 1,120 9,767 Savills 15,200 486 1,064 16,750
320 Rosebank Road Doyle Sails 100%100%6.0%6.3% 679 679 6,625 JLL 10,700 (33) 733 11,400
686 Rosebank Road New Zealand Comfort 98%97%7.0%6.8% 2,447 2,276 21,563 Savills 33,400 899 701 35,000
99%99%6.7%6.7% 6,665 6,375 54,211 94,720 1,381 3,709 99,810
East Tamaki:
17 Allens Road TSB Living 100%100%
6.7%6.5% 1,034 1,000 9,926 Colliers 15,300 605 (405) 15,500
43 Cryers Road Astron Plastics 100%100%6.1%6.2% 721 703 6,068 Savills 11,250 120 380 11,750
6-8 Greenmount Drive Bridon 100%100%7.7%7.5% 644 644 6,590 CBRE 8,600 81 (306) 8,375
92-98 Harris Road GrainCorp 100%100%8.6%8.3% 1,309 1,265 10,687 CBRE 15,250 (69) 69 15,250
36 Neales Road Mainfreight 100%100%6.3%6.4% 1,160 1,160 12,546 JLL 18,000 21 379 18,400
1 Ron Driver Place Stewart Scott Cabinetry 100%100%5.3%5.3% 403 403 4,032 Colliers 7,550 (23) 73 7,600
78 Springs Road Fisher & Paykel Appliances 100%100%6.9%7.1% 5,748 5,580 41,387 JLL 78,500 478 3,822 82,800
10c Stonedon Drive Chemical Freight Services 100%100%7.0%7.1% 824 824 8,711 Colliers 11,650 – 50 11,700
11 Turin Place Thermakraft Industries 100%n/a6.0%n/a 925 n/a 8,523 Savills – 14,365 1,135 15,500
12 Zelanian Drive Central Joinery 100%100%5.5%5.7% 564 564 6,098 CBRE 9,850 8 417 10,275
23 Zelanian Drive Exclusive Tyre Distributors 100%100%6.2%5.9% 416 385 3,811 Savills 6,500 (5) 255 6,750
100%100%6.7%6.9% 13,748 12,528 118,379 182,450 15,581 5,869 203,900
Manukau:
212 Cavendish Drive
a
Mainfreight 100%100%6.1%6.7% 1,368 1,288 18,596 Colliers 19,100 980 2,320 22,400
232 Cavendish Drive
a
TIL Logistics 100%100%6.7%6.8% 1,354 1,354 16,832 JLL 19,800 22 378 20,200
47 Dalgety Drive Peter Hay Kitchens 100%100%7.3%7.5% 979 979 8,860 Savills 13,050 21 429 13,500
59 Dalgety Drive Goodman Fielder 100%100%8.1%7.8% 1,345 1,300 8,649 Savills 16,700 86 (86) 16,700
1 Mayo Road Transdiesel 100%100%6.5%6.5% 542 515 6,361 Savills 7,950 (18) 418 8,350
61 McLaughlins Road TIL Logistics 100%n/a5.3%n/a 1,150 n/a 13,347 Colliers – 20,894 906 21,800
9 Nesdale Avenue Iron Mountain 100%100%6.1%6.2% 622 610 14,182 JLL 9,800 31 369 10,200
9 Narek Place Z Energy 100%100%5.3%5.3% 530 518 5,663 Savills 9,850 (5) 155 10,000
100%100%6.4%6.8% 7,890 6,564 92,490 96,250 22,011 4,889 123,150
a
Excludes development land shown separately.
30
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
Avondale:
15 Copsey Place Canterbury 100%100%
5.9%6.2% 751 732 6,878 CBRE 11,820 56 784 12,660
15 Jomac Place Southern Spars 100%100%6.7%6.6% 1,614 1,568 9,378 CBRE 23,600 (27) 427 24,000
61-69 Patiki Road Bidvest 100%100%7.0%7.4% 1,174 1,120 9,767 Savills 15,200 486 1,064 16,750
320 Rosebank Road Doyle Sails 100%100%6.0%6.3% 679 679 6,625 JLL 10,700 (33) 733 11,400
686 Rosebank Road New Zealand Comfort 98%97%7.0%6.8% 2,447 2,276 21,563 Savills 33,400 899 701 35,000
99%99%6.7%6.7% 6,665 6,375 54,211 94,720 1,381 3,709 99,810
East Tamaki:
17 Allens Road TSB Living 100%100%
6.7%6.5% 1,034 1,000 9,926 Colliers 15,300 605 (405) 15,500
43 Cryers Road Astron Plastics 100%100%6.1%6.2% 721 703 6,068 Savills 11,250 120 380 11,750
6-8 Greenmount Drive Bridon 100%100%7.7%7.5% 644 644 6,590 CBRE 8,600 81 (306) 8,375
92-98 Harris Road GrainCorp 100%100%8.6%8.3% 1,309 1,265 10,687 CBRE 15,250 (69) 69 15,250
36 Neales Road Mainfreight 100%100%6.3%6.4% 1,160 1,160 12,546 JLL 18,000 21 379 18,400
1 Ron Driver Place Stewart Scott Cabinetry 100%100%5.3%5.3% 403 403 4,032 Colliers 7,550 (23) 73 7,600
78 Springs Road Fisher & Paykel Appliances 100%100%6.9%7.1% 5,748 5,580 41,387 JLL 78,500 478 3,822 82,800
10c Stonedon Drive Chemical Freight Services 100%100%7.0%7.1% 824 824 8,711 Colliers 11,650 – 50 11,700
11 Turin Place Thermakraft Industries 100%n/a6.0%n/a 925 n/a 8,523 Savills – 14,365 1,135 15,500
12 Zelanian Drive Central Joinery 100%100%5.5%5.7% 564 564 6,098 CBRE 9,850 8 417 10,275
23 Zelanian Drive Exclusive Tyre Distributors 100%100%6.2%5.9% 416 385 3,811 Savills 6,500 (5) 255 6,750
100%100%6.7%6.9% 13,748 12,528 118,379 182,450 15,581 5,869 203,900
Manukau:
212 Cavendish Drive
a
Mainfreight 100%100%6.1%6.7% 1,368 1,288 18,596 Colliers 19,100 980 2,320 22,400
232 Cavendish Drive
a
TIL Logistics 100%100%6.7%6.8% 1,354 1,354 16,832 JLL 19,800 22 378 20,200
47 Dalgety Drive Peter Hay Kitchens 100%100%7.3%7.5% 979 979 8,860 Savills 13,050 21 429 13,500
59 Dalgety Drive Goodman Fielder 100%100%8.1%7.8% 1,345 1,300 8,649 Savills 16,700 86 (86) 16,700
1 Mayo Road Transdiesel 100%100%6.5%6.5% 542 515 6,361 Savills 7,950 (18) 418 8,350
61 McLaughlins Road TIL Logistics 100%n/a5.3%n/a 1,150 n/a 13,347 Colliers – 20,894 906 21,800
9 Nesdale Avenue Iron Mountain 100%100%6.1%6.2% 622 610 14,182 JLL 9,800 31 369 10,200
9 Narek Place Z Energy 100%100%5.3%5.3% 530 518 5,663 Savills 9,850 (5) 155 10,000
100%100%6.4%6.8% 7,890 6,564 92,490 96,250 22,011 4,889 123,150
31
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

2. PROPERTY (CONTINUED)
2.1. Investment properties (continued)
ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
Mt Wellington:
30-32 Bowden Road Fletcher Building Products 100%100%
6.6%6.8% 1,672 1,457 17,047 CBRE 21,390 (26) 3,986 25,350
50 Carbine Road Atlas Copco 100%100%5.3%5.2% 202 190 2,592 Colliers 3,680 2 118 3,800
54 Carbine Road & 6a Donnor Place EBOS 100%100%6.5%6.6% 1,723 1,710 16,872 CBRE 25,800 401 199 26,400
76 Carbine Road Atlas Gentech 100%100%5.5%5.9% 433 433 5,080 Colliers 7,400 (70) 520 7,850
7 Carmont Place CMI 100%100%5.6%5.8% 588 581 5,336 Colliers 10,100 63 337 10,500
6 Donnor Place Wickliffe 100%100%5.6%5.2% 840 780 14,555 Colliers 15,000 34 66 15,100
4-6 Mt Richmond Drive Brambles 100%100%5.5%5.8% 805 805 7,946 JLL 14,000 110 640 14,750
509 Mt Wellington Highway Fletcher Building Products 100%100%6.2%6.2% 985 979 8,745 Savills 15,750 73 177 16,000
511 Mt Wellington Highway Bremca Industries 100%100%5.8%6.0% 443 443 3,247 Colliers 7,400 (43) 243 7,600
515 Mt Wellington Highway Stryker 100%100%5.4%5.2% 259 259 1,708 CBRE 5,000 4 (204) 4,800
523 Mt Wellington Highway BGH Group 100%100%5.5%5.7% 220 220 1,677 Savills 3,850 – 150 4,000
1 Niall Burgess Road R L Button & Co 100%100%5.7%5.5% 230 218 1,742 CBRE 3,960 – 100 4,060
2-6 Niall Burgess Road McAlpine Hussmann 100%100%6.2%7.4% 813 914 6,874 CBRE 12,400 61 739 13,200
3-5 Niall Burgess Road Electrolux 100%100%5.9%6.0% 1,038 1,038 9,373 CBRE 17,275 30 345 17,650
7-9 Niall Burgess Road DHL Supply Chain 100%100%6.8%7.2% 2,108 2,069 23,565 Savills 28,900 959 1,141 31,000
10 Niall Burgess Road Outside Broadcasting 100%100%6.1%6.4% 258 258 1,725 CBRE 4,050 (5) 155 4,200
2 Pacific Rise Hewlett-Packard 100%100%10.7%10.6% 944 916 2,757 CBRE 8,675 11 164 8,850
5 Vestey Drive PPG Industries 100%100%5.6%5.7% 223 220 1,269 Savills 3,850 (3) 153 4,000
7 Vestey Drive True North 100%100%5.3%5.8% 516 481 4,598 Colliers 8,350 183 1,117 9,650
9 Vestey Drive Multispares 100%100%5.5%5.3% 212 193 1,600 Savills 3,650 (34) 234 3,850
11 Vestey Drive N & Z 100%100%5.5%8.1% 431 537 3,470 Savills 6,650 1,263 (113) 7,800
15a Vestey Drive Hills 100%100%6.2%6.8% 553 544 3,261 Savills 8,000 86 814 8,900
36 Vestey Drive Hose Supplies 100%100%5.3%5.9% 159 150 1,120 Colliers 2,550 178 272 3,000
100%100%6.2%6.5% 15,655 15,395 146,159 237,680 3,277 11,353 252,310
32
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
Mt Wellington:
30-32 Bowden Road Fletcher Building Products 100%100%
6.6%6.8% 1,672 1,457 17,047 CBRE 21,390 (26) 3,986 25,350
50 Carbine Road Atlas Copco 100%100%5.3%5.2% 202 190 2,592 Colliers 3,680 2 118 3,800
54 Carbine Road & 6a Donnor Place EBOS 100%100%6.5%6.6% 1,723 1,710 16,872 CBRE 25,800 401 199 26,400
76 Carbine Road Atlas Gentech 100%100%5.5%5.9% 433 433 5,080 Colliers 7,400 (70) 520 7,850
7 Carmont Place CMI 100%100%5.6%5.8% 588 581 5,336 Colliers 10,100 63 337 10,500
6 Donnor Place Wickliffe 100%100%5.6%5.2% 840 780 14,555 Colliers 15,000 34 66 15,100
4-6 Mt Richmond Drive Brambles 100%100%5.5%5.8% 805 805 7,946 JLL 14,000 110 640 14,750
509 Mt Wellington Highway Fletcher Building Products 100%100%6.2%6.2% 985 979 8,745 Savills 15,750 73 177 16,000
511 Mt Wellington Highway Bremca Industries 100%100%5.8%6.0% 443 443 3,247 Colliers 7,400 (43) 243 7,600
515 Mt Wellington Highway Stryker 100%100%5.4%5.2% 259 259 1,708 CBRE 5,000 4 (204) 4,800
523 Mt Wellington Highway BGH Group 100%100%5.5%5.7% 220 220 1,677 Savills 3,850 – 150 4,000
1 Niall Burgess Road R L Button & Co 100%100%5.7%5.5% 230 218 1,742 CBRE 3,960 – 100 4,060
2-6 Niall Burgess Road McAlpine Hussmann 100%100%6.2%7.4% 813 914 6,874 CBRE 12,400 61 739 13,200
3-5 Niall Burgess Road Electrolux 100%100%5.9%6.0% 1,038 1,038 9,373 CBRE 17,275 30 345 17,650
7-9 Niall Burgess Road DHL Supply Chain 100%100%6.8%7.2% 2,108 2,069 23,565 Savills 28,900 959 1,141 31,000
10 Niall Burgess Road Outside Broadcasting 100%100%6.1%6.4% 258 258 1,725 CBRE 4,050 (5) 155 4,200
2 Pacific Rise Hewlett-Packard 100%100%10.7%10.6% 944 916 2,757 CBRE 8,675 11 164 8,850
5 Vestey Drive PPG Industries 100%100%5.6%5.7% 223 220 1,269 Savills 3,850 (3) 153 4,000
7 Vestey Drive True North 100%100%5.3%5.8% 516 481 4,598 Colliers 8,350 183 1,117 9,650
9 Vestey Drive Multispares 100%100%5.5%5.3% 212 193 1,600 Savills 3,650 (34) 234 3,850
11 Vestey Drive N & Z 100%100%5.5%8.1% 431 537 3,470 Savills 6,650 1,263 (113) 7,800
15a Vestey Drive Hills 100%100%6.2%6.8% 553 544 3,261 Savills 8,000 86 814 8,900
36 Vestey Drive Hose Supplies 100%100%5.3%5.9% 159 150 1,120 Colliers 2,550 178 272 3,000
100%100%6.2%6.5% 15,655 15,395 146,159 237,680 3,277 11,353 252,310
33
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
North Shore:
2-4 Argus Place Pharmapac 100%100%
5.2%5.2% 419 409 3,560 Colliers 7,800 55 245 8,100
47 Arrenway Drive Device Technologies 100%100%5.5%5.9% 225 220 1,245 CBRE 3,725 7 378 4,110
51 Arrenway Drive Pacific Hygiene 100%100%5.1%5.1% 376 368 2,680 Colliers 7,200 (46) 246 7,400
229 Dairy Flat Highway Massey University 100%100%6.9%7.3% 1,857 1,794 6,719 JLL 24,700 (7) 2,307 27,000
15 Omega Street Wesfarmers 100%100%6.6%6.5% 567 551 3,498 Colliers 8,500 (16) 116 8,600
322 Rosedale Road Imake 100%100%6.2%6.5% 1,078 990 7,936 Savills 15,200 52 2,248 17,500
41 William Pickering Drive Innopak Global 100%100%5.7%5.7% 419 411 3,025 JLL 7,200 60 140 7,400
100%100%6.2%6.4% 4,941 4,743 28,663 74,325 105 5,680 80,110
Penrose:
4 Autumn Place Ryco Hydraulics 100%100%
5.5%6.4% 148 148 1,210 JLL 2,300 160 250 2,710
6 Autumn Place MOTAT 100%100%6.1%6.3% 171 166 1,718 JLL 2,650 131 9 2,790
10 Autumn Place MOTAT 100%100%5.7%6.8% 653 613 7,646 JLL 9,000 906 1,594 11,500
122 Captain Springs Road New Zealand Crane Group 100%100%5.9%6.1% 496 496 7,431 Savills 8,100 (14) 314 8,400
8 Hugo Johnston Drive Argyle Schoolwear 100%100%6.0%6.3% 658 651 4,359 JLL 10,400 21 479 10,900
12 Hugo Johnston Drive W H Worrall 100%100%5.9%6.1% 337 329 2,639 JLL 5,400 (6) 366 5,760
16 Hugo Johnston Drive Newflor Industries 100%100%5.8%6.6% 373 362 2,619 Colliers 5,450 32 918 6,400
65 Hugo Johnston Drive Sistema Plastics n/a100%n/a7.4% n/a 896 n/a n/a 12,100 (12,100) – –
80 Hugo Johnston Drive Boxkraft 100%100%6.0%6.3% 457 457 3,872 JLL 7,300 272 28 7,600
102 Mays Road Go Logistics 100%100%6.4%6.3% 513 500 7,588 JLL 8,000 141 (141) 8,000
304 Neilson Street Fletcher Building Products 100%100%6.6%6.6% 720 703 13,438 Colliers 10,700 (24) 274 10,950
312 Neilson Street Transport Trailer Services 100%100%5.6%5.6% 344 308 3,862 CBRE 5,490 231 429 6,150
314 Neilson Street Wakefield Metals 100%100%5.7%6.0% 551 524 5,818 CBRE 8,740 313 607 9,660
12 Southpark Place Storepro Solutions 100%100%5.5%5.9% 490 490 5,477 CBRE 8,350 298 202 8,850
100%100%5.9%6.4% 5,911 6,643 67,677 103,980 (9,639) 5,329 99,670
2. PROPERTY (CONTINUED)
2.1. Investment properties (continued)
34
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
North Shore:
2-4 Argus Place Pharmapac 100%100%
5.2%5.2% 419 409 3,560 Colliers 7,800 55 245 8,100
47 Arrenway Drive Device Technologies 100%100%5.5%5.9% 225 220 1,245 CBRE 3,725 7 378 4,110
51 Arrenway Drive Pacific Hygiene 100%100%5.1%5.1% 376 368 2,680 Colliers 7,200 (46) 246 7,400
229 Dairy Flat Highway Massey University 100%100%6.9%7.3% 1,857 1,794 6,719 JLL 24,700 (7) 2,307 27,000
15 Omega Street Wesfarmers 100%100%6.6%6.5% 567 551 3,498 Colliers 8,500 (16) 116 8,600
322 Rosedale Road Imake 100%100%6.2%6.5% 1,078 990 7,936 Savills 15,200 52 2,248 17,500
41 William Pickering Drive Innopak Global 100%100%5.7%5.7% 419 411 3,025 JLL 7,200 60 140 7,400
100%100%6.2%6.4% 4,941 4,743 28,663 74,325 105 5,680 80,110
Penrose:
4 Autumn Place Ryco Hydraulics 100%100%
5.5%6.4% 148 148 1,210 JLL 2,300 160 250 2,710
6 Autumn Place MOTAT 100%100%6.1%6.3% 171 166 1,718 JLL 2,650 131 9 2,790
10 Autumn Place MOTAT 100%100%5.7%6.8% 653 613 7,646 JLL 9,000 906 1,594 11,500
122 Captain Springs Road New Zealand Crane Group 100%100%5.9%6.1% 496 496 7,431 Savills 8,100 (14) 314 8,400
8 Hugo Johnston Drive Argyle Schoolwear 100%100%6.0%6.3% 658 651 4,359 JLL 10,400 21 479 10,900
12 Hugo Johnston Drive W H Worrall 100%100%5.9%6.1% 337 329 2,639 JLL 5,400 (6) 366 5,760
16 Hugo Johnston Drive Newflor Industries 100%100%5.8%6.6% 373 362 2,619 Colliers 5,450 32 918 6,400
65 Hugo Johnston Drive Sistema Plastics n/a100%n/a7.4% n/a 896 n/a n/a 12,100 (12,100) – –
80 Hugo Johnston Drive Boxkraft 100%100%6.0%6.3% 457 457 3,872 JLL 7,300 272 28 7,600
102 Mays Road Go Logistics 100%100%6.4%6.3% 513 500 7,588 JLL 8,000 141 (141) 8,000
304 Neilson Street Fletcher Building Products 100%100%6.6%6.6% 720 703 13,438 Colliers 10,700 (24) 274 10,950
312 Neilson Street Transport Trailer Services 100%100%5.6%5.6% 344 308 3,862 CBRE 5,490 231 429 6,150
314 Neilson Street Wakefield Metals 100%100%5.7%6.0% 551 524 5,818 CBRE 8,740 313 607 9,660
12 Southpark Place Storepro Solutions 100%100%5.5%5.9% 490 490 5,477 CBRE 8,350 298 202 8,850
100%100%5.9%6.4% 5,911 6,643 67,677 103,980 (9,639) 5,329 99,670
35
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
Other Auckland:
58 Richard Pearse Drive, Mangere EBOS 100%100%
6.0%6.5% 1,174 1,180 10,549 JLL 18,250 316 1,034 19,600
Carlaw Park Gateway Building, Parnell Quest 100%100%7.2%7.2% 2,545 2,523 2,369 JLL 35,000 13 487 35,500
Carlaw Park Office Complex, Parnell Jacobs 100%100%7.2%7.1% 4,484 4,367 11,149 JLL 61,800 107 193 62,100
170 Swanson Road, Swanson Transportation Auckland 100%100%5.3%5.8% 994 994 37,601 CBRE 17,110 211 1,399 18,720
100%100%6.8%6.9% 9,197 9,064 61,668 132,160 647 3,113 135,920
North Island (outside Auckland):
124 Hewletts Road, Mt Maunganui RMD Bulk Storage 100%100%
6.3%6.8% 2,814 2,730 29,270 JLL 44,100 30 870 45,000
124a Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%7.6%7.4% 1,013 973 10,497 JLL 13,200 (54) 234 13,380
124b Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%6.1%6.1% 875 857 8,867 JLL 14,100 – 250 14,350
3 Hocking Street, Mt Maunganui Trayco Manufacturing 100%100%7.1%7.2% 120 120 1,211 JLL 1,675 1 4 1,680
558 Te Rapa Road, Hamilton DEC Manufacturing 100%100%6.8%7.0% 461 461 4,606 Savills 6,600 16 134 6,750
39 Edmundson Street, Napier TIL Logistics 100%n/a7.9%n/a 220 n/a 8,540 Colliers – 2,710 90 2,800
20 Constance Street, New Plymouth Aviagen 100%n/a11.4%n/a 388 n/a 1,366 Colliers – 3,273 127 3,400
330 Devon Street East, New Plymouth TIL Logistics 100%n/a7.5%n/a 112 n/a 482 Colliers – 1,456 44 1,500
28 Paraite Road, New Plymouth TIL Logistics 100%n/a7.7%n/a 1,195 n/a 15,636 Colliers – 14,976 624 15,600
2 Smart Road, New Plymouth New Zealand Post 100%n/a7.4%n/a 320 n/a 2,359 Colliers – 4,143 157 4,300
Shed 22, 23 Cable Street, Wellington Shed 22 Hospo 100%100%6.2%6.9% 831 792 2,809 Colliers 11,500 540 1,260 13,300
143 Hutt Park Road, Wellington EBOS 100%100%7.1%7.1% 1,200 1,169 11,372 Colliers 16,350 68 382 16,800
8 McCormack Place, Wellington Information Management Group 100%100%11.2%9.1% 848 848 6,405 Colliers 9,310 89 (1,799) 7,600
50 Parkside Road, Wellington
a
Waste Management 100%100%9.9%9.5% 335 335 7,104 Colliers 3,530 (3) (127) 3,400
48 Seaview Road, Wellington
a
Goughs Gough & Hamer 100%100%9.4%9.2% 573 564 8,996 Colliers 6,100 (15) (5) 6,080
100%100%7.2%7.0% 11,305 8,849 119,520 126,465 27,230 2,245 155,940
a
Excludes development land shown separately.
2. PROPERTY (CONTINUED)
2.1. Investment properties (continued)
36
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
Other Auckland:
58 Richard Pearse Drive, Mangere EBOS 100%100%
6.0%6.5% 1,174 1,180 10,549 JLL 18,250 316 1,034 19,600
Carlaw Park Gateway Building, Parnell Quest 100%100%7.2%7.2% 2,545 2,523 2,369 JLL 35,000 13 487 35,500
Carlaw Park Office Complex, Parnell Jacobs 100%100%7.2%7.1% 4,484 4,367 11,149 JLL 61,800 107 193 62,100
170 Swanson Road, Swanson Transportation Auckland 100%100%5.3%5.8% 994 994 37,601 CBRE 17,110 211 1,399 18,720
100%100%6.8%6.9% 9,197 9,064 61,668 132,160 647 3,113 135,920
North Island (outside Auckland):
124 Hewletts Road, Mt Maunganui RMD Bulk Storage 100%100%
6.3%6.8% 2,814 2,730 29,270 JLL 44,100 30 870 45,000
124a Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%7.6%7.4% 1,013 973 10,497 JLL 13,200 (54) 234 13,380
124b Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%6.1%6.1% 875 857 8,867 JLL 14,100 – 250 14,350
3 Hocking Street, Mt Maunganui Trayco Manufacturing 100%100%7.1%7.2% 120 120 1,211 JLL 1,675 1 4 1,680
558 Te Rapa Road, Hamilton DEC Manufacturing 100%100%6.8%7.0% 461 461 4,606 Savills 6,600 16 134 6,750
39 Edmundson Street, Napier TIL Logistics 100%n/a7.9%n/a 220 n/a 8,540 Colliers – 2,710 90 2,800
20 Constance Street, New Plymouth Aviagen 100%n/a11.4%n/a 388 n/a 1,366 Colliers – 3,273 127 3,400
330 Devon Street East, New Plymouth TIL Logistics 100%n/a7.5%n/a 112 n/a 482 Colliers – 1,456 44 1,500
28 Paraite Road, New Plymouth TIL Logistics 100%n/a7.7%n/a 1,195 n/a 15,636 Colliers – 14,976 624 15,600
2 Smart Road, New Plymouth New Zealand Post 100%n/a7.4%n/a 320 n/a 2,359 Colliers – 4,143 157 4,300
Shed 22, 23 Cable Street, Wellington Shed 22 Hospo 100%100%6.2%6.9% 831 792 2,809 Colliers 11,500 540 1,260 13,300
143 Hutt Park Road, Wellington EBOS 100%100%7.1%7.1% 1,200 1,169 11,372 Colliers 16,350 68 382 16,800
8 McCormack Place, Wellington Information Management Group 100%100%11.2%9.1% 848 848 6,405 Colliers 9,310 89 (1,799) 7,600
50 Parkside Road, Wellington
a
Waste Management 100%100%9.9%9.5% 335 335 7,104 Colliers 3,530 (3) (127) 3,400
48 Seaview Road, Wellington
a
Goughs Gough & Hamer 100%100%9.4%9.2% 573 564 8,996 Colliers 6,100 (15) (5) 6,080
100%100%7.2%7.0% 11,305 8,849 119,520 126,465 27,230 2,245 155,940
37
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
South Island:
11 Sheffield Street, Blenheim TIL Logistics 100%n/a
7.8%n/a 490 n/a 10,757 Colliers – 6,068 232 6,300
15 Artillery Place, Nelson TIL Logistics 100%n/a7.4%n/a 540 n/a 18,052 Colliers – 7,014 286 7,300
8a & 8b Canada Crescent, Christchurch Polarcold Stores 100%100%7.6%7.7% 1,129 1,129 9,500 CBRE 14,750 – 25 14,775
41 & 55 Foremans Road, Christchurch TIL Logistics 100%n/a6.7%n/a 670 n/a 14,710 Colliers – 9,605 395 10,000
44 Mandeville Street, Christchurch Fletcher Building Products 100%77%8.4%7.0% 1,118 915 11,150 JLL 13,100 270 (130) 13,240
127 Waterloo Road, Christchurch DHL Supply Chain 100%100%7.0%7.7% 314 297 3,519 Colliers 3,870 91 529 4,490
100%90%7.6%7.4% 4,261 2,341 67,688 31,720 23,048 1,337 56,105
Investment properties - subtotal100%100%6.6%6.7% 79,573 72,502 756,455 1,079,750 83,641 43,524 1,206,915
Development land:
212 Cavendish Drive, Manukau
Colliers 1,900 269 31 2,200
232 Cavendish Drive, Manukau JLL 600 – 150 750
50 Parkside Road, Wellington Colliers 550 – (230) 320
48 Seaview Road, Wellington Colliers 500 – 120 620
Development land - subtotal 3,550 269 71 3,890
Investment properties - total 1,083,300 83,910 43,595 1,210,805
2. PROPERTY (CONTINUED)
2.1. Investment properties (continued)
38
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

ALL VALUES IN $000’S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable area
(sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2017201720162017201620172016201720172016201720172017
South Island:
11 Sheffield Street, Blenheim TIL Logistics 100%n/a
7.8%n/a 490 n/a 10,757 Colliers – 6,068 232 6,300
15 Artillery Place, Nelson TIL Logistics 100%n/a7.4%n/a 540 n/a 18,052 Colliers – 7,014 286 7,300
8a & 8b Canada Crescent, Christchurch Polarcold Stores 100%100%7.6%7.7% 1,129 1,129 9,500 CBRE 14,750 – 25 14,775
41 & 55 Foremans Road, Christchurch TIL Logistics 100%n/a6.7%n/a 670 n/a 14,710 Colliers – 9,605 395 10,000
44 Mandeville Street, Christchurch Fletcher Building Products 100%77%8.4%7.0% 1,118 915 11,150 JLL 13,100 270 (130) 13,240
127 Waterloo Road, Christchurch DHL Supply Chain 100%100%7.0%7.7% 314 297 3,519 Colliers 3,870 91 529 4,490
100%90%7.6%7.4% 4,261 2,341 67,688 31,720 23,048 1,337 56,105
Investment properties - subtotal100%100%6.6%6.7% 79,573 72,502 756,455 1,079,750 83,641 43,524 1,206,915
Development land:
212 Cavendish Drive, Manukau
Colliers 1,900 269 31 2,200
232 Cavendish Drive, Manukau JLL 600 – 150 750
50 Parkside Road, Wellington Colliers 550 – (230) 320
48 Seaview Road, Wellington Colliers 500 – 120 620
Development land - subtotal 3,550 269 71 3,890
Investment properties - total 1,083,300 83,910 43,595 1,210,805
39
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

2. PROPERTY (CONTINUED)
2.1. Investment properties (continued)
Recognition and Measurement
Investment properties are held to earn rental income and for long term capital appreciation. After initial recognition at cost including directly
attributable acquisition costs, investment properties are measured at fair value, on the basis of valuations made by independent valuers on at least
an annual basis. Gains or losses arising from changes in the fair values of investment properties are included in the Consolidated Statement of
Comprehensive Income in the year in which they arise.
Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably.
The fair value of investment property reflects the Directors’ assessment of the highest and best use of each property and amongst other things,
rental income from current leases and assumptions about rental income from future leases in light of the current market conditions. The fair value
also reflects the cash outflows that could be expected in respect of the property.
No depreciation or amortisation is provided for on investment properties. However, for tax purposes, depreciation is claimed on building fit-out and a
deferred tax liability is recognised where the building component of the registered valuation exceeds the tax book value of the building. The deferred
tax liability is capped at the amount of depreciation that has been claimed on each building.
Investment properties under construction are carried at cost until it is possible to reliably determine their fair value, from which point they are carried
at fair value less costs to complete.
Gains or losses on the disposal of investment properties are recognised in the Consolidated Statement of Comprehensive Income in the period in
which the risks and rewards of the investment property have been fully transferred to the purchaser.
Borrowing costs are capitalised if they are directly attributable to the acquisition or construction of a qualifying property. Capitalisation of borrowing
costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred. Capitalisation
of borrowing costs will continue until the asset is substantially ready for its intended use. The rate at which borrowing costs are capitalised is
determined by reference to the weighted average borrowing costs of the Group and the average level of borrowings by the Group.
Key estimates and assumptions: Investment properties
The fair value of investment properties are determined from valuations prepared by independent valuers using Level 3 valuation techniques.
All investment properties were valued as at 31 December 2017 and 2016 by CB Richard Ellis (CBRE), Colliers International (Colliers), Jones Lang
LaSalle (JLL) or Savills. CBRE, Colliers, JLL and Savills are independent valuers and members of the New Zealand Institute of Valuers.
As part of the valuation process, the Group’s management verifies all major inputs to the independent valuation reports, assesses movements
in individual property values and holds discussions with the independent valuer.
The fair value was determined using Level 3 valuation techniques via a combination of the following approaches:
• Direct Capitalisation: The subject property rental is divided by a market derived capitalisation rate to assess the market value of the asset.
Further adjustments are then made to the market value to reflect under or over renting, additional revenue and required capital expenditure.
• Discounted Cash Flow: Discounted cash flow projections for the subject property are based on estimates of future cash flows, supported by the
terms of any existing lease and by external evidence such as market rents for similar properties in the same location and condition, and using
discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.
Significant inputs used together with the impact on fair value of a change in inputs:
RANGE OF SIGNIFICANT
UNOBSERVABLE INPUTS MEASUREMENT SENSITIVITY
20172016Increase in inputDecrease in input
Market capitalisation rate (%)
1
5.13 - 10.50 5.13 - 8.75 Decrease Increase
Market rental ($ per sqm)
2
26 - 420 28 - 368 Increase Decrease
Discount rate (%)
3
6.75 - 12.00 6.75 - 10.00 Decrease Increase
Rental growth rate (%)
4
1.61 - 2.93 1.61 - 2.80 Increase Decrease
Terminal capitalisation rate (%)
5
5.25 - 12.00 5.25 - 9.00 Decrease Increase
1. The capitalisation rate applied to the market rental to asses a property’s value, determined through analysis of similar transactions taking into account location, weighted average
lease term, tenant covenant, size and quality of the property.
2. The valuers assessment of the net market income which a property is expected to achieve under a new arm’s length leasing transaction. Includes both leased and vacant areas.
3. The rate applied to future cash flows reflecting transactional evidence from similar properties.
4. The rate applied to the market rental over the future cash flow projection.
5. The rate used to assess the terminal value of the property.
40
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

2. PROPERTY (CONTINUED)
2.1. Investment properties (continued)
Generally, a change in the assumption made for the adopted market capitalisation rate is accompanied by a directionally similar change in the
adopted terminal capitalisation rate. The adopted market capitalisation rate forms part of the direct capitalisation approach and the adopted terminal
capitalisation rate forms part of the discounted cash flow approach. Both valuation methodologies are considered when determining an investment
property’s fair value.
When calculating the direct capitalisation approach, the market rental has a strong interrelationship with the adopted market capitalisation rate given
the methodology involves assessing the total market rental income receivable from the property and capitalising this in perpetuity to derive a capital
value. In theory, an increase in the market rent and an increase in the adopted market capitalisation rate could potentially offset the impact to the fair
value. The same can be said for a decrease in the market rent and a decrease in the adopted market capitalisation rate. A directionally opposite change
in the market rent and the adopted market capitalisation rate could potentially magnify the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and adopted terminal capitalisation rate have a strong interrelationship in deriving
a fair value given the discount rate will determine the rate at which the terminal value is discounted to the present value. In theory, an increase in the
adopted discount rate and a decrease in the adopted terminal capitalisation rate could potentially offset the impact to the fair value. The same can be
said for a decrease in the discount rate and an increase in the adopted terminal capitalisation rate. A directionally similar change in the adopted
discount rate and the adopted terminal capitalisation rate could potentially magnify the impact to the fair value.
2.2. Rental and management fee income
ALL VALUES IN $000’S20172016
Gross rental receipts 72,698 70,817
Fixed rental income adjustments 603 102
Capitalised lease incentive adjustments (312) (196)
Management fee income 461 363
Total rental and management fee income 73,450 71,086
Recognition and Measurement
Rental income from investment properties is recognised in the Consolidated Statement of Comprehensive Income on a straight line basis over the
term of the lease. Lease incentives are capitalised to investment properties in the Consolidated Statement of Financial Position and amortised on
a straight line basis in the Consolidated Statement of Comprehensive Income over the length of the lease to which they relate, as a reduction to
rental income.
Management fee income is recognised in the Consolidated Statement of Comprehensive Income in the period in which the services are rendered.
Future minimum rentals receivable under non-cancellable operating leases are as follows:
ALL VALUES IN $000’S20172016
Within one year 76,061 69,017
After one year but not more than five years 218,152 193,373
More than five years 129,840 86,557
Total 424,053 348,947
2.3. Non-recoverable property costs
Other non-recoverable costs represents property maintenance and operating expenses not recoverable from tenants, property valuation fees and
property leasing costs.
ALL VALUES IN $000’S20172016
Service charge expenses (8,502) (7,762)
Service charge income recovered from tenants 8,502 7,762
Bad and doubtful debts recovery 79 175
Other non-recoverable property costs (2,436) (1,821)
Total non-recoverable property costs (2,357) (1,646)
41
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

3. FUNDING
IN THIS SECTION
This section outlines how the Group manages its capital structure, financing costs and exposure to interest rate risk.
3.1. Borrowings
(i) Net borrowings
ALL VALUES IN $000’S20172016
Syndicated bank facility drawn down - non-current 272,700 333,700
Fixed rate bonds - non-current 100,000 –
Unamortised borrowings establishment costs (2,065) (776)
Net borrowings 370,635 332,924
Weighted average interest rate for drawn debt (inclusive of current interest rate swaps, margins and line fees)4.96%5.24%
Weighted average term to maturity (years) 3.70 3.84
Recognition and Measurement
All borrowings are initially measured at fair value, plus directly attributable transaction costs, and subsequently measured at amortised cost using
the effective interest rate method. Under this method, directly attributable fees, costs, discounts and premiums are capitalised and spread over the
expected life of the facility. All other interest costs and bank fees are expensed in the period they are incurred.
(ii) Syndicated bank facility
On 3 February 2016, the Group entered into revised facilities (A and B) with a banking syndicate comprising ANZ Bank New Zealand Limited (ANZ),
Bank of New Zealand (BNZ), Commonwealth Bank of Australia (CBA) and Westpac New Zealand Limited (Westpac) for $375,000,000.
Facility A for $187,500,000 and Facility B for $187,500,000 are provided by ANZ, BNZ, CBA and Westpac. Facility A is a revolving facility of a long term
nature and expires 4 May 2020. Facility B is a revolving facility of a long term nature and expires 4 May 2021.
ALL VALUES IN $000’S20172016
ANZ 101,625 101,625
BNZ 91,125 91,125
CBA 91,125 91,125
Westpac 91,125 91,125
Total facilities available 375,000 375,000
Syndicated bank facility drawn down - non-current 272,700 333,700
Undrawn facility available 102,300 41,300
Total facilities available 375,000 375,000
On 31 March 2017, the Group entered into a $40 million 16 month institutional credit facility provided by ANZ. The facility was cancelled on 29 November
2017 and never drawn.
On 3 October 2017, the Group entered into a $70 million 16 month institutional credit facility provided by ANZ. The facility was repaid and cancelled on
7 November 2017.
(iii) Fixed rate bonds
On 28 November 2017, the Group issued $100 million of fixed rate bonds, bearing a fixed interest rate of 4.59% per annum. The bonds are quoted on
the NZX Debt Market and mature on 28 November 2024. Interest is payable quarterly in February, May, August and November in equal instalments.
As at 31 December 2017, the fair value of the fixed-rate bonds is $102,333,000 based on their listed market prices at balance date. The fair value is
classified as Level 1 in the fair value hierarchy
(iv) Security
The syndicated bank facility and fixed rate bonds are secured by way of a security trust deed and registered mortgage security which is required to be
provided over Group properties with current valuations of at least $950,000,000 (31 December 2016: $750,000,000). In addition to this, the syndicated
bank facility agreement and the fixed rate bond terms also contain a negative pledge. The Company and PFI No. 1 are guarantors to the facility and fixed
rate bonds. As at 31 December 2017, investment properties totalling $1,175,705,000 (31 December 2016: $1,059,875,000) were mortgaged as security
for the Group’s borrowings.
42
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

3.2. Derivative financial instruments
(i) Fair values
ALL VALUES IN $000’S20172016
Non-current assets 272 384
Current liabilities (372) (242)
Non-current liabilities (11,095) (10,108)
Total (11,195) (9,966)
(ii) Notional values, maturities and interest rates
20172016
Notional value of interest rate swaps - fixed rate payer - start dates commenced ($000’S) 220,000 243,000
Notional value of interest rate swaps - fixed rate receiver
2
- start dates commenced ($000’S) 100,000 –
Notional value of interest rate swaps - fixed rate payer - forward starting ($000’S) 155,000 70,000
Total ($000’S) 475,000 313,000
Percentage of borrowings fixed (%)59%73%
Fixed rate payer swaps:
Average period to expiry - start dates commenced (years) 2.62 3.00
Average period to expiry - forward starting (years from commencement) 3.65 2.86
Average (years) 3.04 2.97
Fixed rate payer swaps:
Average interest rate
1
- start dates commenced (%)4.37%4.53%
Average interest rate
1
- forward starting (% during effective period)3.55%3.54%
Average (%)4.03%4.31%
1 Excluding margin and fees.
2 The Group has $100 million fixed rate receiver swaps for the duration of the $100 million fixed interest bond, the effect of the fixed rate receiver swaps is to convert the $100 million bond
to floating interest rates.
Recognition and Measurement
The Group is exposed to changes in interest rates and uses derivative financial instruments, principally interest rate swaps, to mitigate this risk.
The Group does not apply hedge accounting. Derivative financial instruments are entered into to economically hedge the risk exposure.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
re-measured to fair value at each reporting date. Transaction costs are expensed on initial recognition and recognised in the Consolidated Statement
of Comprehensive Income. The fair value of derivative financial instruments is based on valuations prepared by independent treasury advisers and is
the estimated amount that the Group would receive or pay to terminate the derivative contract at reporting date, taking into account current interest
rates and creditworthiness of the derivative contract counterparties.
Key estimates and assumptions: Derivatives
The fair value of derivative financial instruments are determined from valuations prepared by independent treasury advisers using Level 2 valuation
techniques (2016: Level 2). These are based on the present value of estimated future cash flows accounting for the terms and maturity of each
contract and the current market interest rates at reporting date. Fair values also reflect the current creditworthiness of the derivative counterparty.
These values are verified against valuations prepared by the respective counterparties. The valuations were based on market rates at 31 December
2017 of between 1.88% (31 December 2016: 2.00%) for the 90 day BKBM and 3.14% (31 December 2016: 3.49%) for the 10 year swap rate. There were
no changes to these valuation techniques during the period.
3. FUNDING (CONTINUED)
43
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

4. INVESTOR RETURNS AND INVESTMENT METRICS
IN THIS SECTION
This section shows the relationship between the Group’s accounting profit and dividends paid. It also summarises the earnings per share and net
tangible assets per share which are common investment metrics.
4.1. Relationship of total comprehensive income to dividends paid
The Group’s dividend policy is to distribute between 95% to 100% of its annual distributable profit, subject to the approval of the Board of Directors.
Prior to the internalisation of management (for further details refer to Note 5) this could have increased to above 100% should management performance
fees be earned in any given period.
Distributable profit is a non-GAAP measure determined as total comprehensive income for the period (as determined in accordance with NZ IFRS for the
period) adjusted for fair value gains or losses on investment properties, material damage insurance income, gains or losses on disposal of investment
properties (net of tax on depreciation claw-back), fair value gains or losses on derivative financial instruments, deferred tax, additional revenue booked
as a result of fixed rental review accounting entries, termination of management agreement cost and associated tax benefit and other one off items.
Subsequent to year-end, the Board has resolved to change its dividend policy. The new policy of the Group is to distribute between 80% to 90% of
Funds From Operations (FFO) and 95% to 100% of Adjusted Funds From Operations (AFFO). FFO and AFFO are non-GAAP financial information and
are common investor metrics. They are calculated in accordance with the guidelines issued by the Property Council of Australia. To provide sufficient
flexibility for dividends to be maintained or normalised despite variations in FFO and AFFO, the payout ratios may be decreased or increased from time
to time. In fixing a dividend for any period, consideration will be given to, amongst other things, the Group’s current and forecast financial performance
and position, general business and financial conditions, and the solvency requirements of the Companies Act. Dividends are paid quarterly, the payment
of dividends is not guaranteed by the Group, and the Group’s dividend policy may change from time to time.
ALL VALUES IN $000’S UNLESS NOTED20172016
Total comprehensive income for the year attributable to the shareholders of the Company 51,684 123,412
Adjusted for:
Fair value gains on investment properties (43,595) (88,214)
Material damage insurance income (504) –
Gain on disposal of investment properties (1,949) (302)
Tax on depreciation claw-back on disposals of investment properties 34 132
Fair value loss / (gain) on derivative financial instruments 1,230 (433)
Deferred taxation (2,142) 136
Movement in fixed rent reviews (490) (607)
Termination of management agreement 42,869 –
Current taxation without deductibility of termination of management agreement (10,010) –
Other
1
(12) (12)
Distributable profit 37,115 34,112
Weighted average number of ordinary shares (shares) 459,600,237 450,078,636
Distributable profit per share (cents) 8.08 7.58
Dividends paid relating to the year reported
2
35,536 33,141
Pay-out ratio (%)96%97%
1 Other comprises the current tax impact of an adjustment to one of the Company’s derivative financial instruments.
2 Includes dividends paid for the first three quarters of 2017 totalling $24,813,000 as per the Consolidated Statement of Changes in Equity, plus the fourth quarter dividend for 2017 due to
be paid on 7 March 2018 of $10,723,000.
44
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

4.2. Earnings per share
20172016
Total comprehensive income for the year attributable to the shareholders of the Company ($000) 51,684 123,412
Weighted average number of ordinary shares (shares) 459,600,237 450,078,636
Basic and diluted earnings per share (cents) 11.25 27.42
4.3. Net tangible assets per share
20172016
Net assets ($000) 842,943 756,138
Less: Goodwill ($000) (note 6.5) (29,086) (29,086)
Net tangible assets ($000) 813,857 727,052
Closing shares on issue (shares) 498,723,330 452,458,592
Net tangible assets per share (cents) 163 161
5. INTERNALISATION OF MANAGEMENT
On 22 June 2017, the Company’s shareholders approved the internalisation of the management of the Company. As a result, effective from 30 June 2017,
the Company terminated the management and administrative services contract that was undertaken by PFIM Limited (“PFIM”). PFIM had subcontracted
the property and administrative function to McDougall Reidy & Co Limited (“MRCO”), this management and administrative services contract was
also terminated.
The Company paid $41.9 million to PFIM for the termination of the management and administrative services contract. In addition the Company acquired
certain assets of PFIM and MRCO (comprising $0.1 million, for which a payment of $0.1 million was paid by the Company). Accordingly, the net consideration
for the termination of the management and administrative services contract and the purchase of certain assets was $42.0 million. The previous employees
of MRCO are now directly employed by the Company with the exception of three senior executives who have entered into independent service contracts
with the Company.
Judgement was involved in determining whether these transactions met the definition of a business combination in accordance with NZ IFRS 3 Business
Combinations. It has been determined that this transaction was a business combination. A business consists of inputs and processes applied to those
inputs that have the ability to create outputs. In making this assessment, the key consideration was whether processes were being acquired. The inputs
included the fixed assets and the employees of PFIM and MRCO. The conclusion is that processes were being acquired in the form of the knowledge,
skills and experience of the workforce in carrying out the property management processes.
The cancellation of the management arrangements terminates the pre-existing relationships between the Company and PFIM. $41.9 million of
the consideration transferred has been attributed to the extinguishment of the pre-existing relationships and has been included in the Consolidated
Statement of Comprehensive Income. These arrangements did not contain any substantive settlement provisions that were reasonably available to
the Company. It was also determined that there were no favourable or unfavourable terms in the arrangements when compared with terms for current
market transactions for similar arrangements. Accordingly, no settlement gain or loss arose from the settlement of the pre-existing relationships.
Costs of $1.0 million relating to the internalisation are also recognised in the Consolidated Statement of Comprehensive Income for the period.
Assets acquired
The assets acquired at the date of the acquisition were as follows:
ALL VALUES IN $000’S UNLESS NOTED2017
Property, plant & equipment 106
Total assets acquired 106
No goodwill arose as a result of this transaction.
4. INVESTOR RETURNS AND INVESTMENT METRICS (CONTINUED)
45
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

6. OTHER
IN THIS SECTION
This section includes additional information that is considered less significant in understanding of the financial performance and position of the Group,
but must be disclosed to comply with New Zealand Equivalents to International Financial Reporting Standards.
6.1. Administrative expenses
ALL VALUES IN $000’S20172016
Auditors remuneration:
Audit of annual financial statements (113) (97)
Review of interim financial statements (28) (28)
Review of management fee calculations (2) (4)
Voting procedures over the annual shareholders’ meeting (3) (3)
Benchmarking of director remuneration – (9)
Employee and independent contractor benefits expense (1,310) –
Directors’ fees (360) (336)
Office expenses(253)–
Rent(55)–
Depreciation (26) –
Other expenses (741) (753)
Total administrative expenses (2,891) (1,230)
46
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

6.2. Taxation
(i) Reconciliation of accounting profit before income tax to income tax benefit / (expense)
ALL VALUES IN $000’S20172016
Profit before income tax 49,542 132,083
Prima facie income tax calculated at 28% (13,872) (36,983)
Adjusted for:
Non-tax deductible revenue and expenses 115 (14)
Fair value gain on investment properties 12,207 24,700
Gain on disposal of investment properties 546 85
Depreciation 2,391 2,505
Disposal of depreciable assets (34) (122)
Deductible capital expenditure 740 910
Lease incentives, fees and fixed rental income 213 (51)
Derivative financial instruments (333) 133
Impairment allowance 22 298
Current tax prior period adjustment – 4
Current year tax losses carried forward (1,995) –
Current taxation expense – (8,535)
Current year tax losses carried forward 1,995 –
Depreciation 49 244
Lease incentives, fees and fixed rental income (213) 51
Derivative financial instruments 333 (133)
Impairment allowance (22) (298)
Deferred taxation benefit 2,142 (136)
Total taxation reported in Consolidated Statement of Comprehensive Income 2,142 (8,671)
Prior to the internalisation of management on 30 June 2017, the Group received a binding tax ruling from Inland Revenue on 22 May 2017 which
confirmed that the payment for the termination of the management agreement is deductible for tax purposes. This has resulted in a current year tax
losses to be carried forward. The Group expects to utilise these tax losses during 2018.
(ii) Deferred tax
20152016201620172017
ALL VALUES IN $000’SAs at
Recognised
in profitAs at
Recognised
in profitAs at
Deferred tax assets
Losses carried forward – – – (1,995) (1,995)
Derivative financial instruments (2,942) 133 (2,809) (333) (3,142)
Impairment allowance (362) 298 (64) 22 (42)
Gross deferred tax assets (3,304) 431 (2,873) (2,306) (5,179)
Deferred tax liabilities
Investment properties 14,194 (295) 13,899 164 14,063
Gross deferred tax liabilities 14,194 (295) 13,899 164 14,063
Net deferred tax liability 10,890 136 11,026 (2,142) 8,884
6. OTHER (CONTINUED)
47
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

(iii) Imputation credit account
The amounts below represent the balance of the imputation credit account as at the end of the reporting period, adjusted for imputation credits that will
arise from the payment of taxation payable represented in the Consolidated Statement of Financial Position.
ALL VALUES IN $000’S20172016
Opening balance 2,257 1,507
Taxation paid / payable 6 8,435
Imputation credits attached to dividends paid (2,225) (7,685)
Closing balance available to shareholders for use in subsequent periods 38 2,257
Due to the current year tax loss, the Group has not generated imputation credits during the current financial year through the payment of taxation.
Recognition and Measurement
The Company and Group are a listed Portfolio Investment Entity (PIE) for the purposes of the Income Tax Act 2007. Tax is accounted for on a
consolidated Group basis and the Group is required to pay tax to the Inland Revenue as required by the Income Tax Act 2007. Income tax expense
comprises current and deferred tax and is recognised in the Consolidated Statement of Comprehensive Income for the year.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date,
and any adjustment to tax payable in respect of previous years. Deferred tax is provided for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is recognised on all temporary differences, including:
• The tax liability arising from accumulated depreciation claimed on investment properties, where applicable;
• The tax asset arising from the allowance for impairment;
• The tax liability arising from certain prepayments and other assets; and
• The tax asset / liability arising from the unrealised gains / losses on the revaluation of interest rate swaps.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting date. Deferred tax is not recognised for:
• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
neither accounting nor taxable profit or loss;
• Temporary differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable
future; and
• Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income
taxes levied by the same tax authority on the same taxable entity, or on different entities, but they intend to settle current tax assets and liabilities
on a net basis.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences
can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Additional income tax arising from distribution of dividends is recognised at the same time as the liability to pay the dividend is recognised.
Key estimates and assumptions: Deferred tax
Deferred tax is provided on the accumulated depreciation claimed on the building component of investment properties. Investment properties are
valued each year by independent valuers (as outlined in note 2.1). These values include an allocation of the valuation between the land and building
components. The calculation of deferred tax on depreciation recovered places reliance on the land and building split provided by the valuers.
6. OTHER (CONTINUED)
6.2. Taxation (continued)
48
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

6.3. Accounts receivable, prepayments and other assets
ALL VALUES IN $000’S20172016
Accounts receivable 1,163 1,082
Property sale proceeds to be settled – 7,628
Provision for doubtful debts (67) –
Prepayments and other assets 199 319
Total accounts receivable, prepayments and other assets 1,295 9,029
Recognition and Measurement
Accounts receivable are recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. Receivables
are assessed on an ongoing basis for impairment. A provision for doubtful debts is established where there is evidence that the Group will not be able
to collect all amounts due according to the original terms of the receivable. Those which are anticipated to be uncollectable are written off.
6.4. Accounts payable, accruals and other liabilities
ALL VALUES IN $000’S20172016
Accounts payable 2,038 715
Accrued interest expense and bank fees 2,230 2,417
Accruals and other liabilities in respect of investment properties 1,381 2,335
Accruals and other liabilities 2,612 3,202
Total accounts payable, accruals and other liabilities 8,261 8,669
Recognition and Measurement
Expenses are recognised on an accruals basis and, if not paid at the end of the reporting period, are reflected as a payable in the Consolidated
Statement of Financial Position.
6.5. Goodwill
ALL VALUES IN $000’S20172016
Goodwill 29,086 29,086
Recognition and Measurement
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the fair value of the identifiable net
assets acquired.
Goodwill is measured at cost less accumulated impairment losses. It is tested annually for impairment or more frequently if events or changes in
circumstances indicate potential impairment. An impairment loss is recognised if the carrying amount exceeds the estimated recoverable amount.
Impairment losses are recognised in the Consolidated Statement of Comprehensive Income.
Goodwill is allocated to the Group’s cash generating units (CGU) identified according to the lowest level at which the goodwill is monitored.
To assess whether goodwill is impaired, the carrying amount of the CGU is compared to the recoverable amount, determined based on the greater
of its value in use and its fair value less costs of disposal.
Key estimates and assumptions: Goodwill
All goodwill relates to the Property for Industry Limited CGU.
The fair value of goodwill is determined using Level 3 valuation techniques (2016: Level 3). Fair value less costs of disposal is measured by calculating
the fair value of the Property for Industry Limited CGU using a 1 day volume-weighted average share price at the reporting date, applying a control
premium (15.9%, as determined by a third party) and deducting costs of disposal.
As at 31 December 2017 the estimated fair value less costs of disposal of the Property for Industry Limited CGU exceeded the carrying value
(2016: nil impairment).
6. OTHER (CONTINUED)
49
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

6.6. Financial instruments
The following financial assets and liabilities, that potentially subject the Group to financial risk, have been recognised in the financial statements:
ALL VALUES IN $000’S20172016
Financial Assets
Loans and receivables:
Cash at bank 605 –
Accounts receivable and other assets 1,096 8,710
Total - Loans and receivables 1,701 8,710
Fair value through profit or loss - held for trading:
Derivative financial instruments 272 384
Total - Fair value through profit or loss 272 384
Total Financial Assets 1,973 9,094
Financial Liabilities
Liabilities at amortised cost:
Bank overdraft– 113
Accounts payable, accruals and other liabilities 8,261 8,669
Borrowings 370,635 332,924
Total - Liabilities at amortised cost 378,896 341,706
Fair value through profit or loss - held for trading:
Derivative financial instruments 11,467 10,350
Total - Fair value through profit or loss 11,467 10,350
Total Financial Liabilities 390,363 352,056
6.7. Financial risk management
The Group’s activities expose it to a variety of financial risks: interest rate risk, credit risk, and liquidity risk. The Group’s overall risk management strategy
focuses on minimising the potential negative economic impact of unpredictable events on the Group’s financial well being.
(a) Interest rate risk
The Group’s exposure to the risk of changes in interest rates relates primarily to the Group’s borrowings with a floating interest rate. The Group has an
interest rate hedging policy which has been reviewed by an external firm with expertise in this area. The policy calls for a band of the Group’s borrowings
to be at fixed interest rates, with a greater proportion of the near term to be fixed and a lesser percentage of the far dated to be fixed.
The Group uses derivative financial instruments, principally fixed rate payer interest rate swaps, to exchange its floating short term interest rate exposure
for fixed long term interest rate exposure in accordance with its policy bands. As the Group holds derivative financial instruments, there is a risk that their
fair value will fluctuate because of underlying changes in market interest rates. This is accepted as a by-product of the Group’s interest rate hedging
policy. The fair value of derivative financial instruments is disclosed in the Consolidated Statement of Financial Position (refer note 3.2).
The following sensitivity analysis shows the effect on profit before tax and equity if interest rates at balance date had been 50 basis points (0.50%) higher
or lower with all other variables held constant.
20172016
ALL VALUES IN $000’S
Gain/(loss)
on increase
of 0.50%
Gain/(loss)
on decrease
of 0.50%
Gain/(loss)
on increase
of 0.50%
Gain/(loss)
on decrease
of 0.50%
Impact on profit before tax692 (692) 2,630 (2,630)
Impact on equity498 (498) 1,894 (1,894)
6. OTHER (CONTINUED)
50
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

(b) Credit risk
Credit risk represents the risk that the counterparty to a financial instrument will fail to discharge its obligations and the Group will suffer financial loss
as a result. Financial instruments which potentially subject the Group to credit risk consist of cash and cash equivalents, accounts receivable and other
assets and interest rate swap agreements.
With respect to the credit risk arising from cash and cash equivalents, there is limited credit risk as cash is deposited with ANZ Bank New Zealand
Limited, a registered bank in New Zealand with a credit rating of AA– (Standard & Poor’s).
With respect to the credit risk arising from accounts receivable, the Group only enters into lease arrangements over its investment properties with
parties whom the Group assesses to be creditworthy. It is the Group’s policy to subject all potential tenants to credit verification procedures and
monitor accounts receivable balances. Credit risk does not arise on property sale proceeds to be settled as title will not transfer until settlement.
With respect to the credit risk arising from interest rate swap agreements, there is limited credit risk as all counterparties are registered banks in
New Zealand. The credit ratings of these banks are all AA– (Standard & Poor’s).
The carrying amount of financial assets as per note 6.6 approximates the Groups maximum exposure to credit risk . For certain receivables the Group
holds bank guarantees, parent company guarantees or personal guarantees.
(c) Liquidity risk
Liquidity risk is the risk that the Group will have difficulty realising assets and raising sufficient funds to satisfy commitments associated with
financial liabilities.
The Group manages its liquidity risk by ensuring that it has committed funding facilities at a minimum of 105% of the projected peak debt level over
the next twelve months (excluding business acquisitions).
The maturities of the Group’s borrowings based on the remaining period is 3.7 years (2016: 3.8 years), with all borrowings due later than one year
(2016: later than one year). Further details of the Group’s borrowings, including the maturities of the Group’s borrowings, are disclosed in note 3.1
to the financial statements.
The table below analyses the Group financial liabilities (principal and interest) by the relevant contracted maturity groupings based on the remaining
period as at 31 December 2017 and 31 December 2016.
ALL VALUES IN $000’S
Carrying
amount
Contractual cash flows
0 - 1 year 1 - 2 years 2 - 5 years > 5 years Total
Financial liabilities
Accounts payable, accruals and other liabilities 8,261 8,261 – – – 8,261
Derivative financial instruments
1
11,195 4,265 3,124 4,424 1,117 12,930
Borrowings 370,635 12,639 12,639 289,800 106,887 421,965
Total as at 31 December 2017 390,091 25,165 15,763 294,224 108,004 443,156
Bank overdraft 113 113 – – – 113
Accounts payable, accruals and other liabilities 8,669 8,669 – – – 8,669
Derivative financial instruments
1
9,966 5,232 3,671 2,865 (289) 11,479
Borrowings 332,924 11,460 11,460 354,276 – 377,196
Total as at 31 December 2016 351,672 25,474 15,131 357,141 (289) 397,457
1 The carrying amount of derivative financial instruments shown is the net position of both derivative financial instrument assets and derivative financial instrument liabilities.
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern whilst maximising the return to
shareholders through maintaining an optimal balance of debt and equity. In order to maintain or adjust the capital structure, the Group may adjust
the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group’s capital structure includes borrowings and shareholders equity. The Group monitors capital on the basis of the loan to value ratio and
borrowing covenant compliance. The loan to value ratio is calculated as borrowings divided by investment properties. The Group’s strategy is to
maintain a loan to value ratio of no more than 40%. The covenants on all borrowings require a loan to value ratio of no more than 50%.
The Group operates a Dividend Reinvestment Scheme (DRS) which allows eligible shareholders to reinvest dividends in shares. The Board, at its sole
discretion, may suspend the DRS at any time and/or apply a discount to which shares are issued under the DRS.
6. OTHER (CONTINUED)
6.7. Financial risk management (continued)
51
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

6.8. Related party transactions
The Company internalised its management on 30 June 2017 and paid $41.9 million to PFIM. For further details refer to Note 5.
Gregory Reidy was a Director of both PFIM and the Company, accordingly this transaction and the management fees detailed below were related
party transactions.
As at 31 December 2016, $458,000 in relation to management fees was owing to PFIM and included in accounts payable, accruals and other liabilities.
(i) Management fees
From 30 June 2017 no further base management fees or performance fees are payable. Instead the costs of managing the Company are incurred directly.
Prior to the internalisation, PFIM was entitled to be paid base management and performance fees for the provision of management and administrative
services, pursuant to a management and administrative services contract.
(a) Base management fees
The base management fee was payable monthly and was calculated as one twelfth of:
• 0.725% of total tangible assets under management up to $425 million;
• 0.450% of total tangible assets under management above $425 million and below $775 million; and
• 0.350% of total tangible assets under management above $775 million.
During the year, the Group incurred base management fees totalling $2,919,000 (2016: $5,482,000) from PFIM, for the provision of management and
administrative services.
(b) Performance fees
The performance fee was calculated and payable on a quarterly basis. The performance fee was calculated as 10% of the change in shareholder returns
above 10% per annum (2.5% per quarter) and under 15% per annum (3.75% per quarter). Where shareholder returns exceeded 3.75% in a quarter, no
payment was due for the actual amount of the increase above 3.75% but the amount of the increase above 3.75% was carried forward and added to the
calculation of shareholder returns in the next seven quarters. However, if shareholder returns were less than 2.5% in a quarter, the deficit was carried
forward and subtracted from the calculation of shareholder returns in the next seven quarters.
During the year, the Group incurred no performance fees from PFIM (2016: $1,777,000).
(ii) Key management personnel
ALL VALUES IN $000’S20172016
Directors’ fees360336
Short-term independent contractors benefits 805 –
Key management personnel1,165336
Please note that, as PFI internalised on 30 June 2017, the amounts above represent a half-year of remuneration for the independent contractors.
(iii) Other related party transactions
During the year ended 31 December 2016, the Group incurred $12,816,440 for construction and maintenance works from Haydn & Rollett Limited.
John Waller was a Director of both Haydn & Rollett Limited and the Company until he passed away on 21 September 2016.
On 30 June 2017, the Group entered into a lease agreement with McDougall Reidy & Co Limited (MRCO) to lease the head office for the Group. Gregory
Reidy, a senior executive who became an independent contractor with the Company on 30 June 2017 is also a Director of MRCO. During the year, rental
income of $39,000 was paid to MRCO and is included within other expenses. The head office was sold to a unrelated party on 6 November 2017.
On 30 June 2017, the Group entered into a licence agreement with MRCO enabling MRCO to operate its business from the Group’s premises, access the
Group’s IT and support systems and employees for its business. During the year, licence income of $50,000 was received from MRCO.
On 1 July 2017, Susan Peterson became a Director of ASB Bank Limited (ASB), a 100% subsidiary of CBA. During the year, the Group incurred $2,120,000
of interest expense and bank fees and received $48,000 of interest income from CBA during the period that Susan Peterson was a Director of both ASB
and the Company. As at 31 December 2017: $499,000 was owing to CBA and included in accounts payable, accruals and other liabilities and $48,000
was owing from CBA and included in accounts receivable.
No related party debts have been written off or forgiven during the year (2016: nil).
During the year, fees paid to Directors of the Group were $360,000 (2016: $336,000).
As at 31 December 2017, Directors of the Company held 5,809,115 (31 December 2016: 8,007,684) shares beneficially in the Company and 408,741
(31 December 2016: 371,583) shares non-beneficially in the Company.
6. OTHER (CONTINUED)
52
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

6.9. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the Board of Directors. The Group is internally reported as a single operating segment to the chief operating
decision-maker.
6.10. Capital commitments
As at 31 December 2017, the Group had capital commitments totalling $7,666,000 (31 December 2016: $3,638,000) relating to work on investment
properties.
6.11. Subsequent events
On 12 February 2018, the Directors of the Company approved the payment of a net dividend of $10,723,000 (2.1500 cents per share) to be paid
on 7 March 2018. The gross dividend (2.1500 cents per share) carries no imputation credits. The payment of this dividend will not have any tax
consequences for the Group and no liability has been recognised in the Consolidated Statement of Financial Position as at 31 December 2017
in respect of this dividend.
On 12 February 2018, David Thomson was appointed to the Board of Directors of the Company and PFI No. 1 as an Independent Director.
6. OTHER (CONTINUED)
53
NOTES TO THE FINANCIAL STATEMENTS
(
CONTINUED
)
FOR THE YEAR ENDED 31 DECEMBER 2017

Independent auditor’s report
To the shareholders of Property for Industry Limited
We have audited the consolidated financial statements which comprise:
• the consolidated statement of financial position as at 31 December 2017;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended;
• the reconciliation of profit after income tax to net cash flows from operating activities; and
• the notes to the consolidated financial statements, which include significant accounting policies.
Our opinion
In our opinion, the consolidated financial statements of Property for Industry Limited (the Company), including its controlled entity (the Group), present
fairly, in all material respects, the financial position of the Group as at 31 December 2017, its financial performance and its cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and International Financial Reporting
Standards (IFRS).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs NZ) and International Standards on Auditing (ISAs).
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners (PES 1)
issued by the New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of other related assurance services comprising the review of management fee calculations
and voting procedures over the annual shareholders’ meeting. The provision of these other services has not impaired our independence as auditor of
the Group.
Our audit approach
Overview
Materiality
Audit scope
Key audit
matters
An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material
misstatement.
Overall group materiality: $2.5 million.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above
$0.25 million as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
We have three key audit matters:
• Valuation of Investment Properties;
• Goodwill impairment assessment; and
• Internalisation of management.
54
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Materiality
The scope of our audit was influenced by our application of materiality.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the
consolidated financial statements as a whole as set out above. These, together with qualitative considerations, helped us to determine the scope of
our audit, the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the
consolidated financial statements as a whole.
Overall group materiality
$2.5 million.
How we determined it
Approximately 5% of profit before tax excluding valuation movements relating to investment properties,
interest rate derivatives and the termination of management agreement expense.
Rationale for the materiality
benchmark applied
We applied this benchmark because, in our view, it is more reflective of the metric against which the
performance of the Group is most commonly measured.
Audit scope
We designed our audit by assessing the risks of material misstatement in the consolidated financial statements and our application of materiality.
As in all of our audits, we also addressed the risk of management override of internal controls including among other matters, consideration of
whether there was evidence of bias that represented a risk of material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as
a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements
of the current year. We have three key audit matters: valuation of investment properties; goodwill impairment assessment; and internalisation of
management. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matterHow our audit addressed the key audit matter
Valuation of Investment Properties
As disclosed in note 2.1 of the consolidated financial statements,
the Group’s Investment Properties at $1,211 million represent the
majority of the assets held by the Group as at 31 December 2017.
The valuation of the Group’s property portfolio is inherently
subjective due to, amongst other factors, the individual nature
of each property, location and the expected future rental income
for each respective property.
The existence of significant estimation uncertainty, coupled with
the fact that only a small percentage difference in individual
property valuation assumptions, when aggregated, could result
in material misstatement, is why we have given specific audit
focus and attention to this area.
The valuations were carried out by third party valuers, Colliers
International New Zealand Limited, Jones Lang Lasalle Limited,
CBRE Limited and Savills New Zealand Limited (the Valuers).
The Valuers were engaged by the Group, and performed their
work in accordance with International Valuation Standards and
the Australia and New Zealand Valuation and Property Standards.
The Valuers used by the Group are well known firms, with
experience in the markets in which the Group operates and
are rotated across the portfolio on a three-yearly cycle.
In determining a property’s valuation, the Valuers take into
account property specific information such as the current tenancy
agreements and rental income earned by the asset. They then
External valuations
We read the valuation reports for all properties and discussed the reports with
each of the Valuers. We confirmed that the valuation approach for each property
was in accordance with accounting standards and suitable for use in determining
the carrying value of Investment Properties at 31 December 2017.
It was evident from our discussions with management and the Valuers and
our review of the valuation reports that close attention had been paid to each
property’s individual characteristics and its overall quality, geographic location
and desirability as a whole.
We assessed the Valuers’ qualifications, expertise and their objectivity and we
found no evidence to suggest that the objectivity of any Valuer in their performance
of the valuations was compromised.
We carried out procedures, on a sample basis to test whether property-specific
information supplied to the Valuers by the Group reflected the underlying property
records held by the Group. For the items tested, the information was consistent.
Assumptions
Our work over the assumptions focused on the largest properties in the portfolio
and those properties where the assumptions used and/or year-on-year fair value
movement suggested a possible outlier versus market data. We also engaged our
own in-house valuation specialist to critique and challenge the work performed and
assumptions used by the Valuers. In particular, we compared the valuation metrics
used by the Valuers to recent market activity.
We concluded that the assumptions used in the valuations were supportable in
light of available market evidence.
Independent auditor’s report (continued)
55

Key audit matterHow our audit addressed the key audit matter
apply assumptions in relation to capitalisation rates and current
market rent and anticipated growth, based on available market
data and transactions, to arrive at a range of valuation outcomes,
from which they derive a point estimate. Due to the unique nature
of each property, the assumptions applied take into consideration
the individual property characteristics at a granular tenant by
tenant level, as well as the qualities of the property as a whole.
The Group has adopted the assessed values determined by
the Valuers.
Overall valuation estimates
Because of the subjectivity involved in determining the appropriate valuations
for individual properties with the existence of alternative assumptions and
valuation methods, we determined a range of values that were considered
reasonable for an individual property to evaluate the independent property
valuations used by management. If we find an error in a property valuation
or determine that the valuation is outside the reasonable range, we would
evaluate the error or difference against overall materiality to determine if
there is a material misstatement in the consolidated financial statements.
The valuations adopted by the Group were all within an acceptable range.
We also considered whether or not there was bias in determining individual
valuations and found no evidence of bias.
Goodwill impairment assessment
As disclosed in note 6.5 of the consolidated financial statements,
the goodwill balance of $29 million was recognised when the
Company merged with Direct Property Fund Limited and is
supported by an annual impairment review. No impairment
charge has been recorded against this balance in the current
financial year.
Management have used the fair value of the Group less costs of
disposal to support the continued carrying value for the goodwill
balance and this involves the application of subjective judgement
about the control premium. The control premium is considered
to be a key area of judgement.
We evaluated management’s process around testing for goodwill impairment and
performed the following procedures:
• Agreed the daily high and low trade prices for the Group’s shares at year end
to NZX trading data;
• With the assistance of our in-house valuation specialist, we assessed the
reasonableness of the control premium applied in the goodwill impairment
calculation as well as the costs of disposal estimate through examining
market evidence from past transactions; and
• Recalculated the Group’s net assets as at 31 December 2017.
We also performed sensitivity analysis around the control premium assumption to
ascertain the extent of change that individually would be required for the goodwill
balance to be impaired. The control premium will need to fall by more than 80%
before there is an impairment issue.
Internalisation of management
As disclosed in note 5 of the consolidated financial statements,
the Company paid $41.9 million to PFIM Limited to terminate
the management and administrative services contract with
the Company.
Management have accounted for this transaction as a business
combination in accordance with accounting standards.
This transaction is considered to be a significant transaction.
We have evaluated management’s accounting treatment for the internalisation
and performed the following procedures:
• Considered the requirements under accounting standards to that adopted
by management in respect of the internalisation of management;
• Assessed the accounting treatment and the related disclosures in the
consolidated financial statements of the internalisation of management
through examining the internalisation agreement supporting the underlying
transaction; and
• In respect of the payment to cancel the management arrangement, this has
been attributed to the extinguishment of the pre-existing relationship and
has been expensed in the consolidated statement of comprehensive income.
The accounting for the internalisation transaction has been appropriately reflected
in the consolidated financial statements.
Information other than the consolidated financial statements and auditor’s report
The Directors are responsible for the annual report. The other information included in the annual report is expected to be made available to us after the
date of this auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information included in the annual report and we will not express any form
of assurance conclusion on the other information.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated. When we read the other information in the annual report, if we conclude that there is a material misstatement of this other
information, we are required to communicate the matter to the Directors and consider further appropriate actions.
Independent auditor’s report (continued)
56
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Independent auditor’s report (continued)
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the consolidated financial statements in accordance
with NZ IFRS and IFRS, and for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements, as a whole, are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs NZ and ISAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those matters which
we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinions
we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Samuel Shuttleworth.
For and on behalf of:
Chartered Accountants Auckland
12 February 2018
57

FIVE-YEAR PERFORMANCE SUMMARY
YEAR ENDED 31 DECEMBER 201720162015 2014 2013
ALL VALUES IN $M UNLESS OTHERWISE NOTED
FINANCIAL PERFORMANCE
Operating revenue 73.571.166.963.848.1
Operating expenses(25.9)(28.0)(30.3)(26.9)(21.2)
Total operating earnings47.643.136.636.926.9
Non-operating income and expenses2.088.943.029.020.5
Profit before taxation49.6132.179.665.947.4
Total taxation benefit / (expense)2.1(8.7)(6.8)(6.0)(6.9)
Total comprehensive income after tax51.7123.472.859.940.5
Weighted average number of ordinary shares ('000 shares)459,600450,079422,275411,502316,742
IFRS earnings per share (cents per share)11.2527.4217.2514.5512.79
DISTRIBUTIONS
Total comprehensive income after tax51.7123.472.859.940.5
Distributable profit adjustments(14.6)(89.3)(41.5)(28.9)(17.2)
Distributable profit37.134.131.331.023.3
Weighted average number of ordinary shares ('000 shares)459,600450,079422,275411,502316,742
Distributable profit per share (cents per share)8.087.587.017.417.28
Gross dividends paid relating to the year reported (cents per share)7.459.249.069.048.69
Net dividends paid relating to the year reported (cents per share)7.457.357.307.257.20
Pay-out ratio (%)95.7%97.2%106.1%97.8%100.4%
FINANCIAL POSITION
Investment properties1,210.81,083.3986.6876.0841.8
Goodwill29.129.129.129.129.1
Other assets2.29.411.51.86.1
Total assets1,242.11,121.81,027.2906.9877.0
Borrowings370.6332.9330.9312.8314.6
Other liabilities28.632.738.329.127.2
Total liabilities399.2365.7369.2341.9341.8
Total equity842.9756.1658.0565.0535.2
Closing shares on issue ('000 shares)498,723452,459447,692411,502411,502
Net tangible (excluding goodwill) assets (cents per share)163.2160.7140.5130.2123.0
Gearing (%)30.8%30.1%33.3%35.8%37.4%
PROPERTY PORTFOLIO METRICS
Number of properties (#)9283847983
Number of tenants (#)148143141134136
Contract rent79.672.572.365.865.4
Occupancy (%)99.9%99.6%99.6%98.5%97.1%
Net lettable area including yard (sqm) 756,455 667,441 673,112 626,755 627,575
Weighted average lease term (years)5.334.795.185.265.31
Capitalisation rate (%)6.4%6.6%7.0%7.2%7.8%
58
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

COMPANY
STRUCTURE
& STATUTORY
INFORMATION
Property
for
Industry
Limited
Annual
Report
31 December
2017
59

COMPANY STRUCTURE AND
STATUTORY INFORMATION
Property for Industry Limited (the Company, PFI) is a publicly listed company established in 1994. The Board currently has six Directors, five of
whom are independent.
More information on the PFI Board and Management Team is available on the PFI website at https://www.propertyforindustry.co.nz/about-pfi/
our-people-investors/.
PRINCIPAL ACTIVITY
PFI is a listed industrial property investment company. PFI and its subsidiary, P.F.I. Property No. 1 Limited (together, the Group), invest solely in
New Zealand. There has not been any change in the nature of the Company’s or Group’s business in the year ended 31 December 2017, nor in
the classes of business in which the Company has an interest.
GOVERNANCE
The Board of PFI is committed to the highest standards of business behaviour and accountability. The Board regularly reviews and assesses the
Group’s governance structures and processes to ensure they are consistent with best practice standards.
As part of the Board’s ongoing monitoring and review of the Group’s governance framework, the Board has developed a Corporate Governance
Manual (the manual) that forms the Group’s corporate governance framework. The manual was reviewed and revised by the Board during 2017
to reflect the new NZX Corporate Governance Code (the NZX Code).
A copy of the manual is available on the PFI website at https://www.propertyforindustry.co.nz/about-pfi/governance/ and includes:
1. Code of Ethics;
2. Board Charter;
3. Audit and Risk Committee Charter;
4. Nomination and Remuneration Committee Charter;
5. Remuneration Policy;
6. Financial Products Trading Policy;
7. Continuous Disclosure Policy; and
8. Diversity Policy.
COMPLIANCE WITH NZX REQUIREMENTS
PFI considers that it complies with the NZX Code.
NZX CODE: KEY PRINCIPLES
This section sets out PFI’s corporate governance policies, practices and processes by reference to the NZX Code’s eight key principles and
supporting recommendations.
Principle One : Code of Ethical Behaviour
Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for these standards being
followed throughout the organisation.
Code of Ethics
The Board has developed a Code of Ethics that forms part of the manual. The Code of Ethics provides a framework for PFI’s Directors,
Independent Contractors (Gregory Reidy, Simon Woodhams and Craig Peirce, see below) and employees by which they are expected to
conduct their duties by facilitating behaviour that is consistent with PFI’s business standards.
PFI monitors compliance with the Code of Ethics through its management processes as well as through the whistleblowing procedures set out
in the Code of Ethics itself. All Directors, Independent Contractors and employees are informed of the content of the Code of Ethics prior to
commencing such roles, and will be informed of any future change to the Code of Ethics.
Financial Products Trading Policy
PFI is committed to transparency and fairness in financial product dealing and the rules for dealing in PFI’s listed securities are contained in its
Financial Products Trading Policy. The policy’s main purpose is to ensure no Director, Independent Contractor, employee or contractor uses their
position or knowledge of PFI or its business to engage in financial product dealing for personal benefit, or to provide a benefit to any third party.
60
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

The Financial Products Dealing Policy applies to Directors, Independent Contractors, employees and contractors of PFI and its subsidiary, and
trusts and companies controlled by those persons (Restricted Persons).
The key points of the policy are:
§
A prohibition on “insider trading”, meaning persons who hold non-publically available price-sensitive information must not pass on that
information, nor acquire or dispose of PFI’s listed securities;
§
Restricted Persons must obtain consent to trade PFI listed securities at any time; and
§
No trading is permitted by Restricted Persons during “blackout periods” from the balance date and the half-year balance date until release
of the relevant results to NZX.
Principle Two: Board Composition & Performance
To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and perspectives.
Board Charter
The Board has developed a charter that sets out its authority, duties and responsibilities. The Board, through a set of formal policies and procedures:
§
Establishes a clear framework for oversight and management of PFI’s operations and for defining the respective roles and responsibilities
of the Board;
§
Structures itself to be effective in discharging its responsibilities and duties;
§
Sets standards of behaviour expected of the Company’s Management Team and representatives;
§
Safeguards the integrity of the company’s financial reporting;
§
Ensures timely and balanced disclosure;
§
Respects and facilitates the rights of shareholders;
§
Recognises and manages risk;
§
Encourages Board and Management Team effectiveness;
§
Remunerates fairly and responsibly; and
§
Recognises the legitimate interests of all stakeholders.
The Board has an obligation to protect and enhance the value of the assets of PFI for the benefit of shareholders. It achieves this through
approval of appropriate corporate strategies, with particular attention to capital structure, acquisition and divestment proposals, capital
expenditure and the review of the performance of the Management Team on a regular basis.
The Board delegates implementation of the adopted corporate strategies to PFI’s Management Team.
Board Composition, Appointments, Independence & Operation
The constitution allows for between three and eight Directors. As at 31 December 2017, there were five Directors: four of whom are independent.
In addition, David Thomson was appointed as an Independent Director on 12 February 2018. The information below excludes Mr Thomson as this
appointment was subsequent to 31 December 2017. It is the Company’s policy that there should always be a majority of Independent Directors.
The Directors of the Company who held the office during the 12 months to 31 December 2017, their status, date of appointment and meeting
attendances follows:
DIRECTOR STATUS
DATE OF
APPOINTMENT
LAST
RE-ELECTED
DATE CEASED
TO BE A
DIRECTOR
MEETINGS
ATTENDED
(TEN MEETINGS
HELD)
Peter MasfenBoard Chairman
Independent Director
17 May 200215 June 2016N/A10
Anthony BeverleyDeputy Board Chairman
Audit and Risk
Committee Chairman
Nomination and Remuneration
Committee Chairman
Independent Director
2 July 200122 June 2017N/A10
Humphry RollestonIndependent Director5 July 199422 June 2017N/A8
Susan PetersonIndependent Director24 May 201615 June 2016N/A9
Gregory ReidyManaging Director20 January 201220 May 2015N/A10
61

A profile of each Director outlining their experience, length of service and independence can be found on the PFI website.
Details of Directors’ relevant interests in the Company’s Financial Products as at 31 December 2017 can be found below.
The constitution provides that one third (or the nearest whole number to one third) of the Board must offer themselves for re-election
at a meeting of shareholders each year.
All current Directors are also Directors of the Company’s subsidiary, P.F.I. Property No. 1 Limited.
Where a Board vacancy arises or the Board otherwise determines a need to appoint a new Director, it is the responsibility of the Nomination
and Remuneration Committee to identify and nominate external candidates to fill Board vacancies as and when they arise (see Principle 3 below
for further information). PFI enters into a formal written agreement with all new Directors, which establishes the terms of their appointment.
Directors are encouraged to undertake continuing education to develop and maintain their skills and knowledge. The Chairperson meets
annually with Directors of the Company to discuss individual performance of Directors. The Board reviews its performance as a whole on
an annual basis.
Under the Board Charter (described in further detail above) the Managing Director of PFI is not eligible to be appointed as the Chair of the Board.
Gender and Diversity
The breakdown of the gender composition of PFI’s Directors and Officers as at the end of the previous two financial years is as follows:
FINANCIAL YEAR
MALE FEMALE
DIRECTORSOFFICERSDIRECTORSOFFICERS
Year ending 31 December 20164N/A1N/A
Year ending 31 December 20174210
Note that PFI did not have any Officers for the year ending 31 December 2016 and previous periods.
The Board has established a Diversity Policy in accordance with the NZX Code. The PFI Board believes that a diverse workforce is essential for it
to be able to deliver its strategic objectives and continue to meet its responsibilities to its customers, its employees, the communities in which it
works, and its shareholders. It is further noted that six members of the team of 10 are female.
Principle 3: Board Committees
The Board should use committees where this will enhance its effectiveness in key areas, while still retaining Board responsibility.
Audit and Risk Committee
The Board has established an Audit and Risk Committee in accordance with the NZX Code. The Audit and Risk Committee has developed a
written charter that outlines the committee’s authority, duties, responsibilities, relationship with the Board and a policy on audit independence.
The committee develops and monitors procedures to ensure the Board is properly and regularly informed and updated on corporate financial
matters. The Board is required to regularly review the performance of the Audit and Risk Committee.
The Audit and Risk Committee’s functions include:
§
Recommending the appointment and removal of external auditors (see Principle 7 “Auditors” below for further detail);
§
Reviewing PFI’s financial reporting documents with the view to ensuring PFI maintains accurate financial and accounting records; and
§
Reviewing earnings releases and financial reports.
In addition to the committee’s audit and financial reporting related functions, it is also responsible for providing a view on PFI’s business and
financial risk management process, including the adequacy of the overall control environment, independence from management and controls
in selected areas representing significant risk.
The Audit and Risk Committee meets at least twice a year (or more frequently if required) with the Group’s auditor to review the outcome
of the interim review (30 June) and annual audit (31 December). Independent Contractors and employees will only attend Audit and Risk
Committee meetings at the invitation of the committee.
The Audit and Risk Committee must have a minimum of three Directors as members and the majority must be Independent Directors.
No executive or Managing Director may be a member of the Audit and Risk Committee. The Chair of the Board is not eligible to be chair
of the Audit and Risk Committee.
At 31 December 2017, the members of the Audit and Risk Committee were Anthony Beverley (Chairman of the Audit and Risk Committee),
Peter Masfen and Susan Peterson. All were members of the committee at all times during 2017 and all attended the two meetings of the
Audit and Risk Committee held during 2017.
62
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Nomination and Remuneration Committee
The Board has also established a Nomination and Remuneration Committee in accordance with the NZX Code, whose role includes identifying
and recommending individuals for nomination to be members of the Board and its committees and regularly reviewing the remuneration policy
(for further information on remuneration, see Principle 5 “Remuneration” below). The Nomination and Remuneration Committee has developed
a written charter to assist it fulfil to this purpose, which outlines the committee’s authority, duties, responsibilities and relationship with the
Board. The Board is required to regularly review the performance of the Nomination and Remuneration Committee and undertakes a formal
review annually of its objectives and activities.
When nominating candidates, the committee takes into account a range of factors as well as perceived needs of the Board at the time. Some of
these factors include qualifications, experience, requirements of the NZX Listing Rules and the ability to exercise and independent perspective
and informed judgment on matters that come before the Board. While the committee has the authority to obtain legal or other independent
professional advice, it may only nominate a person to be a Director of PFI with approval of the Board.
The Nomination and Remuneration Committee must have at least two members, all of whom must be Independent Directors.
At 31 December 2017, the members of the Nomination and Remuneration Committee were Anthony Beverley (Chairman of the Nomination
and Remuneration Committee) and Susan Peterson.
Other Committees and Takeover Protocols
The Board does not consider that any additional Board committees as standing Board committees need to be established at this stage.
While the Board has not established a standing independent takeover committee, it has adopted appropriate protocols to guide the Board
in the event there is a takeover offer for PFI.
Principle Four: Reporting & Disclosure
The Board should demand integrity in non-financial reporting, and in the timeliness and balance of corporate disclosures.
Continuous Disclosure Policy
PFI is committed to its obligation to inform shareholders and market participants of all material information that might affect the price of its
listed securities in accordance with the NZX Listing Rules and the Financial Markets Conduct Act 2013. Accordingly, the Board has adopted
a Continuous Disclosure Policy which applies to PFI, its subsidiary (the Group) and their respective Directors, and all relevant Independent
Contractors and employees of PFI. The Board has also appointed the Chief Financial Officer and Company Secretary to act as the Group
Disclosure Officer. The Group Disclosure Officer is responsible for ensuring policy compliance and for investigating any alleged breaches.
Corporate Governance Documents
PFI’s Board and committee charters, annual and interim reports, company announcements, the policies recommended in the NZX Code and
other investor-related material are available on PFI’s website.
Financial / Non-Financial Disclosure
PFI is committed to appropriate financial and non-financial reporting. Oversight of the Company’s financial reporting is applied through the
Audit and Risk Committee. PFI is also committed to non-financial reporting, in particular on material exposure to ESG (environmental, social
and governance) risks and other key risks. You can find more information on PFI’s approach to non-financial disclosure under the heading
“Growing sustainably” in this annual report.
Principle Five: Remuneration
The remuneration of Directors and executives should be transparent, fair and reasonable.
As noted previously under Principle 3, the Board, in setting the Directors’ remuneration, is to be guided by the Remuneration Policy that forms
part of the manual. The total remuneration pool that was approved at the 2016 PFI annual general meeting is $430,000. This comprised five
Independent Director fees of $70,000 each ($350,000 in total), an additional $50,000 for the Board Chair, an additional $10,000 for the Chair
of the Audit and Risk Committee, and an amount for specific payments, being $20,000, which provides flexibility to remunerate Directors who
assume additional responsibilities.
Other than noted in this report, neither the Company nor its subsidiary have provided any other benefits to a Director for services as a Director
or in any other capacity.
Neither the Company nor its subsidiary have made loans to a Director.
Neither the Company nor its subsidiary have guaranteed any debts incurred by a Director.
63

The table below sets out the total remuneration received by the Company’s Directors during the year to 31 December 2017.
DIRECTOR ROLE
FEES PAID
2017
$000
FEES PAID
2016
$000
Peter MasfenBoard Chairman 50 42
 Independent Director 7065
Anthony BeverleyDeputy Board Chairman – –
Audit and Risk Committee Chairman1010
 Nomination and Remuneration Committee Chairman – –
 Independent Director 70 65
Amount for specific payments20–
Humphry RollestonIndependent Director 70 65
Susan Peterson (1)Independent Director 70 41
Gregory Reidy (2)Managing Director – –
John Waller (3)Independent Director– 48
Total  360 336
(1) Susan Peterson appointed to the Board on the 24th of May 2016.
(2) No Directors’ fees were paid to Gregory Reidy due to his role as Managing Director. You can find further information about Gregory Reidy’s
remuneration in the “Employee Remuneration” section below.
(3) John Waller passed away on the 20th of September 2016 and as such ceased to be a Board member on that date.
Directors’ Relevant Interests
Details of Directors’ dealings in the Company’s financial products since 1 January 2017 are as follows:
DIRECTOR
NO. OF SHARES
ACQUIRED / (DISPOSED)
CONSIDERATION
PER SHARE  DATE
Susan Peterson (beneficial holder)16,000$1.653 April 2017
Gregory Reidy (beneficial holder) 914,280$1.646 July 2017
Susan Peterson (beneficial holder)171$1.641 September 2017
Peter Masfen (beneficial holder)433,431$1.547 November 2017
Peter Masfen (legal, but not beneficial, holder)27,083$1.547 November 2017
Humphry Rolleston (beneficial holder)1,625$1.547 November 2017
Humphry Rolleston (legal, but not beneficial, holder)10,075$1.547 November 2017
Susan Peterson (beneficial holder)1,617$1.547 November 2017
Gregory Reidy (beneficial holder)91,428$1.547 November 2017
Details of Directors’ relevant interests in the Company’s financial products as at 31 December 2017 are as follows:
DIRECTOR NATURE OF RELEVANT INTEREST NUMBER OF SHARES
Peter MasfenBeneficial holder 4,767,744
 Legal, but not-beneficial, holder 297,916
Humphry RollestonBeneficial holder17,875
 Legal, but not-beneficial, holder 110,825
Susan PetersonBeneficial holder17,788
Gregory ReidyBeneficial holder1,005,708
Please note that no Director had a relevant interest in the Company’s bonds.
64
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Employee Remuneration
On 30 June 2017, the management of the Company and its subsidiary was internalised. Following the internalisation, the Company employed
seven staff for the remainder of 2017.
The Managing Director, General Manager and Chief Financial Officer are Independent Contractors and their remuneration is set out in
accordance with the terms of those contracts, which the Board and Nomination and Remuneration Committee oversee. Their remuneration
package comprises of a base amount as well as a performance bonus, which is measured quarterly and based on shareholder return.
During the year ended 31 December 2017, the remuneration of the Independent Contractors was as follows (please note that, as PFI internalised
on 30 June 2017, the amounts below represent a half-year of remuneration, and that there are no prior year comparatives as these
arrangements did not exist in the prior year):
NAMEPOSITION
BASE
AMOUNT
$000
PERFORMANCE
BONUS
$000
TOTAL
$000
Gregory ReidyManaging Director21256268
Craig PeirceChief Financial Officer21256268
Simon WoodhamsGeneral Manager21256268
TOTAL636168804
During the year ended 31 December 2017, the number of employees who received remuneration with a combined total value exceeding
$100,000 is set out below (please note that, as PFI internalised on 30 June 2017, the amounts below represent a half-year of remuneration):
REMUNERATION RANGEEMPLOYEES
$110,001 - $120,0001
$100,001 - $110,000–
During the year ended 31 December 2016, neither the Company nor its subsidiary has any employees; accordingly no employees, or former
employees, of the Company or its subsidiary received remuneration or other benefits in their capacity as employees, the value of which was
or exceeded $100,000 per annum.
Principle Six: Risk Management
Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The Board should regularly
verify that the issuer has appropriate processes that identify and manage potential and material risks.
The Board is responsible for identifying key risks and managing those risks through internal procedures, which the Audit and Risk Committee
regularly reviews (see Principle 3 “Board committees” above).
For example, the Audit and Risk Committee formally considers the Company’s risk register twice annually during the meetings of the Audit and
Risk Committee
As identified in our “Growing Sustainably” section, health and safety is one of the highest priorities for our business. The Board is responsible
for overseeing PFI’s compliance with health and safety in accordance with industry best practice.
65

Principle Seven: Auditors
The Board should ensure the quality and independence of the external audit process.
Together with the Audit and Risk Committee (see Principle 3), the Board is responsible for establishing the Company’s audit framework and
that communication is maintained with external auditors or accountants. Annexed to the Audit and Risk Committee Charter is a separate
Policy on Audit Independence, which covers the provision of services by external auditors.
Under the policy, it is the Audit and Risk Committee’s role to approve the appointment of PFI’s external auditors and assessing PFI’s internal
controls and systems the support external financial reporting.
PFI’s external auditors are subject to a rotation system, which requires the external auditor or lead audit partner to change every five years.
There is also a mandatory stand down period before those partners can next be engaged by PFI. Neither will a former Independent Contractor
or employee of PFI be engaged in an external audit role within two years of ceasing to be employed by PFI.
The external auditor attends PFI’s Annual Meeting each year to answer any questions relating to the audit.
The Audit and Risk Committee must pre-approve all audit services, as well as all non-audit services provided by the auditor. The Policy on Audit
Independence sets out a number of principles to guide the committee in assessing whether the services could be perceived as conflicting with
the independent role of the auditor. To illustrate, approval will not be granted to produce financial statements (such that they might be perceived
as auditing their own work), implement financial systems, or perform any function of management. This ensures that there is a clear separation
between internal and external audit roles. The Audit and Risk Committee monitors, and may limit, the amount of non-audit related work being
undertaken by the firm holding office as auditor, if that work may, in its opinion, impair the independence of the external auditor.
Principle Eight: Shareholder Rights & Relations
The Board should respect the rights of shareholders and foster constructive relationships with shareholders that encourage them to engage
with the issuer.
PFI encourages an open dialogue with its shareholders and stakeholders. The manual, annual report, financial information, and all NZX
announcements are available on the Company’s website. PFI shareholders are encouraged to receive shareholder communications
electronically.
In respect of voting rights, PFI shareholders have one vote per share they hold in PFI, and will have the right to vote on major decisions which
may change the nature of PFI in accordance with the NZX Main Board Listing Rules.
In order for shareholders to fully participate in meetings, the Board endeavours to post the annual shareholders’ notice of meeting on PFI’s
website as soon as possible and at least 28 days prior to the meeting.
OTHER MATTERS
Directors’ Interests Register
During the year, the Board authorised the renewal of the Directors’ and Officers’ insurance cover as at 30 June 2017 for a period of 12 months
and has certified, in terms of section 162 of the Companies Act 1993, that this cover is fair to the Company.
As permitted by the Company’s constitution and the Companies Act 1993, the Company has also executed a deed indemnifying its Directors
against potential liabilities and costs they may incur for acts or omissions in their capacity as Directors of the Company and its subsidiary.
Please refer to the Directors’ Relevant Interests section above for information regarding the acquisition and disposition of relevant interests
in the Company’s financial products by its Directors.
No Director has sought authorisation to use Company information.
Other than noted in this report, there were no other interest register entries recorded for the Company or its subsidiary for the year ended
31 December 2017.
Donations
Neither the Company nor its subsidiary made any donations during the year.
66
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

Substantial Productholders as at 31 December 2017
As at 31 December 2017, the total number of ordinary shares on issue was 498,723,330. The Company has only ordinary shares on issue.
The persons, who, for the purposes of section 293 of the Financial Markets Conduct Act 2013, were substantial productholders as at
31 December 2017 are:
SECURITY HOLDER NO. OF SHARES
% WHEN NOTICE
WAS FILED
ANZ New Zealand Investments Limited 22,829,7685.035%
Accident Compensation Corporation26,579,2575.329%
Details of Dividends Paid
DIVIDENDS DATE PAID
CENTS
PER SHARE
TOTAL PAID
2017
$000
TOTAL PAID
2016
$000
Q4 2015 final dividend9 March 2016 2.00 – 8,954
Q1 2016 interim dividend23 May 2016 1.75 – 7,860
Q2 2016 interim dividend1 September 2016 1.75 – 7,882
Q3 2016 interim dividend23 November 2016 1.80 – 8,124
Q4 2016 final dividend8 March 2017 2.05 9,275 –
Q1 2017 interim dividend29 May 2017 1.75 7,918 –
Q2 2017 interim dividend1 September 2017 1.75 7,918 –
Q3 2017 interim dividend22 November 2017 1.80 8,977 –
Total dividends per statement of changes in equity  34,088 32,820
NZX Waivers
The Company has relied on the NZX class waiver and ruling on NZX Debt Market Listing Rules 3.2.1(d) and 3.2.1(e), issued on 7 April 2017,
in relation to the trust deed for the fixed rate bonds. The class waiver permits the trust deed to provide for (1) a meeting of bondholders to
be called on a requisition in writing by holders of not less than 10% of the amount of the bonds for the time being outstanding (or such other
number of holders as required by section 120(1)(b) of the Financial Markets Conduct Act 2013), and (2) the necessary majority to pass an
extraordinary resolution to be not less than 75% of the votes cast on a poll.
67

GROWING SUSTAINABLY
We have recognised the
changing reporting landscape
in New Zealand. We are looking
forward to continuing our journey
in formalising and disclosing
some of the things we do to
combat our environmental,
social and governance (ESG)
impacts. We spent some time
this year to initiate the process
by defining our ESG vision and
completing our materiality
assessment to determine the
most important issues for us
to consider. Through doing so,
we realised that we are already
addressing ESG issues in various
ways and are now transitioning
to  a more transparent and
formalised framework to be
able to quantify, highlight
and continually improve our
ESG practises.
OUR ESG VISION IS FOCUSED ON BEING A RESPONSIBLE AND
RESPONSIVE LANDLORD IN ORDER TO CREATE LONG TERM VALUE FOR
OUR KEY STAKEHOLDERS.
IMPORTANCE TO BUSINESS
IMPORTANCE TO STAKEHOLDER
HIGH
HIGHLOW
Building Safety
Diversity
Industry Leadership
Contaminated Land
Shareholder Rights
Environmental Compliance
Reporting & Transparency
Policies & Procedures
Energy
Management
Health and Safety
Community
Involvement
Environmental IssuesSocial IssuesGovernance Issues
The size of points represents the potential
scale of the impact on the business
We have followed a staged process to complete our materiality process. After identifying our stakeholders, individual interviews with various
representatives of our stakeholder groups helped us identify the material issues which are most important to them. Materiality will help us
ensure that we are reporting on matters that are relevant going forward. These material issues can be seen below.
How we know what’s
most important to
our business
In accordance with accepted
ESG assessment practise,
we have considered both
our internal and external
stakeholders’ ESG risks and
opportunities. We determined
our stakeholder groups as
the following:
OUR BOARD
OUR STAFF
OUR INVESTORS

REGULATORS
OUR TENANTS
OUR CONTRACTORS
OUR COMMUNITIES
68
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

ASSET
SELECTION
FINANCING /
STRUCTURING
PORTFOLIO
MANAGEMENT /
LETTING
REDEVELOPINGASSET
DIVESTMENT
GOVERNANCE /
MANAGEMENT
Contaminated land
■■■
Environmental compliance
■■
Energy management
■
Building safety
■■■
Health & safety
■■■■■■
Industry leadership
■
Diversity
■
Community involvement
■■
Policies & procedures
■■■■■■
Stakeholder rights
■■■■■■
Reporting & transparency
■■
After identifying our material
issues we prioritised them to
focus on the issues currently
of greatest importance to PFI.
Four of the eleven material issues
identified surfaced as the highest
priorities for our business.
§
Building Safety
§
Health & Safety
§
Policies and Procedures
§
Stakeholder Rights
These were prioritised on the
basis of combined highest
importance (top right quadrant
of the matrix) and also breadth
of impact across our value
chain (as can be seen in the
chart above).
Addressing our
material issues
As this is the first time PFI has used ESG as a reporting framework, we will look to refine our approach in
subsequent years. We wanted to share our progress on this journey so far in building some solid foundations
by setting out our ESG strategy and conducting the materiality assessment.
Looking forward
69

SHAREHOLDER STATISTICS
20 LARGEST REGISTERED SHAREHOLDERS
AS AT 31 JANUARY 2018
HOLDER HOLDING
HOLDING
%
1Forsyth Barr Custodians Limited 30,465,155 6.11%
2Accident Compensation Corporation - NZCSD 27,396,074 5.49%
3BNP Paribas Nominees (NZ) Limited - NZCSD 26,938,392 5.40%
4FNZ Custodians Limited 25,426,804 5.10%
5Custodial Services Limited (A/c 3) 14,205,415 2.85%
6Citibank Nominees (New Zealand) Limited - NZCSD 13,827,925 2.77%
7ANZ Wholesale Trans-Tasman Property Securities Fund - NZCSD 13,351,997 2.68%
8HSBC Nominees (New Zealand) Limited - NZCSD 8,802,998 1.77%
9MFL Mutual Fund Limited - NZCSD 8,350,217 1.67%
10Messrs. Wildermoth, Wilson, Young and Spence 7,253,638 1.45%
11Investment Custodial Services Limited (A/c C) 7,252,074 1.45%
12ANZ Wholesale Property Securities - NZCSD 6,557,289 1.31%
13Custodial Services Limited (A/c 2) 5,841,115 1.17%
14Mr. Mckee, Ms. Mckee and NWM Trustees 120 Limited 5,566,373 1.12%
15TEA Custodians Limited Client Property Trust - NZCSD 5,545,573 1.11%
16Custodial Services Limited (A/c 4) 5,520,579 1.11%
17Masfen Securities Limited 4,767,744 0.96%
18Carlaw Heritage Trust Inc 4,115,481 0.83%
19Heatherfield Investments Limited 4,003,286 0.80%
20PT (Booster Investments) Nominees Limited 3,411,914 0.68%
Shares held by top 20 shareholders 228,600,043 45.83%
Balance of shares 270,123,287 54.17%
Total of issued shares 498,723,330 100.00%
SHAREHOLDER SPREAD
AS AT 31 JANUARY 2018
ORDINARY SHARES
NUMBER OF
HOLDERS HOLDING
HOLDING
%
Up to 4,999 825 2,110,249 0.42%
5,000 - 9,999 993 7,190,570 1.44%
10,000 - 49,999 2,411 52,052,175 10.44%
50,000 - 99,999 397 27,043,395 5.42%
100,000 - 499,999 303 59,074,382 11.85%
500,000 and above 113 351,252,559 70.43%
Total 5,042 498,723,330 100.00%
GEOGRAPHICAL SPREAD
AS AT 31 JANUARY 2018
ORDINARY SHARES HOLDING
HOLDING
%
Auckland & Northern Region 282,500,521 56.64%
Hamilton & Surrounding Districts 91,671,257 18.38%
Wellington & Central Districts 62,526,150 12.54%
Dunedin & Southland 43,679,934 8.76%
Nelson, Marlborough & Christchurch 16,404,102 3.29%
Overseas 1,941,366 0.39%
Total 498,723,330 100.00%
70
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

BONDHOLDER STATISTICS
BONDHOLDER SPREAD
AS AT 31 JANUARY 2018
BONDS
NUMBER OF
HOLDERS HOLDING
HOLDING
%
5,000 - 9,999 69 361,000 0.36%
10,000 - 49,999 442 8,705,000 8.71%
50,000 - 99,999 60 3,511,000 3.51%
100,000 - 499,999 33 4,074,000 4.07%
500,000 - 999,999 1 560,000 0.56%
1,000,000 and above 11 82,789,000 82.79%
Total 616 100,000,000 100.00%
71

2018
FEBRUARY
§
2017 Annual report released
MARCH
§
2017 Final dividend payment
MAY
§
2018 First-quarter announcement
§
2018 First-quarter dividend payment
§
Annual meeting
AUGUST
§
2018 Half-year announcement
§
2018 Interim report released
§
2018 Half-year dividend payment
NOVEMBER
§
2018 Third-quarter announcement
§
2018 Third-quarter dividend payment
2019
FEBRUARY
§
2018 Full-year announcement
§
2018 Annual report released
MARCH
§
2018 Final dividend payment
ISSUER OF SHARES AND BONDS
Property for Industry Limited
Shed 24, Prince’s Wharf
147 Quay Street
PO Box 1147
Auckland 1140
Tel: +64 9 303 9450
Fax: +64 9 303 9657
propertyforindustry.co.nz
info@propertyforindustry.co.nz
DIRECTORS
Peter Masfen (Chairman)
Anthony Beverley (Deputy Chairman)
David Thomson (appointed 12 February
2018)
Humphry Rolleston
Susan Peterson
Gregory Reidy
GENERAL MANAGER
Simon Woodhams
Tel: +64 9 303 9652
woodhams@propertyforindustry.co.nz
CHIEF FINANCIAL OFFICER /
COMPANY SECRETARY
Craig Peirce
Tel: +64 9 303 9651
peirce@propertyforindustry.co.nz
AUDITOR
PricewaterhouseCoopers
188 Quay Street
Private Bag 92162
Auckland 1142
Tel: +64 9 355 8000
Fax: +64 9 355 8001
CORPORATE LEGAL
ADVISOR
Chapman Tripp
23 Albert Street
PO Box 2206
Auckland 1140
Tel: +64 9 357 9000
Fax: +64 9 357 9099
VALUATION PANEL
CBRE Limited
Colliers International New Zealand
Limited
Jones Lang LaSalle Limited
Savills (NZ) Limited
BANKERS
ANZ Bank New Zealand Limited
Bank of New Zealand
Commonwealth Bank of Australia
Westpac New Zealand Limited
SECURITY TRUSTEE
New Zealand Permanent Trustees
Limited
34 Shortland Street
PO Box 1598
Auckland 1140
Tel: 0800 371 471
BOND SUPERVISOR
Public Trust
34 Shortland Street
PO Box 1598
Auckland 1140
Tel: 64 9 985 5300
REGISTRAR
Computershare Investor Services
159 Hurstmere Road
Private Bag 92119
Auckland 1142
Tel: +64 9 488 8777
Fax: +64 9 488 8787
investorcentre.com/nz
This Annual Report is dated 21 February 2018 and signed on behalf of the board by:
Peter Masfen Anthony Beverley
Chairman Director
DIRECTORYCALENDAR
72
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2017

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