Kiwi Property lifts profit, positions for growth
Results announcement
Results for announcement to the market
Name of issuer Kiwi Property Group Limited
Reporting Period 12 months to 31 March 2019
Previous Reporting Period 12 months to 31 March 2018
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$286,279 +3.0%
Total Revenue $286,279 +3.0%
Net profit/(loss) from continuing
operations
$138,092 +15.0%
Total net profit/(loss) $138,092 +15.0%
Final Dividend
Amount per Quoted Equity
Security
$0.03475000
Imputed amount per Quoted
Equity Security
$0.01070000
Record Date 5 June 2019
Dividend Payment Date 20 June 2019
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$1.43 $1.40
A brief explanation of any of the
figures above necessary to
enable the figures to be
understood
Please see attached result announcement for commentary
on the result.
Authority for this announcement
Name of person authorised to
make this announcement
Stuart Tabuteau
Contact person for this
announcement
Stuart Tabuteau
Contact phone number +64 9 359 4025
Contact email address stuart.tabuteau@kp.co.nz
Date of release through MAP 20/05/2019
Audited financial statements accompany this announcement.
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NZX RELEASE
20 May 2019
Kiwi Property lifts profit, positions for growth
Kiwi Property today reported a profit after tax
1
of $138.1 million for the year ended
31 March 2019, up from $120.1 million in the prior year, driven primarily by a stronger revaluation
performance from our high-quality portfolio of assets.
Funds from Operations (FFO)
2
, the Company’s measure of operating performance, was
$106.9 million. As expected, this was down from $111.3 million in the prior year due to the
short-term impact associated with selling two non-core assets and reinvesting the proceeds into
superior development opportunities at Sylvia Park in Auckland. These developments will
contribute progressively to shareholder returns from the 2020 financial year.
Chair, Mark Ford, said: “Our portfolio is now beneficially weighted towards Auckland and the
golden triangle where about 50 per cent of New Zealand’s population lives and much of the
country’s economic activity takes place.
“We have continued to grow dividends, improved the quality of the portfolio and placed the
company in an even stronger position to pursue growth opportunities for long-term benefit,”
said Mr Ford.
growth in dividends
A final cash dividend of 3.475 cents per share will be paid, taking the full year cash dividend to
6.95 cents per share, in line with guidance and up from 6.85 cents per share in the prior year.
The Dividend Reinvestment Plan will operate in respect of the final dividend and a 2% discount
will be applied.
In the year ahead, the board projects an increased full-year cash dividend of 7.05 cents per
share, absent material adverse events or unforeseen circumstances.
strategic alignment
Chief Executive Officer, Clive Mackenzie, said: “In line with our evolving strategy, during the year
we reorganised the executive team to more strongly align the business and execute on our
growth opportunities. These opportunities include intensifying our large landholdings by
developing mixed-use communities, growing income from existing assets and establishing a
team to investigate funds management opportunities.
“Over the 2020 financial year, we will continue to realign our business to these core strategic
objectives,” he said.
strong portfolio performance
Our portfolio of mixed-use, retail and office assets continues to perform strongly. At year-end, the
portfolio was 99.3% occupied, with a healthy weighted average lease expiry of 5.2 years.
2
For the year ended 31 March 2019, total retail sales from our shopping centre assets were
$1.53 billion, up 2.0% (2.4% like-for-like), with specialty sales productivity improving to $11,000 per
square metre. Total retail sales, including those from our large format centres, were $1.70 billion.
Mr Mackenzie said: “Our asset teams have done a great job growing income, with 747 new
leases or rent reviews executed across the entire portfolio, providing a 4.0% lift over prior passing
rentals.”
development pipeline in full swing
During the year, we delivered our first office building at Sylvia Park, ‘ANZ Raranga’ (formerly
known as No.1 Sylvia Park) and the dining development, Langdons Quarter, at Northlands in
Christchurch. We completed the first of two new multi-level carparks at Sylvia Park, and
construction activity for the arrival of a new Kmart store, together with our major Sylvia Park
galleria retail expansion, is well in train.
Mr Mackenzie said: “We have made the decision to expand our galleria retail development at
Sylvia Park. An increase in the net lettable area will accommodate key tenants who want to be
in this iconic location. The expansion increases the project cost by $35 million to $258 million and
we have maintained key yield metrics and increased the projected development profit to 13%
of project cost.”
With completion due in mid-2020, we are finalising negotiations with exciting international and
national tenants to provide further strength for the project, in addition to the two-level Farmers
department store and other retail tenancies already secured.
robust balance sheet
The Company’s balance sheet remains robust, with gearing at 31.0%, comfortably within our
target band of 25%-35%. Our portfolio was valued at $3.2 billion at year-end.
outlook
Mr Mackenzie said: “Kiwi Property is in a great position to focus on growth. I am excited to be
able to work with the executive team and the broader business on implementing our strategic
initiatives, especially exploring how we can best serve New Zealanders through the creation of
mixed-use communities on our largest landholdings.”
additional information
Kiwi Property has today also released an Annual Result Presentation, Annual Report, Property
Compendium and Sustainability Report which are available for download on the Company’s
website kp.co.nz/annual-result or from nzx.com
Notes
1. The reported profit has been prepared in accordance with New Zealand generally accepted accounting
practice (GAAP). Refer to the 2019 Annual Result Presentation for definitions.
2. FFO is an alternative non-GAAP performance measure. Refer to the 2019 Annual Result Presentation for
definitions.
> Ends
3
Contact us for further information
Clive Mackenzie
Chief Executive Officer
clive.mackenzie@kp.co.nz
+64 9 359 4011
Gavin Parker
GM Funds Management and Capital Markets
gavin.parker@kp.co.nz
+64 9 359 4012
Stuart Tabuteau
Chief Financial Officer
stuart.tabuteau@kp.co.nz
+64 9 359 4025
About us
Kiwi Property (NZX: KPG) is the largest listed property company on the New Zealand Stock
Exchange and is a member of the S&P/NZX 20 Index. We’ve been around for 25 years and we
proudly own and manage a $3.2 billion portfolio of real estate, comprising some of New
Zealand’s best mixed-use, retail and office buildings. Our objective is to provide investors with
a reliable investment in New Zealand property through the ownership and active
management of a diversified, high-quality portfolio. S&P Global Ratings has assigned Kiwi
Property a corporate credit rating of BBB (stable) and an issue credit rating of BBB+ for each of
its fixed rate senior secured bonds. Kiwi Property is one of the highest rated New Zealand
companies within CDP (Carbon Disclosure Project) and is a member of FTSE4 Good, a series of
benchmarks and tradable indices for ESG (Environmental, Social and Governance) investors.
Kiwi Property is licensed under the Real Estate Agents Act 2008. To find out more, visit our
website kp.co.nz
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kp.co.nz
feedback
We welcome your questions and value your feedback about our
reporting approach. Please contact us at info@kp.co.nz
Find us at linkedin.com/company/kiwi-property-group
This annual report is dated 17 May 2019 and is signed
on behalf of the board by:
MARK FORD
CHAIR
MARY JANE DALY
CHAIR OF THE AUDIT
AND RISK COMMITTEE
2019 annual reporting suite
In conjunction with this Annual Report, Kiwi Property has released
a Property Compendium, Sustainability Report and Annual Result
Presentation that form part of our 2019 annual reporting suite.
All documents are available on our website,
kp.co.nz/annual-result
key dates
For all our upcoming key investor dates, visit our investor centre
at kp.co.nz/investor-centre
annual meeting
The 2019 annual meeting of Kiwi Property shareholders will be held at
10.30am on Thursday, 20 June 2019, in Cinema 4, HOYTS Cinemas,
Sylvia Park, 286 Mount Wellington Highway, Mount Wellington, Auckland.
our year in review
letter from the chair
PG 02
chief executive officer’s report
PG 06
financials
PG 15
other investor information
corporate governance
PG 52
remuneration report
PG 53
other investor information
PG 59
contents
01
letter from the chair
growing with New Zealand
letter from the chair
dear shareholders
It is my pleasure to present to you our 2019 Annual Report.
In December 2018, we celebrated our 25th year as a
New Zealand listed property entity. We are today – as always
– a Company that is focused on delivering reliable investment
returns from a portfolio of high-quality New Zealand property.
As New Zealand continues to grow, the opportunity is now
for us to capitalise on that growth and plan methodically
for the future. Central to this growth is Auckland and the
golden triangle – the term economic commentators use to
describe the geographic area bounded by Auckland, Hamilton
and Tauranga. It is where about 50 percent of New Zealand’s
population lives and much of the country’s economic activity
takes place.
For these reasons, we have a strong investment bias towards
Auckland and the golden triangle, where a strong economy
and growing population present myriad opportunities to
provide places for people to work, shop, live and play. We are
more determinedly evolving our strategy to intensify our large
landholdings into mixed-use communities – thriving destinations
with outstanding transport infrastructure that combine a
range of complementary uses, such as retail, office, dining,
entertainment, hotel, civic, leisure and residential.
The benefit of this strategy for shareholders is compelling.
By owning a group of assets that provide complementary
economic benefits, we provide income diversity and have
stronger potential to smooth returns through the property cycle.
To read more about our mixed-use vision,
turn to page 10 of this report.
We are also going to deliberately focus on developing
a funds management business to further diversify and grow
our income streams.
In line with our evolving strategy, in March 2019 we reorganised
our executive team to more strongly align the business and
execute on our growth opportunities.
To read more about our executive team,
visit kp.co.nz/about-us/executive-team
our performance
Kiwi Property has recorded a strong full-year result. Net profit
after tax was $138.1 million, which is up on the prior year result
of $120.1 million, driven primarily by a stronger revaluation
performance from our high-quality portfolio of assets.
The Company’s balance sheet remains robust, with gearing
at 31.0%, comfortably within our target band of 25%–35%.
Our property portfolio was valued at $3.2 billion at year end.
contributing to a brighter New Zealand
A key part of our strategy is to help build a brighter New Zealand,
given the fundamental role our assets play in Kiwi communities.
This year, we joined over 80 leading New Zealand companies
on the Climate Leaders Coalition. This coalition of companies,
which represents over 50 percent of New Zealand’s carbon
footprint, has together committed to transitioning New Zealand
to a low-carbon economy.
As a Company, we have already set ourselves a target to reduce
our own carbon footprint by 55% (from 2012 levels) by 2050
(in the past year alone, we reduced our carbon footprint by 3%
and since 2012, we have reduced our footprint by 47%). This is
the right thing to do for New Zealand, and our commitment to
the Climate Leaders Coalition is a natural continuation of our
sustainability programme, which has been in place for more
than 16 years.
the board
There have been no changes to the board in the past 12 months.
Mike Steur and Jane Freeman were re-elected as independent
directors and Mark Powell was elected by our shareholders in
June 2018. Mary Jane Daly will stand for re-election at the
upcoming annual meeting of shareholders.
To read more about our board members,
visit kp.co.nz/about-us/our-board
kiwi property
02
annual report 2019
We have refocused our priorities over the past
year, evolving our strategy and structure to
execute more purposefully on opportunities
and capitalise on New Zealand’s growth.
MARK FORD
CHAIR
dividend guidance
I am pleased to confirm a full-year cash dividend of 6.95 cents
per share, up from 6.85 cents in the prior year and in line with
guidance. In the year ahead, we project an increased full-year
cash dividend of 7.05 cents per share, absent material adverse
events or unforeseen circumstances.
outlook
The Company is in a strong position to capitalise on New Zealand’s
continued growth and to continue moving the business forward.
Our strategic initiatives are set, implementation plans are in place
and under development and we will continue to align capabilities
within our teams to our forward vision.
In the year ahead, full attention will be given to delivering the
galleria development project at Sylvia Park, while an equally strong
focus will be given to progressing our mixed-use community
opportunities across our portfolio. Our new funds management
and property investment teams will focus on examining market
opportunities, while our asset management team will continue
to drive the operational performance of our property assets.
Supportive economic and property market fundamentals,
in combination with strong portfolio metrics, provide us with
confidence the Company will continue to deliver a strong
financial performance.
I look forward to sharing more details on our 2019 annual result
at the annual meeting of shareholders, which will be held in
Auckland on Thursday, 20 June 2019. Details of the meeting
can be found on the inside front cover of this report.
03
kiwi property
04
annual report 2019
where kiwis love to
work, shop, live and play
creating places
05
chief executive officer’s report
This is my first annual report to Kiwi Property shareholders as
Chief Executive Officer. I am pleased to report that we are
delivering on our long-term strategic objectives of rebalancing
our portfolio to focus on growth opportunities while at the same
time diversifying the risks and rewards in the portfolio.
In recent years, we have been rebalancing the composition of
our property portfolio in favour of a greater exposure to Auckland
and the golden triangle because of its economic dominance in
New Zealand. In July 2018, we executed the sale of a non-core
retail asset, North City in Porirua, which followed the sale of The
Majestic Centre in Wellington during December 2017.
We have also invested strategically in value-add opportunities,
delivering over $140 million in property developments in the
past year, including a new fully-leased office building and new
carpark at Sylvia Park and a new dining precinct at Northlands in
Christchurch. We’re also well into our construction and leasing
programme for the new galleria retail extension at Sylvia Park to
deliver an even better retail experience.
Repositioning our portfolio through asset sales and
redevelopments naturally provides a short-term earnings impact.
In line with this, our funds from operations declined year-on-year.
However, we have grown our dividends, improved the quality of
our portfolio and placed ourselves in an even stronger position
to pursue growth opportunities for long-term benefit.
Our after-tax profit improved due to stronger revaluation gains
from our high-quality portfolio of assets, which in turn provided
growth in our net tangible asset backing per share.
FY19 highlights
profit after tax
$138.1m
FY18: $120.1m
funds from operations
$106.9m
FY18: $111.3m
funds from operations
per share
7. 47 c p s
FY18: 7.84 cps
net tangible assets
per share
$1.43
FY18: $1.40
diversifying our risks
and rewards
chief executive officer’s report
kiwi property
06
annual report 2019
Kiwi Property has delivered a year of strong
performance, as we reset the business to
focus on growing with New Zealand.
strategy focus and execution
The strength of Kiwi Property is underpinned by the consistent
strategic actions we have pursued over several years.
This has included the evolution of our mixed-use property
strategy. As noted by the Chair, we increasingly see ourselves as
creators of mixed-use communities that are unique in the market.
We will look to create mixed-use communities at each of
our core assets by intensifying the use of our landholdings
to accommodate a range of complementary assets, evolving
our offerings to respond to market demand.
We will remain disciplined regarding our use of capital, investing
in our business and progressing developments while seeking to
drive shareholder returns.
To help you picture our vision for mixed-use
communities and how we are shaping them for our
visitors and customers, read more on pages 10 to 13.
developments
Sylvia Park represents an outstanding opportunity to create
a mixed-use community over time, adding to what is already a
diverse commercial and lifestyle destination. We currently have
$385 million of developments completed or under way here –
all designed to complement one another and create future value.
In December 2018, we completed the construction of ANZ
Raranga, our first office tower at Sylvia Park, enabling the arrival
of our first tenant, IAG. Fitout works for ANZ, who will take the
lion’s share of space in the building, are under way, with the bank
to move in progressively between May and December of this
year. Leasing of the building concluded with KiwiRail and Roche
taking the remaining space on level one. They will also move into
the building between July and October of this year.
This is the first step in our mixed-use journey. The seamless
integration of ANZ Raranga into the heart of Sylvia Park’s
dining precinct adds fantastic amenity for office workers and
a new source of customers for our retailers.
07
chief executive officer’s report
diversifying our risks
and rewards
With the first office tower now fully leased, we are already taking
enquiries for a second office tower. In response, we have
commenced concept design works, with the possible inclusion
of a hotel also being investigated.
Our customer parking at Sylvia Park will be unrivalled in
New Zealand. This year, we added a further 590 spaces for
our visitors and customers, and by the time we complete the
galleria extension, which includes construction of a further 900
spaces, Sylvia Park will offer an unmatched 5,000 parking spaces.
We have made the decision to expand the new galleria retail
development at Sylvia Park, providing an increase in lettable area
that will accommodate key tenants who want to be in the centre.
The expansion increases the project cost by $35 million to
$258 million, and we have maintained key yield metrics and
increased the projected development profit to 13% of project
cost. With completion due in mid-2020, we are finalising
negotiations with exciting international and national tenants to
provide further strength for the project in addition to the
two-level Farmers department store already secured.
Construction activity for the arrival of a new Kmart store in the
existing centre is also well in train, with the customer favourite
due to open mid-year.
During the year, we completed our Langdons Quarter dining
development at Northlands. Our food retailers have been
trading well since opening, and we are on track to achieve a
6% yield on cost (excluding seismic strengthening costs) in the
first full year post completion.
At Drury, in Auckland’s South, we settled the acquisition of the
remaining parcel of land to complete our 50-hectare holding,
which has been earmarked by Auckland Council for intensification
and the location for a future transit-oriented town centre.
Our vision for Drury is the creation of a mixed-use community,
staged over the next 20 years to coincide with population
growth, predicted household formation and employment
growth in the area. We actively participated in the Council-led
structure plan and are now completing masterplanning
of the site before commencing rezoning activities – the key
precursors that will enable us to realise our vision.
acquisitions and disposals
Our asset recycling programme continued throughout the year,
with the sale of the non-core North City Shopping Centre
in Porirua. The centre achieved a sale price of $100 million,
enabling us to pay down debt and free up capital to redeploy
to our value-adding initiatives.
In step with our long-term vision for Sylvia Park, we added to our
adjoining landholdings through the acquisition of a 2.2-hectare
industrial site at 43 Carbine Road, Mount Wellington. The site
provides great potential for future mixed-use opportunities
given it lies immediately adjacent to the Sylvia Park train station.
The purchase takes our total additional landholdings surrounding
the existing centre to nearly 10 hectares.
property portfolio performance
We continue to drive portfolio performance through our active
asset management activities.
Across the portfolio, our leasing teams executed 747 new leases
or rent reviews, resulting in a 4.0% lift over prior passing rentals
(mixed-use up 4.9%, retail up 1.5%, office up 5.1%).
Our assets are 99.3% occupied, with a healthy weighted average
lease expiry of 5.2 years.
Read more about our properties and their
performance in our 2019 Property Compendium.
retail sales
New Zealand retail continues to outshine global retail markets,
which we attribute to the relatively low supply of retail space per
capita, good economic conditions, the proven ability of retailers
to meet local consumer demands and population growth in our
key areas of operation.
Total retail sales from our shopping centre assets for the
12 months ended 31 March 2019 grew by 2% (2.4% like-for-like) to
$1.53 billion, with our centres attracting nearly 48 million
customer visits.
Our continued focus on improving our experiential offer for
customers continues to reap rewards with strong category
performances from commercial services, mini-majors and
pharmacy and wellbeing. Total sales, including those from
our large format centres, were $1.70 billion.
kiwi property
08
annual report 2019
sustainability
Our sustainability programme continues to serve us and
New Zealand well. Looking at our environmental savings alone,
since our 2012 audited base year (for carbon reporting), we have:
reduced our energy consumption by
4,800,000kWh, which is enough to supply
598 typical homes for a year
reduced our water consumption by 27.8 million
litres, which is enough to fill 515 domestic
swimming pools
diverted 286 tonnes of waste from landfill,
which is equivalent to filling 468 jumbo bins, and
reduced our carbon footprint by 47%.
This year, we also:
−Installed a further seven electric vehicle charging stations.
−Installed 10 electric bike charging stations at LynnMall.
−Launched a community education programme ‘Meet the
Greens’ to encourage New Zealanders to recycle.
−Installed water bottle filling stations in each of our shopping
centres. We can proudly say that since the conclusion of
the project initiative, the stations have been used in excess
of 87,000 times. That’s 87,000 plastic bottles saved from
potentially making their way into our oceans and landfills.
−Awarded our inaugural Māori and Pasifika scholarship to a
student embarking on tertiary study in property. As part of
this scholarship Kiwi Property provides, in addition to
financial support, a dedicated mentor to assist with the
recipient’s pastoral care.
Read more about our sustainability achievements
in our 2019 Sustainability Report.
outlook
Kiwi Property is in a great position to focus on growth.
I am excited to be able to work with my executive team and
the broader business on implementing our strategic initiatives.
Our successful efforts to rebalance our portfolio have provided
us with balance sheet flexibility, enabling us to focus on growth
through developments and considered acquisitions while still
maintaining conservative levels of debt.
Thank you for your continued support of Kiwi Property.
CLIVE MACKENZIE
CHIEF EXECUTIVE
OFFICER
09
mixed-use strategy
mixed-use
communities
−
the way forward
mixed-use strategy
As we grow with New Zealand,
we will seek to intensify some
of our largest landholdings,
developing thriving mixed-use
communities where people can
work, shop, live and play.
Mixed-use communities strategically combine
complementary assets to create spaces for
people to thrive and for businesses to prosper.
Within our existing portfolio, we have identified
long-term mixed-use opportunities for our
landholdings at Sylvia Park, LynnMall, The Base
(in joint venture with Tainui Group Holdings)
and Drury. These assets all enjoy great road and
public transport access, which we know from
experience builds better pathways for retail trade
and business, that in turn create stronger
prospects for long-term economic stability.
10
kiwi property
annual report 2019
a Kiwi community
A Kiwi Property mixed-use
community is one that will have
strong common denominators
strong investment
qualities
focused on reliable
shareholder returns
carefully curated
tenant communities
for better shopping and
employment opportunities
high community
engagement
places where
people can connect
resource minimisation
programmes
water, energy, waste
a commitment
to biodiversity
through plantings
on our properties
well located, with excellent
roading infrastructure
supported by outstanding
public transport options,
including rail and bus
thoughtful innovations
supporting sustainable
technologies
open spaces
for enjoyment
and recreation
buildings developed
in step with
market demand
11
mixed-use strategy
the ingredients
that bring our
places to life
spaces for the mind and soul
Public open spaces have the potential to
increase levels of physical activity, have
health and wellbeing benefits and reduce
healthcare and other costs. They are the
spaces we can enjoy in search of solitude
or community enjoyment – a place to play,
relax, run, walk, cycle or rest.
places to shop
A vibrant retail offer forms the
economic heart of every community –
providing the clothes we wear, the
goods we need to furnish our homes
and dining and entertainment options
that suit our lifestyles.
places to connect
The rise of the digital age has brought
with it an increasing need for people
to connect more in the real world.
Our communities provide food,
entertainment and meeting places
where people can come together
in social settings.
places to work
As New Zealand expands, providing
local commercial spaces for
employment assists communities to
prosper while having the added
benefit of supporting surrounding
retail and commercial businesses.
mixed-use strategy
12
kiwi property
annual report 2019
places to live
Home is the heart of family life.
We are investigating housing options
that will complement our existing
assets and provide easy and desirable
living options. This includes a high
level of amenity, access to quality
public transport and commercial
infrastructure, open spaces and
a multitude of nearby amenities
for everyday living.
spaces for wellness
Our health and wellness is nurtured
through a variety of options across
medical, dental, optical and
health-related services, while our
fitness is served through gyms,
cycleways, walkways and general
sporting facilities.
spaces for interaction
Civic spaces are an extension of the
community. These are the ‘front porches’
of our public institutions – post offices,
Crown buildings – where we can interact
with each other and with government.
ways to commute
Our places will have easy
access, whether by train,
bus, car or bike.
13
kiwi property
annual report 2019
14
15
financials
financials
kiwi property
annual report 2019
16
five-year summary
five-year summary
financial performance
for the year ended 31 March
2019
$m
2018
$m
2017
$m
2016
$m
2015
$m
Income
Property revenue and management income237.5251.0239.6208.6 206.3
Other income1.10.30.36.5 0.4
Net fair value gain on investment properties47.626.541.0175.9 58.3
Net fair value gain on interest rate derivatives–– 9.7 – –
Total income286.2277.8290.6391.0 265.0
Expenses
Direct property expenses(54.6)(57.2)(55.6)(51.6)(50.5)
Interest and finance charges(37.6)(42.6)(43.2)(33.5)(52.6)
Employment and administration expenses(20.9)(20.5)(18.0)(16.2)(15.1)
Net fair value loss on interest rate derivatives(11.0)(2.4) – (17.6)(13.1)
Termination of management arrangements–– – – (2.1)
Other expenses–(7.1)(2.1)(0.4)(7.2)
Total expenses(124.1)(129.8)(118.9)(119.3)(140.6)
Profit before tax(162.1)148.0171.7271.7124.4
Income tax expense(24.0)(27.9)(28.7)(20.9)(9.2)
Profit after tax
1
138.1120.1143.0250.8115.2
funds from operations
for the year ended 31 March
2019
$m
2018
$m
2017
$m
2016
$m
2015
$m
Profit after income tax138.1120.1 143.0 250.8 115.2
Adjusted for:
Net fair value gain on investment properties(47.6)(26.5)(41.0)(175.9)(58.3)
Loss/(gain) on disposal of investment properties(1.0)7.11.3 – 0.8
Net fair value loss/(gain) on interest rate derivatives11.02.4(9.7)17.6 13.1
Termination of management arrangements–– – – 2.1
Insurance adjustment–– – – 5.1
Litigation settlement expenses/(income)–– 0.8 (5.9) 1.3
Straight-lining of fixed rental increases(2.0)(2.1)(2.1)(2.3)(4.1)
Amortisation of tenant incentives and leasing fees7.07.86.76.45.6
Other one-off items4.5––––
Deferred tax expense/(benefit)(3.1)2.53.8 0.4 4.0
Funds from operations
2
106.9111.3 102.8 91.1 84.8
17
financials
dividends
for the year ended 31 March
2019
$m
2018
$m
2017
$m
2016
$m
2015
$m
Funds from operations106.9111.3 102.8 91.1 84.8
Less amount retained(7.4)(14.1)(15.5)(7.2)(14.5)
Cash dividend99.597.2 87.3 83.9 70.3
Payout ratio93%87%85%92%83%
cpscpscpscpscps
Cash dividend6.95 6.85 6.75 6.60 6.50
Imputation credits2.00 1.89 1.92 1.62 0.44
Gross dividend8.95 8.74 8.67 8.22 6.94
financial position
as at 31 March
2019
$m
2018
$m
2017
$m
2016
$m
2015
$m
Assets
Investment properties3,207.4 3,052.0 2,969.4 2,669.9 2,275.8
Cash and cash equivalents9.9 10.7 9.8 6.2 6.2
Other assets19.1 18.6 16.5 15.4 8.4
Total assets3,236.4 3,081.3 2,995.7 2,691.5 2,290.4
Liabilities
Interest bearing liabilities1,001.7 913.5 1,030.4 814.2 766.4
Deferred tax liabilities88.5 91.7 89.2 85.4 85.0
Other liabilities95.3 82.0 70.0 75.1 56.4
Total liabilities1,185.5 1,087.2 1,189.6 974.7 907.8
Equity
Share capital1,449.6 1,432.9 1,272.6 1,241.1 1,079.1
Share-based payments reserve0.6 0.4 0.5 0.2 –
Retained earnings600.7 560.8 533.0 475.5 303.5
Total equity2,050.9 1,994.1 1,806.1 1,716.8 1,382.6
Total equity and liabilities3,236.4 3,081.3 2,995.7 2,691.5 2,290.4
Gearing ratio31.0%29.7%34.5%30.3%33.5%
Net tangible assets per share$1.43$1.40$1.39$1.34$1.21
1. The reported profit has been prepared in accordance with New Zealand Generally Accepted Accounting Practice (GAAP) and complies with New Zealand Equivalents to
International Financial Reporting Standards. The reported profit information has been extracted from the annual financial statements which have been the subject of an audit
pursuant to New Zealand Auditing Standards issued by the External Reporting Board.
2. Funds from Operations (FFO) is an alternative non-GAAP performance measure used by Kiwi Property to assist investors in assessing the Company’s underlying operating performance
and to determine income available for distribution. FFO is a measure commonly used by real estate entities to describe their underlying and recurring earnings from operations. FFO does
not have a standard meaning prescribed by GAAP and therefore may not be comparable to information presented by other entities. FFO is calculated by Kiwi Property in accordance with
the Voluntary Best Practice Guidelines issued by the Property Council of Australia (the Guidelines). The reported FFO information has been extracted from the Company’s annual financial
statements which have been the subject of an audit pursuant to New Zealand Auditing Standards issued by the External Reporting Board. During the 2018 financial year, the Guidelines
amended the method used to derive FFO to include the amortisation of leasing fees. Kiwi Property amended its FFO calculation from 2018 to reflect this change.
kiwi property
annual report 2019
18
five-year summary
five-year summary (continued)
property metrics
as at 31 March
20192018201720162015
Number of core properties1213141412
Net lettable area (sqm)436,870 451,230 474,381 374,739 364,713
Occupancy99.3%99.6%98.8%98.7%98.4%
Weighted average lease expiry (years)5.2 5.3 5.6 5.1 4.5
Weighted average capitalisation rate5.99%6.11%6.40%6.61%6.92%
interpretation
The following commentary is provided to assist with the
interpretation of the five-year summary:
2019
—Concluded development of an office tower (ANZ Raranga)
and the central carpark at Sylvia Park, Auckland, and
Langdons Quarter at Northlands, Christchurch.
—Acquired property adjacent to Sylvia Park, Auckland,
for $25 million.
—Acquired a further 8.6 hectares of land at Drury,
South Auckland, for $9.1 million.
—North City, Porirua, was sold.
—A $100 million bond issue was completed (2025 expiry).
2018
—Acquired 30.6 hectares of land at Drury, South Auckland,
for $32.7 million.
—Acquired property adjacent to Sylvia Park, Auckland,
for $27.1 million.
—1 for 11 entitlement offer completed, raising $157 million
(net of costs).
—The Majestic Centre, Wellington, was sold.
—A $125 million bond issue was completed (2024 expiry).
2017
—Acquired a 50% interest in The Base, Hamilton, for
$192.5 million.
—Centre Place South, Hamilton, was sold.
—Concluded developments at Westgate Lifestyle, Auckland,
44 The Terrace and The Aurora Centre, Wellington.
—Completed development of H&M and Zara at
Sylvia Park, Auckland.
—A $125 million bond issue was completed (2023 expiry).
2016
—1 for 9 entitlement offer completed, raising $148.1 million
(net of costs).
—Westgate Lifestyle, Auckland, was acquired.
—Acquired 12.1 hectares of land at Drury, South Auckland,
for $7.1 million.
2015
—Kiwi Income Property Trust was converted to a company
and rebranded as Kiwi Property.
—Final 50% interest in 205 Queen Street, Auckland,
was sold.
—Sylvia Park Lifestyle, Auckland, was acquired.
—A $125 million bond issue was completed (2021 expiry).
—$120 million of mandatory convertible notes were
converted to shares.
—Refurbishment works at The Aurora Centre, Wellington,
commenced.
19
financials
consolidated statement
of comprehensive income
PG 20
consolidated statement
of changes in equity
PG 21
consolidated statement
of financial position
PG 22
consolidated statement
of cash flows
PG 23
notes to the consolidated
financial statements
PG 25
independent
auditor’s report
PG 48
financial
statements
kiwi property
annual report 2019
20
financial statements
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
consolidated statement
of comprehensive income
for the year ended 31 March 2019
Note
2019
$000
2018
$000
Income
Property revenue2.1 235,286 249,263
Property management income 2,202 1,742
Interest and other income 170 285
Net fair value gain on investment properties3.2 47,650 26,528
Gain on disposal of investment properties 971 –
Total income 286,279 277,818
Expenses
Direct property expenses (54,624) (57,168)
Interest and finance charges2.2 (37,622) (42,645)
Employment and administration expenses2.2 (20,878) (20,567)
Net fair value loss on interest rate derivatives3.4.2 (11,040) (2,390)
Loss on disposal of investment properties – (7,069)
Total expenses (124,164) (129,839)
Profit before income tax 162,115 147,979
Income tax expense2.3 (24,023) (27,877)
Profit and total comprehensive income after income tax attributable to shareholders 138,092 120,102
Basic and diluted earnings per share (cents)3.6.3 9.67 8.66
21
financials
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
consolidated statement
of changes in equity
for the year ended 31 March 2019
Note
Share
capital
$000
Share-based
payments
reserve
$000
Retained
earnings
$000
Total
equity
$000
Balance at 1 April 2017 1,272,622 365 533,046 1,806,033
Profit after income tax – – 120,102 120,102
Dividends paid3.6.2 – – (92,404) (92,404)
Dividends reinvested3.6.1 3,842 – – 3,842
Shares issued – entitlement offer3.6.1 156,950 – – 156,950
Long-term incentive plan3.6.4 (478) 36 33 (409)
Balance at 31 March 2018 1,432,936 401 560,777 1,994,114
Balance at 1 April 2018 1,432,936 401 560,777 1,994,114
Profit after income tax – – 138,092 138,092
Dividends paid3.6.2 – – (98,323) (98,323)
Dividends reinvested3.6.1 16,779 – – 16,779
Employee share ownership plan 69 137 – 206
Long-term incentive plan3.6.4 (138) 64 86 12
Balance at 31 March 2019 1,449,646 602 600,632 2,050,880
kiwi property
annual report 2019
22
financial statements
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
MARK FORD
CHAIR
MARY JANE DALY
CHAIR OF THE AUDIT AND
RISK COMMITTEE
consolidated statement
of financial position
as at 31 March 2019
Note
2019
$000
2018
$000
Current assets
Cash and cash equivalents 9,923 10,697
Trade and other receivables3.1 13,201 14,261
23,124 24,958
Non-current assets
Investment properties3.2 3,207,389 3,051,964
Property, plant and equipment 4,253 3,764
Interest rate derivatives3.4.2 1,665 658
3,213,307 3,056,386
Total assets 3,236,431 3,081,344
Current liabilities
Trade and other payables3.5 60,345 57,430
Interest bearing liabilities
3.4.1 166,000 –
Income tax payable 8,675 9,290
Interest rate derivatives3.4.2 344 627
235,364 67,347
Non-current liabilities
Interest bearing liabilities3.4.1 835,688 913,502
Interest rate derivatives3.4.2 25,958 14,725
Deferred tax liabilities3.3 88,541 91,656
950,187 1,019,883
Total liabilities 1,185,551 1,087,230
Equity
Share capital3.6.1 1,449,646 1,432,936
Share-based payments reserve 602 401
Retained earnings 600,632 560,777
Total equity 2,050,880 1,994,114
Total equity and liabilities 3,236,431 3,081,344
For and on behalf of the board, who authorised these financial statements for issue on 17 May 2019.
23
financials
consolidated statement
of cash flows
for the year ended 31 March 2019
2019
$000
2018
$000
Cash flows from operating activities
Property revenue 236,642 247,835
Property management income 2,177 1,727
Interest and other income 170 285
Direct property expenses (56,236) (58,290)
Interest and finance charges (35,774) (42,054)
Employment and administration expenses (18,691) (18,149)
Income tax expense (27,752) (23,287)
Goods and Services Tax received/(paid) (493) 151
Net cash flows from operating activities 100,043 108,218
Cash flows from investing activities
Proceeds from disposal of investment properties 101,635 122,083
Acquisition of investment properties (34,348) (59,828)
Expenditure on investment properties (161,373) (108,877)
Interest and finance charges capitalised to investment properties (8,459) (3,755)
Acquisition of property, plant and equipment (1,227) (3,035)
Net cash flows used in investing activities (103,772) (53,412)
Cash flows from financing activities
Proceeds from issue of shares – 156,950
Own shares acquired for long-term incentive plan (323) (633)
Repayment of bank loans (13,000) (242,500)
Proceeds from fixed-rate bonds 98,833 123,555
Settlement of interest rate derivatives (1,097) (2,724)
Dividends paid (81,458) (88,529)
Net cash flows from/(used in) financing activities 2,955 (53,881)
Net increase in cash and cash equivalents (774) 925
Cash and cash equivalents at the beginning of the year 10,697 9,772
Cash and cash equivalents at the end of the year 9,923 10,697
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
kiwi property
annual report 2019
24
financial statements
consolidated statement
of cash flows (continued)
for the year ended 31 March 2019
2019
$000
2018
$000
Reconciliation of profit after income tax
to net cash flows from operating activities
Profit after income tax 138,092 120,102
Items classified as investing or financing activities:
Movements in working capital items relating to investing and financing activities (6,643) (8,846)
Non-cash items:
Net fair value loss on interest rate derivatives 11,040 2,390
Net fair value gain on investment properties (47,650) (26,528)
Movement in deferred tax liabilities (3,115) 2,464
Amortisation of lease incentives and fees 6,975 8,021
Straight-lining of fixed rental increases (2,016) (2,100)
Movements in working capital items:
Trade and other receivables 1,060 (1,378)
Income tax payable (615) 2,127
Trade and other payables 2,915 11,966
Net cash flows from operating activities 100,043 108,218
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
25
notes
notes to the consolidated
financial statements
for the year ended 31 March 2019
1. general information
1.1 reporting entity PG 26
1.2 basis of preparation PG 26
1.3 significant changes during the year PG 26
1.4 group structure PG 26
1.5 new standards, amendments
and interpretations PG 26
1.6 key judgements and estimates PG 27
1.7 accounting policies PG 27
1.8 changes in presentation PG 27
2. profit and loss information
2.1 property revenue PG 28
2.2 expenses PG 29
2.3 tax expense PG 30
3. financial position information
3.1 trade and other receivables PG 32
3.2 investment properties PG 32
3.3 deferred tax PG 37
3.4 funding PG 37
3.5 trade and other payables PG 39
3.6 equity PG 40
4. financial risk management
4.1 interest rate risk PG 43
4.2 credit risk PG 44
4.3 liquidity risk PG 44
5. other information
5.1 segment information PG 45
5.2 related party transactions PG 46
5.3 key management personnel PG 47
5.4 commitments PG 47
5.5 subsequent events PG 47
kiwi property
annual report 2019
26
notes to the consolidated financial statements
notes
1.1 reporting entity
The financial statements are for Kiwi Property Group Limited
(Kiwi Property or the Company) and its controlled entities
(the Group). The Company is incorporated and domiciled in
New Zealand, is registered under the Companies Act 1993
and is a FMC reporting entity for the purposes of the Financial
Markets Conduct Act 2013. The Company is listed with NZX
Limited with its ordinary shares quoted on the NZX Main Board
and fixed-rate bonds quoted on the NZX Debt Market.
The principal activity of the Group is to invest in New Zealand
real estate.
1.2 basis of preparation
The financial statements have been prepared in accordance
with Generally Accepted Accounting Practice (GAAP) and
the Financial Markets Conduct Act 2013. They comply with
New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and other guidance as issued by the
External Reporting Board, as appropriate for profit-oriented
entities, and with International Financial Reporting Standards.
The financial statements are prepared on the basis of historical
cost, except where otherwise identified. The functional and
presentation currency used in the preparation of the financial
statements is New Zealand dollars.
1.3 significant changes during the year
The financial position and performance of the Group was
affected by the following events and transactions during
the reporting period:
fixed-rate bonds
On 12 November 2018, the Group issued $100 million of
seven-year fixed-rate senior secured bonds. For further
details refer to Note 3.4.1.
investment property acquisitions and disposals
On 9 July 2018, the Group settled the sale of North City,
Porirua for $100 million before disposal costs.
On 29 October 2018, the Group settled its acquisition of
8.6 hectares of additional development land at Drury,
Auckland for $9.1 million.
On 20 December 2018, the Group acquired property at
43 Carbine Road, Mount Wellington, Auckland for $25 million.
1.4 group structure
controlled entities
The Company has the following wholly owned subsidiaries:
Kiwi Property Holdings Limited (KPHL), Kiwi Property Holdings
No. 2 Limited (KPHL2), Kiwi Property Te Awa Limited (KPTAL)
and Sylvia Park Business Centre Limited (SPBCL). SPBCL
owns Sylvia Park and Sylvia Park Lifestyle, KPHL2 owns the
development land at Drury and KPTAL owns the Group's 50%
interest in The Base. All other properties are owned by KPHL.
The Company has control over the trust fund operated by
Pacific Custodians (New Zealand) Limited as trustee for the
Company's long-term incentive plan (for further details, refer to
Note 3.6.4). The trust fund is consolidated as part of the Group.
joint venture
The Group holds its 50% interest in The Base by way of an
unincorporated joint venture. The Group has determined that
its interest constitutes a joint arrangement as the relevant
decisions about the property require the unanimous consent
of both parties. The joint arrangement has been classified as
a joint operation on the basis that the parties have direct rights
to the assets and obligations for the liabilities relating to their
share of the property in the normal course of business. The
Group recognises its share of assets, liabilities, revenue and
expenses of the joint venture.
principles of consolidation
The consolidated financial statements include the Company
and the entities it controls up until the date control ceases.
The balances and effects of transactions between controlled
entities and the Company are eliminated in full.
1.5 new standards, amendments
and interpretations
The Group has adopted both NZ IFRS 9 Financial instruments and
NZ IFRS 15 Revenue from contracts with customers as required.
There have been no material changes required to the financial
statements through the adoption of these standards.
The following new standard has been published but is not yet
effective and has not been early adopted by the Group:
NZ IFRS 16 Leases
This standard replaces the current guidance in NZ IAS 17.
NZ IFRS 16 requires a lessee to recognise a lease liability
reflecting future lease payments and a 'right-of-use' asset for
virtually all lease contracts. Lessor accounting remains largely
unchanged from NZ IAS 17. The standard is required to be
adopted by the Group in its financial statements for the year
ending 31 March 2020. A right-of-use asset and corresponding
liability reflecting future lease payments will be recognised
based on the commitments at 31 March 2020.
1. general information
for the year ended 31 March 2019
27
notes
As outlined in Note 5.4, the Group has several occupational
ground leases of properties/parts of properties in its investment
property portfolio. The Group has assessed the impact of NZ
IFRS 16 from these ground leases. It is estimated that the Group
would recognise a right-of-use asset and corresponding lease
liability of approximately $6.5 million, and the net impact on the
statement of comprehensive income will not be material.
1.6 key judgements and estimates
In the process of applying the Group's accounting policies,
a number of judgements have been made and estimates of
future events applied. Judgements and estimates are found
in the following notes:
Note 2.3Tax exp e n s ePG 30
Note 3.2Investment propertiesPG 32
Note 3.4.2Interest rate derivativesPG 38
Note 3.6.4Share-based paymentsPG 41
1.7 accounting policies
Accounting policies that summarise the measurement basis used
and are relevant to an understanding of the financial statements
are provided throughout the notes to the consolidated financial
statements. Other relevant policies are provided as follows:
measurement of fair values
The Group classifies its fair value measurement using a fair
value hierarchy that reflects the significance of the inputs used
in making the measurements. The fair value hierarchy has the
following levels:
—Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
—Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
—Level 3: Inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The carrying amount of all financial assets and liabilities is
equivalent to their fair values apart from the fixed-rate bonds
(refer to Note 3.4.1 for further details on the fair value of the
fixed-rate bonds).
goods and services tax
The financial statements have been prepared on a Goods and
Services Tax exclusive basis, with the exception of receivables
and payables which are inclusive of Goods and Services Tax
where relevant.
1.8 changes in presentation
The Group has changed the presentation of its consolidated
statement of financial position by presenting deferred tax
assets and liabilities as a net liability. Comparative information
has been reclassified to ensure consistency with presentation
in the current year.
kiwi property
annual report 2019
28
notes to the consolidated financial statements
notes
2. profit and loss information
for the year ended 31 March 2019
2.1 property revenue
2019
$000
2018
$000
Gross rental income 239,262 253,131
Straight-lining of fixed rental increases 2,016 2,100
Amortisation of capitalised lease incentives (5,992) (5,968)
Property revenue 235,286 249,263
The contractual future minimum property operating lease income to be received on properties owned by the Group
at balance date is as follows:
2019
$000
2018
$000
Within one year 238,577 238,643
One year or later and not later than five years
757,236
741,748
Later than five years 393,894 414,261
Property operating lease income 1,389,707 1,394,652
recognition and measurement
The Group enters into retail and office property leases with tenants on its investment properties. The Group has determined that it
retains all significant risks and rewards of ownership of these properties and has therefore classified the leases as operating leases.
Rental income from those leases, including fixed rental increases, is recognised on a straight-line basis over the term of the lease.
Lease incentives offered to tenants as an inducement to enter into leases are capitalised to investment properties and then
amortised over the term of the lease as a reduction of rental income.
29
notes
2.2 expenses
2019
$000
2018
$000
Interest and finance charges on bank loans 25,628 31,618
Interest on fixed-rate bonds 20,453 14,777
Capitalised to investment properties (8,459) (3,750)
Interest and finance charges 37,622 42,645
Auditor’s remuneration:
Statutory audit and review of the financial statements 246 238
Assurance related services 33 33
Attendance and voting procedures at shareholder meetings 4 4
Benchmarking of executive remuneration12 9
Professional services in relation to long-term incentive plan design 18 45
Directors’ fees 701 704
Employee entitlements 22,949 21,898
Less: recognised in direct property expenses
(6,875) (6,723)
Less: capitalised to investment properties (2,177) (3,117)
Information technology 1,351 1,298
Investor related expenses 643 670
Occupancy costs 451 1,769
Professional fees 1,463 1,590
Trustees’ fees 106 69
Other 1,953 2,080
Employment and administration expenses 20,878 20,567
recognition and measurement
interest and finance charges
The interest and finance charges on bank loans are expensed in the period in which they occur, other than associated transaction
costs, which are capitalised and amortised over the term of the facility to which they relate.
The interest expense on fixed-rate bonds is recognised using the effective interest rate method.
To determine the amount of borrowing costs capitalised to investment properties that are being constructed or developed for future
use, the Group uses the weighted average interest rate applicable to its outstanding borrowings during the year. For 2019 this was
4.98% (2018: 4.91%).
employee entitlements
Employee benefits are expensed as the related service is provided. Details of the employee entitlements expense in relation to
share-based payments is outlined in Note 3.6.4.
kiwi property
annual report 2019
30
notes to the consolidated financial statements
notes
2.3 tax expense
A reconciliation of profit before income tax to income tax expense follows:
2019
$000
2018
$000
Profit before income tax 162,115 147,979
Prima facie income tax expense at 28% (45,392) (41,434)
Adjusted for:
Net fair value loss on interest rate derivatives (2,784) (669)
Net fair value gain on investment properties 13,342 7,428
Gain/(loss) on disposal of investment properties 272 (1,979)
Depreciation 7,314 7,054
Depreciation recovered on disposal of investment properties (4,539) –
Deferred leasing costs 474 137
Deductible capitalised expenditure 2,938 1,655
Prior year adjustment 333 1,317
Other 905 1,077
Current tax expense (27,137) (25,414)
Depreciation recoverable 1,309 (2,733)
Net fair value loss/(gain) on interest rate derivatives 2,784 (94)
Deferred leasing costs and other temporary differences
(979) 364
Deferred tax benefit/(expense)3,114 (2,463)
Income tax expense reported in profit (24,023) (27,877)
Imputation credits available for use in subsequent periods 15,264 13,808
recognition and measurement
current tax
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
at balance date, and any adjustment to tax payable in respect of previous years.
deferred tax
Deferred tax is recognised in respect of all taxable temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. For deferred tax liabilities or assets arising on investment
property measured at fair value, it is assumed that the carrying amounts of investment property will be recovered through sale
(refer to Note 3.3).
imputation credits
The imputation credits available represent the balance of the imputation credit account at the end of the reporting period, adjusted
for imputation credits which will arise from the payment of the income tax liability.
31
notes
key estimates and assumptions: income tax
deferred tax on depreciation
Deferred tax is provided in respect of depreciation expected to be recovered on the sale of investment properties at fair value.
Investment properties are valued each year by independent valuers. These values include an allocation of the valuation between the land
and building components. The calculation of deferred tax on depreciation recovered relies on this allocation provided by the valuers.
The calculation of deferred tax on depreciation recovered also requires an assessment to be made of market values attributable to
fixtures and fittings. The market values of fixtures and fittings for significant properties have been assessed utilising independent
valuation advice, and the remaining properties have been assessed with reference to previous transactional evidence and their
age and quality.
depreciation recovered on the former PricewaterhouseCoopers Centre (PwC Centre), Christchurch
The impairment of the PwC Centre in the year ended 31 March 2012 (resulting from the 2010 and 2011 Canterbury earthquakes) and
the associated insurance recovery triggered a potential tax liability for depreciation recovered.
Following the earthquakes, the Government introduced legislation that provides, in certain circumstances, rollover relief for taxpayers
affected by the earthquakes where insurance income will be used to acquire or develop replacement property in the Canterbury region.
The legislation requires that the replacement property be available for use by 31 March 2024. As at 31 March 2019, the Group continues
to qualify for this relief and a deferred tax liability of $4.2 million continues to be provided.
kiwi property
annual report 2019
32
notes to the consolidated financial statements
notes
3. financial position information
for the year ended 31 March 2019
3.1 trade and other receivables
2019
$000
2018
$000
Trade debtors 8,899 10,087
Provision for doubtful debts (238) (357)
Prepayments 4,540 4,531
Trade and other receivables 13,201 14,261
recognition and measurement
Trade debtors are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method,
less an allowance for impairment. The Group applies the simplified approach to providing for expected credit losses prescribed by NZ
IFRS 9, which permits the use of lifetime expected loss provisions for all trade debtors. Collectability of trade debtors is reviewed on an
ongoing basis and a provision for doubtful debts is made when there is evidence that the Group will not be able to collect the receivable.
Debtors are written off when recovery is no longer anticipated. There are no overdue debtors considered impaired that have not been
provided for.
3.2 investment properties
recognition and measurement
Investment properties are properties held for long-term capital appreciation and to earn rentals.
initial recognition – acquired properties
Investment properties are initially measured at cost, plus related costs of acquisition. Subsequent expenditure is capitalised to the
asset’s carrying amount when it adds value to the asset and its cost can be measured.
initial recognition – properties being developed
Investment properties also include properties that are being constructed or developed for future use as investment properties. All costs
directly associated with the purchase and construction of a property, and all subsequent capital expenditures for the development
qualifying as acquisition costs, are capitalised. Borrowing costs are capitalised if they are directly attributable to the development.
subsequent recognition
After initial recognition, investment properties are measured at fair value as determined by independent registered valuers.
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. Investment properties are valued annually and may not be valued by the same valuer for more than
three consecutive years.
Any gains or losses arising from changes in fair value are recognised in profit or loss in the reporting period in which they arise.
lease incentives
Lease incentives provided by the Group to lessees are included in the measurement of fair value of investment properties and are
treated as separate assets. Such assets are amortised on a straight-line basis over the respective periods to which the lease
incentives apply.
disposals
Investment properties are derecognised when they have been disposed of. The net gain or loss on disposal is calculated as the
difference between the carrying amount of the investment property at the time of the disposal and the proceeds on disposal and
is included in profit or loss in the reporting period in which the disposal settled.
33
notes
Investment properties held by the Group are as follows:
Valuer
Capitalisation
rate
%
Fair value
31 March
2018
$000
Capital
movements
2019
$000
Fair value
gain/(loss)
2019
$000
Fair value
31 March
2019
$000
Mixed-use
Sylvia Park
1
JLL 5.38 835,000 116,775 3,225 955,000
Sylvia Park Lifestyle JLL 6.25 74,000 3 2,997 77,000
LynnMall CBRE 6.38 274,000 8,799 1,201 284,000
The Base
2
CBRE 6.13 202,500 1,929 13,071 217,500
1,385,500 127,506 20,494 1,533,500
Retail
Westgate Lifestyle Colliers 6.38 90,000 154 (154) 90,000
Centre Place North CBRE 10.25 59,000 1,122 (6,622) 53,500
The Plaza Colliers 7.38 207,000 5,977 (5,977) 207,000
North City
3
99,150 (99,150) – –
Northlands Colliers 7.50 240,000 21,836 (14,836) 247,000
695,150 (70,061) (27,589) 597,500
Office
Vero Centre Colliers 5.13 420,000 8,186 21,814 450,000
ASB North Wharf JLL 5.38 209,000 1,037 19,963 230,000
The Aurora Centre Colliers 6.13 152,250 22 7,228 159,500
44 The Terrace Colliers 6.50 49,900 (328) 3,928 53,500
831,150 8,917 52,933 893,000
Other
Other properties Various 93,064 27,641 4,534 125,239
Development land JLL 47,100 13,772 (2,722) 58,150
140,164 41,413 1,812 183,389
Investment properties 3,051,964 107,775 47,650 3,207,389
1. Sylvia Park was valued 'as if complete' at $1.1715 billion. The deduction of outstanding development costs for the office building, Kmart, galleria and south carpark
($188.3 million) together with allowances for profit and risk and stabilisation ($28.3 million) resulted in an 'as is' value of $955 million.
2. Represents the Group’s 50% ownership interest. Refer to Note 1.4 for further information.
3. On 9 July 2018, the Group settled the sale of North City for $100 million before disposal costs.
kiwi property
annual report 2019
34
notes to the consolidated financial statements
notes
3.2 investment properties (continued)
Valuer
Capitalisation
rate
%
Fair value
31 March
2017
$000
Capital
movements
2018
$000
Fair value
gain/(loss)
2018
$000
Fair value
31 March
2018
$000
Mixed-use
Sylvia Park
1
CBRE 5.38 755,000 69,497 10,503 835,000
Sylvia Park LifestyleCBRE 6.25 70,900 (233) 3,333 74,000
LynnMall CBRE 6.25 271,000 2,130 870 274,000
The Base
2
JLL 6.25 195,000 1,512 5,988 202,500
1,291,900 72,906 20,694 1,385,500
Retail
Westgate LifestyleJLL 6.38 87,000 286 2,714 90,000
Centre Place NorthJLL 8.75 66,000 554 (7,554) 59,000
The Plaza Colliers 7.00 215,500 6,529 (15,029) 207,000
North City
3
110,500 4,217 (15,567) 99,150
Northlands Colliers 7.13 248,500 8,926 (17,426) 240,000
727,500 20,512 (52,862) 695,150
Office
Vero CentreCBRE5.50 381,000 8,879 30,121 420,000
ASB North WharfColliers5.63 196,250 1,318 11,432 209,000
The Majestic Centre
4
119,400 (119,400) – –
The Aurora CentreColliers6.38 140,650 4,330 7,270 152,250
44 The TerraceColliers6.63 41,750 2,618 5,532 49,900
879,050 (102,255) 54,355 831,150
Other
Other propertiesVarious 57,915 29,555 5,594 93,064
Development land JLL 13,000 35,353 (1,253) 47,100
70,915 64,908 4,341 140,164
Investment properties 2,969,365 56,071 26,528 3,051,964
1. Sylvia Park was valued at $1.12 billion assuming completion of the office building, central carpark, galleria and south carpark developments, less costs to complete of
$261 million and a $24 million allowance for profit and risk.
2. Represents the Group’s 50% ownership interest. Refer to Note 1.4 for further information.
3. On 11 April 2018, the Group entered into an unconditional agreement to dispose of North City for $100 million. The carrying value as at 31 March 2018 represented the
net disposal proceeds. The sale settled on 9 July 2018.
4. On 11 December 2017, the Group settled the sale of The Majestic Centre for $123.2 million. The main contractor submitted a final claim for works at The Majestic Centre
that exceeded the Company’s assessment of the amount due. Post balance date, the arbitration of the claim was settled. The settlement was reflected in the loss on
disposal of investment properties in the statement of comprehensive income.
The movement in the Group’s investment properties during the year is as follows:
2019
$000
2018
$000
Balance at the beginning of the year 3,051,964 2,969,365
Capital movements:
Acquisitions (refer to Note 1.3) 34,348 59,828
Disposals (refer to Note 1.3) (99,623) (128,373)
Capitalised costs (including fees and incentives) 169,550 128,882
Capitalised interest and finance charges 8,459 3,755
Amortisation of lease incentives, fees and fixed rental income (4,959) (8,021)
107,775 56,071
Net fair value gain on investment properties 47,650 26,528
Balance at the end of the year 3,207,389 3,051,964
35
notes
key estimates and assumptions:
valuation and fair value measurement of investment properties
introduction
All of the Group’s investment properties have been determined to be Level 3 (2018: Level 3) in the fair value hierarchy because
all significant inputs that determine fair value are not based on observable market data. Refer to Note 1.7 for further information
on the fair value hierarchy.
valuation process
All investment properties were valued as at 31 March 2019 (and as at 31 March 2018 with the exception of North City which was
subject to an unconditional sale and purchase agreement and accordingly was carried at its sale price less disposal costs).
All valuations are prepared by independent valuers who are members of the Group’s valuation panel and members of the
New Zealand Institute of Valuers.
The adopted valuations of investment properties have been assessed within a range indicated by at least two valuation approaches
– most commonly an income capitalisation approach and discounted cash flow approach. In addition, the adopted valuation of an
investment property undergoing development may be assessed using a residual approach. These approaches contain unobservable
inputs in determining fair value, which are summarised in the table below.
The valuations of the independent valuers are reviewed by the Group and adopted as the carrying value in the financial statements
subject to any specific adjustments required. The Group’s management verifies all major inputs to the valuations, assesses valuation
movements when compared to the previous year and holds discussions with the independent valuers as part of this process.
valuation inputs
The significant unobservable inputs used and the sensitivity to a change in those inputs are as follows:
Class
of propertyInputs used to measure fair value
Range of significant
unobservable inputs
Sensitivity2019 2018
Mixed-use
Core capitalisation rate 5.4%–6.4%5.4%–6.3%
The higher the capitalisation rates and
discount rate, the lower the fair value
Other income capitalisation rate 5.4%–6.5%5.4%–6.5%
Discount rate 7.3%–7.6% 7.0%–7.8%
Terminal capitalisation rate 5.5%–7.0% 5.9%–7.0%
Gross market rent (per sqm)
1
$359–$769 $336–$682
The higher the market rent and
growth rate, the higher the fair value
Rental growth rate (per annum) -0.4% –3.5% -0.2%–5.8%
Retail
Core capitalisation rate 6.4% –10.3% 6.4%–8.8%
The higher the capitalisation rates and
discount rate, the lower the fair value
Other income capitalisation rate 6.4%–15.0% 6.4%–15.0%
Discount rate 7.8%–9.8% 8.0%–9.8%
Terminal capitalisation rate 6.5% –11.3% 6.6%–9.0%
Gross market rent (per sqm)
1
$276–$634 $281–$619
The higher the market rent and
growth rate, the higher the fair value
Rental growth rate (per annum) -2.7%–2.5% 0.0%–3.0%
Office
Core capitalisation rate 5.1%–6.5% 5.5%–6.6%
The higher the capitalisation rates and
discount rate, the lower the fair value
Other income capitalisation rate 7.0%6.5%–7.5%
Discount rate 7.5%–8.3% 7.0%–8.3%
Terminal capitalisation rate 5.3% –7.0% 5.8%–7.3%
Gross market rent (per sqm)
1
$465–$653 $421–$662
The higher the market rent and
growth rate, the higher the fair value
Rental growth rate (per annum) 2.0%–3.5% 0.0%–3.5%
Other
Core capitalisation rate 4.8%–9.4% 5.0%–11.5%
The higher the capitalisation rates and
discount rate, the lower the fair value
Discount rate 6.5%–10.3% 7.0%–12.0%
Terminal capitalisation rate 5.0%–10.5% 5.3%–11.8%
Gross market rent (per sqm)
1
$98–$292 $101–$230
The higher the market rent and
growth rate, the higher the fair value
Rental growth rate (per annum) 1.0%–2.9% 0.0%–3.0%
1. Weighted average by property.
kiwi property
annual report 2019
36
notes to the consolidated financial statements
notes
3.2 investment properties (continued)
Generally, a change in the assumption made for the adopted core capitalisation rate is accompanied by a directionally similar change
in the adopted terminal capitalisation rate. The adopted core capitalisation rate forms part of the income capitalisation approach and
the adopted terminal capitalisation rate forms part of the discounted cash flow approach.
When calculating the income capitalisation approach, the gross market rent has a strong interrelationship with the adopted core
capitalisation rate. An increase in the gross market rent and an increase in the adopted core capitalisation rate could potentially offset
the impact to the fair value. The same can be said for a decrease in each input. A directionally opposite change in the two inputs
could potentially magnify the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and the adopted terminal capitalisation rate have a strong
interrelationship in deriving fair value. 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 an opposite movement in each input. A directionally
similar change in the two inputs could potentially magnify the impact to the fair value.
The table below explains the key inputs used to measure fair value for investment properties.
Valuation techniques
Income capitalisation approachA valuation technique that determines fair value by capitalising a property’s sustainable net income
at an appropriate market-derived rate of return with subsequent capital adjustments for near-term
events, typically including letting up allowances, capital expenditure and the difference between
contract and market rentals.
Discounted cash flow approachA valuation technique that requires explicit assumptions to be made regarding the prospective
income and expenses of a property over an assumed holding period, typically 10 years. The
assessed cash flows are discounted to present value at an appropriate market-derived discount
rate to determine fair value.
Residual approachA valuation technique used primarily for property that is undergoing, or is expected to undergo,
redevelopment. Fair value is determined through the estimation of a gross realisation on
completion of the redevelopment with deductions made for all costs associated with converting
the property to its end use including finance costs and a typical profit margin for risks assumed by
the developer.
Unobservable inputs within the income capitalisation approach
Gross market rentThe annual amount a tenancy within a property is expected to achieve under a new arm’s length
leasing transaction, including a fair share of property operating expenses.
Core capitalisation rateThe rate of return, determined through analysis of comparable, market-related sales transactions,
that is applied to a property’s sustainable net income to derive value.
Other income capitalisation rateThe rate of return that is applied to other, typically variable or uncontracted, sources of property
income to derive value and that is assessed with consideration to the risks in achieving each
income source.
Unobservable inputs within the discounted cash flow approach
Discount rateThe rate, determined through analysis of comparable market-related sales transactions, that is
applied to a property’s future net cash flows to convert those cash flows into a present value.
Terminal capitalisation rateThe rate that is applied to a property’s sustainable net income at the end of an assumed holding
period to derive an estimated future market value.
Rental growth rateThe annual growth rate applied to market rents over an assumed holding period.
37
notes
3.3 deferred tax
2019
$000
2018
$000
Deferred tax assets
Interest rate derivatives 6,898 4,114
Deferred tax liabilities
Depreciation recoverable (86,664) (87,973)
Deferred leasing costs and other temporary differences (8,775) (7,797)
(95,439) (95,770)
Net deferred tax liabilities (88,541) (91,656)
recognition and measurement
Deferred tax is provided for all taxable temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised to the extent that it is probable
that future taxable profits will be available to utilise them. For deferred tax assets or liabilities arising on investment prop er t y,
it is assumed that the carrying amounts of investment property will be recovered through sale.
The carrying amount of deferred tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or
the liability is settled, based on tax rates (and tax laws) applicable at balance date.
3.4 funding
3.4.1 interest bearing liabilities
The Group’s secured interest bearing liabilities are as follows:
2019
$000
2018
$000
Bank loans – total facilities 825,000 917,000
Bank loans – undrawn facilities (298,000) (377,000)
Bank loans – drawn facilities 527,000 540,000
Fixed-rate bonds 475,000 375,000
Unamortised capitalised costs on fixed-rate bonds (312) (1,498)
Interest bearing liabilities
1
1,001,688 913,502
Weighted average interest rate for drawn debt
(inclusive of bonds, active interest rate derivatives, margins and line fees)4.80%4.99%
Weighted average term to maturity for the combined facilities 3.2 years 3.6 years
1. As at 31 March 2019, the Group had $166 million of current bank loan facilities which were refinanced in May 2019. Refer to Note 5.5 for further information.
recognition and measurement
All interest bearing liabilities are initially recognised at the fair value of the consideration received, less directly attributable transaction
costs. After initial recognition, they are subsequently measured at amortised cost using the effective interest rate method whereby
the transaction costs are spread over the expected life of the instrument.
kiwi property
annual report 2019
38
notes to the consolidated financial statements
notes
3.4.1 interest bearing liabilities (continued)
bank loans
The bank loans are provided by ANZ Bank New Zealand, Bank of New Zealand, China Construction Bank (New Zealand),
Commonwealth Bank of Australia, The Hongkong and Shanghai Banking Corporation (HSBC) and Westpac New Zealand.
On 28 September 2018, $165 million of existing bank debt facilities were extended. The facilities, which were due to expire in the
2022 financial year, will now expire in the 2023 and 2024 financial years.
On 14 November 2018, the Group cancelled $92 million of short-dated bank debt facilities.
fixed-rate bonds
The following table provides details of the Group’s fixed-rate bonds:
NZX code
Value of issue
$000
Date
issued
Date of
maturity
Interest
rateInterest payable
Fair value
2019
$000
Fair value
2018
$000
KPG010 125,000 6-Aug-1420-Aug-216.15% February, August 134,409 135,254
KPG020 125,000 7-Sep-167-Sep-234.00% March, September 128,997 125,848
KPG030 125,000 19-Dec-1719-Dec-244.33% June, December 130,528 127,403
KPG040 100,000 12-Nov-1812-Nov-254.06% May, November 102,447 –
Fixed-rate bonds 475,000 496,381 388,505
The fair value of the fixed-rate bonds is based on their listed market prices at balance date and is classified as Level 1 in the fair value
hierarchy (2018: Level 1). Refer to Note 1.7 for further information on the fair value hierarchy.
security
The bank loans and fixed-rate bonds are secured by way of a Global Security Deed. Pursuant to the Deed, a security interest has been
granted over all of the assets of the Group. No mortgage has been granted over the Group's properties, however, the Deed allows a
mortgage to be granted if an event of default occurs.
3.4.2 interest rate derivatives
The Group is exposed to changes in interest rates and uses interest rate derivatives to mitigate these risks (commonly referred to as
interest rate swaps).
The following table provides details of the fair values, notional values, term and interest rates of the Group’s interest rate derivatives.
2019
$000
2018
$000
Interest rate derivative assets – non-current 1,665 658
Interest rate derivative liabilities – current (344) (627)
Interest rate derivative liabilities – non-current (25,958) (14,725)
Net fair values of interest rate derivatives (24,637) (14,694)
Notional value of interest rate derivatives – fixed-rate payer – active 365,000 385,000
Notional value of interest rate derivatives – fixed-rate receiver
1
– active 40,000 –
Notional value of interest rate derivatives – fixed-rate payer – forward starting 170,000 140,000
Notional values 575,000 525,000
Fixed-rate payer swaps:
Weighted average term to maturity – active 3.2 years 2.3 years
Weighted average term to maturity – forward starting 5.7 years 4.9 years
Weighted average term to maturity 4.0 years 2.9 years
Fixed-rate payer swaps:
Weighted average interest rate – active
2
3.63% 3.80%
Weighted average interest rate – forward starting
2
2.90% 3.56%
Weighted average interest rate
1
3.40% 3.74%
1. The Group has $40 million of fixed-rate receiver swaps for the duration of the $100 million KPG040 fixed-rate bonds. The effect of the fixed-rate receiver swaps is to
convert a portion of the bond to floating interest rates.
2. Excluding fees and margins.
39
notes
In conjunction with the disposal of North City (refer to Note 1.3), interest rate swaps with a face value of $20 million were closed
out during the year for a payment of $1.1 million. The net fair value loss on the remaining interest rate derivatives for the year was
$11.0 million. The difference between these two amounts represents the movement in the net interest rate derivative liabilities from
31 March 2018 to 31 March 2019.
recognition and measurement
Interest rate derivative instruments are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently remeasured to fair value each balance date exclusive of accrued interest. Fair values at balance date are calculated
to be the present value of the estimated future cash flows of these instruments. Transaction costs are expensed on initial recognition
and recognised in profit or loss. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value
is negative.
The Group does not designate any derivatives into hedging relationships. Gains or losses arising from changes in fair value of interest
rate derivatives are recognised in profit or loss.
key estimate: fair value of interest rate derivatives
The fair values of interest rate derivatives are determined from valuations prepared by independent treasury advisors using valuation
techniques classified as Level 2 in the fair value hierarchy (2018: Level 2). Refer to Note 1.7 for further information on the fair value
hierarchy. These are based on the present value of estimated future cash flows based on the terms and maturities of each contract and
the current market interest rates at balance date. Fair values also reflect the current creditworthiness of the derivative counterparties.
These values are verified against valuations prepared by the respective counterparties. The valuations were based on market rates at
31 March 2019 of between 1.85% for the 90-day BKBM and 2.16% for the 10-year swap rate (2018: 1.96% and 3.06%, respectively).
3.4.3 capital management
The Group’s capital includes equity and interest bearing liabilities. The Group maintains a strong capital base to ensure investor,
creditor and market confidence and to sustain the Group’s ongoing activities. The impact of the level of capital on shareholder
returns and the need to maintain a balance between the higher returns that might be possible with greater gearing and the
advantages and security afforded by a sound capital position is recognised by the Group. The Group is subject to the capital
requirement imposed by the Group’s Senior Facilities Agreement governing its interest bearing liabilities, which requires that total
finance debt be maintained at no more than 45% of the total assets of the Group. This capital requirement has been complied
with at all times throughout the year.
3.5 trade and other payables
2019
$000
2018
$000
Trade creditors27,911 29,099
Interest and finance charges payable 2,413 2,918
Development costs payable 24,415 19,217
Employment liabilities 4,310 4,246
Rent in advance 502 663
Goods and Services Tax payable 794 1,287
Trade and other payables 60,345 57,430
recognition and measurement
Trade and other payables are carried at amortised cost and due to their short-term nature are not discounted. Provisions are
recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that a future outflow
of cash or other benefit will be required and a reliable estimate can be made of the amount of the obligation.
kiwi property
annual report 2019
40
notes to the consolidated financial statements
notes
3.6 equity
3.6.1 share capital
The following table provides details of movements in the Group’s issued shares:
2019
Number
000
2019
Amount
$000
2018
Number
000
2018
Amount
$000
Balance at the beginning of the year 1,420,415 1,432,936 1,299,389 1,272,622
Issue of shares:
Dividend reinvestment 12,340 16,779 2,831 3,842
Entitlement offer – – 118,132 156,950
Employee share ownership plan – shares issued 65 – 63 –
Employee share ownership plan – shares vested – 69 – –
Long-term incentive plan – (138) – (478)
Balance at the end of the year 1,432,820 1,449,646 1,420,415 1,432,936
1,510,930 shares at a cost of $2.1 million are held by Pacific Custodians (New Zealand) Limited (the LTI Plan Trustee) for the
Group’s long-term incentive plan (2018: 1,378,582 shares at a cost of $2.0 million). Refer to Note 3.6.4 for further information
on share-based payments.
recognition and measurement
Share capital is recognised at the fair value of the consideration received by the Company. Costs relating to the issue of new shares
have been deducted from proceeds received.
All shares carry equal weight in respect of voting rights, dividend rights and rights on winding up of the Company and have no par value.
3.6.2 dividends
Dividends paid during the year comprised:
Date declared
2019
cps
2019
$000 Date declared
2018
cps
2018
$000
Cash 3.425 48,651 3.375 43,856
Imputation credits0.970 13,779 0.980 12,735
Final dividend18-May-184.395 62,430 19-May-174.355 56,591
Cash 3.475 49,672 3.425 48,548
Imputation credits0.930 11,903 0.920 11,587
Interim dividend16-Nov-184.405 61,575 17-Nov-174.345 60,135
Cash 6.900 98,323 6.800 92,404
Imputation credits1.900 25,682 1.900 24,322
Total dividends8.800 124,005 8.700 116,726
41
notes
The Group operates a Dividend Reinvestment Plan (DRP) which allows eligible shareholders to elect to reinvest dividends in shares.
The board, at its sole discretion, may suspend the DRP at any time and/or apply a discount to which shares are issued under the DRP.
On 17 May 2019, the board declared a final cash dividend for the six months ended 31 March 2019 of 3.475 cents per share
(equivalent to $49.8 million), together with imputation credits of 1.07 cents per share. The dividend record date is 5 June 2019 and
payment will occur on 20 June 2019.
3.6.3 earnings per share
2019 2018
Profit and total comprehensive income after income tax attributable to shareholders ($000) 138,092 120,102
Weighted average number of shares (000) 1,428,387 1,386,649
Basic and diluted earnings per share (cents) 9.67 8.66
3.6.4 share-based payments
long-term incentive plan (LTI plan)
The Company provides an LTI plan for selected senior employees. Under the LTI plan, ordinary shares in the Company are purchased
on market by Pacific Custodians (New Zealand) Limited (the LTI Plan Trustee). Participants purchase shares from the LTI Plan Trustee
with funds lent to them by the Company. The number of shares that vest depends on the Company’s absolute total shareholder
return as well as its ranking relative to comparator entities in the S&P/NZX All Real Estate Index. If the individual is still employed by
the Company at the end of the vesting period and the hurdles have been achieved, the employee is provided a cash amount that
must be used to repay the loan and the relevant number of shares are then transferred to the individual.
recognition and measurement
The fair value of the LTI plan at grant date is recognised over the vesting period of the plan as an employee entitlements expense,
with a corresponding increase in the share-based payments reserve. The fair value is independently measured using an appropriate
option pricing model.
kiwi property
annual report 2019
42
notes to the consolidated financial statements
notes
3.6.4 share-based payments (continued)
Number of shares
Grant date
Measurement
date
Share price
at grant date
Balance
at the
beginning
of the year
Granted
during the
year
Vested
during the
year
Forfeited
during the
year
Balance at
the end of
the year
2019
1 April 201831 March 2021$1.368 – 608,068 – – 608,068
1 April 201731 March 2020$1.383 492,068 21,919 – – 513,987
1 April 201631 March 2019$1.466 388,875 – – – 388,875
1 April 201531 March 2018$1.260 372,903 – (108,138) (264,765) –
1,253,846 629,987 (108,138) (264,765) 1,510,930
2018
1 April 201731 March 2020$1.383 – 534,691 – (42,623) 492,068
1 April 201631 March 2019$1.466 459,785 – – (70,910) 388,875
1 April 201531 March 2018$1.260 448,375 – – (75,472) 372,903
15 December 201431 March 2017$1.232 303,339 – (291,201) (12,138) –
1,211,499 534,691 (291,201) (201,143) 1,253,846
key estimates and assumptions: fair value measurement of LTI plan
The fair value of the LTI plan has been determined using a Monte Carlo simulation to model a range of future share price outcomes
for the Company and comparator entities in the S&P/NZX All Real Estate Index. The fair value at grant date and the measurement
inputs used were as follows:
Measurement date
31 March
2021
31 March
2020
31 March
2019
Weighted average share price at grant date$1.368$1.383$1.466
Risk-free rate1.9%2.2%2.1%
Standard deviation of the entities in the S&P/NZX All Real Estate Index9.3%-12.1%8.9%-14.6%8.4%-15.2%
Correlation between Company share price and other entities
in the S&P/NZX All Real Estate Index0.310.280.20
Estimated fair value per share$0.462$0.508$0.502
The volatility and correlation measures were derived from measuring the standard deviation and correlation of returns
for listed entities in the S&P/NZX All Real Estate Index over a three-year period. The risk-free rate was based on government bond
yields over the same period.
It has been assumed that participants will remain employed with the Company on the vesting date. Dividend assumptions are based
on projected dividend payments over the vesting period.
The employee entitlements expense relating to the LTI plan for the year ended 31 March 2019 is $246,450 (2018: $190,148) with a
corresponding increase in the share-based payments reserve. The unamortised fair value of the remaining shares at 31 March 2019 is
$409,577 (2018: $330,508).
43
notes
4. financial risk management
for the year ended 31 March 2019
In the normal course of business, the Group is exposed to a variety of financial risks. This section explains the Group’s exposure
to financial risks, how these risks could affect the Group’s financial performance and how they are managed.
The Group is exposed to the following financial risks through its use of financial instruments:
—interest rate risk
—credit risk, and
—liquidity risk.
financial instruments
The following items in the statement of financial position are classified as financial instruments: cash and cash equivalents,
trade and other receivables, trade and other payables, interest bearing liabilities and interest rate derivatives. All financial instruments
are recorded at amortised cost with the exception of interest rate derivatives, which are recorded at fair value through profit or loss.
risk management
The board has overall responsibility for establishing and overseeing the Group’s risk management framework. The board has established
an audit and risk committee with responsibilities that include risk management, compliance and financial management and control.
The Group has developed a risk management framework that guides management and the board in the identification, assessment and
monitoring of new and existing risks. Management report to the audit and risk committee and the board on relevant risks and the
controls and treatments of those risks.
4.1 interest rate risk
nature of the risk
Interest rate risk is the risk that fluctuations in interest rates impact the Group’s financial performance or the fair value of
its holdings of financial instruments.
risk management
The Group adopts a policy of reducing its exposure to changes in interest rates by utilising interest rate derivatives to limit
future interest cost volatility by exchanging floating rate interest obligations for fixed rate interest obligations or by exchanging fixed
rate interest obligations for floating rate interest obligations. The Group has established a treasury management group consisting of
senior management and external treasury advisors to review and set treasury strategy within the guidelines of its treasury policy.
exposure
The Group’s exposure to interest rate risk arises primarily from bank loans that are subject to floating interest rates. The weighted
average interest rate, term to maturity of interest bearing liabilities and details of the interest rate derivatives utilised are set out in
Note 3.4. The fair value of interest rate derivatives is impacted by changes in market interest rates.
sensitivity to interest rate movements
The following sensitivity analysis shows the effect on pre-tax profit or loss and equity if market interest rates at balance date had been
100 basis points higher or lower with all other variables held constant.
100 bps increase ($000)100 bps decrease ($000)
(15,109)14,233
(12,846)
(10,878)
(9,249)
12,158
10,248
8,754
2019 – equityprofit or loss (pre-tax) – 2019
2018 – equityprofit or loss (pre-tax) – 2018
kiwi property
annual report 2019
44
notes to the consolidated financial statements
notes
4.2 credit risk
nature of the risk
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group
incurs credit risk in the normal course of business from trade receivables and transactions with financial institutions.
risk management
The risk associated with trade receivables is managed with a credit policy that includes performing credit evaluations on tenants and
imposing standard payment terms and the monitoring of aged debtors. Collateral is obtained where possible. The risk from financial
institutions is managed by placing cash and deposits with high credit quality financial institutions only.
exposure
The carrying amounts of financial assets recognised in the statement of financial position best represent the Group’s maximum
exposure to credit risk and are recognised net of any provision for losses on these financial instruments.
4.3 liquidity risk
nature of the risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
risk management
The Group evaluates its liquidity requirements on an ongoing basis by continuously forecasting cash flows. The Group generates sufficient
cash flows from its operating activities to meet its obligations arising from its financial liabilities and has bank facilities available to cover
potential shortfalls. The Group’s approach to managing liquidity risk is to ensure it will always have sufficient liquidity to meet its obligations
when they fall due under both normal and stress conditions. The Group manages liquidity by maintaining adequate committed credit
facilities and spreading maturities in accordance with its treasury policy.
exposure
The following table analyses the Group’s financial liabilities into relevant maturity groupings based on the earliest contractual
maturity date at balance date. The amounts are contractual undiscounted cash flows, which includes interest through to maturity
and assumes all other variables remain constant.
Statement of
financial position
$000
Contractual cash flows (principal and interest)
Total
$000
0–6 mths
$000
6–12 mths
$000
1–2 yrs
$000
2–5 yrs
$000
>5 yrs
$000
2019
Trade and other payables 52,326 52,326 52,326 – – – –
Interest bearing liabilities 1,001,688 1,132,311 20,387 184,679 323,570 368,149 235,526
Net interest rate derivatives 24,637 26,776 3,060 3,489 6,719 13,043 465
Total financial liabilities 1,078,651 1,211,413 75,773 188,168 330,289 381,192 235,991
2018
Trade and other payables 48,316 48,316 48,316 – – – –
Interest bearing liabilities 913,502 1,050,527 18,577 18,577 291,548 460,277 261,548
Net interest rate derivatives 14,694 19,132 4,427 4,002 6,207 4,401 95
Total financial liabilities 976,512 1,117,975 71,320 22,579 297,755 464,678 261,643
45
notes
5. other information
for the year ended 31 March 2019
5.1 segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating
segments, is the Chief Executive Officer.
Operating segments have been determined based on the reports reviewed by the Chief Executive Officer to assess performance,
allocate resources and make strategic decisions. In March 2019, the Group made a change to its asset classifications in line with strategy.
The prior year reportable segments have been reclassified for consistency purposes.
The Group’s primary assets are investment properties. Segment information regarding investment properties is provided in Note 3.2.
The Group operates in New Zealand only.
The following is an analysis of the Group’s profit by reportable segments:
Mixed-use
$000
Retail
$000
Office
$000
Other
$000
Total
$000
2019
Property revenue 104,369 68,336 57,420 5,161 235,286
Less: straight-lining of fixed rental increases(199) 239 (2,091) 35 (2,016)
Less: direct property expenses
(23,188) (18,189)
(11,888)
(1,359) (54,624)
Segment profit 80,982 50,386 43,441 3,837 178,646
2018
Property revenue 100,001 77,830 67,018 4,414 249,263
Less: straight-lining of fixed rental increases 1,293 (482) (2,876) (35) (2,100)
Less: direct property expenses(21,754) (20,558) (13,680) (1,176) (57,168)
Segment profit 79,540 56,790 50,462 3,203 189,995
mixed-use 42%
retail 30%
office 26%
other 2%
2018
segment profit
mixed-use 46%
retail 28%
office 24%
other 2%
2019
segment profit
kiwi property
annual report 2019
46
notes to the consolidated financial statements
notes
5.1 segment information (continued)
A reconciliation of the segment profit to the profit before income tax reported in the consolidated statement of comprehensive
income is provided as follows:
2019
$000
2018
$000
Segment profit 178,646 189,995
Property management income 2,202 1,742
Rental income resulting from straight-lining of fixed rental increases 2,016 2,100
Interest and other income 170 285
Net fair value gain on investment properties 47,650 26,528
Interest and finance charges (37,622)(42,645)
Employment and administration expenses (20,878)(20,567)
Net fair value loss on interest rate derivatives (11,040)(2,390)
Gain/(loss) on disposal of investment properties 971 (7,069)
Profit before income tax 162,115 147,979
5.2 related party transactions
The Group holds its 50% interest in The Base by way of an unincorporated joint venture. Kiwi Property manages the entire property
on behalf of the joint venture and receives management fees in accordance with the Property Management Agreement.
During the year, the following transactions were undertaken with the joint venture:
2019
$000
2018
$000
Property management fees 1,288 1,252
Expenditure reimbursement 1,275 515
Leasing fees 691 814
Development management fees 303 169
Legal fees 69 68
Retail design management fees 16 88
Total related party transactions 3,642 2,906
47
notes
5.3 key management personnel
2019
$000
2018
$000
Directors’ fees 701 704
Short-term employee benefits6,651 5,288
Other long-term benefits 21 –
Termination benefits 945 –
Share-based payments 392 297
Key management personnel costs 8,710 6,289
Additional disclosures relating to key management personnel are set out in the remuneration report on page 53. Further details
regarding share-based payments can be found in Note 3.6.4.
5.4 commitments
The following costs have been committed to but not recognised in the financial statements as they will be incurred in future
reporting periods:
2019
$000
2018
$000
Development costs at Sylvia Park 124,858 185,152
Development costs at LynnMall – 1,819
Development costs at The Plaza 807 5,111
Development costs at Northlands 1,648 8,042
Development and leasing costs at Vero Centre – 261
Development costs at 44 The Terrace – 45
Drury infrastructure 1,913 –
Commitments 129,226 200,430
the Base
Under the Group's agreement to purchase 50% of The Base from The Base Limited (TBL), TBL has the right to require the Group
to purchase its remaining 50% interest, at a price determined by independent valuation, between 2019 and 2021.
ground leases
Ground leases exist over ASB North Wharf, The Base and certain adjoining properties. In addition, ground leases also exist over parts
of the land at Sylvia Park, Westgate Lifestyle, Centre Place North, The Plaza and Northlands. The amount paid in respect of ground
leases during the year was $1.0 million (2018: $1.1 million). The leases terminate between November 2026 and March 3007.
5.5 subsequent events
On 15 May 2019, $166 million of existing bank debt facilities were extended. The facilities, which were due to expire in the
2020 financial year, will now expire in the 2025 financial year.
On 17 May 2019, the board declared a final dividend. For further details, refer to Note 3.6.2.
kiwi property
annual report 2019
48
notes to the consolidated financial statements
independent auditor’s report
We have audited the consolidated financial statements which comprise:
—the consolidated statement of financial position as at 31 March 2019;
—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; and
—the notes to the consolidated financial statements, which include a summary of significant accounting policies.
our opinion
In our opinion, the accompanying consolidated financial statements of Kiwi Property Group Limited (the Company), including its
controlled entities (the Group), present fairly, in all material respects, the financial position of the Group as at 31 March 2019, 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 audits of special purpose financial information in accordance with
tenancy agreements, voting procedures over the annual shareholders’ meeting, the benchmarking of executive remuneration and
assistance with the long-term incentive plan. The provision of these other services has not impaired our independence as auditor
of the Group.
independent auditor’s report
To the shareholders of Kiwi Property Group Limited
49
notes
our audit approach
overview
An audit is designed to obtain reasonable assurance whether the financial statements are free
from material misstatement.
Overall Group materiality: $6.27 million, which represents approximately 5% of profit before income tax
excluding valuation movements relating to investment properties and interest rate derivatives.
We chose this benchmark because, in our view, it is the benchmark against which the performance
of the Group is most commonly measured by users, and is a generally accepted benchmark.
We have determined that there is one key audit matter: Valuation of Investment Properties.
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.
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. 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.
Materiality
Audit scope
Key audit
matters
kiwi property
annual report 2019
50
notes to the consolidated financial statements
independent auditor’s report
key audit matterhow our audit addressed the key audit matter
valuation of investment properties
Refer to note 3.2 of the consolidated financial statements.
The Group's investment properties comprise mixed-use, retail
and office portfolios. At $3.2 billion, the investment properties
represent the majority of the assets as at 31 March 2019.
The mixed-use classification was introduced in the year to align
with the Group's strategy.
The valuation of the Group's property portfolio is inherently
subjective due to, among other factors, the individual nature of
each property, location and the expected future rental income.
This area is given specific audit focus and attention due to the
existence of significant estimation uncertainty, along with the
fact that only a small percentage difference in individual
property valuation assumptions, when aggregated, could result
in material misstatement.
The valuations were carried out by independent third party valuers.
The valuers were engaged by the Group, and performed their work
in accordance with the 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 apply
assumptions in relation to capitalisation rates and current market
rent and the anticipated growth, based on available market data
and transactions.
This information is used 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.
Comparable market information is available in New Zealand for
most of the Group’s properties, other than for the larger, higher
value properties, which are unique in New Zealand due to their
size. The valuers take into consideration Australian market
information for these properties.
The Group has adopted the assessed values determined by
the valuers.
For properties that have development work ongoing at
31 March 2019, the costs to complete these developments
were taken into account by the valuers.
There is subjectivity involved in determining valuations for
individual properties including alternative assumptions and
valuation methods. We therefore determined a range of values
that were considered reasonable for an individual property to
evaluate the valuations used by management. In assessing
whether the valuations fall within this range, we performed
the following procedures:
external valuations
We read the valuation reports for all properties and held
discussions with specific valuers.
The valuers 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 March 2019.
It was evident from our discussions with management and the
valuers and our review of the valuation reports that there has
been close attention to each property's individual characteristics
and its overall quality, geographic location and desirability.
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 also considered whether or not there was bias in determining
individual valuations and found no evidence of bias.
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 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 assumptions used by the valuers to market evidence
and current market conditions.
We concluded that the assumptions used in the valuations were
supportable in light of available and comparable market evidence.
We obtained management’s estimates of costs to complete on the
properties under development. We compared these estimates to
management forecasts and external quantity surveyors’ reports and
discussed the costs to complete for significant developments with
the relevant quantity surveyors. We consider the estimates to be
reasonable based on available information.
From the procedures performed, we have no matters to report.
51
notes
information other than the financial statements and auditor’s report
The Directors are responsible for the annual report. Our opinion on the consolidated financial statements does not cover the other
information included in the annual report and we do 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. If, based on the work we have performed on
the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report in this regard.
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 the 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 financial statements is located at the External Reporting Board’s website:
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 Jonathan Skilton.
For and on behalf of:
Chartered Accountants Auckland
17 May 2019
corporate governance
We are committed to the highest standards of
corporate governance.
Our corporate governance framework draws on principles,
guidelines, recommendations and requirements from a range
of sources including the NZX Listing Rules and NZX Corporate
Governance Code (the NZX Code). In addition, the Board has
approved policies and practices that aim to reflect best practice
corporate governance.
The overarching purpose of the NZX Code is to promote
good corporate governance. The NZX Code contains eight
corporate governance principles. For each principle, the NZX
Code sets out good practice recommendations. There are a
total of 33 recommendations.
NZX Code compliance
Kiwi Property has followed the recommendations set out
in the NZX Code for the year ended 31 March 2019 except,
to the extent set out in the Kiwi Property FY19 Corporate
Governance Statement, which is available on our website
kp.co.nz/about-us/corporate-governance
This statement is current as at 31 March 2019 and has been
approved by the Board.
The corporate governance policies, practices and processes
that Kiwi Property adopted or followed for the year ended
31 March 2019 are summarised, or referred to, in the
Kiwi Property FY19 Corporate Governance Statement.
The following disclosures are required to be made in this Annual
Report by NZX Listing Rules, the Companies Act 1993 and other
legislation, rules or disclosure regimes.
director independence
Director independence is determined in accordance with the
requirements of the NZX Listing Rules. The Board has determined
that, as at 31 March 2019, all directors of the Company were
independent: Mary Jane Daly, Richard Didsbury, Mark Ford,
Jane Freeman, Mark Powell and Mike Steur. This assessment
is based on the fact that:
−All directors are non-executive directors.
−No director is currently, or within the last three years, employed
in an executive role by the Company, or any of its subsidiaries,
and there has been a period of at least three years between
ceasing such employment and serving on the Board.
−No director currently, or within the last 12 months, holds a
senior role in a provider of material professional services to
the Company or any of its subsidiaries.
−No director currently, or within the last three years, has a
material business relationship (e.g. as a supplier or customer)
with the Company or any of its subsidiaries.
−No director currently is a substantial product holder of the
Company, or a senior manager of, or a person otherwise
associated with, a substantial product holder of the Company.
−No director currently, or within the last three years, has a
material contractual relationship with the Company or any of
its subsidiaries, other than as a director.
−No director has close family ties with anyone in the
categories listed above.
−No director has been a director with the Company for a
length of time that may compromise independence.
The Board noted that Jane Freeman had previously disclosed her
family connection to NZ Strong Construction. The Board noted
Richard Didsbury’s 26 year length of tenure on the Board. The Board
concluded that Jane Freeman’s family connection to NZ Strong
Construction and Richard Didsbury’s 26 year length of tenure on the
Board did not and does not influence, in a material way, the capacity
for each of those directors to bring an independent view to
decisions in relation to the Company, act in the best interests of the
Company, and represent the interests of the Company’s financial
product holders, generally having regard to the factors described in
the NZX Code that may impact director independence.
board committees
The members of the Audit and Risk Committee are
Mary Jane Daly (Chair), Mark Ford, Mark Powell and Mike Steur.
The members of the Company’s Remuneration and Nominations
Committee are Richard Didsbury, Mark Ford, Jane Freeman (Chair),
and Mike Steur.
diversity policy
The Board has evaluated the performance of the Company
against the Company’s Diversity and Equal Employment
Opportunity Policy and considers that the Company has complied
with the policy and with objectives relating to increasing the
diversity of the candidate talent pool during recruitment, diversity
and inclusion education and pay practices.
The Board recognises that business performance and productivity
are enhanced by a diverse team. It acknowledges that progress
towards achieving diversity across the business requires a long
term approach. The Board and management are committed to
the continuation of this work in order to achieve a future workforce
that reflects the diverse make-up of New Zealand, our customers
and visitors.
More information concerning the Company’s Diversity and Equal
Employment Opportunity Policy can be found in the Company’s FY19
Corporate Governance Statement, which is available on our website.
gender diversity
The following table provides a breakdown of the gender
composition of the directors and officers of the Company, the
Company’s executive team together with all employees as at the
current and prior balance dates:
2019
numberproportion %
femalemalefemalemale
directors243367
officers252971
all employees116566733
2018
numberproportion %
femalemalefemalemale
directors243367
officers142080
all employees126477327
corporate governance
kiwi property
annual report 2019
52
remuneration report
remuneration strategy
The Board supports a remuneration strategy that
is aligned to our investors’ interests and encourages
the achievement of our strategic objectives.
performance metricsremuneration strategyremuneration framework
—Long-term total shareholder returns
of >9% per annum.
—Annual operating earnings before
interest and tax.
—Employee job performance and
achievement of stretch goals
aligned to strategic objectives.
Our remuneration strategy is to drive
the achievement of strategic objectives
and to focus our people’s performance
and subsequent remuneration outcomes
on the achievement of sustainable returns.
Our remuneration framework is designed
to attract, retain, motivate and reward our
people to deliver performance that is
aligned to our investors’ interests.
our remuneration structure
fixed annual
remuneration (FAR)
short-term incentive
scheme (STI)
long-term incentive
p l a n (LT I)
employee share
ownership plan (ESOP)
—FAR is benchmarked
at either the median
or the upper quartile
of the market to enable
competitiveness
in the market.
—Benefits include income
protection, life and total
permanent disability
insurance and KiwiSaver
Company contributions
at 3%.
—A discretionary, at-risk
incentive for salaried,
permanent employees.
—Company and
individual-based
performance measures,
founded on stretch goals.
—Incentives benchmarked
at either the median
or the upper quartile
of the market to enable
competitiveness in
the market.
—A discretionary share plan,
with a three-year vesting
period, for executives and
employees (by invitation).
—Reflects reward for delivery
of sustained results over
the long term.
—The LTI performance hurdles
consist of an absolute and
relative total shareholder
return, measured
independently of each
other over a three-year
performance period.
—Assists in employee
retention objectives.
—A discretionary share plan,
with a three-year vesting
period that is designed to
align our people’s interests
with those of our
shareholders.
—An annual grant that enables
our permanent employees to
acquire $781 of shares for $1.
—Provides our people with
an opportunity to take
an ownership stake in
the business.
—Assists in employee
retention objectives.
53
other
remuneration report
remuneration report (continued)
STI
The STI potential for our people has a component linked to the Company’s performance and a component linked to personal
performance against specific stretch goals.
Both components are based on ‘stretch’ performance goals. Measures may change year on year to best drive business objectives
and performance. Incentives are set around the market median for target performance, with potential for participants to earn more
for premium performance.
performance measures
company performance
—The Company performance measure is linked to the Company’s budgeted Operating Earnings before Interest and Tax (Operating EBIT).
—The scheme is designed to drive outperformance of the Operating EBIT metric.
—The Board determines an annual Operating EBIT target that must be achieved before any incentive is paid.
—Once this target is achieved, payment of the Company component commences at 50% and can increase to a maximum of 115%
depending on the level of Operating EBIT outperformance.
individual performance
Measures are discussed and agreed between each people leader and their direct report, in line with the following principles:
—Between one and three stretch goals are set which relate to the Company’s strategy and its current priorities and each employee’s
individual role.
—Measures will be quantifiable, objective and able to be measured.
—All individual measures and targets are underpinned by the concept of stretch performance (not business as usual). This is
consistent with how the Company’s measures and targets have been set and is aligned to the Company’s goal of paying
incentives where ‘above and beyond’ performance levels have been achieved.
The Company is in the process of reviewing the STI scheme performance measures and will report on any changes in the next
Annual Report.
LTI
The Company’s officers, executive team and certain other employees may be invited to join the Company’s LTI plan on an annual
basis. Performance is measured against absolute and relative Total Shareholder Returns (TSR) measured independently of each
other over a three-year performance period.
componentLTI grant componentmeasure
absolute
TSR hurdle
50%
—The Company’s TSR must exceed 9% per annum, compounding over the
performance period.
relative
TSR hurdle
50%
—Requires the Company’s TSR to be compared with the TSRs of the entities that make
up the S&P/NZX All Real Estate Index (excluding Kiwi Property and CDL Investments
New Zealand Limited, referred to as the ‘peer group’).
—The TSRs of the entities in the peer group over the performance period will be ranked
from highest to lowest.
—If Kiwi Property’s TSR over the performance period exceeds the 50th percentile in the
peer group, 50% of this portion of the LTI grant will vest (i.e. 25% of the total LTI grant).
—If Kiwi Property’s TSR over the performance period exceeds the 75th percentile in the
peer group, 100% of this portion of the LTI grant will vest (i.e. 50% of the total LTI grant).
—There is a straight-line progression and apportionment between these two points.
The Company is in the process of reviewing the LTI scheme performance measures and will report on any changes in the next
Annual Report.
kiwi property
annual report 2019
54
relative weightings of remuneration components for officers
—Officers (as defined by the NZX Listing Rules) of the Company now comprise the Chief Executive Officer, GM Asset Management,
GM Development, GM Funds Management and Capital Markets, GM Income and Leasing, GM People and Communications
and GM Property Investment.
—The total remuneration package for each of our officers comprises FAR, STI and LTI.
—The STI for our officers, in the reporting period, was as follows:
STI % of FAR
% of STI attributed to Company
Operating EBIT performance
% of STI attributed to
individual performance
Chief Executive Officer60%50%50%
other officers30–40%50%50%
—The LTI for our officers, in the reporting period, was as follows:
LTI % of FAR
Chief Executive Officer45%
other officers25–27.5%
performance and development
All our permanent employees participate in performance and development conversations on a quarterly basis. The outcomes
of the end-of-year conversation inform decisions regarding remuneration adjustments in accordance with the Company’s policy.
annual remuneration review
The Board is responsible for the overall remuneration strategy and for reviewing and setting the remuneration of the Chief Executive
Officer. The Remuneration and Nominations Committee is responsible for reviewing and setting the remuneration of the direct
reports of the Chief Executive Officer and advising the Board on the remuneration of the Chief Executive Officer. The Board sets the
total pool available for remuneration of our employees at the time the annual budget is approved.
To underpin our remuneration decision making and ensure our employees are paid appropriately, we use a benchmarking job-
matching approach utilising market data from several external remuneration consultancies.
equal pay
Kiwi Property is committed to undertaking an annual equal pay review to assess the impact of gender on the pay and participation
of women in the workforce and to ensure unconscious bias does not impact remuneration decisions.
55
other
remuneration report
remuneration report (continued)
remuneration outcomes for the year
employee remuneration
During the reporting period, there were 77 employees and former employees, excluding directors of the Company, who received
remuneration and other benefits in their capacity as employees totalling $100,000 or more.
Remuneration includes salary, STI payments, LTI payments that have vested, employer’s contributions to superannuation, redundancy
payments, the cost of providing insurance plans and sundry benefits received in their capacity as employees (including the cost of
fringe benefit tax). Employee remuneration does not include LTIs that have not vested.
amount of remuneration (from $ to $)number of employeesamount of remuneration (from $ to $)number of employees
100,000–110,00010260,001–270,0001
110,001–120,0009280,001–290,0001
120,001–130,0004300,001–310,0003
130,001–140,0002310,001–320,0002
140,001–150,0004330,001–340,0001
150,001–160,0002340,001–350,0001
160,001–170,0005360,001–370,0001
170,001–180,0001370,001–380,0001
180,001–190,0002380,001–390,0001
190,001–200,0005390,001–400,0001
200,001–210,0003400,001–410,0001
210,001–220,0001410,001–420,0002
220,001–230,0004480,001–490,0001
240,001–250,0002870,001–880,0001
250,001–260,00041,750,001–1,760,0001
total employees earning $100,000+77
employees included but no longer employed by Kiwi Property2
LTI
LTIs that have been granted, vested or forfeited by executives (being the officers of the Company and other invited employees,
but excluding the Chief Executive Officer) as at 31 March 2019 are detailed in the following table:
grant date
measurement
date
total
participantsgrant value
number of shares
granted
number of shares
forfeited
number of shares
vested
1 April 201531 March 201813$1,064,559565,887(457,749)108,138
1 April 201631 March 201912$1,006,135459,785(70,910)
not yet applicable1 April 201731 March 202012$1,148,713556,610(42,623)
1 April 201831 March 202114$1,241,603608,068(0)
Note 3.6.4 of the financial statements on pages 41 and 42 provides further details of the number of shares granted, forfeited and vested.
kiwi property
annual report 2019
56
chief executive officer remuneration
Clive Mackenzie took up the role of Chief Executive Officer in July 2018. His employment agreement comprises standard conditions
that are appropriate for a Chief Executive Officer in the market. The Chief Executive Officer’s remuneration for the year ended
31 March 2019 includes salary, employer’s contributions to KiwiSaver and the cost of providing insurance plans and sundry benefits.
Clive did not receive a STI payment in the period and will receive a pro-rata LTI grant for the year ended 31 March 2019 in the next
financial year.
Clive’s annual base salary as at 31 March 2019 was $630,000. The remuneration he received for the period 16 July 2018 to
31 March 2019 comprised the following:
fixed annual remuneration (including KiwiSaver and value of benefits)$488,647
The basis of the Chief Executive Officer’s STI is set out on pages 54 and 55.
prior chief executive’s remuneration
According to the NZX Corporate Governance Code (recommendation 5.3), Kiwi Property should disclose the remuneration
arrangements in place for the Chief Executive. Chris Gudgeon retired from the role of Chief Executive during the period. The details
of his remuneration have not been disclosed in order to comply with the Privacy Act given Mr Gudgeon did not consent to disclosure.
57
other
remuneration report
remuneration report (continued)
director remuneration
The directors’ remuneration is paid in the form of directors’ fees.
At the Company’s 2017 annual meeting, shareholders approved a total directors’ fee pool of $737,500 per annum. During the year
ended 31 March 2019, the Board allocated the pool as follows:
fee
number of persons
holding officetotal fee pool
Chair (including membership of all committees) $165,0001$165,000
Director (excluding the Chair)$92,0005$460,000
Chair of the Audit and Risk Committee $20,0001$20,000
Audit and Risk Committee member$10,0002$20,000
Chair of the Remuneration and Nominations Committee$20,0001$20,000
Remuneration and Nominations Committee member$8,1252$16,250
discretionary pool$36,250n/a$36,250
total$737,500
The fees paid to our directors during the year ended 31 March 2019 are outlined below:
directorsdutiesfees
Mary Jane DalyDirector
Chair of the Audit and Risk Committee
$112,000
Richard DidsburyDirector
Member of the Remuneration and Nominations Committee
$100,125
Mark FordChair
Member of the Audit and Risk Committee
Member of the Remuneration and Nominations Committee
$165,000
Jane FreemanDirector
Chair of the Remuneration and Nominations Committee
$111,907
Mark PowellDirector
Member of the Audit and Risk Committee
$102,000
Mike SteurDirector
Member of the Audit and Risk Committee
Member of the Remuneration and Nominations Committee
$110,125
From 1 April 2019, the total directors’ fee pool will be allocated as follows:
fee
number of persons
holding officetotal fee pool
Chair (including membership of all committees) $172,5001$172,500
Director (excluding the Chair)$94,0005$470,000
Chair of the Audit and Risk Committee $20,0001$20,000
Audit and Risk Committee member$11,5002$23,000
Chair of the Remuneration and Nominations Committee$20,0001$20,000
Remuneration and Nominations Committee member$11,5002$23,000
discretionary pool$9,000n/a$9,000
total$737,500
The discretionary pool has been utilised to fund the increase in allocated fees.
kiwi property
annual report 2019
58
other
other investor information
reporting entity
Kiwi Property Group Limited (the Company) was incorporated
under the Companies Act 1993 on 16 October 2014.
In December 2014, investors approved a move from a unit
trust to a Company structure. Prior to this approval, the entity
(known as Kiwi Income Property Trust) was a unit trust
established under the Unit Trusts Act 1960 by a Trust Deed
dated 21 August 1992.
stock exchange listing
The Company’s shares are quoted on the NZX under the ticker
code KPG and the Company’s bonds are quoted on the NZDX
under the ticker codes KPG010, KPG020, KPG030 and KPG040.
credit rating
S&P Global Ratings has assigned a corporate credit rating of
BBB (stable) to the Company and an issue credit rating of BBB+
to each of the Company’s fixed-rate senior secured bonds
(KPG010, KPG020, KPG030 and KPG040).
Further information about S&P Global Ratings’ credit rating
scale is available at standardandpoors.com. A rating is not a
recommendation by any rating organisation to buy, sell or hold
the Company’s securities. The credit ratings referred to in this
annual report are current as at 17 May 2019 and may be subject
to suspension, revision or withdrawal at any time by
S&P Global Ratings.
changes in the nature or classes of business
There were no changes in the nature of the Company’s business
during the year, or that of its subsidiaries. There were no changes
in the classes of business in which the Company has an interest,
whether as a shareholder of another company or otherwise.
NZX waiver
The following is a summary of the waiver granted by NZX during
the year ended 31 March 2019 and relied on by the Company.
Waiver in relation to the Company’s offer of up to $100 million
(with the ability to accept oversubscriptions of up to $25 million at
Kiwi Property’s discretion) of seven-year fixed-rate senior secured
bonds maturing on 12 November 2025 (Offer). Capitalised terms
below have the meanings given to them in the Offer Document
dated 2 November 2018 (which is available on the Company’s
website at kp.co.nz/investor-centre).
On 26 October 2018, NZX granted the Company a waiver from
Listing Rule 7.11.1 in respect of the Offer, subject to certain terms
and conditions, to enable the Company to allot the bonds six
Business Days after the Closing Date.
NZX disciplinary action
There has been no public exercise by NZX of any of its powers
set out in Listing Rule 9.9.3 in relation to the Company.
auditor
PricewaterhouseCoopers (PwC) has continued to act as the
Company’s external auditor and has undertaken the audit of
the financial statements for the 31 March 2019 financial year.
PwC will be automatically reappointed as external auditor at
the Company’s next annual meeting pursuant to section 207T
of the Companies Act 1993.
donations, sponsorship and volunteering
During the year, the Company donated $3,000 to the
Christchurch Shooting Victims’ Fund, $1,500 to the
Tuwhitia Kapa Haka Group and shopping centre gift vouchers
totalling $500 to Tainui Group Holdings Limited in support
of a New Zealand Breast Cancer Foundation initiative.
The Company is a longstanding corporate sponsor
(currently $12,500 per annum) of Keystone Trust. Keystone is
a charitable trust that gives tertiary students a hand up to
further their education in property industry-related fields.
Volunteering within the communities in which we invest
and operate is important to the Company. For details of
our volunteering over the past year, refer to our 2019
Sustainability Report.
directors of the Company’s subsidiaries
As at 31 March 2019, the directors of the subsidiary companies
Kiwi Property Holdings Limited, Kiwi Property Holdings No. 2
Limited, Kiwi Property Te Awa Limited and Sylvia Park Business
Centre Limited were Clive Mackenzie, Gavin Parker, Stuart
Tabuteau and Trevor Wairepo.
During the year to 31 March 2019, Chris Gudgeon ceased
to hold office as a director of the subsidiary companies,
and Clive Mackenzie and Stuart Tabuteau were appointed
as directors of the subsidiary companies.
Directors of the Company’s subsidiaries do not receive any
remuneration or other benefits in their capacity as a director
of those companies, except the indemnity and insurance
referred to below.
directors’ indemnity and insurance
In accordance with the constitution of the Company and section
162 of the Companies Act 1993, the directors of the Company
continue to receive an indemnity from the Company and
insurance to cover liabilities that may arise out of the normal
performance of their duties.
The directors of the subsidiary companies also continue to
receive an indemnity from each subsidiary company and
insurance to cover liabilities that may arise out of the normal
performance of their duties.
annual meeting of shareholders
The Company’s annual meeting of shareholders will be held
at 10.30am on Thursday, 20 June 2019 in Cinema 4, HOYTS
Cinemas, Sylvia Park, 286 Mount Wellington Highway, Mount
Wellington, Auckland.
interest register entries
directors’ general disclosures
In accordance with section 211(1)(e) of the Companies Act 1993,
details of the entries made in the Interests Register of the
Company during the year are set out over the page, together
with the existing entries as at 31 March 2019.
59
other investor information
namename of company/entitynature of interest
Mary Jane DalyAirways Corporation of New Zealand LimitedDeputy Chair
Airways International LimitedDirector
Auckland TransportDirector
Cigna Life Insurance New Zealand LimitedDirector
Earthquake CommissionDeputy Chair
OnePath Life (NZ) Limited
1
Director
Richard DidsburyAuckland City Mission Redevelopment CommitteeChair
Brick Bay Development TrustTrustee
Brick Bay Investment TrustTrustee
Brick Bay Trustee LimitedDirector and Shareholder
Brick Bay Wines LimitedDirector and Shareholder
Committee for AucklandTrustee
NX2 Hold GP Limited (Northern Express consortium)Chair
SkyCity Entertainment Group LimitedDirector and Shareholder
Mark FordCBUS Property Pty Limited and related entities
2
Director
Dexus Property GroupDirector
Prime Property Fund Asia GP Pte LimitedDirector
RREEF China Commercial Trust Management Limited
(Manager of China Commercial Trust and a Subsidiary
of Deutsche Bank)
Director
The Ford Family Superannuation FundTrustee
Jane FreemanArgosy Property Limited
2
Spouse of Director (Christopher Hunter)
Foodstuffs North Island LimitedDirector
Jane Freeman Consulting LimitedDirector and Shareholder
NZ Strong ConstructionSpouse of Director (Christopher Hunter)
Mark PowellAuckland University Graduate School of Management
1
Adjunct Professor
Carey Baptist Theological CollegeElected board member
JB Hi-Fi Group LimitedDirector
Stihl Shop NZAdvisory board member
The Halls Group Limited
2
Director
The Parenting Place
1
Trustee
Trinity Lands LimitedDirector
Venn Foundation NZChair
Mike Steur BWP Management LimitedDirector
Dexus Wholesale Property FundDirector
Healthcare Wholesale Property FundChair
M & D Steur Investments Pty LimitedShareholder
directors’ holdings of quoted financial products
In accordance with NZX Listing Rule 3.7.1(d), as at 31 March 2019, the directors of the Company who had a relevant interest in quoted
financial products of the Company are listed below.
directornumber of quoted financial products
Mark Powell18,450 ordinary shares in the Company
1. Entry added by notice given by the director during the year.
2. Entry removed by notice given by the director during the year.
kiwi property
annual report 2019
60
other
shareholder statistics
as at 31 March 2019
twenty largest shareholders
shareholder
number
of shares
% of total
issued shares
HSBC Nominees (New Zealand) Limited 142,220,198 9.93
Accident Compensation Corporation 117,790,205 8.22
Citibank Nominees (NZ) Limited 112,238,425 7.83
HSBC Nominees (New Zealand) Limited 92,329,233 6.44
Premier Nominees Limited <Wholesale Trans-Tasman Property> 83,259,531 5.81
JPMorgan Chase Bank 70,699,635 4.93
Cogent Nominees Limited 57,067,167 3.98
FNZ Custodians Limited 53,047,726 3.70
National Nominees New Zealand Limited 40,473,116 2.82
Investment Custodial Services Limited 37,859,898 2.64
BNP Paribas Nominees NZ Limited 35,841,402 2.50
Premier Nominees Limited <Armstrong Jones Property Securities Fund> 26,702,874 1.86
Forsyth Barr Custodians Limited 25,459,394 1.78
JBWere (NZ) Nominees Limited 21,619,386 1.51
TEA Custodians Limited 21,619,357 1.51
New Zealand Superannuation Fund Nominees Limited 21,178,520 1.48
Custodial Services Limited 20,170,126 1.41
MFL Mutual Fund Limited 17,770,076 1.24
New Zealand Permanent Trustees Limited 16,276,431 1.14
Private Nominees Limited 14,924,346 1.04
total 1,028,547,046 71.77
total shares on issue 1,432,819,563
spread of shareholders
size of holding
number
of holders
% of total
holders
number
of shares
% of total
issued shares
1–1,000 717 6.51 350,967 0.02
1,001–5,000 1,727 15.69 5,347,186 0.37
5,001–10,000 1,963 17.83 14,935,805 1.04
10,001–50,000 5,316 48.29 120,468,879 8.41
50,001–100,000 811 7.37 55,043,514 3.84
100,001 and over 474 4.31 1,236,673,212 86.32
total 11,008 100.00 1,432,819,563 100.00
61
other investor information
bondholder statistics
as at 31 March 2019
twenty largest bondholders
bondholder
number
of bonds
% of total
issued bonds
FNZ Custodians Limited 38,775,000 8.16
Forsyth Barr Custodians Limited <1 Custody> 37,867,000 7.97
Custodial Services Limited <3> 35,589,000 7.49
Custodial Services Limited <4> 29,807,500 6.28
Citibank Nominees (NZ) Limited 24,694,000 5.20
Investment Custodial Services Limited 22,108,000 4.65
Custodial Services Limited <2> 22,090,500 4.65
Cogent Nominees Limited 16,787,000 3.53
JPMorgan Chase Bank 16,610,000 3.50
Custodial Services Limited <1> 14,582,000 3.07
HSBC Nominees (New Zealand) Limited 13,020,000 2.74
Westpac Banking Corporation 12,190,000 2.57
Custodial Services Limited <18> 11,950,000 2.52
New Zealand Permanent Trustees Limited <Group Investment Fund No 20> 8,780,000 1.85
New Zealand Permanent Trustees Limited <NZPT44> 6,628,000 1.40
National Nominees New Zealand Limited 6,297,000 1.33
ANZ National Bank Limited 5,819,000 1.23
Custodial Services Limited <16> 5,448,000 1.15
FNZ Custodians Limited <DTA Non Resident> 5,382,000 1.13
Forsyth Barr Custodians Limited <1 E> 5,296,000 1.11
total 339,720,000 71.53
total bonds on issue 475,000,000
spread of KPG010 bondholders (August 2021 maturity)
size of holding
number of
holders
% of total
holders
number
of bonds
% of total
issued bonds
1–1,000 - - - -
1,001–5,000 127 9.9 635,000 0.51
5,001–10,000 308 24.16 2,946,000 2.36
10,001–50,000 690 54.12 19,066,000 15.25
50,001–100,000 85 6.67 7,187,000 5.75
100,001 and over 65 5.09 95,166,000 76.13
total 1,275 100.00 125,000,000 100.00
spread of KPG020 bondholders (September 2023 maturity)
size of holding
number of
holders
% of total
holders
number
of bonds
% of total
issued bonds
1–1,000 - - - -
1,001–5,000 43 7.52 215,000 0.17
5,001–10,000 114 19.93 1,112,000 0.89
10,001–50,000 311 54.37 9,158,000 7.33
50,001–100,000 44 7.69 3,831,000 3.06
100,001 and over 60 10.49 110,684,000 88.55
total 572 100.00 125,000,000 100.00
kiwi property
annual report 2019
62
other
spread of KPG030 bondholders (December 2024 maturity)
size of holding
number of
holders
% of total
holders
number
of bonds
% of total
issued bonds
1–1,000 - - - -
1,001–5,000 41 7.78 205,000 0.16
5,001–10,000 110 20.87 1,076,000 0.86
10,001–50,000 285 54.08 7,867,000 6.29
50,001–100,000 36 6.83 2,935,000 2.35
100,001 and over 55 10.44 112,917,000 90.34
total 527 100.00 125,000,000 100.00
spread of KPG040 bondholders (November 2025 maturity)
size of holding
number of
holders
% of total
holders
number
of bonds
% of total
issued bonds
1–1,000 - - - -
1,001–5,000 18 6.45 90,000 0.09
5,001–10,000 56 20.07 544,000 0.54
10,001–50,000 161 57.71 4,156,000 4.16
50,001–100,000 19 6.81 1,643,000 1.64
100,001 and over 25 8.96 93,567,000 93.57
total
279 100.00
100,000,000
100.00
substantial product holders
In accordance with section 293 of the Financial Markets Conduct Act 2013, listed below are the names and details of all persons who,
according to the Company’s records and disclosures made, are substantial product holders of the Company as at 31 March 2019.
The total number of ordinary shares on issue at 31 March 2019 was 1,432,819,563.
name
number of
shares held at
date of notice
date of
notice
Accident Compensation Corporation
1,2
104,473,105 29-Apr-16
ANZ New Zealand Investments Limited
3,4
147,407,526 17-Nov-17
BlackRock, Inc and related bodies corporate
5
71,147,019 19-Mar-18
The Vanguard Group, Inc. 72,948,236 18-Dec-18
Some of the above relevant interests comprise a mixture of shares that are legally and/or beneficially held and shares over which
voting control is held.
1. Nicholas Bagnall, Guy Eliffe, Paul Robertshawe, Blair Tallott, Jason Hamilton, Jonathan Davis and Blair Cooper are employees and either a portfolio manager, equity analyst
or corporate governance manager of Accident Compensation Corporation (ACC). Under current ACC investment policies, they have the discretion to exercise control
over some or all of the rights to vote and/or acquisition or disposal of some or all the financial products of which ACC is the beneficial owner.
2. Including personal holdings of Blair Cooper, an employee and portfolio manager of Accident Compensation Corporation (notice dated 29 April 2016) 58,529 shares.
3. ANZ New Zealand Investments Limited (ANZ Investments) acts as a manager or investment manager for certain managed investment schemes under investment
management contracts and as a discretionary investment management service (DIMS) provider in respect of investment portfolios under a wholesale DIMS client
agreement. ANZ Investments has a relevant interest in the financial products arising only from the powers of investment contained in the investment management
contracts and wholesale DIMS client agreement as it has a qualified power to control the exercise of the rights to vote attached to the financial products and a qualified
power to aquire or dispose of the financial products.
4. Including relevant interests held by ANZ Bank New Zealand Limited (ANZ Bank), ANZ Custodial Services New Zealand Limited (ANZCS) and OnePath Funds Management Limited
(Australia) (OnePath). ANZ Bank acts as a discretionary investment management service (DIMS) provider in respect of investment portfolios under a DIMS client agreement.
ANZ Bank has a relevant interest in the financial products arising only from the powers of investment contained in the DIMS client agreements as it has a qualified power to
control the exercise of the right to vote attached to the financial products and a qualified power to acquire or dispose of the financial products. ANZCS is the custodian for ANZ
New Zealand Investments Limited’s wholesale discretionary investment management service under a custody agreement and ANZ Bank’s discretionary investment management
service and trading and custody service under a custody agreement. ANZCS has a relevant interest in the financial product as it is the registered holder of the financial products.
OnePath is the responsible entity of a number of registered managed investment schemes and the trustee of a number of unregistered schemes under investment management
contracts. OnePath has a relevant interest in the financial products arising only from the powers of investment contained in the investment management contracts as it has a
qualified power to control the exercise of the right to vote attached to the financial products and qualified power to acquire or dispose of the financial products.
5. The nature of the relevant interest is the power to control the acquisition or disposal of the quoted voting product and/or the exercise of a right to vote attached to
the quoted voting product, arising only from the powers of investment contained in each case under investment management agreements appointing each entity as
investment manager of funds or separate accounts (i.e. entity currently exercising investment discretion on behalf of the relevant funds or separate accounts).
63
kiwi property
annual report 2019
64
directory
COMPANY
Kiwi Property Group Limited
Level 7, Vero Centre
48 Shortland Street
PO Box 2071
Shortland Street
AUCKLAND 1140
T: +64 9 359 4000
W: kp.co.nz
E: info@kp.co.nz
BOND TRUSTEE
Public Trust
Level 9
34 Shortland Street
PO Box 1598
Shortland Street
AUCKLAND 1140
T: 0800 371 471
W: publictrust.co.nz
E: cstenquiry@publictrust.co.nz
SECURITY TRUSTEE
New Zealand Permanent Trustees Limited
Level 9
34 Shortland Street
PO Box 1598
Shortland Street
AUCKLAND 1140
T: 0800 371 471
E: cstenquiry@publictrust.co.nz
REGISTRAR
Link Market Services Limited
Level 11, Deloitte Centre
80 Queen Street
PO Box 91976
AUCKLAND 1142
T: +64 9 375 5998 or 0800 377 388
W: linkmarketservices.co.nz
E: enquiries@linkmarketservices.co.nz
AUDITOR
PricewaterhouseCoopers New Zealand
PwC Tower
188 Quay Street
Private Bag 92162
AUCKLAND 1142
T: +64 9 355 8000
W: pwc.co.nz
BANKERS
ANZ Bank New Zealand
Bank of New Zealand
China Construction Bank (New Zealand)
Commonwealth Bank of Australia
The Hongkong and Shanghai Banking
Corporation
Westpac New Zealand
65
kp.co.nz
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kp.co.nz
property
Kiwi Property has been creating the spaces that Kiwis
love for more than 25 years, providing exciting places
to work, shop, live and play. Learn more about our
high-quality portfolio of New Zealand property assets
in this, our 2019 Property Compendium.
portfolio overview
PG 02
mixed-use portfolio
PG 08
retail portfolio
PG 16
office portfolio
PG 24
contents
about kiwi property
Kiwi Property (NZX: KPG) is the largest listed property
company on the New Zealand Stock Exchange and is
a member of the S&P/NZX 20 Index.
New Zealand born and bred, we’ve been creating
the spaces that Kiwis love for over 25 years, with
expertise in property investment, development and
asset management.
We proudly own and manage $3.2 billion in direct
property investments, and we manage properties valued
at approximately $400 million for third party clients.
Our properties are diverse environments that connect
and engage people through great experiences; spaces
where New Zealanders can work, shop, live and play,
and where communities come together.
As we move forward, we will continue to focus on
maintaining our existing assets while seeking growth
through value-added initiatives, such as redevelopments
and refurbishments, and intensifying our larger
properties by creating mixed-use communities. We will
also continue to examine acquisition opportunities to
further strengthen our investment portfolio and, over
time, through the establishment of new funds and
investment partnerships.
All data in this document is for the year ended and/or as
at 31 March 2019. Due to rounding, numbers within this
report may not add up precisely to the totals provided and
percentages may not precisely reflect the absolute figures.
This Property Compendium should be read in conjunction
with the 2019 Kiwi Property Annual Report, which is available
on our website, kp.co.nz/annual-result
01
portfolio overview
the values noted above include other properties
and development land with a combined value
of over $183 million
We own a diverse mix of property assets, from direct retail and office investments, to larger
properties that we will continue to develop into mixed-use communities over time. These
communities have the potential to support a range of complementary asset types, including
retail, office, entertainment, personal services, hotels, civic buildings and more.
our portfolio
we have a strong bias
to Auckland and the
golden triangle
we favour these locations because of
their superior prospects for economic,
population and employment growth
we have a diversified
portfolio of high-quality
property
we target prominent mixed-use and
retail properties that are
−in locations favoured by the
Auckland Unitary Plan
−located in regions outside of
Auckland with positive growth
prospects
we target office assets that are
−located in Auckland and comprise
prime-quality buildings
−located in Wellington and are
subject to long-term leases to the
Crown
third party management
we also manage properties for third
parties and joint owners to diversify
our revenue streams and leverage
our management platform
$2.26b
3 mixed-use assets
1 retail asset
2 office assets
Auckland
$213m
2 office assets
Wellington
$254m
1 retail asset
Christchurch
$207m
1 retail asset
Palmerston North
$2.26b
3 mixed-use assets
1 retail asset
2 office assets
Auckland
$277m
1 mixed-use asset
1 retail asset
Hamilton
0202
property compendium 2019
portfolio overview
kiwi property
portfolio overview
the values noted above include other properties
and development land with a combined value
of over $183 million
Auckland
70%
Hamilton
9%
Palmerston North
6%
Wellington
7%
Christchurch
8%
geographic diversification
by portfolio value
sector diversification
by portfolio value
mixed-use
48%
retail
18%
office
28%
other
6%
0303
portfolio overview
ASB Bank
6.9%
Ministry of Social Development
4.8%
Farmers
2.6%
ANZ Bank
2.4%
Progressive Enterprises
2.2%
Bell Gully
1.8%
Foodstuffs
1.8%
Suncorp
1.8%
The Warehouse
1.8%
Cotton On Clothing
1.8%
Just Group
1.6%
Russell McVeagh
1.5%
Kmart
1.5%
HOYTS Cinemas
1.4%
Hallenstein/Glasson
1.4%
Craigs Investment Partners
1.0%
Life Pharmacy
0.9%
BNZ
0.9%
Whitcoulls
0.8%
IAG
0.8%
top 20 tenants
by investment portfolio gross income
mixed-useretailoffice
investment
portfolio
specialty stores59%66%4%
47%
mini-majors21%11%-
13%
department stores and DDS6%10%-
6%
supermarkets4%8%-
4%
cinemas3%2%-
2%
home and living majors1%2%-
1%
government--25%
6%
banking3%-24%
8%
legal--20%
5%
insurance2%-9%
3%
financial services--11%
3%
consultancy--1%
-
other1%1%6%
2%
portfolio tenant mix
by portfolio gross income
Our portfolio is well diversified by tenant type and industry. Our 20 largest tenants
comprise respected companies, government departments and successful retail chains.
Collectively they occupy 50% of our portfolio by area and contribute 40% of our portfolio
gross income with a weighted average lease expiry of 7.5 years.
our tenant base is strong and diverse
0404
property compendium 2019
portfolio overview
kiwi property
portfolio overview
Our weighted average lease expiry (WALE) indicates how long, on average, our portfolio
income is ‘locked-in’. Our portfolio WALE is 5.2 years, underpinned by our office portfolio
which has a solid WALE of 9.3 years with long-term leases in place across most of these
assets. Our mixed-use and retail portfolios have WALEs of 4.1 years and 3.3 years
respectively. Shorter WALEs on retail properties are expected as this provides us the
opportunity to keep our mix fresh by constantly introducing new, on-trend retailers or
concepts.
we have long-term, locked-in revenues
rent review structures
by investment portfolio gross income
fixed
66%
CPI-based
22%
market and other
12%
lease expiry profile
by investment portfolio gross income
office
retail
mixed-use
vacant or
holdover6%
FY20
10%
FY21
9%
FY22
13%
FY23
9%
FY24
10%
FY25+
43%
0505
portfolio overview
location
ownership
% valuer
value
$m
capitalisation
rate
%
10-year IRR
%
net
lettable
area
sqm
tenants
no.
carparks
no.
net
operating
income
$m
1
occupancy
%
2
WALE
yearskey tenants
investment portfolio
Sylvia Park
3
Auckland 100 JLL 955.0 5.38 7. 386,4272084,05344.9 100.0 4.2
ANZ (from mid-2019), H&M, HOYTS Cinemas, IAG,
Kmart (from mid-2019), PAK′nSAVE, The Warehouse, Zara
Sylvia Park Lifestyle Auckland 100 JLL 7 7.0 6.257. 3 16,550 16 393 5.1 100.0 2.7Freedom Furniture, Spotlight, Torpedo7
LynnMall Auckland 100 CBRE 284.0 6.387. 537,6 8 9139 1,319 18.5 98.74.7Countdown, Farmers, Reading Cinemas
The Base
4
Hamilton 50 CBRE 2 17. 5 6.137. 5 85,681158 3,343 12.599.13.3
Farmers, HOYTS Cinemas, Mitre 10 Mega,
The Warehouse
mixed-use portfolio1,533.5 5.717. 3226,3475219,10881.099.54.1
Westgate Lifestyle Auckland100Colliers 90.06.387. 925,604 28 6225.9100.05.4
Briscoes, Freedom Furniture, Harvey Norman,
Rebel Sport
Centre Place North Hamilton 100 CBRE 53.510.259.8 15,80577 554 5.997.02.9Lido Cinemas, METRO by HOYTS Cinemas
The Plaza Palmerston North 100 Colliers 207.0 7. 3 89.2 32,201103 1,251 16.899.93.3Countdown, Farmers, Kmart
Northlands Christchurch 100 Colliers 247.0 7. 5 09.1 40,9211211,66319.1 99.63.0
Countdown, Farmers, HOYTS Cinemas, PAK’nSAVE,
The Warehouse
retail portfolio5 97. 5 7. 5 39.0 114,5313294,09047.799.43.3
Vero Centre Auckland 100 Colliers 450.0 5.137.4 39,539 38 420 18.997.06.1
Bell Gully, Craigs Investment Partners, nib,
Russell McVeagh, Suncorp
ASB North Wharf Auckland 100 JLL230.05.387.6 21,625 12 97 12.5 100.0 11.7ASB Bank
The Aurora Centre Wellington 100 Colliers 159.56.138.4 24,503 3 308 8.8 100.0 15.2Ministry of Social Development
44 The Terrace Wellington 100 Colliers 53.56.508.1 10,325 10 – 3.2 100.0 7.7
Commerce Commission, Energy Efficiency and
Conservation Authority, Tertiary Education Commission
office portfolio 893.05.457.7 95,992 63 825 43.4 98.7 9.3
investment portfolio 3,024.05.997.7 436,87091314,023172.1 99.3 5.2
other properties
adjoining propertiesVarious 100Various125.23.9
development landAuckland 100 JLL58.2–
other properties 183.4 3.9
total portfolio
3,207.4
176.0
0606
property compendium 2019
portfolio overview
kiwi property
portfolio overview
location
ownership
% valuer
value
$m
capitalisation
rate
%
10-year IRR
%
net
lettable
area
sqm
tenants
no.
carparks
no.
net
operating
income
$m
1
occupancy
%
2
WALE
yearskey tenants
investment portfolio
Sylvia Park
3
Auckland 100 JLL 955.0 5.38 7. 386,4272084,05344.9 100.0 4.2
ANZ (from mid-2019), H&M, HOYTS Cinemas, IAG,
Kmart (from mid-2019), PAK′nSAVE, The Warehouse, Zara
Sylvia Park Lifestyle Auckland 100 JLL 7 7.0 6.257. 3 16,550 16 393 5.1 100.0 2.7Freedom Furniture, Spotlight, Torpedo7
LynnMall Auckland 100 CBRE 284.0 6.387. 537,6 8 9139 1,319 18.5 98.74.7Countdown, Farmers, Reading Cinemas
The Base
4
Hamilton 50 CBRE 2 17. 5 6.137. 5 85,681158 3,343 12.599.13.3
Farmers, HOYTS Cinemas, Mitre 10 Mega,
The Warehouse
mixed-use portfolio1,533.5 5.717. 3226,3475219,10881.099.54.1
Westgate Lifestyle Auckland100Colliers 90.06.387. 925,604 28 6225.9100.05.4
Briscoes, Freedom Furniture, Harvey Norman,
Rebel Sport
Centre Place North Hamilton 100 CBRE 53.510.259.8 15,80577 554 5.997.02.9Lido Cinemas, METRO by HOYTS Cinemas
The Plaza Palmerston North 100 Colliers 207.0 7. 3 89.2 32,201103 1,251 16.899.93.3Countdown, Farmers, Kmart
Northlands Christchurch 100 Colliers 247.0 7. 5 09.1 40,9211211,66319.1 99.63.0
Countdown, Farmers, HOYTS Cinemas, PAK’nSAVE,
The Warehouse
retail portfolio5 97. 5 7. 5 39.0 114,5313294,09047.799.43.3
Vero Centre Auckland 100 Colliers 450.0 5.137.4 39,539 38 420 18.997.06.1
Bell Gully, Craigs Investment Partners, nib,
Russell McVeagh, Suncorp
ASB North Wharf Auckland 100 JLL230.05.387.6 21,625 12 97 12.5 100.0 11.7ASB Bank
The Aurora Centre Wellington 100 Colliers 159.56.138.4 24,503 3 308 8.8 100.0 15.2Ministry of Social Development
44 The Terrace Wellington 100 Colliers 53.56.508.1 10,325 10 – 3.2 100.0 7.7
Commerce Commission, Energy Efficiency and
Conservation Authority, Tertiary Education Commission
office portfolio 893.05.457.7 95,992 63 825 43.4 98.7 9.3
investment portfolio 3,024.05.997.7 436,87091314,023172.1 99.3 5.2
other properties
adjoining propertiesVarious 100Various125.23.9
development landAuckland 100 JLL58.2–
other properties 183.4 3.9
total portfolio
3,207.4
176.0
notes:
1. Net operating income (NOI) is expressed inclusive of property management fees and
excludes rental income from straight-lining fixed rental increases ($2.0 million). This
schedule excludes income earned from North City prior to its sale. The sale settled
July 2018.
2. Vacant tenancies with current or pending development works are excluded from the
occupancy statistics. At 31 March 2019 excluded 488 sqm at Sylvia Park, 102 sqm at
LynnMall and 204 sqm at Northlands. Tenancies at Westgate Lifestyle subject to
vendor underwrites are treated as occupied.
3 Sylvia Park was valued 'as if complete' at $1.17 billion. The deduction of outstanding
development costs for the office building, Kmart, galleria and south carpark
($188.2 million), together with allowances for profit and risk and stabilisation
($28.3 million), results in an 'as is' value of $955 million.
4. Value and income statistics represent Kiwi Property’s 50% ownership interest.
Other statistics reflect the entire asset.
0707
mixed-use
0808
property compendium 2019
mixed-use
kiwi property
mixed-use
mixed-use portfolio overview PG 10
sylvia park PG 12
sylvia park lifestyle PG 13
lynnmall PG 14
the base PG 15
09
4 assets
226,347 sqm net lettable area
521 tenants
9,108 carparks
~28 million customer visits per annum2
1. Not all large format retail tenants report sales.
2. Excluding large format retail centres.
$1.53b
portfolio value
5.7 1%
weighted average
capitalisation rate
$81.0m
net operating income
99.5%
occupancy
4.1 years
weighted average
lease expiry
$1 .1b
annual sales1
mixed-use portfolio overview
1010
property compendium 2019
mixed-use
kiwi property
mixed-use
property type
by mixed-use portfolio value
geographic weighting
by mixed-use portfolio value
specialty stores
59%
mini-majors
21%
department stores and DDS
6%
supermarkets
4%
cinemas
3%
banking
3%
insurance
2%
home and living majors
1%
other
1%
tenant diversification
by mixed-use portfolio gross income
Auckland
86%
Hamilton
14%
regional centres1
95%
large format centres
5%
1. Includes ANZ Raranga office building which is included within the
Sylvia Park valuation.
1111
1212
property compendium 2019
mixed-use
kiwi property
key tenants
ANZ (from mid-2019)
H&M
HOYTS Cinemas
IAG
Kmart (from mid-2019)
PAK’nSAVE
The Warehouse
Zara
286 Mount Wellington Highway
Mount Wellington
Auckland
sylviapark.org
sylvia park
property overview
ownership interest (%) 100
centre typeregional
date completedJun-07
last refurbished/redeveloped2018-2019
net lettable area (sqm) 86,427
tenants (no.) 208
carparks (no.) 4,053
property metrics
net operating income ($m) 44.9
occupancy (%) 100.0
weighted average lease expiry (years) 4.2
valuation metrics
valuation ($m) 955.0
capitalisation rate (%) 5.38
10-year internal rate of return (%) 7. 3
sales performance
annual sales ($m) 5 5 7. 8
Sylvia Park was developed by Kiwi Property
between 2006 and 2007, and has since grown
from New Zealand's largest shopping centre to a
thriving mixed-use community, providing
outstanding retail, dining, entertainment, office
and personal services. More recently we opened
a new food and beverage precinct known as 'The
Grove dining district' and added a new 10-level
office building, ANZ Raranga. Sylvia Park's growth
story is continuing with a 'galleria' level under
construction and due to open in mid-2020. Sylvia
Park's unparalleled exposure and accessibility,
including ample parking and excellent public
transport linkages, has contributed to its success.
vacant or
holdover9%
FY209%
FY2114%
FY2216%
FY237%
FY248%
FY25+37%
lease expiry profile
by gross income
tenant diversification
by gross income
specialty stores63%
mini-majors17%
banking6%
department stores and DDS5%
supermarkets3%
insurance3%
cinemas2%
other office1%
1212
property compendium 2019
kiwi property
mixed-use
retail
mixed-use
1313
key tenants
Freedom Furniture
Spotlight
Torpedo7
393 Mount Wellington Highway
Mount Wellington
Auckland
sylviapark.org
sylvia park lifestyle
Sylvia Park Lifestyle is located on a prominent site
adjacent to Auckland's southern motorway. It
comprises a large format retail centre constructed in
2011. It forms part of the broader Sylvia Park
mixed-use community and provides customers with
a broad, complementary and compelling retail offer
in this strong destination.
vacant or
holdover–
FY2032%
FY212%
FY2236%
FY23–
FY2425%
FY25+5%
lease expiry profile
by gross income
property overview
ownership interest (%) 100
centre typelarge format
date acquired (constructed 2011)Dec-14
last refurbished/redevelopedN/A
net lettable area (sqm) 16,550
tenants (no.) 16
carparks (no.) 393
property metrics
net operating income ($m) 5.1
occupancy (%)100.0
weighted average lease expiry (years) 2.7
valuation metrics
valuation ($m) 7 7.0
capitalisation rate (%) 6.25
10-year internal rate of return (%) 7. 3
sales performance
sales are not reported
mini-majors96%
specialty stores4%
tenant diversification
by gross income
1313
1414
property compendium 2019
mixed-use
kiwi property
key tenants
Countdown
Farmers
Reading Cinemas
3058 Great North Road
New Lynn
Auckland
lynnmall.co.nz
lynnmall
LynnMall was New Zealand's first shopping
centre, having opened in 1963, and has been
delivering quality retail to Auckland's western
suburbs ever since. In 2015 we expanded the
centre to incorporate an eight-screen Reading
Cinemas complex and 'The Brickworks' dining
precinct. The centre provides a compelling
and convenient shopping, dining and
entertainment destination in the developing
town centre of New Lynn. LynnMall's proximity
to public transport and 'Metropolitan Centre'
zoning provides future potential to develop the
centre to a greater intensity, in line with our
mixed-use vision.
lease expiry profile
by gross income
tenant diversification
by gross income
specialty stores68%
mini-majors11%
supermarkets9%
department stores and DDS7%
cinemas5%
property overview
ownership interest (%) 100
centre typeregional
date acquired (constructed 1963)Dec-10
last refurbished/redeveloped2015
net lettable area (sqm) 37,6 8 9
tenants (no.) 139
carparks (no.) 1,319
property metrics
net operating income ($m) 18.5
occupancy (%) 98.7
weighted average lease expiry (years) 4.7
valuation metrics
valuation ($m) 284.0
capitalisation rate (%) 6.38
10-year internal rate of return (%) 7. 5
sales performance
annual sales ($m)251.5
vacant or
holdover2%
FY208%
FY218%
FY2216%
FY239%
FY2418%
FY25+39%
1414
property compendium 2019
kiwi property
mixed-use
retail
mixed-use
1515
the base
property overview
ownership interest (%) 50
centre typeregional
date acquired (constructed in stages: 2004–2014)May-16
last refurbished/redeveloped2018
net lettable area (sqm) 85,681
tenants (no.) 158
carparks (no.) 3,343
property metrics
net operating income ($m) – 50% interest 12.5
occupancy (%)99.1
weighted average lease expiry (years) 3.3
valuation metrics
valuation ($m) – 50% interest 2 17. 5
capitalisation rate (%) 6.13
10-year internal rate of return (%)7. 5
sales performance
annual sales ($m) 294.7
specialty stores52%
mini-majors27%
department stores and DDS12%
home and living majors5%
cinemas4%
vacant or
holdover8%
FY2011%
FY2112%
FY2212%
FY2327%
FY245%
FY25+25%
The Base is New Zealand's largest single-site retail
asset, providing outstanding growth opportunities to
become an exciting mixed-use community over time.
Located in Hamilton's growing northern suburbs, this
significant asset comprises both an enclosed
regional shopping centre, Te Awa, as well as large
format retailing. Kiwi Property is proudly partnering
with Tainui Group Holdings in a 50:50 joint venture
and Kiwi Property manages the property for the joint
venture. The Base includes a component of
redevelopment land with zoning allowing for a range
of future uses including offices and entertainment.
lease expiry profile
by gross income
tenant diversification
by gross income
key tenants
Farmers
HOYTS Cinemas
Mitre 10 Mega
The Warehouse
Corner of Te Rapa Road and Wairere Drive
Te Rapa
Hamilton
the-base.co.nz
1515
1616
property compendium 2019
kiwi property
retail
1616
property compendium 2019
retail
kiwi property
retail
retail portfolio overview PG 18
westgate lifestyle PG 20
centre place north PG 21
the plaza PG 22
northlands PG 23
17
$5 9 7. 5 m
portfolio value
7. 5 3%
weighted average
capitalisation rate
$4 7.7m
net operating income
99.4%
occupancy
3.3 years
weighted average
lease expiry
$583m
annual sales
1
3 shopping centres
1 large format retail centre
114,531 sqm net lettable area
329 tenants
4,090 carparks
~20 million customer visits per annum2
1. Not all large format retail tenants report sales.
2. Excluding large format retail centres.
retail portfolio overview
1818
property compendium 2019
retail
kiwi property
retail
retail
property type
by retail portfolio value
geographic weighting
by retail portfolio value
specialty stores
66%
mini-majors
11%
department stores and DDS
10%
supermarkets
8%
cinemas
2%
home and living majors
2%
other
1%
tenant diversification
by retail portfolio gross income
Auckland
15%
Hamilton
9%
Palmerston North
35%
Christchurch
41%
regional centres
76%
large format centres
15%
sub-regional centres
9%
1919
key tenants
Briscoes
Freedom Furniture
Harvey Norman
Rebel Sport
57-61 Maki Street
Westgate
Auckland
westgatelifestyle.co.nz
westgate lifestyle
vacant or
holdover–
FY20–
FY21–
FY221%
FY2327%
FY247%
FY25+65%
Westgate Lifestyle forms part of the Westgate
Town Centre development off the north-
western motorway in Auckland. The centre
provides 28 large format retail stores featuring a
range of home and living retailers, and is
located in a high residential growth area.
lease expiry profile
by gross income
tenant diversification
by gross income
property overview
ownership interest (%) 100
centre typelarge format
date acquired (constructed 2015–2016)Sep-15
last refurbished/redevelopedN/A
net lettable area (sqm) 25,604
tenants (no.) 28
carparks (no.) 622
property metrics
net operating income ($m)5.9
occupancy (%) 100.0
weighted average lease expiry (years)5.4
valuation metrics
valuation ($m)90.0
capitalisation rate (%)6.38
10-year internal rate of return (%)7. 9
sales performance
sales are not reported
mini-majors66%
home and living majors19%
specialty stores12%
other retail3%
2020
property compendium 2019
retail
kiwi property
retail
retail
key tenants
501 Victoria Street
Hamilton
centreplace.co.nz
centre place north
Lido Cinemas
METRO by HOYTS Cinemas
property overview
ownership interest (%) 100
centre typesub-regional
date acquired (constructed 1985)Dec-94
last refurbished/redeveloped2011
net lettable area (sqm) 15,805
tenants (no.)77
carparks (no.) 554
property metrics
net operating income ($m) 5.9
occupancy (%)97.0
weighted average lease expiry (years) 2.9
valuation metrics
valuation ($m) 53.5
capitalisation rate (%)10.25
10-year internal rate of return (%) 9.8
sales performance
annual sales ($m)75.9
specialty stores85%
mini-majors8%
cinemas7%
vacant or
holdover6%
FY20
25%
FY21
9%
FY22
12%
FY23
6%
FY24
25%
FY25+
17%
Centre Place North is Hamilton CBD’s destination for
food, fashion and entertainment. The centre features
both Lido and METRO by HOYTS cinema complexes,
together with a good range of indoor and outdoor
dining options. The centre is adjacent to Centre Place
South which was sold in 2016 but continues to be
managed by Kiwi Property for its owners.
lease expiry profile
by gross income
tenant diversification
by gross income
2121
key tenants
Countdown
Farmers
Kmart
84 The Square
Palmerston North
theplaza.co.nz
the plaza
property overview
ownership interest (%) 100
centre typeregional
date acquired (constructed 1986)Aug-93
last refurbished/redeveloped2010
net lettable area (sqm) 32,201
tenants (no.) 103
carparks (no.) 1,251
property metrics
net operating income ($m) 16.8
occupancy (%) 99.9
weighted average lease expiry (years) 3.3
valuation metrics
valuation ($m) 207.0
capitalisation rate (%) 7. 3 8
10-year internal rate of return (%) 9.2
sales performance
annual sales ($m)200.5
specialty stores76%
department stores and DDS16%
supermarkets5%
mini-majors3%
vacant or
holdover10%
FY2015%
FY219%
FY2230%
FY2310%
FY249%
FY25+17%
The Plaza is Manawatu's premium shopping
destination, located in the heart of Palmerston
North's CBD. The centre extends over 32,000 sqm
with more than 100 shops providing a wide mix of
fashion, food, services and general retailing.
lease expiry profile
by gross income
tenant diversification
by gross income
2222
property compendium 2019
retail
kiwi property
retail
retail
key tenants
Countdown
Farmers
HOYTS Cinemas
PAK’nSAVE
The Warehouse
55 Main North Road
Papanui
Christchurch
northlands.co.nz
northlands
property overview
ownership interest (%) 100
centre typeregional
date acquired (constructed 1967)Mar-94/Mar-98
last refurbished/redeveloped2018-2019
net lettable area (sqm)40,921
tenants (no.) 121
carparks (no.) 1,663
property metrics
net operating income ($m)19.1
occupancy (%)99.6
weighted average lease expiry (years)3.0
valuation metrics
valuation ($m) 247.0
capitalisation rate (%) 7. 5 0
10-year internal rate of return (%) 9.1
sales performance
annual sales ($m)286.5
specialty stores68%
supermarkets15%
department stores and DDS10%
mini-majors4%
cinemas3%
vacant or
holdover12%
FY2020%
FY2111%
FY2214%
FY236%
FY2416%
FY25+21%
Northlands is one of New Zealand’s largest enclosed
shopping centres and has been servicing its
Christchurch catchment for more than 50 years. This
single-level regional shopping centre has been
progressively redeveloped over many years to meet
demand and demographic shifts. We recently
completed Langdons Quarter, a new food precinct at
the southern end of the centre which provides a
range of food and beverage options and
complements the adjacent HOYTS Cinemas.
lease expiry profile
by gross income
55 Main North Road
Papanui
Christchurch
northlands.co.nz
tenant diversification
by gross income
2323
2424
property compendium 2019
office
kiwi property
office
2424
property compendium 2019property compendium 2019
office
office portfolio overview PG 26
vero centre PG 28
asb north wharf PG 29
the aurora centre PG 30
44 the terrace PG 31
25
4 assets
95,992 sqm net lettable area
63 tenants
825 carparks
$893.0m
portfolio value
5.45%
weighted average
capitalisation rate
$43.4m
net operating income
98.7%
occupancy
9.3 years
weighted average
lease expiry
office portfolio overview
2626
property compendium 2019
office
kiwi property
office
office
property grade
by office portfolio value
geographic weighting
by office portfolio value
government
25%
banking
24%
legal
20%
financial services
11%
insurance
9%
other office
5%
specialty stores
4%
consultancy
1%
other
1%
tenant diversification
by office portfolio gross income
Auckland
76%
Wellington
24%
premium
50%
a-grade campus
26%
a-grade
18%
b-grade
6%
2727
2828
property compendium 2019
office
kiwi property
key tenants
Bell Gully
Craigs Investment
Partners
nib
Russell McVeagh
Suncorp
48 Shortland Street
Auckland
vero centre
property overview
ownership interest (%) 100
building gradepremium
date acquired (constructed 2000)Apr- 01
last refurbished/redeveloped2016
net lettable area (sqm) 39,539
typical floorplate (sqm) 1,200
carparks (no.) 420
property metrics
net operating income ($m) 18.9
occupancy (%)97.0
weighted average lease expiry (years)6.1
valuation metrics
valuation ($m)450.0
capitalisation rate (%)5.13
10-year internal rate of return (%)7.4
legal40%
financial services23%
insurance19%
other office10%
banking3%
consultancy3%
specialty stores1%
government1%
vacant or
holdover–
FY204%
FY216%
FY226%
FY2316%
FY246%
FY25+62%
Vero Centre, completed in 2000, is our flagship
office asset and remains one of Auckland’s most
prestigious office buildings, attracting and retaining
some of the country’s most respected companies as
tenants. The property has won numerous awards for
excellence in design, construction and efficiency.
The lobby was comprehensively upgraded in 2016.
lease expiry profile
by gross income
tenant diversification
by gross income
2828
property compendium 2019
kiwi property
retail
office
2929
key tenant
ASB Bank12 Jellicoe Street
Auckland
asb north wharf
ASB North Wharf is a showcase of environmental
design and innovative office space solutions. It is an
award-winning, seven-level office building which was
developed by Kiwi Property for ASB Bank. ASB has a
lease over all the office space until 2031. The
waterfront location and striking architecture have
made it a landmark on the cityscape, and it includes
award-winning restaurants creating an active
frontage to North Wharf.
property overview
ownership interest (%) 100
building gradea-grade campus
date completedMay-13
last refurbished/redevelopedN/A
net lettable area (sqm) 21,625
typical floorplate (sqm) 4,000
carparks (no.) 97
property metrics
net operating income ($m) 12.5
occupancy (%) 100.0
weighted average lease expiry (years) 11.7
valuation metrics
valuation ($m) 230.0
capitalisation rate (%) 5.38
10-year internal rate of return (%) 7.6
lease expiry profile
by gross income
tenant diversification
by gross income
banking91%
specialty stores9%
vacant or
holdover–
FY20
1%
FY21
–
FY22
–
FY23
–
FY24
2%
FY25+
97%
12 Jellicoe Street
Auckland
2929
3030
property compendium 2019
office
kiwi property
key tenant
Ministry of
Social Development
56 The Terrace
Wellington
the aurora centre
The Aurora Centre is a mainstay accommodation
option for the New Zealand Government with all the
office space leased to the Ministry of Social
Development until 2034. A comprehensive
refurbishment and seismic strengthening project
completed in 2016.
property overview
ownership interest (%) 100
building gradea-grade
date acquired (constructed 1968)Apr- 04
last refurbished/redeveloped2014–2016
net lettable area (sqm) 24,503
typical floorplate (sqm)
upper: 1,100
lower: 1,800
carparks (no.) 308
property metrics
net operating income ($m) 8.8
occupancy (%) 100.0
weighted average lease expiry (years) 15.2
valuation metrics
valuation ($m) 159.5
capitalisation rate (%) 6.13
10-year internal rate of return (%) 8.4
lease expiry profile
by gross income
tenant diversification
by gross income
government98%
specialty stores1%
other1%
vacant or
holdover–
FY20–
FY21–
FY22–
FY23–
FY24–
FY25+100%
3030
property compendium 2019
kiwi property
retail
office
3131
key tenants
Commerce
Commission
Energy Efficiency
and Conservation
Authority
Tertiary Education
Commission
44 The Terrace
Wellington
44 the terrace
44 The Terrace is well located within the Wellington
parliamentary sector and provides 10,000 sqm of
efficient office space over 12 levels. All office floors
are leased by government tenants mostly on
long-term leases. A comprehensive refurbishment
and seismic strengthening project completed
in 20 17.
property overview
ownership interest (%) 100
building gradeb-grade
date acquired (constructed 1987)Sep-04
last refurbished/redeveloped2015–2017
net lettable area (sqm) 10,325
typical floorplate (sqm) 800
carparks (no.) –
property metrics
net operating income ($m)3.2
occupancy (%)100.0
weighted average lease expiry (years)7.7
valuation metrics
valuation ($m)53.5
capitalisation rate (%)6.50
10-year internal rate of return (%)8.1
lease expiry profile
by gross income
tenant diversification
by gross income
government90%
specialty stores10%
vacant or
holdover–
FY20–
FY21–
FY221%
FY236%
FY243%
FY25+90%
key tenants
Commerce
Commission
Energy Efficiency
and Conservation
Authority
Tertiary Education
Commission
44 The Terrace
Wellington
3131
kp.co.nz
---
sustainability
Kiwi Property is committed to delivering a brighter
New Zealand by reducing our resource consumption,
contributing to community building and providing
a reliable investment option from a high-quality property
portfolio. Learn more in this, our 2019 Sustainability
Report.
kp.co.nz
kiwi property
sustainability report 2019
01
During the 2019 financial year,
Kiwi Property has again delivered real
results through the execution of its
sustainability programme, as we contribute
to a sustainable New Zealand.
In July 2018, we joined more than 60
New Zealand companies on the Climate
Leaders Coalition (now over 80); a group
dedicated to leading the way to a low
carbon economy. This continues what has
been for us a 16-year commitment to
reducing our environmental footprint.
Some of the metrics I love from our
achievements this year include:
• our 3% reduction in carbon emissions
(taking our total reduction since 2012 to
47%)
• the saving of over 87,000 uses of plastic
water bottles following the installation of
our free water filling stations, and
• the start of our journey to become
New Zealand’s largest commercial user
of solar energy.
We have also reviewed our sustainability
programme for the next three years,
focusing us on our commitments across
people, planet and profit. In doing so, we
have set in place guidelines on
how we will:
• contribute positively to the communities
in which we operate
• continue to reduce our environmental
footprint, and
• continue to deliver sustainable returns
for our shareholders.
We’re proud of our journey to date and look
forward to continued success.
JASON HAPPY
NATIONAL FACILITIES MANAGER
welcome to our 2019
sustainability report
Jason Happy volunteering at Cue Haven, Auckland
kiwi property
sustainability report 2019
02
we are kiwi property
PG 03
our sustainability strategy
PG 04
people
PG 09
planet
PG 20
profit
PG 38
corporate governance
PG 42
contents
kiwi property
sustainability report 2019
02
kiwi property
sustainability report 2019
03
we are
kiwi property
bringing places to life
All data in this document is for the year ended and/or as at 31 March 2019. Due to rounding, numbers
within this report may not add up precisely to the totals provided and percentages may not precisely
reflect the absolute figures.
This Sustainability Report should be read in conjunction with the 2019 Kiwi Property Annual Report,
which is available on our website, kp.co.nz/annual-result
Kiwi Property (NZX: KPG) is the largest listed property
company on the New Zealand Stock Exchange and is a
member of the S&P/NZX 20 Index.
New Zealand born and bred, we've been creating the spaces that Kiwis love
for over 25 years, with expertise in property investment, development and
asset management.
We proudly own and manage $3.2 billion in direct property investments, in a
portfolio comprising some of New Zealand’s best mixed-use, retail and office
assets. We also manage properties valued at approximately $400 million
on behalf of third parties.
'Live on the Lawn' at Sylvia Park, Auckland
kiwi property
sustainability report 2019
04
our sustainability strategy
for the next three years
is focused on our
continued commitments to
people, planet and profit
our sustainability
strategy
we are community
builders
Our assets connect us to diverse
people and cultures across
New Zealand. We set out to create
spaces where people feel they
belong and that contribute to
wellness and inclusiveness by
providing a broad mix of spaces for
both active and restful enjoyment.
sustainable returns by creating
exceptional experiences
We are committed to delivering
sustainable returns for our investors.
We do this by:
• ensuring our assets are resilient
and perform strongly
• investing in the economic
prosperity of the communities in
which we operate, and
• intensively managing our assets so
that they remain attractive for
visitors and customers.
we are focused on reducing
our footprint
We’re deeply committed to investing
in a brighter New Zealand by lowering
our resource consumption and
carbon footprint, preserving our
nation’s outstanding biodiversity, and
by encouraging others to do the
same.
By focusing on reducing our resource
consumption and carbon footprint,
we not only obtain better
environmental outcomes, we also
deliver tangible benefits to our
business.
.
our commitments across people, planet, profit
peopleprofitplanet
kiwi property
sustainability report 2019
05
our guiding principles
people
foster wellbeing and
health and safety
• promote employee, contractor,
visitor and customer wellbeing and
health and safety
promote accessibility and
inclusiveness
• improve accessibility for all
• promote cultural inclusiveness
support our communities
• support local communities through
relevant projects
• encourage employee participation
in the volunteering programme
reduce waste
• reduce waste to landfill and
increase recycling rates
reduce energy consumption
• reduce energy consumption
• increase energy usage from
renewable sources
preserve biodiversity
• in new developments, preserve or,
ideally, enhance the local
biodiversity
reduce chemical use
• identify and implement measures
that reduce chemical usage
reduce carbon footprint
• reduce carbon footprint in line with
‘science-based targets’ initiative
• continue leading the New Zealand
property market in reporting and
certification
responsible investment
• maintain good practice reporting
• maintain at least two, third party
index ratings to ‘good’ practice
level
encourage sustainability practices
with our suppliers, visitors and
customers
• encourage sustainability practices
for our key suppliers
• continue to enhance our guidance
to customers
• raise awareness of sustainability
issues with our visitors
profitplanet
our key focus over the next three years
kiwi property
sustainability report 2019
06
The Board has ultimate responsibility
for sustainability. The Board reviews
and approves the sustainability
strategy and reviews and monitors
progress against targets.
Chaired by the National Facilities
Manager, the Sustainability
Committee includes senior
managers from across the business.
The Chief Executive Officer is tasked
by the Board to implement the
sustainability strategy and report
progress at each board meeting.
boardsustainability committeechief executive officer
roles and responsibilities
kiwi property
sustainability report 2019
07
kiwi property
sustainability report 2019
07
our sustainability strategy is implemented and monitored using both top down
and bottom up management
Our journey started with a commitment in 2003, when we began integrating sustainability into our operations.
At that time, we recognised that we could play an important role in protecting and enhancing the environment
for future generations. In doing so, we established our commitment to securing a viable and sustainable
property sector by integrating environmental considerations into our business practices.
we implement, monitor and report against our sustainability strategy
implementationglobal alignmentreportingstakeholder feedback
how we report
The Sustainability Committee
implements our sustainability strategy
and manages the programme of
actions.
Our key assets are supported by a
Facilities Manager who is responsible
for achieving operational efficiencies
and implementing our environmental
programmes. Typically, one third of
their performance incentive, and one
third of the National Facilities
Manager's performance incentive,
depends on them achieving set
targets.
Our key Asset Managers include
sustainability initiatives in their annual
plan in line with the sustainability
strategy. Each key asset has a
sustainability champion who supports
the Facilities Manager to implement
the broader community and
sustainability initiatives.
We have aligned the Company to the
United Nations Principles for
Responsible Investment (UNPRI) and
have conducted a full sustainability
and climate change review.
The review analysed internal and
external sustainability factors,
including comparing the Company’s
practices with best practice. These
included CDP, UNPRI, AA1000 and
GRESB (Global Real Estate
Sustainability Benchmarking).
A climate change risk and opportunity
assessment, from asset level through
to strategic level, was conducted and
continues to inform the strategy
development.
Our sustainability performance is
reported through the Company’s
Annual Report, this standalone
Sustainability Report and a
Greenhouse Gas Inventory Disclosure
Document, each of which is
published on our website, kp.co.nz.
In addition, we benchmark
our performance through the
Carbon Disclosure Project (CDP)
and FTSE4Good.
An ongoing stakeholder engagement
and review process with investors,
customers, employees, suppliers and
government supports us in identifying
our key material risks and issues. The
material risks identified can be
summarised as:
• responsible investment and
reporting
• reducing our environmental
impacts, and
• supporting our communities by
making our facilities accessible,
safe and inclusive and supporting
local community and business
initiatives.
The feedback we receive supports
the ongoing refinement of our
sustainability strategy, practices and
reporting.
kiwi property
sustainability report 2019
08
kiwi property
sustainability report 2019
09
we are community builders
People are at the heart of everything we do at Kiwi Property
– from our great team and customers to the diverse
New Zealand communities we serve.
As the country's oldest and largest listed property company, we see a
fundamental part of our role as being that of a community builder; a company
that combines social responsibility with economic prosperity.
For the people we employ, we have a responsibility for their safety and wellness,
and to help them grow in their careers as they deliver for our visitors, customers
and shareholders.
In the community, our assets connect us to diverse people and cultures across
New Zealand. More than a duty, we see our role as providing spaces of
inclusiveness, where people are safe and feel they belong, and where
communities can thrive.
people
'Just add Colour' at LynnMall, Auckland
kiwi property
sustainability report 2019
10
we have a duty of care for the safety
and wellbeing of our people and the
New Zealand community; it’s a duty
of care we take very seriously
People save people. So while our
property assets are built to high
standards, with safety in mind, we also
actively engage our people, our
customers, our service providers and
contractors, and our visitors to be
health and safety aware.
strong governance oversight to
manage health and safety
Health and safety is fully integrated
into our governance and
management practices. In step with
the seriousness with which we take
our role in this matter, our Board has
full oversight of our health and safety
policy, programmes and incidents,
with reporting provided to each
board meeting by our Health and
Safety Leadership Committee.
wellbeing and health and safety
“We not only seek to deliver
safe environments in our
common areas, we also
collaborate with our tenants to
promote health and safety
within their stores, offices and
work areas.”
LOUISE HUNT
HEALTH AND SAFETY COORDINATOR
key focus areas
People save people. We take this
to heart, which is why we believe
that health and safety is everyone's
concern. We look to advance
our health and safety practice by
everyone at Kiwi Property striving to
deliver healthy and injury-free places
of work.
Key risk areas in our workplaces and
across our assets include:
• working at height
• electrical works, and
• asbestos management.
For further information on our risk
management framework and health and
safety management, refer to our FY19
Corporate Governance Statement that is
available on our website,
kp.co.nz/about-us/corporate-governance
kiwi property
sustainability report 2019
11
targets and risk management
In 2015, we set ourselves a zero
employee 'notifiable injury and illness’
target. We have achieved this standard
in every year since.
As a responsible landlord, we are also
focused on reducing notifiable injury
and illness for our contractors and
visitors to our sites.
To achieve our aims, we work diligently
to mitigate our health and safety risks,
seeking to improve our workplaces
wherever possible, with active
monitoring, management and
reporting being undertaken by our
Health and Safety Leadership
Committee.
A full risk assessment and review is
conducted annually, covering all
existing and any new buildings or
operations.
Near miss incidents are investigated,
with practical and appropriate actions
taken to reduce risks.
collaboration
All employees and contractors are
inducted into the Health and Safety
Management System. This ensures
they understand their obligations, the
risks, how we manage those risks and
what the processes are to report
issues in a timely manner.
management structure
We have a Health and Safety
Leadership Committee, made up of
senior leaders, which is responsible
fo r:
• reviewing the effectiveness of
policies and processes and
proposing revisions to address
concerns
• reviewing progress against specific
objectives, and
• reviewing key incidents to ensure
appropriate responses, including
wider Company responses if
necessary.
The Committee meets bi-monthly.
We offer our employees the
opportunity to participate in the Health
and Safety Representatives Committee.
This Committee assists with employee
engagement and participation in health
and safet y.
we have achieved our zero
employee 'notifiable injury and
illness' target since we set the
target in 2015
our report card for FY19
number of employee health and safety serious incidents1
working hours~ 298,000
% of sites covered by the certified Health and Safety
Management System
100%
number of courses undertaken with external organisations on
health and safety standards in the year ended 31 March 2019
42
kiwi property
sustainability report 2019
12
All employees can provide feedback on
health and safety matters to their local
Health and Safety Representative who
is also tasked with encouraging our
people to speak up on health and
safety matters at regular team
meetings or through communication
forums such as our internal social
platform or via email.
Employee feedback is channelled back
through the Health and Safety
Representatives to the Health and
Safety Committee and subsequently
the Health and Safety Leadership
Committee. This facilitates
communication on health and safety
matters from our people to our leaders.
performance benchmarking
We have benchmarked ourselves
against the Business Leaders Health
and Safety Forum (BLHSF). BLHSF
reported that the industry average for
employee recordable injuries, per
200,000 work hours, was 3.13 for 2017.
With our zero employee 'notifiable
injury and illness’ incidents record, our
equivalent metric is 0.0. BLHSF
reported contractor related injuries
were 1.95 for 2017. This compares to
our incident rate from our development
activities of 1.6.
Our Health and Safety Management
Systems for all our sites have been
independently reviewed by a number
of health and safety specialists, and we
currently enjoy an ACC 'excellent'
experience rating.
employee incidents
During FY19, we recorded one serious
incident (what we regard as a serious
incident is beyond WorkSafe notifable
standards). This incident involved a
Kiwi Property employee who lacerated
a finger while putting away a trailer in a
storage area, requiring six stitches. The
employee has made a full recovery and
has returned to work. Improved safety
equipment is now provided.
The matter was investigated, and the
findings reported to our Health and
Safety Leadership Committee and
Board.
Kiwi Property has a comprehensive
approach, which includes working
with third party providers, to support
employees returning to work after an
injury.
Kiwi Property has never had an
employee or contractor fatality at any
of its sites.
other incidents
Kiwi Property also records and
investigates all incidents or reported
near misses regarding contractors
and members of the public passing
through our sites.
In our portfolio, there were
85 incidents we would regard as
'serious', relating to customers,
visitors or contractors, of which
17 were ’notifiable’ incidents in the
reporting period.
This is set against a background of
more than 48 million customers
visiting our shopping centres
annually.
kiwi property
sustainability report 2019
13
We do this through thoughtful
development; ensuring people of all
ages, genders, abilities and cultures
have an equal opportunity to access
our facilities.
we provide access to all
It is imperative to us that everyone
enjoys our assets with the same
convenience as each other.
So beyond just complying with the
requirements of the Building Act 2004,
we partnered with Be. Accessible to
have our mixed-use and retail centres
(excluding lifestyle centres) assessed to
ensure they are designed for
accessibility.
From this initial assessment, we have
achieved bronze, silver and gold
ratings across our portfolio. We are
determined to do better, with the
goal of achieving at least one
platinum-rated centre.
At a minimum our properties include
accessible:
• routes
• carparks
• footpaths, ramps and landings
• entrances, corridors, doorways
and doors
• stairs
• lifts
• public facilities
• places of assembly, entertainment
and recreation
• outdoor public areas, and
• public transport.
accessibility and inclusiveness
we see our role as providing
places of inclusiveness;
spaces where people are
safe and feel they belong
kiwi property
sustainability report 2019
14
our success is linked to the success
of the local communities in which
we operate
For us, it makes good business and
social sense to play an active role in
supporting New Zealand to prosper.
We do this by:
• creating vibrant places to work,
shop, live and play
• creating a strong company culture
• operating ethically with high levels
of governance
• supporting employment and
education in our industry, and
• giving back to our communities
through volunteering, sponsorships
and helping community groups to
flourish.
volunteering
Our volunteering programme provides
each employee with one day of paid
leave each year to enable them to
participate in volunteering.
Over the year to March 2019, we
focused our volunteering efforts on the
overarching theme of children and
young people with the future in mind.
To create a brighter future for children
and youth, our people provided
community services such as:
• painting, gardening, maintenance
and meal preparation for Ronald
McDonald House, and
• food and toy donations to the
Auckland City Mission Christmas
Appeal.
sponsorship
At a corporate level, we provide
sponsorship to foster diversity within
the property industry.
The Company is a key scholarship
partner of Keystone Trust — a
charitable trust that gives students a
hand up into property related tertiary
studies to further their education in
property industry-related fields.
Additionally, this year we provided the
inaugural scholarship for Māori and
Pasifika students embarking on
tertiary study in property.
As part of this scholarship,
Kiwi Property provides, in addition to
financial support, a dedicated mentor
to assist with the recipient’s pastoral
care.
The total sponsorship value provided
to Keystone Trust during the year was
$12,500.
community experiences
Our mixed-use and retail centres
touch the lives of millions of visitors
every year. As local gathering places,
our centres have an important role to
play in strengthening local
communities.
As a result, we support more than 50
grassroots initiatives that promote the
provision of local employment,
wellbeing and social engagement.
Some great examples include:
• KiwiFit – a safe, all weather
community exercise group
• KiwiBubs – a free club created to
help Kiwi parents find support,
practical advice and friendship
• free childcare for 0-5 year olds for
two hours (at selected centres)
• Kiwi Property hosted Christmas gift
wrapping, from which we directed
the $86,500 of gold coin donations
to Dementia Auckland, Volunteer
Waikato, The Papapioea Rose City
and Heartland Lions and Papanui
Rotary
• recognising students doing
exceptional work in their community
through the 'My Future' programme
• 'The Big Hoot’ – a public arts
programme supporting the Child
Cancer Foundation
• ‘Match Hero’ – supporting youth
sport in select regions, and
• 'Love my Manawatu', supporting the
arts and community engagement.
supporting our communities
kiwi property
sustainability report 2019
15
We also regularly support our
community by:
• providing space in our mixed-use
and retail centres for Justice of the
Peace and events run by
New Zealand Police, Fire Emergency
New Zealand and other community
organisations
• providing park-and-ride facilities to
local events
• allowing our mixed-use and retail
centres to be used for training for
assistance dogs and New Zealand
Police dogs, and
• providing gift cards for local sports
or hobby clubs for player of the day
or giveaways.
1. Match Hero, Northlands, Christchurch
2. Christmas gift wrapping at The Base, Hamilton
3. Volunteering at Ronald McDonald House, Auckland
4. KiwiFit at Centre Place, Hamilton
5. My Future programme presentation at Sylvia Park, Auckland
6. The Big Hoot at LynnMall, Auckland
1
2
1
2
3
4
5
6
kiwi property
sustainability report 2019
16
people
we have a vibrant culture, focused
on excellence
The people component of our
sustainability programme focuses on
our employees, customers, visitors,
suppliers and communities, ensuring
we provide environments where
people may flourish. As an employer,
we do this by promoting diversity,
ensuring we adhere to best practice
labour standards, while providing
appropriate training, cultural awareness
and wellbeing programmes.
our report card for FY19
• all employees are on individual
agreements
• Kiwi Property has had no
employment-related findings or
fines against it, and
• there have been zero incidents
reported of non-compliance with
our Diversity and Equal
Employment Opportunity Policy.
we comply with labour standards
Kiwi Property complies with all New
Zealand labour laws, which align with
International Labour Organisation
(ILO) standards regarding:
• freedom of association
• collective bargaining
• prevention of forced labour
• prevention of child labour
• equal opportunity
and treatment, and
• elimination of excessive
working hours.
Kiwi Property has a Diversity and
Equal Employment Opportunity Policy.
Kiwi Property does not pay below the
minimum wage for any positions. We
review employee remuneration on an
annual basis to ensure that our people
are paid fairly and competitively for the
work they are performing.
“Diversity of thought,
experience, gender, ethnicity
and backgrounds makes us who
we are – united as one team.”
CLIVE MACKENZIE
CHIEF EXECUTIVE OFFICER
our employee agreementsno.%
employees on full-time 40-hour week employment agreements12877
employees on part-time employment agreements3823
total employees (permanent employees) 166100
contractors 1
casual employees (current contracts as at 31 March 2019)121
full-time equivalent employee turnover 22
kiwi property
sustainability report 2019
17
we provide a flexible workplace,
focused on wellbeing
We recognise each of our employees
has work-life demands unique to
them, which is why we promote a
flexible workplace.
Our Flexible Working Arrangement
Policy and our wellbeing initiatives
include:
• flexible working options
• flexible carparking
• remote systems access
• Employee Assistance
Programme (EAP)
• Southern Cross health care
at preferential rates
• on-site hearing tests, melanoma
checks and flu vaccinations
• long service leave
• volunteering leave
• yoga at work
• group fitness initiatives
• learning and development
opportunities
• tertiary study support
• purchased annual leave.
• extended unpaid leave, and
• paid leave over the legislative
requirements for parental leave;
one weeks paid leave for primary
caregivers and partners.
we train with purpose
It’s important to us that our people
are not only engaged and happy but
can also further their careers through
exposure to on-the-job training,
education and experience.
Our model for this is set out below:
• 70% of development via
experience, day-to-day tasks,
challenges and practice
• 20% of development via exposure
to others, work situations and
collaboration, and
•
•
•
•
•
•
•
•
•
•
• 10% of development via education
and structured learning.
To ensure our people are engaged and
career growth occurs, each person is
encouraged to have a structured
individual learning and development
plan.
For our leaders, we provide additional
training to equip them with the
necessary skills to lead our people.
Sixty of our people leaders and
managers participated in leadership
training during the 2019 financial year.
The total spend on employee
development training during the
2019 financial year was $167,000.
individual training and
development is provided for
each employee to upskill in
areas that benefit their work,
creating both individual and
team capability
Kiwi Property's Auckland Marathon team
kiwi property
sustainability report 2019
18
emerging talent
Growing and developing talent is
critical to our future success. We're
committed to increasing the
representation of women in senior
roles in our business. The following
stories about Caitlin Hargesheimer,
Tyler Ely-Tuhimata and Helena Bui are
just three examples of career
progression within Kiwi Property.
The career development approaches
for our people are tailored to their
individual needs and those of the
business. We have been working to
encourage diversity of experience in
our team.
Caitlin Hargesheimer's appointment
to the Centre Manager role at LynnMall
in 2018 is a great example of where we
have attracted talent from outside of
core property careers. Caitlin's prior
career experience was primarily in the
retail sector. For Kiwi Property,
attracting talent with strong customer
and retail capability was key to building
diversity in our asset management
team.
Developing our people through new
role opportunities is a critical way we
grow and develop capability in our
business.
Tyler Ely-Tuhimata's career journey
with Kiwi Property started in a
Customer Service Representative role
at Sylvia Park. Tyler has now moved
into an administration role within the
centre management team at Sylvia
Park and is learning new skills.
Helena Bui's career growth has seen
her move from an accountant role in
the team, to a management role
leading a team responsible for
finance systems. With a talent for
systems, Helena has progressed
through a variety of roles, from
Systems and Property Accountant to
her current role as Finance Manager
- Systems, where she is developing as
a people leader and is growing
new skills and capability. Helena's
career growth at Kiwi Property has also
been supported through our Tertiary
Study Support Policy, where we
contributed financial and non-financial
support for Helena to achieve her CPA
accreditation. The Tertiary Study
Support Policy supports our people
undertaking tertiary study aligned to
their career path.
TYLER ELY-TUHIMATA
CENTRE ADMINISTRATOR
CAITLIN HARGESHEIMER
CENTRE MANAGER
HELENA BUI
FINANCE MANAGER -
SYSTEMS
male female
directors
67%33%
executive team
71%29%
other executives
67%33%
senior managers
48%52%
other managers
42%58%
non managers
19%81%
total
33%67%
kiwi property
sustainability report 2019
19
we embrace diversity
We are committed to promoting a
culture where diversity and equal
employment opportunity are
embraced.
We recruit and develop the best
person for the job regardless of
gender, age, ethnicity, religious
beliefs, disability or sexual
orientation. This is embedded
through our Diversity and Equal
Employment Opportunity Policy,
which applies to all employees within
Kiwi Property as well as the Board,
and covers all aspects of
employment.
Given women make up 67% of the
Company’s workforce, we have
placed a focus on increasing the
representation of women in senior
roles.
our diversity goals
Diversity objectives are in place to
continue our focused work on
developing a workforce that is a
more reflective representation of
the communities and the visitors
and customers we serve.
Our objectives focus on sourcing
and attracting a broader candidate
talent pool and identifying
alternative recruitment channels in
order to attract and source a greater
representation of Māori, Pacific
Peoples, Asian and female
candidates.
our ethnic diversity1
our gender diversity
European (including New Zealander)
78%
Māori
10%
Asian
8%
Middle Eastern/Latin American/African
6%
Pacific Peoples
5%
not disclosed
5%
other
1%
1. The data adds to greater than 100% as some employees identify with more
than one ethnic group.
kiwi property
sustainability report 2019
20
we are focused on reducing our footprint
From our corporate head office to our portfolio of mixed-use,
retail and office buildings, for almost two decades we have
been committed to finding better ways to reduce our
environmental footprint.
It is this focus that continues to deliver us rewards, year after year.
Our performance is measured in a number of ways, across water, waste, energy
and carbon.
We share some of our programmes and successes throughout this section.
planet
EV charging station at LynnMall, Auckland
our environmental programme
continues to reap significant
rewards
Compared with our 2012 base year1
(for audited carbon reporting) we have
made the following savings:
kiwi property
sustainability report 2019
21
summary of our recent successes
water consumption
reduced by 27.8 million litres
enough to fill
515 domestic swimming pools
waste consumption
286 tonnes diverted from landfill
equivalent to filling
468 jumbo bins
we are being kind to our planet
energy consumption
reduced by 4,800,000 kWh
enough to supply
598 typical homes
1. The data above and on pages 28-36 is for the period(s) ended
31 December and is expressed for like-for-like properties within
our portfolio.
we are strong supporters of
initiatives that reduce our
environmental footprint
our other initiatives
The Aurora Centre,
Wellington (expired)
5.5 stars
Vero Centre,
Auckland
4.5 stars
ASB North Wharf,
Auckland (expired)
4.5 stars
44 The Terrace,
Wellington
4 stars
kiwi property
sustainability report 2019
22
EV and e-bike
chargers
We now offer 33 free electric vehicle
charging stations across five of our
mixed-use assets and retail centres,
including eight Tesla supercharger
stations which have been installed at
The Base, Hamilton and The Plaza,
Palmerston North.
During the year, we installed 10 electric
bike charging stations at LynnMall.
This initiative complements the e-bike
chargers provided within the
end-of-trip facilities at many of
our office assets.
our buildings' energy
ratings
We have committed to achieving a
NABERSNZ energy rating of at least
4 star 'excellent performance' on all our
office buildings by 2020. We’re well on
our way to achieving this.
Across our existing office assets, we
have achieved the following NABERSNZ
ratings:
We are currently seeking to renew our
energy ratings for The Aurora Centre
and ASB North Wharf.
Our brand new office building,
ANZ Raranga at Sylvia Park, Auckland,
will be rated late-2020 once we have
the required 12 months of post
occupancy data.
e-bike charging stations – supporting early adopters
kiwi property
sustainability report 2019
23
Changes in technology have delivered
new forms of transportation that can be
kinder to the environment and human
wellbeing.
In a New Zealand first for shopping
centres, we were pleased in 2019 to
support early adopters of e-bike
technology, installing 10 charging
stations at our LynnMall shopping
centre.
E-bikes have further enhanced cycling
as a viable transportation alternative and,
as Aucklanders know only too well, can
help overcome the challenges that come
with living in hilly environments. E-bikes
have the potential to reduce car usage,
and encourage people to choose
healthier transportation options.
The e-bike chargers are a great
complement to the four electric vehicle
(EV) charging stations we also offer free
to our customers at LynnMall. These EV
chargers are used on average 26 times
every day of the year.
e-bike charging stations at LynnMall, Auckland
kiwi property
sustainability report 2019
24
Kiwi Property is an avid supporter of
renewable energy and, thanks to a
ground-breaking agreement with
Meridian Energy, we are well on our way
to becoming New Zealand’s largest
commercial user of solar energy.
At Northlands in Christchurch, crews are
busy installing the second rooftop solar
installation in our portfolio, delivering a
175kW array that will power a significant
portion of that centre’s base building
energy requirements. The array itself is
about the size of six tennis courts.
Under our agreement with Meridian, we
also intend to add new solar arrays to the
rooftops at LynnMall and The Plaza.
Meridian will invest in the upfront system
cost and then charge Kiwi Property for
the solar power generated under an
innovative Power Purchase Agreement
(PPA) solution.
Ownership of each array will pass to
Kiwi Property at the end of the PPA term,
which is anticipated to be the mid-point
of the system’s lifecycle.
Once the programme is complete, it is
expected that Kiwi Property’s combined
solar power capacity will exceed one
megawatt – enough to power
120 average New Zealand homes for a
year – making us the largest commercial
user of solar energy in New Zealand.
This bold next step in our solar
programme follows the installation in
2015 of what was then New Zealand’s
largest photo-voltaic system for
producing solar power on the roof of
Sylvia Park, producing 448,000 kWh of
electricity and saving 45 tCO
2
e.
This system now produces 18% of
Sylvia Park’s base building energy
requirements.
Upon completion of our rooftop
installations, we anticipate saving over
128 tonnes of carbon dioxide equivalents
each year. This will reduce our overall
carbon footprint by 3.2% annually, while
providing nearly 8% of our total portfolio
base building energy requirements
through solar energy.
solar panels at Sylvia Park, Auckland
solar power – avid supporters of renewable energy
kiwi property
sustainability report 2019
25
free water filling stations – being kind to the environment
We love sharing our sustainability ideas
with Kiwis. In 2018, we introduced New
Zealand shoppers to ‘The Greens’ – a
family made from recycled plastic bottles.
The Greens were a great way for us to
demonstrate our collective need to
reduce environmental waste by avoiding
plastics whenever possible. The
campaign, which coincided with the
installation of free water filling stations in
our shopping centres, was well received.
Since the start of the campaign in late
2018, our water filling stations have been
used in excess of 87,000 times. That's
87,000 plastic bottles saved from
potentially making their way into our
oceans and landfill.
The Greens
kiwi property
sustainability report 2019
26
we actively manage our
property portfolio
Our customers, visitors and buildings
rely on the sustainable supply of
energy and water.
To ensure certainty of service, we have
a continuous improvement programme
that focuses on energy and water. This
now includes installing, where possible,
photo-voltaics to create sustainable
energy and rainwater storage to
improve building resilience.
Our integrated environmental
management system and programme
has been in place for more than
16 years, and is led by the National
Facilities Manager. The programme
covers all of Kiwi Property’s operations
and properties focusing on reducing
carbon and waste outputs, and
energy and water consumption.
As part of the programme, we set
annual targets that are broken down
to an individual asset level. Each
Facilities Manager is responsible
for achieving the annual targets for
their asset, and must report on
progress monthly.
Kiwi Property has not received
any environmental fines in this
reporting period.
we are responding to climate
change
In 2012, we concluded a climate
change risk and opportunity analysis
from an asset level through to a
strategic level.
This led to a formalised carbon
reduction strategy.
In 2018, a further in-depth climate
change risk and opportunity review was
conducted using four defined climate
change scenarios:
—Representative Concentration
Pathway (RPC) 2.6
—RPC 4.5
—RPC 6.0, and
—RPC 8.5.
Under each scenario, risks and
opportunities were broadly identified
and considered over a 50-year
plus timeframe.
These were then used to inform our
climate change programme and targets.
our environmental programme
to ensure we understand,
manage and reduce our
environmental impact, we set
reduction targets and manage,
measure and report our results
kiwi property
sustainability report 2019
27
Our climate change risk assessment
identified there was low to medium risk
from the physical impacts of climate
change to our property assets.
These risks are addressed in our
strategy, which ensures adaption to the
impacts of climate change through a
range of business programmes such
as:
• all new office builds targeting
5 Star Green Star ratings
• continuous improvement
programmes to reduce energy,
waste and water usage
• supporting public transport, and
• increasing solar electricity
generation and water collection.
A significant short-term risk identified
was the increasing importance some
investors are placing on carbon
management performance when
selecting stocks.
We are mitigating this risk by
demonstrating leadership in carbon
management.
This year, we joined over 60 leading
New Zealand companies on the Climate
Leaders Coalition. This group, which
has now grown to over 80 companies,
represents over 50% of New Zealand’s
carbon footprint and has committed to
transitioning New Zealand to a low
carbon economy.
As a Company, we have already set
ourselves a target based on climate
science to reduce our own carbon
footprint by 55% (from 2012 levels) by
2050 (to date we have reduced our
carbon footprint by a market-leading
47%).
We continue to be a leading force in this
space, this year achieving the equal
highest rating in New Zealand for the
Carbon Disclosure Project (CDP), with
a score of ‘B', alongside a number of
other major New Zealand entities.
kiwi property
sustainability report 2019
28
Our climate change strategy to
address risks and reduce our emissions
is included in the sustainability strategy,
which is reviewed and approved by the
Board annually. Our progress is
reported to the Board at each board
meeting, and to our investors through
our annual reporting materials and this
Sustainability Report.
Most of our costs in managing
climate change are incorporated into
the operational budget. The need
to reduce our gas and electricity
consumption is considered when
purchasing new equipment. For
specific climate change-related
expenditure, the additional costs
incurred are:
• the cost of achieving a 5 Star Green
Star rating on a new office building is
estimated to be $130,000 (based on
our experience) in consultancy fees
and $30,000 in accreditation
• the cost of securing NABERSNZ
ratings for all eligible buildings
is estimated to be $5,000 per
building per year, and
• the cost of carbon reporting and
compliance is estimated to be
$40,000 (in our experience) for
external consultants and auditors.
Kiwi Property also supports the efforts
of other businesses and organisations
to reduce climate change.
In the past year, we have demonstrated
this by our active participation in the
recently formed Climate Change
Coalition, the members of which now
represent over 50% of New Zealand's
carbon emissions.
kiwi property
sustainability report 2019
29
we are reducing our
carbon footprint
We’ve been measuring, managing and
reporting on our carbon footprint since
2006. In 2012, and annually thereafter,
our carbon footprint has been
independently audited to Carbon
Warranty and ISO14064-1 standard.
Eighty three percent of our carbon
footprint is made up of electricity,
waste and gas, for which we have
active reduction programmes in place.
Our carbon footprint is primarily
from the operation of our office
buildings 28% and our retail centres
66%, with the remaining 6% from
corporate activities.
To view our carbon footprint in more
detail, see our Greenhouse Gas
Inventory Disclosure Document under
'key documents' in the sustainability
section of our website,
kp.co.nz/sustainability
our carbon footprint
in the past six years, we
have reduced our carbon
footprint by 47%
1. Carbon data has not previously been collated in our new asset
classifications. Reclassification of data will be made going
forward.
our carbon footprint emissions profile
our spatial carbon footprint1
electricity – location
38%
waste
33%
gas
12%
air travel
6%
hydro fluorocarbon
6%
electricity line loss
4%
natural gas line loss
1%
retail
66%
office
28%
corporate activities
6%
kiwi property
sustainability report 2019
30
20127,6 4 4
20137, 5 9 6
20146,419
20155,116
20164,543
20174,183
20184,060
In the past six years, we have reduced our carbon footprint by 47%
(including a 3% reduction in the last year).
The following emission reduction targets were set for the reporting period:
targetresult
reduce
electricity use
by 1.3% – 2.6%
Our electricity efficiency programme continues to forge ahead,
delivering a 3.3% saving on the prior year through a wide
variety of projects encompassing equipment upgrade work
and the continuous fine-tuning of operations, as well as timely
maintenance. Two specific projects were the LynnMall chiller
replacement project noted on page 33 and the continuation of
our LED replacement project. As a consequence of the LED
programme, now in its third year, over 11,000 fittings have been
replaced with an expected annual energy saving of over
3.5 million kWh and approximately 358 tCO
2
e.
reduce
gas use
by 1.3% – 2.6%
Our gas efficiency programme also continues to forge ahead,
delivering a 6% saving on the previous year through a wide
variety of equipment upgrade work and the continuous fine-
tuning of operations, as well as timely maintenance. A specific
focus on metering, extensive leak management and efficiency
has delivered 160,000 kWh reduction in gas compared to the
prior year, saving over 31 tCO
2
e in carbon emissions.
carbon footprint
tCO
2
e
201246.2
201345.9
201438.9
20152 7. 8
201621.9
201719.1
201818.2
carbon intensity
tCO
2
e per NLA.hours
1
1. NLA.hours is net lettable area multiplied by annual hours of
operation.
Kiwi Property does not have any operations that produce or emit Nitrogen
Oxides (NOX), Sulphur Oxides (SOX) or Volatile Organic Compounds
(VOC)
or hazardous waste.
kiwi property
sustainability report 2019
31
how we will get there
An annual emission reduction
programme will be set to progress
towards achieving these targets. This
reduction plan will be broken down to
set individual building targets and
energy and waste reduction plans.
Facilities Managers will be responsible
for achieving their individual building
targets and programmes.
our emission reduction targets
In 2017, we set greenhouse gas
emission reduction targets to play our
part in helping keep a rise in global
temperature to below 2°C.
Based on climate change science,
the world needs to reduce its carbon
emissions between 49% and 72%
below 2010 levels to achieve a 2°C
temperature change by 2050. We have
set science-based targets in line with
climate change science.
Our targets are to:
• reduce total greenhouse gas
emissions by 36% by 2020 on 2012
base year emissions
• reduce total greenhouse gas
emissions by 40% by 2025 on 2012
base year emissions, and
• reduce total greenhouse gas
emissions by 55% by 2050 on 2012
base year emissions.
These targets represent a year-on-year
reduction of 2.1% from 2012.
kiwi property
sustainability report 2019
32
Jason Happy, National Facilities
Manager, said: “This was quite a feat.
To manage the lift, we had to secure
the largest mobile crane in New
Zealand at its furthest reach. The
installation crew then had to swing the
entire 8.7 tonne chiller in to the side of
the building without landing it on the
adjacent car park deck.”
The chiller replaces an old inefficient
chiller, providing greater efficiency,
operational resilience, and plant life.
Operational equipment can often be
the make or break of great customer
experiences, none more so than the
equipment that controls indoor
environments.
At LynnMall, in Auckland, this year we
installed the latest generation
centrifugal chiller that will provide
greater efficiency and plant longevity to
deliver a consistent indoor climate for
our visitors and customers.
In what was the culmination of a four-
year project to integrate the centre’s
chilled water system, New Zealand’s
largest crane along with precision
logistics and planning, were required to
insert the new chiller into its final
resting place.
The installation required a 12-hour road
closure, four hours to get set for the lift,
which in turn took 15 minutes, and then
a further four hours to disassemble the
crane.
equipment reinvestment – investing in great efficiency and great customer experiences
kiwi property
sustainability report 2019
33
energy savings
since our 2012 audited base
year, we have saved enough
energy to supply 598 typical
New Zealand homes for a year
electricity intensity target
2019 – 2020
kWh/0.1 million NLA.hours
1
20192020
97. 595.1
gas intensity target
2019 – 2020
kWh/0.1 million NLA.hours
1
20192020
18.417. 9
electricity
kWh/0.1 million NLA.hours1
actual
long-term target
gas
kWh/0.1 million NLA.hours1
actual
long-term target
1. NLA.hours is net lettable area multiplied by annual hours
of operation.
we are actively reducing
the amount of energy
we consume
Kiwi Property has had an energy
efficiency programme in place for the
past 16 years. As a result, our
buildings now consume 21% less
energy than they did in the 2012
audited base year.
We are committed to reducing our
energy consumption to play our part
in keeping the global temperature rise
to below 2ºC. We do this by setting
annual asset-specific energy savings
goals which collectively keep us on
track to achieve our long-term
reduction targets. To drive further
energy savings we have also
committed to:
• improve the energy efficiency of all
our office buildings to above 4 Star
NABERSNZ rating by 2020, and
• increase our use of 100%
renewable power to 15% of
total electricity usage by 2025.
In the past six years we have reduced our energy use, on a like-for-like
basis, and our targets for the next two years, are as follows:
0
20
40
60
80
100
120
201220132014201520162017201820192020
0
5
10
15
20
25
201220132014201520162017201820192020
kiwi property
sustainability report 2019
34
water savings
since our 2012 audited base
year, the amount of water we
have saved would fill
515 domestic swimming pools
water
litres/0.1 million NLA.hours
1
actual
target
we are actively reducing
the amount of water
we consume
As a result of our persistent focus on
water management, our buildings use
10% less water (on a like-for-like basis)
than they did in our 2012 audited base
ye ar.
In New Zealand, all waste water goes
to treatment ponds and waste water
quantities are not recorded. It is
assumed that the amount of water
consumed on site compared with the
amount used for flushing and washing
is negligible and so the amount of
water entering a building is assumed
to be the same amount of waste water
going out of the building for treatment.
It is for this reason we report water
consumption only.
1.
NLA.hours is net lettable area multiplied by annual hours
of operation.
In the past six years we have reduced our water use, on a like-for-like
basis, and our targets for the next two years, are as follows:
water intensity target 2019 – 2020
litres/0.1 million NLA.hours
1
20192020
1.431.39
0.0
0.5
1.0
1.5
2.0
201220132014201520162017201820192020
kiwi property
sustainability report 2019
35
waste reduction
since our 2012 audited base
year, we have diverted enough
waste from landfill to fill
468 jumbo bins
In the past six years we have reduced our waste to landfill, on a like-for-like
basis, and our targets for the next two years, are as follows:
waste intensity target 2019 – 2020
kg/0.1 million NLA.hours
1
20192020
15.515.1
waste
kg/0.1 million NLA.hours
1
actual
target
1.
NLA.hours is net lettable area multiplied by annual hours
of operation.
we are actively reducing
pollution and diverting
waste from landfill
Kiwi Property recognises the needless
loss of resources that waste represents
and, as such, has a waste management
programme in place which strives to
divert waste from landfill to areas where
the resources can be reused or recovered.
Ninety percent of all waste is generated
in our mixed-use and retail centres,
primarily by our visitors and customers.
Our waste programmes work closely with
our visitors and customers to increase
the use of the recycling facilities we
provide.
As a result of our persistent focus on
recycling, our buildings now send
9% less waste to landfill than they did in
our 2012 audited base year. This
equates to a reduction of 268 tonnes
per annum which is enough to fill
468 jumbo bins and represents a
reduction of 126 tCO
2
e per annum.
0
2
4
6
8
10
12
14
16
18
20
201220132014201520162017201820192 020
kiwi property
sustainability report 2019
36
pollution and procurement
As part of Kiwi Property’s
environmental management system,
we have made a commitment to
work towards preventing pollution by
minimising our environmental impacts
and emissions and, where possible,
using non-polluting alternatives.
Some of the ways we work to
prevent pollution include:
• our Design and Fitout Criteria
specifying low Volatile Organic
Compound (VOC) finishes and
furnishings
• implementation of a continuous
improvement programme for
the reduction of greenhouse
gas emissions
• committing to reducing pollution
from lighting disposal. Traditional
lighting contains mercury and we
have removed over 11,000
fluorescents and metal halide lights
and replaced them with LEDs, which
do not contain mercury. This has
saved 12kg of mercury being used
and disposed of over the lifetime of
the LED lights, and
• applying in a first for New Zealand,
innovative photo-catalyst self-
cleaning coatings to ANZ Raranga’s
concrete façade panels, which will
help reduce the effect of motorway
pollutants and reduce our long-term
cleaning requirements.
our suppliers
We actively engage with our suppliers
to achieve better environmental
outcomes from our projects. Two great
examples of this are the partnerships
we formed with ECOLight to deliver
our LED light replacement programme
and with ECOtricity to deliver 100%
renewable and carbon neutral
electricity programmes.
For other suppliers, we have a strategy
to assess the full-life cost when
procuring assets. When we consider
the purchase of an asset, suppliers are
asked to provide information on the
cost of usage and disposal. This
ensures we procure the most efficient
assets, supporting our energy
reduction targets. This procurement
methodology also ensures assets last
longer, requiring less capital outlay over
time, that in turn reduces operational
costs.
It also provides a clear message to our
suppliers that we are not only
interested in the initial cost of the asset,
but rather the full cost, generally
resulting in a higher quality and
better performing asset.
supporting our customers
As a leading property company in
New Zealand, we utilise the knowledge
we have gained to educate our
customers to minimise their own
environmental impacts through
Sustainability Design Guidelines in our
Fitout Manuals.
As a result, we have recorded a
dramatic improvement in our
customers’ electricity efficiency,
leading to a 51% reduction in carbon
emissions over the past six years.
Further, to support our own resource
consumption reductions, smart meters
are being progressively installed
throughout the portfolio in partnership
with registered meter owners, in
accordance with industry regulations.
These, along with Kiwi Property’s own
metering, will support our Facilities
Managers to proactively manage the
efficiency of our buildings.
kiwi property
sustainability report 2019
37
Property Council New Zealand
—Our GM Property Investment is the
President of the Property Council
New Zealand, Auckland Branch
—Our GM People and Communications
sits on the Property Council
New Zealand Diversity Committee
Facilities Management Association of
New Zealand (FMANZ) Standards
Committee
—Our National Facilities Manager
chaired the FMANZ Standards
Committee until early 2019
New Zealand Green Building Council
(NZGBC)
—Kiwi Property has been a member of
NZGBC since it started in 2005
we support organisations
that are committed to
sustainability
kiwi property
sustainability report 2019
38
delivering sustainable returns by creating
exceptional experiences
Long before Green Star rating tools were available in
New Zealand, Kiwi Property deployed best-in-class
sustainable design principles
.
In 2005, when we built Sylvia Park, sustainable design was one of the eight
guiding principles we initiated, which drove a raft of sustainable outcomes. We
even built a railway station to ensure Aucklanders could travel to Sylvia Park by
train.
By building assets that remain relevant, attractive and focus on endurance, we
can deliver on our objective of providing our investors with long-term
sustainable returns.
Sustainability is integrated into our buildings through the physical structure and
footprint of our buildings, and how they operate. Given our properties are long-
term investments, we seek to ensure they are resilient and fit for purpose now
and into the future. By continuously monitoring and adapting to technical,
societal and environmental trends, our properties continue to evolve and stay
relevant.
profit
kiwi property
sustainability report 2019
39
In 2018, we opened the doors for the
first time to our brand new office
building at Mt Wellington, ANZ Raranga,
which is integrated seamlessly into the
thriving dining precinct entrance to
Sylvia Park.
More than just another suburban office
building, ANZ Raranga purposefully
sets itself apart thanks to our use of the
Green Star Framework to deliver a fully
rounded approach to sustainability.
The result is a modern, efficient design
that balances an excellent internal
environment with energy efficient
outcomes to garner a 5 Star Green Star
‘New Zealand Excellence’ design rating.
In a first for New Zealand, we applied
innovative, environmentally certified,
photo-catalyst self-cleaning coatings to
the building’s concrete façade panels,
which will help reduce the effect of
motorway pollutants and reduce our
long-term cleaning requirements.
The building is also superbly located,
being on the doorstep to New
Zealand’s favourite shopping centre1
and a short walk to Sylvia Park’s
dedicated train station.
Our customers at ANZ Raranga will also
benefit from:
• abundant and comfortable natural
light delivered through an efficient
façade, providing vision glazing and
high levels of shading where it is
needed most. Benefits include an
excellent internal environment for
occupants and a reduced load on
mechanical systems
• smart climate design, including a
white coloured roof, which
minimises heat gain through
reflections and heat loss through
radiation – great for winter and
summer
• clever lighting, delivering excellent
illumination throughout the office
environment, while reducing energy
consumption
designed for better – ANZ Raranga
1.
In 2017, Sylvia Park was named New Zealand’s favourite shopping
centre to visit in a nationwide Nielsen survey. The survey was
conducted by Nielsen from 20 February to 13 March 2017. Nielsen
had a sample size of 2,507 interviews, with a predicted margin
error of +/- 2.0% at the 96% confidence level.
ANZ Raranga, Sylvia Park
kiwi property
sustainability report 2019
40
• a great way to arrive with high-
quality end-of-trip facilities, allowing
direct access to an external bike
locker and office floors without the
need to traverse through the
building’s main entrance
• plenty of water savings delivered
through efficient water systems
installed throughout the building,
including bathroom fittings which
reduce water usage and a
landscape irrigation system with
moisture sensors to prevent
overwatering and allow efficient
water distribution
• sustainable building materials which
have been used throughout,
including low formaldehyde
engineered wood, FSC timber and
environmentally certified floor
coverings, and
• lower emissions, with zero ozone
depletion potential (ODP)
refrigerants and insulation, reduced
flow to sewer as a result of water-
efficient sanitary fittings, and no
water-based heat rejection to
eliminate the risk of legionella.
IAG's internal staircase at ANZ Raranga, Sylvia Park
kiwi property
sustainability report 2019
41
The new Langdons Quarter food and
entertainment precinct in Northlands,
Christchurch containing over 1,200
sqm of new food tenancies, is an
example of design-led placemaking at
its transformational best.
Combining concrete floors and bare
structural steel with lush greenery,
we've created ‘botanic industrial’ — a
new category for retail design.
In the retail world of today there is a big
push for sustainable development in
the bricks and mortar space. This
project embraces the structure, while
creating a 21st century dining and
entertainment precinct.
designed for better – Langdons Quarter
Langdons Quarter, Northlands
kiwi property
sustainability report 2019
42
Kiwi Property's Board (left to right) Mary Jane Daly, Richard Didsbury, Mark Ford, Jane Freeman, Mike Steur, Mark Powell
corporate governance
kiwi property
sustainability report 2019
43
The Board of Kiwi Property is
responsible for, and committed to,
ensuring the Company maintains best
practice corporate governance
structures and high ethical standards
and integrity.
Our Board is committed to undertaking
this role in accordance with accepted
best practice. Accordingly, our
corporate governance framework
draws on principles, guidelines,
recommendations and requirements
from a range of sources including the
NZX Listing Rules and NZX Corporate
Governance Code. In addition, the
Board has approved policies and
practices which aim to reflect best
practice corporate governance.
The corporate governance policies,
practices and processes that Kiwi
Property adopted for the year ended
31 March 2019 are set out in our FY19
Corporate Governance Statement
which is available on our website.
we're committed to the highest standards of corporate governance
We are also now producing this
Sustainability Report demonstrating
our commitment to sustainability and
detailing our sustainability practices.
our board
Our Board comprises six independent
directors, whose individual specialist
skill sets complement one another and
ensure that our Board collectively has
the skills, diversity, experience and
acumen to meet and discharge its
duties and obligations. Kiwi Property’s
Board Charter prescribes that the
Board chair will not also hold the
position of Chief Executive Officer.
At the 2018 annual meeting, the re-
election of Mike Steur and Jane
Freeman as directors was supported by
votes of 100.00% and 99.79%
respectively and Mark Powell was
elected as a director by a vote of
99.82%.
Mary Jane Daly retires by rotation and
has offered herself for re-election at the
2019 annual meeting to be held on
20 June 2019.
board diversity
Kiwi Property is committed to
promoting diversity in the composition
of the Board. The Remuneration and
Nominations Committee helps to
ensure that the Board maintains an
appropriate mix of skills, experience
and diversity by recommending
potential candidates for appointment
as directors based on a range of factors
including background and gender.
Our Diversity and Equal Employment
Opportunity Policy stipulates that in
compiling a shortlist of director
candidates at least one female and one
from the ethnic groups of either Māori,
Asian or Pacific Peoples will be
included, wherever possible.
You can view our Diversity and Equal
Opportunity Policy on our website.
conflicts of interest
Our Code of Ethics makes it clear that
our people are required to avoid
placing themselves in a position where
they have a conflict of interest, and to
notify our General Counsel immediately
if there is a likelihood of a conflict of
interest arising.
You can view our Code of Ethics on our
website.
periodic evaluation of
board effectiveness
Reviews of the performance of the
Board and individual directors are
undertaken annually.
we have high ethical standards and integrity
kiwi property
sustainability report 2019
44
board committees
The Board has two standing
committees to assist in the execution
of its duties and allow detailed
consideration of complex issues; the
Audit and Risk Committee and
Remuneration and Nominations
Committee.
Membership of each committee is
disclosed in our FY19 Corporate
Governance Statement.
The charters for both committees are
available on our website.
audit and risk committee
The Audit and Risk Committee assists
the Board in carrying out its
responsibilities under the Companies
Act 1993, the Financial Markets
Conduct Act 2013 and the NZX Listing
Rules with respect to accounting
practices, policies and controls. All
members of the Audit and Risk
Committee, including the Chair, are
independent.
remuneration and nominations
committee
The Remuneration and Nominations
Committee assists the Board to ensure
it has appropriate remuneration
policies and practices in place to
ensure the Company continues to
attract and retain talent.
The Remuneration and Nominations
Committee Charter requires the
Committee to oversee implementation
of the Company’s remuneration policy
and practices, which set out the
process and guiding principles to be
used for determining employee
remuneration.
Further details about remuneration are
set out in our 2019 Annual Report,
which is available on our website.
All members of the Remuneration and
Nominations Committee, including the
Chair, are independent.
board and committee
meeting attendance
The attendance of directors at Board
and Committee meetings during the
year is set out in our FY19 Corporate
Governance Statement.
disclosure of board remuneration
Remuneration payable to our directors
for the year is disclosed in our 2019
Annual Report.
Our Board Charter, which is available
on our website, expressly states that
any change to the fees available to be
paid to our directors is subject to the
approval of our shareholders.
disclosure of accounts in
relevant languages
Kiwi Property is listed on the NZX, and
its accounts are disclosed in English.
notification of annual
meeting
Kiwi Property gives advance notification
of each annual meeting in accordance
with the NZX Listing Rules. The notice
of meeting for the 2019 annual meeting
was published 28 days before that
annual meeting. The annual meeting
will be held on 20 June 2019.
Further details are available on our
website.
protection of minority
shareholders’ rights
Kiwi Property is a widely held, publicly
listed company, so there is minimal risk
of a blockholder ownership stake being
acquired and then utilised in a manner
that adversely affects the rights of our
minority shareholders.
As disclosed in our 2019 Annual Report,
as at 31 March 2019 our largest single
shareholder held 9.93% of the
Company’s shares and our largest
twenty shareholders collectively held
71.77% of the Company’s shares.
Robust protections for minority
shareholders apply under the
Companies Act 1993.
Read more about our corporate governance policies and
processes in our FY19 Corporate Governance Statement,
which is available on our website, kp.co.nz/about-us/
corporate-governance
kiwi property
sustainability report 2019
45
we have a sound understanding of risk management
The Board has overall responsibility for
establishing and overseeing the
Company’s risk management
framework. The Board has established
an Audit and Risk Committee with
responsibilities that include risk
management, compliance and
financial management and control.
Through that committee and its own
enquiries, the Board ensures that it
retains oversight in respect of
compliance with the Company’s Code
of Ethics and the identification and
management of risks to the Company
(including sustainability and climate
change risks).
The Company has developed a risk
management framework which guides
management and the Board in the
identification, assessment and
monitoring of new and existing risks,
which include environmental, social,
governance, market and financial risks.
risk management
Management regularly reports to the
Audit and Risk Committee and the
Board on any non-compliance with the
Company’s Code of Ethics as well as
management’s assessment and
management of relevant risks. The
Audit and Risk Committee is charged
with overseeing the risk management
framework and monitoring compliance
within that framework.
The Company has adopted as its risk
management framework the New
Zealand and Australian Risk
Management Standard (AS/NZS ISO
31000:2009). This framework provides
risk management principles which the
Company has also adopted.
Our FY19 Corporate Governance
Statement provides more detail on our
risk management frameworks, policies
and procedures.
The Company has a corporate-wide
approach to non-compliance, including
procedures to investigate and follow up
on any non-compliance identified and
reporting on the number of
substantiated claims or incidents of
non-compliance.
audit quality and independence
Kiwi Property’s External Auditor
Independence Policy, which is available
on our website, requires the audit
partner and review partner of its
external auditor to change every
five years.
Note 2.2 to the financial statements on
page 29 of our 2019 Annual Report
details what was paid by the Company
to the external auditors as audit fees
and, as separate items, for other
services in the year ended
31 March 2019.
code of ethics
The Company reviews its Code of
Ethics on a regular basis, and at least
every two years.
There is an anonymous whistle-blowing
mechanism (being a free telephone
hotline serviced by an independent
third party, as detailed in the
Company’s Fraud and Corruption
Policy and Code of Ethics) through
which breaches of the Company’s
codes or policies can be reported.
kiwi property
sustainability report 2019
46
our commitment to countering bribery is clearly expressed
anti-corruption
To minimise the opportunity for bribery
and corruption, Kiwi Property has a
detailed Corporate Governance Policy
and a Code of Ethics as well as a
detailed set of operational policies
overseen by our Board. Our key policy
documents are placed in the corporate
governance section of our website,
kp.co.nz/about-us/corporate-
governance.
Our commitment to countering bribery
is clearly expressed in our Fraud and
Corruption Policy and our Gifts and
Entertainment Policy, which make it
clear that bribery can take many forms,
such as event tickets, flights or
accommodation. These policies also
unequivocally communicate our zero
tolerance approach to fraud and
corruption, and include multiple
practical examples of fraudulent and
corrupt conduct. As noted on page 46
of this report, there is an anonymous
whistle-blowing mechanism through
which fraud, corruption or breach of
any of the Company’s codes or policies
can be reported.
Our Board has oversight of the Fraud
and Corruption Policy. This policy sets
out guiding principles to be applied by
our people to ensure that the risk of
fraud and corruption (including bribery)
is minimised. This policy includes a
framework for measuring risk in this
regard, based on the likelihood of fraud
or corruption being perpetrated and
the consequences of such fraud or
corruption. Where the residual risk is
high, management monitors and
mitigates the risk (including by tracking
its management of the risk on the
Company’s risk register).
The Company periodically reminds
employees of the key aspects of the
Fraud and Corruption Policy.
Our people undertake regular training
to help maintain high ethical standards.
During the year ended 31 March 2019,
this included training on ethics, cultural
sensitivity, discrimination, integrity and
compliance, privacy, risk management
and social media in the workplace.
In the period 1 April 2018 to
31 March 2019:
—The Company made no political
contributions.
—No employees were dismissed
due to non-compliance with
anti-corruption policies or Code
of Ethics breaches.
—The Company had no fines,
penalties or settlements awarded
against it in relation to any
corruption or governance issue.
kp.co.nz
---
Distribution notice
Section 1: Issuer information
Name of issuer Kiwi Property Group Limited
Financial product name/description Ordinary Shares
NZX ticker code KPG
ISIN NZKPGE0001S9
Type of distribution Full Year X Quarterly
Half Year Special
DRP applies X
Record date 05/06/2019
Ex-Date 04/06/2019
Payment date (and allotment date for
DRP)
20/06/2019
Total monies associated with the
distribution
$49,790,480
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.04545000
Total cash distribution $0.03475000
Excluded amount (applicable to listed
PIEs)
$0.00723571
Supplementary distribution amount $0.00485546
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Partial imputation
If fully or partially imputed, please state
imputation rate as % applied
28% on the imputed component
Imputation tax credits per financial
product
$0.01070000
Resident Withholding Tax per financial
product
N/A
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any) 2%
Start date and end date for determining
market price for DRP
04/06/2019 17/06/2019
Date strike price to be announced (if not
available at this time)
18/06/2019
2
Specify source of financial products to
be issued under DRP programme
New issue
DRP strike price per financial product $
Last date to submit a participation
notice for this distribution in accordance
with DRP participation terms
05/06/2019
Section 5: Authority for this announcement
Name of person authorised to make this
announcement
Stuart Tabuteau
Contact person for this announcement Stuart Tabuteau
Contact phone number +64 9 359 4025
Contact email address stuart.tabuteau@kp.co.nz
Date of release through MAP 20/05/2019
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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