Kiwi Property reports 2020 financial results

NZX RELEASE
25 May 2020
Kiwi Property reports 2020 financial results


Kiwi Property today announced its financial result for the year ended 31 March 2020, reporting a solid
operating performance. Net rental income increased 3.4% to $186.8 million, contributing to an
operating profit before tax
1
of $129.7 million, up 4.2% on the year before.

Funds from operations (FFO
1
), a key measure of the Company’s operating performance, rose 6.3% to
$113.6 million, underpinned by income growth across its diversified property portfolio. Kiwi Property’s
asset classes all delivered rental income growth through the period, including office (+7.3%), mixed-
use (+5.0%) and retail (+0.9%). At year-end, the portfolio was 99.5% occupied, with a healthy weighted
average lease expiry of 4.9 years.

While Kiwi Property’s FY20 revenue was largely unaffected by COVID-19, the widespread
economic uncertainty caused by the pandemic prompted valuers to soften their assumptions,
resulting in a $290 million, or 8.5%, write-down in the fair value of the Company’s property portfolio.
The portfolio was valued at $3.1 billion as at 31 March 2020
2
. The revaluation of Kiwi Property’s
investment assets caused a drag on the Company’s reported full year financial performance,
turning an otherwise healthy operating result into a net loss after tax of $186.7 million
3
.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said: “While the Company delivered a good
operating performance FY20, the onset of the COVID-19 pandemic late in the financial year had a
significant impact on our property valuations and net profit. We’re committed to protecting the
physical and financial health of Kiwi Property and our stakeholders, and have implemented a number
of measures to help us collectively navigate the pandemic, and emerge strongly on the other side.”

Supporting tenants
Kiwi Property is working with its tenants to share a fair proportion of the financial impact caused by
the COVID-19 pandemic. Rent relief measures including rent abatements and deferments have
been offered, with a focus on supporting the small and medium sized businesses, and retailers, that
were unable to operate during the recent lockdown.

Abatements apply to the first quarter of FY21 and are expected to impact FFO by $20 million ($14
million on an after tax basis), equivalent to around 8% of the gross rental income earned by the
company in FY20. This cost will be partially offset by the reintroduction of depreciation allowances
for commercial buildings, which is expected to increase Kiwi Property’s after tax earnings by
approximately $4.5 million in FY21.

Cost discipline
Kiwi Property implemented a number of measures to help offset the financial headwinds caused
by the COVID-19 pandemic. Key among these was the introduction of a comprehensive cost
control programme, including the suspension of all non-essential capital projects and operating
expenditure. The Board of Directors, Chief Executive Officer and Executive Team all agreed to a
temporary 20% pay cut, while recruitment and employee salaries were frozen until further notice.

Prudent capital management
Kiwi Property maintained its solid balance sheet in FY20, including the extension of $361 million of
bank debt facilities in March 2020. This builds on the successful equity raise undertaken by the
Company in November 2019, which delivered net proceeds of $193.7 million. Kiwi Property has no
bank debt maturing until FY23, $291 million in undrawn credit facilities and gearing of 32%, as at 31
March 2020.

2
Mr Mackenzie said: “Our banking headroom and proactive approach to balance sheet
management will help the business withstand the financial impact of COVID-19 and capitalise on
the anticipated medium term opportunities.”

Targeted development
Construction of the Sylvia Park galleria is nearing completion, following a delay due to the
nationwide Alert Level 4 lockdown. The development is now scheduled to open progressively from
the fourth quarter of the 2020 calendar year, featuring a carefully curated line-up of domestic and
international retailers. Sylvia Park’s new South Carpark will offer 900 additional parking spaces and
is due to launch by the third quarter of the 2020 calendar year, bringing the total number of car
parks at Sylvia Park to 5,000, the most of any shopping centre in New Zealand.

Planning is well advanced on a second commercial building at Sylvia Park, following the success
of ANZ Raranga. The new landmark development is the next stage in Sylvia Park’s evolution into a
dynamic mixed-use precinct, with construction due to begin in line with tenant demand and
prevailing market conditions.

Mr Mackenzie said: “We’ve made good progress on the design of the second office building at
Sylvia Park. In the current climate, we must be particularly disciplined in our use of capital,
adopting a prudent and agile approach to investment and development.”

Progress at Drury
Plans for a mixed-use community at Drury continue to take shape, with Kiwi Property’s 51-hectare
landholding now recognised as the main town centre for the region, which is expected to
become home to approximately 60,000 people in the years ahead. Following the Government’s
announcement regarding its plans to invest $2.4 billion to build new infrastructure at Drury, Kiwi
Property has now submitted a private plan change, which if successful, could allow construction
from 2023.

Dividend update
Further to Kiwi Property’s recent announcement, the Board made the difficult decision not to pay
a final dividend for the year ended March 2020. Kiwi Property Chair, Mark Ford, said:

“While our operating performance for FY20 was in line with expectations, given the inherent
uncertainty caused by the pandemic, we believe not proceeding with the final dividend was the
prudent decision to protect Kiwi Property’s balance sheet.

“The Company has taken the opportunity to revise its dividend policy to ensure future payments
are covered by underlying cash flows. Under the revised dividend policy, we will be targeting
dividend payments that are approximately 90-100% of the Company’s Adjusted Funds from
Operations (AFFO
1
). Our aim is to resume paying a dividend, as appropriate, once the financial
impact of COVID-19 is clear.”
Outlook
Mr Mackenzie said: “Since New Zealand’s return to Alert Level 2, the number of visitors to our
shopping centres is down just 8% on the same time last year. While this initial trend is encouraging,
there is still uncertainty about what the next few months will bring. With our diversified property
portfolio, banking headroom and commitment to cost discipline, we will navigate the pandemic
and strive to capitalise on the opportunities that follow.

“We’re committed to delivering for all our stakeholders through this difficult time, including
supporting our tenants, enhancing our communities and creating value for our shareholders,” Mr
Mackenzie concluded.

3
Additional information
Kiwi Property has today also released an Annual Result Presentation, Annual Report and Property
Compendium, which are available for download on the Company’s website kp.co.nz/annual-result or
from nzx.com

> Ends

Notes:
1. Operating profit before tax, FFO and AFFO are alternative non-GAAP performance measures.
Refer to the 2020 Annual Result presentation accompanying this announcement for definitions.
2. Kiwi Property’s independent valuers have included ‘material valuation uncertainty’ clauses in
their reports, which are consistent with market practice following COVID-19. These clauses
highlight that less certainty and a higher degree of caution should be attached to the
valuations, and values could change quickly and significantly due to subsequent events. As a
result, Kiwi Property intends to keep asset values under frequent review with additional
valuations to be commissioned if material movements are identified.
3. The reported profit has been prepared in accordance with New Zealand generally accepted
accounting practice (GAAP).



CONTACT US FOR FURTHER INFORMATION
Clive Mackenzie
Chief Executive Officer
clive.mackenzie@kp.co.nz

Campbell Hodgetts
Communications Lead
campbell.hodgetts@kp.co.nz
+64 27 563 4985

About us
Kiwi Property (NZX: KPG) is one of the largest listed property companies on the New Zealand
Stock Exchange and is a member of the S&P/NZX 20 Index. We’ve been around for over 25
years and proudly own and manage a significant real estate portfolio, 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 an issuer credit rating of BBB (stable) and an issue credit rating of BBB+ for each of its
fixed rate senior secured bonds. Kiwi Property is the highest rated New Zealand company
within CDP (Carbon Disclosure Project) and is a member of FTSE4 Good, a series of benchmark
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

---

Results announcement


Results for announcement to the market
Name of issuer Kiwi Property Group Limited
Reporting Period 12 months to 31 March 2020
Previous Reporting Period 12 months to 31 March 2019
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$243,622 +2.6%
Total Revenue $243,622 +2.6%
Net profit/(loss) from continuing
operations
-$186,694 -235.2%
Total net profit/(loss) -$186,694 -235.2%
Interim/Final Dividend
Amount per Quoted Equity
Security
It is not proposed to pay a final dividend for the 12 months to
31 March 2020.
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$1.26 $1.43
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
Steve Cooper
Contact person for this
announcement
Steve Cooper
Contact phone number +64 9 359 4025
Contact email address steve.cooper@kp.co.nz
Date of release through MAP 25/05/2020

Audited financial statements accompany this announcement.

---

ANNUAL
REPORT
2020

Our year in review
Letter from the Chair Pg 2
Chief Executive Officer’s report Pg 6
Financials Pg 11
Other investor information
Corporate governance Pg 58
Remuneration report Pg 60
Other investor information Pg 68
Directory Pg 74
Contents
1

1. The Terrace at Sylvia Park galleria
(artist’s impression)
2. The Terrace at Sylvia Park galleria
(artist’s impression)
3. Galleria at Sylvia Park
(artist’s impression)
1
23
Letter from
the Chair
Putting
people first
Kiwi Property is part of a large and interdependent
ecosystem that includes consumers, office workers,
retailers, tenants and suppliers, to name a few. Although
we are a property business, it’s people who bring
our assets to life. The COVID-19 pandemic has placed
many of those people under immense pressure and
threatened their health, their livelihoods and their
future. We have a responsibility to act as a partner
rather than a landlord, supporting others to come
through the pandemic in good physical and financial
health, ready for life in a post-COVID-19 world.
This view has helped shape the Company’s response
to the pandemic, which quite simply, is to put people
first. Kiwi Property has delivered on this ideal in a
number of ways, including implementing best-practice
cleaning regimes at our assets to help keep consumers
and customers safe. New technology has been
launched at our shopping centres to help measure
and maintain social distancing. And perhaps most
significantly, the Company is supporting tenants
by sharing a fair proportion of the financial burden
caused by the pandemic. These measures all carry
a cost, but the short-term financial impact is far
outweighed by the long-term value that will be
delivered by a strong commercial ecosystem.
Supporting our stakeholders during the COVID-19
pandemic is both the right thing to do and a precursor
to the Company’s future success.
Navigating the
new normal
COVID-19 has changed New Zealand and will
inevitably change Kiwi Property. To be successful
in the new normal operating environment we must
be agile and responsive. The Company will focus on
three specific areas, designed to direct our response
to the pandemic through the short to medium term.
In the first instance, we will build business resilience
by ensuring safe operations, stabilising the tenant
portfolio and reducing costs. Secondly, we will drive
competitive advantage through our mixed-use
strategy, which remains as relevant today as it did
before the pandemic. By intensifying our large
landholdings and diversifying our asset mix, we will
reduce our pure retail exposure, expand our income
streams and promote smoother returns through the
property cycle. Finally, we will enhance the resilience
of our assets by embracing targeted development
opportunities and proactively responding to the shifts
in the way people work, shop and live that have
been accelerated by COVID-19.
There has been much speculation over recent
weeks regarding the pandemic’s long-term impact
on commercial property. In reality however, it’s
too early to say how the sector will be disrupted
by COVID-19. Kiwi Property’s extensive mixed-use
landholdings provide significant optionality and
will help the Company respond to shifting demand
patterns. This could include greater diversification
into a range of asset classes, including office,
build-to-rent residential or even industrial.
COVID-19 has changed
New Zealand and
will inevitably change
Kiwi Property. We must
be agile over the coming
months, addressing
future challenges and
taking advantage of
emerging opportunities.
Dear shareholders,
Kiwi Property delivered a solid operating result
for the 2020 financial year, the details of which
are outlined in the Chief Executive Officer’s report
and financial statements on the following pages.
In the weeks since our reporting period concluded,
the world has been transformed by COVID-19. Rather
than discussing our financial result for the year just
been, I’d instead like to outline Kiwi Property’s response
to the pandemic and preparations for a ‘new normal’
operating environment.
This is Kiwi Property’s 26th year as a New Zealand
listed property entity. During that time, we have
witnessed significant changes within our sector
and across New Zealand as a whole. The Company
has experienced highs and lows, including the global
financial crisis and the Canterbury earthquakes.
Our resilience is being tested once again, this time
by COVID-19, which reached New Zealand in
the final weeks of our 2020 financial year, causing
unprecedented social and economic disruption.
Few sectors or businesses have been immune
to the effects of the pandemic and the lockdown
that followed.
COVID-19 has had a significant impact on
Kiwi Property and its operations over recent weeks
and we are some way from understanding the
pandemic’s lasting effect on the business. This isn’t
the first time we have faced adversity and it is unlikely
to be the last. As before, the Company will face this
challenge head on. With the pandemic expected
to accelerate the rate of change in the commercial
property sector, the future will bring with it both
challenges and opportunities. Kiwi Property will be
ready for both, with an unwavering commitment to
delivering for its shareholders and other stakeholders
today, tomorrow and for years to come.
For more information on the executive
team leading Kiwi Property’s business
units please see
kp.co.nz/about-us/executive-team
3KIWI PROPERTY ANNUAL REPORT 20202
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Embedding
cost discipline
Kiwi Property has implemented a number of measures
to help mitigate the financial impact of the COVID-19
pandemic on the business. Key among these was
the introduction of a comprehensive cost control
programme, including the suspension of all non-
essential capital projects and operating expenditure.
The Board of Directors, Chief Executive Officer and
Executive Team have all taken a temporary 20 percent
pay cut, while recruitment and employee salaries have
been frozen.
Prudent capital
management
Amidst the challenging economic climate,
Kiwi Property remains a robust and resilient business,
underpinned by a $3.1 billion portfolio of some of
New Zealand’s leading property assets. The Company
maintained a solid balance sheet throughout the year,
following a successful $193.7 million capital raising
(net of issue costs) in November 2019 and the
extension of $361 million of bank debt facilities in
March 2020. With no bank debt maturities until the
2023 financial year, $291 million in undrawn credit
facilities and gearing at 32% (as at 31 March 2020),
Kiwi Property has headroom to help withstand the
economic downturn expected to arise from the
COVID-19 pandemic. For more information on the
Company’s operating performance during the year,
please refer to the CEO’s report on page 6.
Dividend outlook
In April 2020, the Board made the difficult decision
not to proceed with the final dividend for the 2020
financial year. This was not a move we made lightly,
and I know many of our shareholders will be
disappointed. While Kiwi Property’s operating
performance was in-line with expectations prior
to COVID-19, given the inherent uncertainty
caused by the pandemic, we believe not proceeding
with the final dividend was the prudent decision to
protect the Company’s balance sheet.
Mark Ford
Chair
Further to my undertaking at the 2019 annual meeting
of shareholders, the Company has taken the opportunity
to revise its dividend policy. In future we will look to
pay out 90%-100% of the company’s underlying cash
flows, commonly referred to as adjusted funds from
operations (AFFO). Our aim is to resume paying a
dividend, as appropriate, as soon as the financial
impact of COVID-19 on the Company is clear.
Board update
There have been a number of changes to the
Board in the past 12 months, with Simon Shakesheff
appointed in October and Mary Jane Daly re-elected
in June 2019. Simon will stand for election as an
independent director at the upcoming annual
meeting of shareholders, where Richard Didsbury
and I will also seek re-election. As announced on
11 February 2020, Mike Steur will resign from the
Board at the 2020 annual meeting, following 10 years
as a director of Kiwi Property. Mike has made an
invaluable contribution to the Company and I’d like
to thank him for his efforts in helping build the
organisation into what it is today.
A new environmental, social and governance (ESG)
committee has been established, with Mark Powell
as the chair. This move reflects the growing importance
of ESG to our stakeholders and will enable the Board
to focus on the issues and opportunities arising from
matters such as climate change and corporate social
responsibility. The establishment of the ESG committee
is the natural evolution of our sustainability programme,
first put in place 17 years ago, and highlights
the Company’s long held belief that in order for
Kiwi Property to do well, so too must the communities
in which it operates.
Outlook
New Zealand is facing an unprecedented
situation. COVID-19 has disrupted society,
the economy and it is likely there is more to
come. As the country prepares for a ‘new normal’,
Kiwi Property is preparing to take advantage of
the opportunities that lie ahead. We’re committed
to delivering for all our stakeholders through this
difficult time, including supporting our tenants,
enhancing our communities and creating value
for our shareholders.
I look forward to sharing more details of our annual
result at the annual meeting of shareholders, which
will be held virtually on Monday, 29 June 2020.
5KIWI PROPERTY ANNUAL REPORT 20204
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The health and safety of
our employees, tenants,
customers and communities
is our top priority. Kiwi Property
will only be successful if we all
come through the pandemic
in a strong position.
Chief Executive
Officer’s report
Dear shareholders,
New Zealand has experienced a remarkable series
of events since the close of our financial year. The
COVID-19 pandemic and the lockdown that followed
have had a significant impact on businesses across
the country, and ours is no exception. As we have
faced the threat of the virus, I have been reminded of
the strength and spirit of our company and the people
within it. As a nation and an organisation we are in
uncharted territory and it’s inevitable there will be
challenges ahead. To be successful in this new
operating environment we must be agile and adapt.
The future under COVID-19 is uncertain, but we’re
ready to tackle it head-on.
2020 operating
performance
Kiwi Property achieved solid revenue growth
during the 2020 financial year, with total income
up 2.6% on the prior period. Our office portfolio
performed particularly well, delivering growth
of 7.3%, while net income from our mixed-use assets
rose 5.0%. Funds from Operations, a key measure
of underlying operating performance, increased 6.3%
to $113.6 million, underpinned by a company-wide
commitment to continuous improvement. These
figures contributed to a pre-tax operating profit for
Kiwi Property of $129.7 million (excluding the impact
of fair value movements), up 4.2% on the previous year,
a positive outcome given the high degree of volatility
in the market late in the financial year.
Property
portfolio
COVID-19 had a negative effect on the fair value
of our property portfolio, which declined 8.5%
from book value to $3.1 billion as at 31 March 2020.
The significant uncertainty caused by the virus
prompted valuers to soften their assumptions
around rental growth, vacancy, downtime and
letting-up allowances. Challenging investment market
conditions and an expected decline in capital inflows
also contributed to an expansion in capitalisation
and discount rates. The negative revaluation of our
investment assets caused a drag on the Company’s
full year financial performance, turning an otherwise
healthy operating result into a loss after tax of
$186.7 million.
The valuation impact of COVID-19 varied markedly
across asset classes, highlighting the strategic
importance of our portfolio-rebalancing programme.
Despite the pandemic’s negative economic effects,
our office assets increased in value by 1.6%
in the past financial year, while our mixed-use assets
demonstrated greater resilience to COVID-19 than
our regional shopping centres, despite the former
also having a substantial retail component. By further
diversifying our portfolio, we will be in a stronger
position to respond to growth opportunities, while
reducing our exposure to any single asset class.
Mixed-use
Our large, transport-oriented
landholdings at Sylvia Park, LynnMall,
The Base and Drury are ideally suited to
intensification with a range of complementary
asset types, placing us in a unique position among
the country’s listed property entities. Our mixed-use
strategy will be the cornerstone of our efforts to
navigate the aftermath of the COVID-19 pandemic,
providing both a platform for growth and a buffer
against further shocks to the property sector. We will
remain disciplined in our use of capital throughout
this journey, adopting a prudent approach to investment
and development that enables us to enhance our
portfolio, while strictly controlling costs.
Portfolio
performance
Kiwi Property’s leasing teams completed 698 rental
agreements during the year, resulting in a 4% lift over
prior passing rentals. New leases and renewals were
particularly strong, with our mixed-use and office
portfolios the standout, increasing 11.9% and 10.0%
respectively. Kiwi Property’s active asset management
approach was a key driver of this rental performance,
while also helping to promote close and collaborative
partnerships with our tenants. These relationships
will be particularly important as we collectively learn
to operate under the complexities of COVID-19.
At year-end, our assets were 99.5% occupied, with
a healthy weighted average lease expiry of 4.9 years.
KIWI PROPERTY ANNUAL REPORT 202067
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Outlook
New Zealand is facing an unparalleled challenge and
the full financial impact of COVID-19 is still unclear.
Over the coming months, businesses across the
country will come under pressure from the pandemic.
Kiwi Property will not be immune. With our diversified
property portfolio, bank funding headroom and
commitment to cost discipline, we will navigate the
pandemic and position the company to capitalise
on the opportunities that will follow.
Thank you for your continued support.
Targeted
development
Sylvia Park was the focus of our development activity
during FY20, with the site continuing to evolve into
a diversified commercial and lifestyle destination.
Development of the level-one galleria progressed
rapidly during the year, before being impacted by
the nationwide Alert Level 4 lockdown in March.
The project is now due to open progressively from
the fourth quarter of this calendar year and will feature
approximately 60 new stores, including a carefully
curated line-up of domestic and international brands.
Construction of the South Carpark at Sylvia Park
is also nearing completion, delivering an additional
900 parking spaces. Once the project is complete,
Sylvia Park will boast 5,000 car parks, the most of any
shopping centre in New Zealand. With unparalleled
access via train, bus or car, getting to Sylvia Park
has never been easier.
Following the success of the ANZ Raranga
office tower, planning is underway for a second
commercial building at Sylvia Park, expected to
include approximately 14,000 square meters of
office space and potentially, a 140-room hotel.
The new landmark building is set to offer outstanding
accessibility and amenities, and will mark the next
stage in the creation of a dynamic office precinct at
Sylvia Park. We will look to begin construction in line
with tenant demand and prevailing market conditions.
Progress
at Drury
At Drury, we are advancing plans to develop
our 51-hectare landholding into a master-planned
mixed-use community. Working alongside
a consortium of property companies, we plan
to create a thriving transport-oriented town centre,
catering to the approximately 60,000 people
who are predicted to call the area home. Featuring
a compelling mix of residential, commercial
and retail, Drury will be an attractive place to live,
work and play south of Auckland, as the city’s
geographic boundaries continue to expand.
The Government has announced plans to invest
$2.4 billion to build new infrastructure at Drury,
including new roads, train stations and a motorway
interchange. This funding will facilitate progress
at Drury, providing major opportunities for job
and community creation. We have submitted a plan
change application to Council, with the aim of
accelerating the original development schedule.
If successful, construction could be permitted as early
as 2023, pending favourable market dynamics.
Strategic
acquisitions
In 2020, we purchased strategic landholdings
at 51-53 Carbine Road and 7-10 Arthur Brown Place
in Mount Wellington. We now own close to 12 hectares
of industrial property on the eastern side of the railway
line, adjacent to Sylvia Park, offering excellent access
to the train station. This land offers significant
mixed-use redevelopment potential and will be
instrumental to our medium to long-term vision
for the location, whilst providing a healthy income
stream in the interim.
Read more about our properties and their
performance in our 2020 Property Compendium.
Sustainability
Sustainability has been an important focus for
the business over a number of years and the 2020
financial year was no exception. Over the past
12 months, we continued to achieve against
the pillars of people, planet and profit, recording
a number of milestones in the process.
We were the top performing New Zealand business
on the Carbon Disclosure Project’s climate action list,
having achieved a 50% reduction in greenhouse gas
emissions from our 2012 baseline. This year we
achieved Be.Lab accessibility accreditation for
our entire shopping centre portfolio, while on the
environmental front, we launched our new solar
array at The Plaza in Palmerston North, reinforcing
Kiwi Property’s position as one of the country's
largest commercial users of solar power.
Responding
to COVID-19
The health and safety of our employees, tenants,
customers and communities is our top priority.
We responded quickly to COVID-19’s arrival in
New Zealand, introducing comprehensive hygiene
protocols across our assets to protect our stakeholders
and limit the threat of the virus. A new safety
programme, underpinned by robust cleaning and
social distancing measures was implemented at
each of our shopping centres and office buildings.
Kiwi Property’s well-established flexible working
policy was extended to enable the vast majority
of our employees to work from home, helping
to keep them safe and ensuring business continuity.
While COVID-19 presents a clear threat to people’s
health, for many of our tenants, the pandemic’s
greatest impact to date has been a financial one.
The majority of our retailers and SMEs were unable
to trade during the lockdowns at Alert Levels 3
and 4, placing them under significant pressure.
We’re committed to working closely with these
businesses to help them navigate COVID-19 and
are negotiating relief packages to support them
through this difficult period. Kiwi Property will only
be successful if our tenants come through the
pandemic and are in a position to scale up as soon
as possible. By providing assistance now, we increase
the likelihood of Kiwi Property being in a strong
position post COVID-19.
Clive Mackenzie
Chief Executive Officer
1. Drury Town Park
(artists impression)
2. Vero Centre
1
2
.7m$
129
Operating
profit
.7m$
186
Net loss
after tax
9KIWI PROPERTY ANNUAL REPORT 20208
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Financials
1011

Financial performance
FOR THE YEAR ENDED 31 MARCH 2020
2020
$m
2019
$m
2018
$m
2017
$m
2016
$m
Property revenue and management fees243.6237.5251.0239.6208.6
Total income243.6237.5251.0239.6208.6
Direct property expenses(54.5)(54.6)(57.2)(55.6)(51.6)
Employment and administration expenses(22.6)(20.9)(20.5)(18.0)(16.2)
Total expenses(77.1)(75.5)(77.7)(73.6)(67.8)
Profit before net finance expense,
other (expenses)/income and tax166.5162.0173.3166.0140.8
Interest income0.20.20.30.30.2
Interest and finance charges(37.0)(37.6)(42.6)(43.2)(33.5)
Net fair value (loss)/gain on interest rate derivatives(9.9)(11.0)(2.4)9.7(17.6)
Net finance expense(46.7)(48.5)(44.7)(33.2)(50.9)
Profit before other (expenses)/income and tax119.9113.5128.6132.889.9
Net fair value (loss)/gain on investment properties(290.0)47.726.541.0175.9
Gain/(loss) on disposal of investment properties-1.0(7.1)(1.3)-
Litigation settlement (expenses)/income---(0.8)5.9
Other (expenses)/income(290.0)48.619.438.9181.8
(Loss)/profit before tax(170.1)162.1148.0171.7271.7
Income tax expense(16.6)(24.0)(27.9)(28.7)(20.9)
(Loss)/profit after tax
1
(186.7)138.1120.1143.0250.8
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.
Reconciliation of (loss)/profit before
tax to operating profit before tax
FOR THE YEAR ENDED 31 MARCH 2020
2020
$m
2019
$m
2018
$m
2017
$m
2016
$m
(Loss)/profit before tax(170.1)162.1148.0171.7271.7
Net fair value loss/(gain) on investment properties290.0(47.7)(26.5)(41.0)(175.9)
(Gain)/loss on disposal of investment properties-(1.0)7.11.3-
Litigation settlement expenses/(income)---0.8(5.9)
Net fair value loss/(gain) on interest rate derivatives9.911.02.4(9.7)17.6
Operating profit before tax
2
129.7124.5131.0123.1107.5
2. Operating profit before tax is an alternative non-GAAP performance measure used by Kiwi Property to assist investors in assessing the Company’s performance for the
year by adjusting for a number of non-operating items. Operating profit before tax does not have a standard meaning prescribed by GAAP and therefore may not be
comparable to information presented by other entities. The reported operating profit before tax 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.
Adjusted funds from operations
FOR THE YEAR ENDED 31 MARCH 2020
2020
$m
2019
$m
2018
$m
2017
$m
2016
$m
(Loss)/profit after tax(186.7)138.1120.1143.0250.8
Adjusted for:
Net fair value loss/(gain) on investment properties290.0(47.7)(26.5)(41.0)(175.9)
(Gain)/loss on disposal of investment properties-(1.0)7.11.3-
Net fair value loss/(gain) on interest rate derivatives9.911.02.4(9.7)17.6
Litigation settlement expenses/(income)---0.8(5.9)
Straight-lining of fixed rental increases(1.2)(2.0)(2.1)(2.1)(2.3)
Reversal of lease liability movement in investment properties(0.1)----
Amortisation of tenant incentives and leasing fees7.07.07.86.76.4
Other one-off items-4.5---
Deferred tax (benefit)/expense(5.3)(3.1)2.53.80.4
Funds from operations
3
113.6106.9111.3102.891.1
Maintenance capital expenditure(7.5)(6.9)(4.7)(8.6)
Tenant incentives and leasing fees(3.9)(8.4)(11.9)(16.2)
Adjusted funds from operations
4
102.291.694.778.0
3. 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. 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.
4. Adjusted funds from Operations (AFFO) is an alternative non-GAAP performance measure used by Kiwi Property. AFFO is a measure commonly used by real estate entities
to describe their underlying and recurring cash flows from operations. Broadly, AFFO adjusts FFO by deducting the cost of lease incentives and leasing fees provided for
sustaining and maintaining existing space and annual maintenance capital expenditure. AFFO does not have a standard meaning prescribed by GAAP and therefore may
not be comparable to information presented by other entities. AFFO is calculated by Kiwi Property in accordance with the Voluntary Best Practice Guidelines issued by
the Property Council of Australia (the Guidelines). The reported AFFO 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. The company started measuring AFFO in 2017.
Dividends
FOR THE YEAR ENDED 31 MARCH 2020
2020
$m
2019
$m
2018
$m
2017
$m
2016
$m
Funds from operations113.6106.9111.3102.891.1
Less amount retained(58.3)(7.4)(14.1)(15.5)(7.2)
Cash dividend55.399.597.287.383.9
Payout ratio49%93%87%85%92%
cpscpscpscpscps
Cash dividend3.536.956.856.756.60
Imputation credits0.792.001.891.921.62
Gross dividend4.328.958.748.678.22
Five-year summary
KIWI PROPERTY ANNUAL REPORT 20201213
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Financial position
AS AT 31 MARCH 2020
2020
$m
2019
$m
2018
$m
2017
$m
2016
$m
Assets
Investment properties3,114.73,207.43,052.02,969.42,669.9
Cash and cash equivalents21.39.910.79.86.2
Other assets20.419.118.616.515.4
Total assets3,156.43,236.43,081.32,995.72,691.5
Liabilities
Interest bearing liabilities1,009.91,001.7913.51,030.4814.2
Deferred tax liabilities83.288.591.789.285.4
Other liabilities91.895.382.070.075.1
Total liabilities1,184.91,185.51,087.21,189.6974.7
Equity
Share capital1,661.01,449.61,432.91,272.61,241.1
Share-based payments reserve1.60.60.40.50.2
Retained earnings308.9600.7560.8533.0475.5
Total equity1,971.52,050.91,994.11,806.11,716.8
Total equity and liabilities3,156.43,236.43,081.32,995.72,691.5
Gearing ratio32.0%31.0%29.7%34.5%30.3%
Net tangible assets per share$1.26$1.43$1.40$1.39$1.34
Property metrics
AS AT 31 MARCH 2020
20202019201820172016
Number of core properties1212131414
Net lettable area (sqm)435,528436,870451,230474,381374,739
Occupancy99.5%99.3%99.6%98.8%98.7%
Weighted average lease expiry (years)4.95.25.35.65.1
Weighted average capitalisation rate6.11%5.99%6.11%6.40%6.61%
Interpretation
The following commentary is provided to assist with the interpretation of the five-year summary:
2020
—Raised $193.7 million (net of issue costs) of new equity
through a placement and retail entitlement offer.
—Acquired additional properties adjacent to Sylvia Park,
Auckland, for $25.5 million.
—COVID-19 declared a global pandemic by the World Health
Organisation in March 2020, impacting investment
property valuations at balance date and causing the
board to cancel the final dividend for the year ended
31 March 2020.
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.
Five-year summary (continued)
KIWI PROPERTY ANNUAL REPORT 20201415
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Financial statements
FOR THE YEAR ENDED 31 MARCH 2020
Consolidated statement
of comprehensive income
Pg 17
Consolidated statement
of changes in equity
Pg 18
Consolidated statement
of financial position
Pg 19
Consolidated statement
of cash flows
Pg 20
Notes to the consolidated
financial statements
Pg 22
Independent auditor’s
report
Pg 54
Note
2020
$000
2019
$000
Income
Property revenue2.1 241,308 235,286
Property management fees 2,314 2,202
Total income 243,622 237,488
Expenses
Direct property expenses (54,525) (54,624)
Employment and administration expenses2.2 (22,556) (20,878)
Total expenses (77,081) (75,502)
Profit before net finance expenses, other (expenses)/
income and income tax 166,541 161,986
Interest income 180 170
Interest and finance charges2.2 (37,014) (37,622)
Net fair value loss on interest rate derivatives3.4.2 (9,862) (11,040)
Net finance expenses (46,696) (48,492)
Profit before other (expenses)/income and income tax 119,845 113,494
Net fair value (loss)/gain on investment properties3.2 (289,969) 47,650
Gain on disposal of investment properties - 971
Other (expenses)/income (289,969) 48,621
(Loss)/profit before income tax (170,124) 162,115
Income tax expense2.3 (16,570) (24,023)
(Loss)/profit and total comprehensive income after income
tax attributable to shareholders (186,694) 138,092
Basic and diluted earnings per share (cents)3.6.3 (12.50) 9.67
Consolidated statement
of comprehensive income
FOR THE YEAR ENDED 31 MARCH 2020
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
KIWI PROPERTY ANNUAL REPORT 20201617
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Consolidated statement
of changes in equity
FOR THE YEAR ENDED 31 MARCH 2020
Note
Share
capital
$000
Share-based
payments
reserve
$000
Retained
earnings
$000
Total
equity
$000
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
Balance at 1 April 2019 1,449,646 602 600,632 2,050,880
Loss after income tax - - (186,694) (186,694)
Dividends paid3.6.2 - - (105,086) (105,086)
Dividends reinvested3.6.1 17,534 - - 17,534
Shares issued - retail and institutional placements3.6.1 193,714 - - 193,714
Employee share ownership plan 67 42 - 109
Long-term incentive plan3.6.4 - 956 92 1,048
Balance at 31 March 2020 1,660,961 1,600 308,944 1,971,505
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated statement
of financial position
AS AT 31 MARCH 2020
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
Note
2020
$000
2019
$000
Current assets
Cash and cash equivalents 21,252 9,923
Trade and other receivables3.1 11,932 13,201
33,184 23,124
Non-current assets
Investment properties3.2 3,114,734 3,207,389
Property, plant and equipment 4,274 4,253
Interest rate derivatives3.4.2 4,186 1,665
3,123,194 3,213,307
Total assets 3,156,378 3,236,431
Current liabilities
Trade and other payables3.5 53,523 60,345
Interest bearing liabilities3.4.1 - 166,000
Income tax payable 1,748 8,675
Interest rate derivatives3.4.2 104 344
Lease liabilities1.5 1,024 -
56,399 235,364
Non-current liabilities
Interest bearing liabilities3.4.1 1,009,867 835,688
Interest rate derivatives3.4.2 26,530 25,958
Deferred tax liabilities3.3 83,217 88,541
Lease liabilities1.5 8,860 -
1,128,474 950,187
Total liabilities 1,184,873 1,185,551
Equity
Share capital3.6.1 1,660,961 1,449,646
Share-based payments reserve 1,600 602
Retained earnings 308,944 600,632
Total equity 1,971,505 2,050,880
Total equity and liabilities 3,156,378 3,236,431
For and on behalf of the board, who authorised these financial statements for issue on 22 May 2020
Mark Ford
Chair
Mary Jane Daly
Chair of the Audit
and Risk Committee
KIWI PROPERTY ANNUAL REPORT 20201819
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Consolidated statement
of cash flows
FOR THE YEAR ENDED 31 MARCH 2020
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
2020
$000
2019
$000
Cash flows from operating activities
Property revenue 245,702 236,642
Property management fees 2,138 2,177
Interest and other income 180 170
Direct property expenses (53,792) (56,236)
Interest and finance charges (36,566) (35,774)
Employment and administration expenses (21,518) (18,691)
Income tax expense (28,822) (27,752)
Goods and services tax received/(paid) (54) (493)
Net cash flows from operating activities 107,268 100,043
Cash flows from investing activities
Proceeds from disposal of investment properties - 101,635
Acquisition of investment properties (25,796) (34,348)
Expenditure on investment properties (159,587) (161,373)
Interest and finance charges capitalised to investment properties (10,793) (8,459)
Acquisition of property, plant & equipment (966) (1,227)
Net cash flows used in investing activities (197,142) (103,772)
Cash flows from financing activities
Proceeds from issue of shares 193,714 -
Own shares acquired for long-term incentive plan - (323)
Repayment of bank loans 7,000 (13,000)
Proceeds from fixed-rate bonds - 98,833
Settlement of interest rate derivatives (12,051) (1,097)
Dividends paid (87,460) (81,458)
Net cash flows from financing activities 101,203 2,955
Net increase/(decrease) in cash and cash equivalents 11,329 (774)
Cash and cash equivalents at the beginning of the year 9,923 10,697
Cash and cash equivalents at the end of the year 21,252 9,923
Consolidated statement
of cash flows (continued)
FOR THE YEAR ENDED 31 MARCH 2020
2020
$000
2019
$000
Reconciliation of (loss)/profit after income tax
to net cash flows from operating activities
(Loss)/profit after income tax (186,694) 138,092
Items classified as investing or financing activities:
Movements in working capital items relating to investing and financing activities 6,658 (6,643)
Non-cash items:
Net fair value loss on interest rate derivatives 9,862 11,040
Net fair value loss/(gain) on investment properties 289,969 (47,650)
Movement in deferred tax liabilities (5,324) (3,115)
Amortisation of lease incentives and fees 6,470 6,975
Straight-lining of fixed rental increases (1,193) (2,016)
Movements in working capital items:
Trade and other receivables 1,269 1,060
Income tax payable (6,927) (615)
Trade and other payables (6,822) 2,915
Net cash flows from operating activities 107,268 100,043
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
KIWI PROPERTY ANNUAL REPORT 20202021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated
financial statements
FOR THE YEAR ENDED 31 MARCH 2020
1. General information
FOR THE YEAR ENDED 31 MARCH 2020
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 to for-profit entities,
and with International Financial Reporting Standards (IFRS).
The financial statements have been prepared on the basis
the Group is a going concern.
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 period
The financial position and performance of the Group was
affected by the following events and transactions during
the reporting period:
Investment property acquisitions and disposals
On 30 September 2019, the Group acquired property at
51 Carbine Road, 53 Carbine Road and 7-10 Arthur Brown
Place, Mount Wellington, Auckland for $25.5 million.
Equity raise
In November 2019, the Group raised $193.7m of new equity
(net of issue costs) through a fully underwritten placement
and subsequent retail offer. The issue price for all new shares
was $1.58 per share and all new shares rank equally with
existing shares on issue.
COVID-19 global pandemic
In March 2020, the World Health Organisation designated
COVID-19 to be a pandemic, threatening the health and
well-being of large numbers of people across multiple
countries. The global outbreak has caused escalating levels
of societal uncertainty. In response, New Zealand entered
a Government-directed ‘Alert Level 4’ lockdown at 11.59pm
on 25 March 2020. The Government’s Alert Level system
dictates the level of business activity and societal interaction
that can take place. At Alert Level 4, the highest alert level,
strong border restrictions are in place and only essential
services can trade. People must remain at home, venturing
out to access only the most essential goods and services.
At 11.59pm on 27 April 2020 New Zealand moved to Alert
Level 3 under which regional travel was allowed and some
businesses, including construction and food retailing, could
operate as long as strict social-distancing practices were
adopted. At 11.59pm on 13 May 2020, the country moved
down to Alert Level 2, making a significant step towards
pre-pandemic normality. Under Alert Level 2 national travel
is allowed, schools have re-opened and businesses are
able to trade, albeit restrictions remain in place around
social-distancing and mass gatherings and contact tracing
measures are required to be followed.
A significant proportion of the business activities of the Group’s
tenants were deemed non-essential services during the Alert
Level 4 lockdown and were unable to operate for the six days
from 26 March 2020 to 31 March 2020 covered by these
financial statements, and subsequent to balance date.
The pandemic has resulted in impacts to key estimates and
judgements used in these financial statements, including:
—Investment property valuations being materially impacted
as at 31 March 2020, as detailed in note 3.2
—Decisions being made on capital management with
regards to dividends, as detailed in note 3.4.3
—Exposures to, and the policies and procedures for,
managing financial risks changing, as detailed in note 4
—The re-introduction of depreciation allowances for
commercial building structures impacting tax expense
estimates for future periods, as detailed in note 2.3
—The occurrence of subsequent events relating to COVID-19,
as detailed in notes 3.2 and 5.5.
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 and SPBCL.
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.
1.General information
1.1Reporting entity
Pg 23
1.2 Basis of preparation
Pg 23
1.3 Significant changes during the year
Pg 23
1.4 Group structure
Pg 23
1.5 New standards, amendments and interpretations
Pg 24
1.6Key judgements and estimates
Pg 24
1.7Accounting policies
Pg 24
1.8Changes in presentation
Pg 24
2.Profit and loss information
2.1 Property revenue
Pg 25
2.2 Expenses
Pg 26
2.3 Tax expense
Pg 27
3. Financial position information
3.1 Trade and other receivables
Pg 29
3.2 Investment properties
Pg 29
3.3 Deferred tax
Pg 39
3.4 Funding
Pg 40
3.5 Trade and other payables
Pg 44
3.6 Equity
Pg 44
4. Financial risk management
4.1 Interest rate risk
Pg 48
4.2 Credit risk
Pg 49
4.3 Liquidity risk
Pg 49
5. Other information
5.1 Segment information
Pg 50
5.2 Related party transactions
Pg 51
5.3 Key management personnel
Pg 52
5.4 Commitments
Pg 52
5.5 Subsequent events
Pg 53
23
KIWI PROPERTY ANNUAL REPORT 202022
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.4 Group structure (continued)
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 NZ IFRS 16 Leases as required, which
is effective for annual reporting periods beginning on or after
1 January 2019. This standard replaces 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.
While the majority of the Group’s portfolio is freehold, the
Group does have several occupational ground leases of
properties/parts of properties in its investment property
portfolio to which NZ IFRS 16 applies.
The Group has elected to apply the modified retrospective
approach in adopting NZ IFRS 16 with the effect of adoption
being recognised at the transition date with no adjustment
to the prior period presented. The lease liabilities recognised
on 1 April 2019 of $9.973 million were measured as the present
value of the remaining cash flows discounted at the transition
date “incremental borrowing rate”, being the property yield
for the properties with the benefit of the occupational ground
leases. Property yield has been used given the long term
nature of the leases. The cash flows relating to the ground
leases are included in the fair value of the investment
properties and therefore a gross up for the lease liability
is recognised in the investment property balance at the
amount equal to the lease liability. As at 31 March 2020,
the lease liabilities were $9.884 million.
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 2.3 Tax expense Pg 27
Note 3.2 Investment properties Pg 29
Note 3.4.2 Interest rate derivatives Pg 41
Note 3.6.4 Share-based payments Pg 46
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 presentation of the Consolidated Statement of
Comprehensive Income has changed from the prior year
to make comparison more meaningful. There have been
no other changes in the presentation of comparative
information in the current year.
2. Profit and loss information
FOR THE YEAR ENDED 31 MARCH 2020
2.1 Property revenue
2020
$000
2019
$000
Gross rental income 245,587 239,262
Straight-lining of fixed rental increases 1,193 2,016
Amortisation of capitalised lease incentives (5,472) (5,992)
Property revenue 241,308 235,286
The contractual future minimum property operating lease income to be received on properties owned by the Group at balance
date is as follows:
2020
$000
2019
$000
Within one year 243,457 238,577
Between one and two years 207,567 201,400
Between two and three years 173,386 180,744
Between three and four years 152,802 148,010
Between four and five years 126,260 125,354
Later than five years 426,338 495,622
Property operating lease income 1,329,810 1,389,707
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.
KIWI PROPERTY ANNUAL REPORT 20202425
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.2 Expenses
2020
$000
2019
$000
Interest and finance charges on bank loans 23,554 25,628
Interest on fixed-rate bonds 23,339 20,453
Interest on lease liabilities 935 -
Capitalised to investment properties being developed (10,814) (8,459)
Interest and finance charges 37,014 37,622
Auditor’s remuneration:
Statutory audit and review of the financial statements311 246
Assurance related services 40 33
Attendance and voting procedures at shareholder meetings 4 4
Remuneration benchmarking 33 12
Professional services in relation to long-term incentive plan design 29 18
Directors' fees 772 701
Employee entitlements 23,678 22,949
Less: recognised in direct property expenses (5,888) (6,875)
Less: capitalised to investment properties being developed (2,151) (2,177)
Information technology 1,534 1,351
Investor related expenses 617 643
Occupancy costs 448 451
Professional fees 1,214 1,463
Trustees' fees 107 106
Other 1,808 1,953
Employment and administration expenses 22,556 20,878
Subsequent to year end the auditors were engaged to perform specified remuneration metric procedures for $5,100.
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 2020 this was 4.58% (2019: 4.98%).
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.
2.3 Tax expense
A reconciliation of (loss)/profit before income tax to income tax expense follows:
2020
$000
2019
$000
(Loss)/profit before income tax (170,124) 162,115
Prima facie income tax expense at 28% 47,635 (45,392)
Adjusted for:
Net fair value loss on interest rate derivatives 613 (2,784)
Net fair value (loss)/gain on investment properties (81,191) 13,342
Loss on disposal of investment properties - 272
Depreciation 8,046 7,314
Depreciation recovered on disposal of investment properties - (4,539)
Deferred leasing costs (250) 474
Deductible capitalised expenditure 3,166 2,938
Prior year adjustment - 333
Other 87 905
Current tax expense (21,894) (27,137)
Depreciation recoverable 5,727 1,309
Net fair value (loss)/gain on interest rate derivatives (613) 2,784
Deferred leasing costs and other temporary differences 210 (979)
Deferred tax benefit 5,324 3,114
Income tax expense reported in profit (16,570) (24,023)
Imputation credits available for use in subsequent periods 11,242 15,264
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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.3 Tax expense (continued)
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.
As part of the assistance package offered by the Government on 25 March 2020, depreciation allowances will be re-introduced
for commercial building structure effective from 1 April 2020. This does not have an impact on the current year due to deferred
tax being recognised on a held for sale basis.
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 which 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 2020, the Group continues to qualify for this relief and a deferred tax liability of $4.2 million continues to be provided.
3.1 Trade and other receivables
2020
$000
2019
$000
Trade debtors 6,779 8,899
Provision for doubtful debts (1,030) (238)
Prepayments 6,183 4,540
Trade and other receivables 11,932 13,201
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. Additionally, the Group has established an allowance for Expected Credit Loss (ECL) based
on a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment. 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 at least 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.
3. Financial position information
FOR THE YEAR ENDED 31 MARCH 2020
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.2 Investment properties (continued)
Investment properties held by the Group are as follows:
Valuer
Capitalisation
rate
%
Fair value
31 March
2019
$000
Capital
movements
2020
$000
Fair value
gain/(loss)
2020
$000
Fair value
31 March
2020
$000
Mixed-use
Sylvia Park
1
JLL 5.50 955,000 135,723 (108,723) 982,000
Sylvia Park Lifestyle JLL 6.25 77,000 (64) (2,636) 74,300
LynnMall Colliers 6.63 284,000 4,787 (43,787) 245,000
The Base
2
CBRE 6.63 217,500 2,519 (22,019) 198,000
1,533,500 142,965 (177,165) 1,499,300
Retail
Westgate Lifestyle Colliers 6.63 90,000 69 (11,069) 79,000
Centre Place North CBRE 11.25 53,500 238 (17,238) 36,500
The Plaza CBRE 8.25 207,000 2,688 (39,688) 170,000
Northlands JLL 8.00 247,000 6,070 (58,070) 195,000
597,500 9,065 (126,065) 480,500
Office
Vero Centre Colliers 5.25 450,000 2,786 (7,786) 445,000
ASB North Wharf JLL 5.25 230,000 846 7,154 238,000
The Aurora Centre CBRE 6.00 159,500 (443) 11,243 170,300
44 The Terrace CBRE 6.38 53,500 (314) 3,914 57,100
893,000 2,875 14,525 910,400
Other
Other properties Various 125,239 26,011 3,400 154,650
Development land JLL 58,150 6,425 (4,575) 60,000
183,389 32,436 (1,175) 214,650
Investment properties 3,207,389 187,341 (289,880) 3,104,850
Gross up of lease liabilites
3
- - (89) 9,884
Investment properties 3,207,389 187,341 (289,969) 3,114,734
1. Sylvia Park was valued “as if complete” at $1.09 billion based on a capitalisation rate of 5.50%. The deduction of outstanding development costs for the galleria
and south carpark ($84.9 million) together with allowances for profit and risk and stabilisation ($23.2 million) results in an “as is” value of $982 million.
2. Represents the Group’s 50% ownership interest. Refer to note 1.4 for further information.
3. Refer to note 1.5.
3.2 Investment properties (continued)

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 LifestyleJLL 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 LifestyleColliers 6.38 90,000 154 (154) 90,000
Centre Place NorthCBRE 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 CentreColliers5.13 420,000 8,186 21,814 450,000
ASB North WharfJLL5.38 209,000 1,037 19,963 230,000
The Aurora CentreColliers6.13 152,250 22 7,228 159,500
44 The TerraceColliers6.50 49,900 (328) 3,928 53,500
831,150 8,917 52,933 893,000
Other
Other propertiesVarious 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
3,051,964 107,775 47,650 3,207,389
1. Sylvia Park was valued “as if complete” at $1.1715 billion. 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.
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 20203031
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.2 Investment properties (continued)
The movement in the Group’s investment properties during the year is as follows:
2020
$000
2019
$000
Balance at the beginning of the year 3,207,389 3,051,964
Capital movements:
Acquisitions (refer to note 1.3) 25,583 34,348
Disposals - (99,623)
Capitalised costs (including fees and incentives) 156,242 169,550
Capitalised interest and finance charges 10,793 8,459
Amortisation of lease incentives, fees and fixed rental income (5,277) (4,959)
187,341 107,775
Net fair value (loss)/gain on investment properties (289,880) 47,650
Gross up of lease liabilities (refer to note 1.5) 9,884 -
Balance at the end of the year 3,114,734 3,207,389
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 (2019: 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 2020 (and as at 31 March 2019). 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.
Investment property values are assessed within a range indicated by at least two valuation approaches; most commonly the
income capitalisation approach and discounted cash flow approach. Other valuation approaches, including the sales comparison
approach or deferred land value approach may be used depending on the nature of the property. In addition, the adopted
valuation of an investment property undergoing development may be assessed using a residual approach. Valuation techniques
are explained on page 38.
Estimates are used in these valuation approaches to determine fair value. For the two most common approaches, these include
the capitalisation rate in the income capitalisation approach and the discount rate in the discounted cash flow approach.
Both approaches are also influenced by other estimates relating to market rental levels, vacancy rates, letting-up allowances
and the cost of ongoing operating expenses, capital expenditure and other capital payments.
Under the residual approach, valuers estimate the ‘as if complete’ value of an asset using the common investment valuation
approaches described above. They then deduct remaining project costs to determine the asset’s ‘as is’ or residual value.
Sylvia Park is currently valued using the residual approach as the galleria development is still in progress. A key input into the
residual approach is the cost required to complete the development. The valuers rely on cost to complete information provided
by the Group to inform their residual approach. This cost information is based on internal budgets developed by the Group’s
project team, based on management’s experience and knowledge of market conditions. The largest component of project cost
is construction cost and this input is verified by independent quantity surveyors to ensure its accuracy. The valuer typically also
assesses profit and risk and stabilisation allowances which are also deducted to arrive at the residual value. Profit and risk
represents the return to the owner for assuming the development’s remaining risks while stabilisation is a more general allowance
that may be required to support net income in the early stages of a retail development as it trades up to a stabilised level of activity.
The valuations of the independent valuers are reviewed by the Group and adopted as the carrying value in the financial
statements. As part of this process, the Group’s management verifies all major inputs to the valuations (including costs to
complete for investment properties being developed), assesses valuation movements since the previous year and holds
discussions with the independent valuers to assess the reasonableness of the valuations.
3.2 Investment properties (continued)
Impact of the COVID-19 global pandemic
As at 31 March 2020 the real estate markets to which the Group’s investment properties belong were impacted by significant market
uncertainty caused by the COVID-19 outbreak. The landscape and market conditions around this time were changing on a daily
basis. This created valuation uncertainty and had a material impact on the value of investment property as at 31 March 2020.
The valuation uncertainty has affected key inputs, assumptions and processes used in the valuation of the Group’s investment
properties, being:
—estimating the net income that a property can produce (income uncertainty), and
—converting that income to value by applying investment rates of return which are derived from analysis of recent market
transactions (investment uncertainty).
Income uncertainty
The impact of the pandemic on the income earning potential of the Group’s properties is uncertain. The Group leases
commercial accommodation to a range of businesses from where they conduct their operations. Restrictions imposed
by the Government to combat the pandemic prevented non-essential businesses from physically accessing their premises.
In response, the Group is currently working through a cost sharing programme with each affected tenant whereby the Group
will forgive a portion of the rent payable by the tenant. The percentage of rent forgiven and the duration of the forgiveness
period is subject to negotiation between the Group and the tenant. This programme will have a negative impact on the Group’s
income for the year ending 31 March 2021.
Future income may also be impacted as:
—the underlying activity and profitability of many of the Group’s tenants have been affected by restrictions which have
prevented the population from socialising or accessing goods and services to the extent they could before the pandemic,
—border restrictions into New Zealand mean businesses that rely on travel and tourism will be particularly negatively
impacted, and
—the pandemic will result in increased unemployment and a deterioration in economic conditions, both nationally and
globally, that will take some time to recover from. This will affect people’s spending power and could mean businesses
retrench or put expansion plans on hold.
Mixed-use and retail portfolios
Tenants within the Group’s mixed-use and retail portfolios fundamentally rely on the availability and accessibility of their
premises to conduct core business. Most of these tenants were unable to trade at all for the Alert Level 3 and 4 periods,
and their ability to generate sales and custom will be reduced at Alert Level 2 with the socialisation restrictions that are in place.
Cafes, restaurants, bars and cinemas will be particularly impacted as they cannot physically accommodate as many patrons
as they could before the restrictions.
As a result, some businesses have a higher risk of failure and others will face a reduced ability to meet business expenses,
including rent and other occupancy charges.
We can expect that property vacancy rates will increase and it may take longer to lease vacant tenancies. When they are leased,
the achieved rentals may be less than expected pre COVID-19 and incoming tenants may require a higher level of inducement
to take on their leases.
Office portfolio
Many of the Group’s affected office portfolio tenants have been able to continue business operations with staff working from
home. Portable technology and web-based meeting software means the physical office environment is not always essential
to continued operations. While some tenants may be impacted by COVID-19 we don’t expect the same degree of short-term
impact on the Group’s office portfolio.
Longer term impacts
The Group’s income may be impacted longer term by perceived structural changes to both the retail and office markets resulting
from changed behaviours during COVID-19. For retail, it has been suggested that a step-change towards higher uptake and
acceptance of online retailing may have occurred. For the office sector, it is anticipated that the work-from-home movement
may have gained significant momentum. These structural changes, if embedded, could result in longer-term reduced demand
for retail and office space.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.2 Investment properties (continued)
Investment uncertainty
Valuation uncertainty has also arisen from an inactive property investment market. Investment market participants have not
been able to conduct normal business activities during Alert Levels 3 and 4. Additionally, many large investors are domiciled
offshore and travel restrictions prevent them from physically inspecting assets and undertaking typical due diligence. An inactive
market means a lack of transactional evidence demonstrating current market pricing. In these circumstances the only inputs
and metrics available to reliably estimate fair value relate to the market before the event occurred and the impact of the event
on prices cannot be known until the market stabilises.
Valuation uncertainty
As a result of these income and investment uncertainties the Group’s valuers noted the difficulty in undertaking valuations
at this time and, in the absence of relevant market evidence, they have adjusted valuation inputs and estimates to reflect the
impact of the pandemic on investment property value. The valuers have tended to place greater emphasis on the discounted
cash flow approach as this methodology allows them to more explicitly model assumptions and events that are not expected
to prevail long into the future.
While these estimates have been formed by the valuers after careful consideration and consultation with a range of reliable
sources, it must be recognised that COVID-19 was a unique, rapidly-evolving situation and critical events that could help
determine the duration and depth of its impact were still unknown at the date of valuation.
The valuations of the Group’s investment properties as at 31 March 2020 have therefore been prepared on the basis of ‘material
valuation uncertainty’ as recommended by The New Zealand Institute of Valuers to highlight the difficulties in undertaking
valuations in the current environment.
A ‘material valuation uncertainty’ statement implies the valuation is current at the date of valuation only and that less certainty
and a higher degree of caution should be attached to the valuation. In addition, the valuation should be kept under frequent
review as the assessed value may change significantly and unexpectedly over a relatively short period of time.
Until investment property values can be demonstrated to have stabilised post COVID-19, the Group intends to procure more
frequent valuation updates from its panel of registered valuers.
The Group has invested significant time in understanding the impact of COVID-19 on various property sectors, and on individual
property values, at balance date to ensure the valuations remain reasonable. This has involved more frequent interaction with the
valuers than prior periods to discuss specific estimates and assumptions adopted in the valuations, the impact of key events on
value as they have unfolded and comparison of the Group’s value changes with comparable evidence available in the market.
Impact on values as at 31 March 2020
To reflect the impact of the pandemic on investment property value, the valuers have generally adopted softer valuation inputs
including expanded capitalisation and discount rates, lower growth rates across the near term, lower market rental levels, increased
vacancy rates and increased letting-up allowances. The valuers have also made deductions for the costs of estimated rent relief
to tenants for occupancy disruption resulting from pandemic-related impacts.
These estimates and assumptions have had a material impact on the value of the Group’s investment property. For the year
ended 31 March 2020, the Group reported a fair value loss of $289.9 million. The valuation impact of COVID-19 is greater than
this however as draft valuation reports prepared for the Group in early March 2020 indicated that, before COVID-19, a fair value
gain would have been posted.
The impact on key inputs are further discussed under ‘Valuation inputs’ on page 38.
Costs to complete development – Sylvia Park
Despite completion of Sylvia Park’s galleria development being delayed by COVID-19 restrictions, the Group is not anticipating
any material change to the development costs advised to the valuers. Prior to the lockdown period progress was ahead of
programme which would have delivered some cost saving. We now anticipate that even with the current delayed completion,
the project should be delivered in line with approved project budgets.
3.2 Investment properties (continued)
Valuation inputs
A valuation is determined based on a range of unobservable inputs. These are unobservable as they are not freely available
or explicit in the marketplace but rather analysed from transactional data that has taken place in similar market circumstances
to that prevailing at the date of valuation. Refer to note 1.7 for further information on the fair value hierarchy.
The Group’s investment property values contain unobservable inputs in determining fair value, some of which can be described
as ‘key unobservable inputs’ where significant judgement is applied in determining the input and a change to any one of these
inputs could significantly alter the fair value of an investment property.
Key unobservable inputs are the capitalisation rate, discount rate, terminal capitalisation rate, market rent and growth rates.
The table below sets out these key unobservable inputs and the ranges adopted by the valuers across the various properties
making up the Group’s mixed-use, retail and office portfolios.
The impact of COVID-19 can be seen in the analysis below through the general softening in metrics from 2019 to 2020. This
is mainly evident through the capitalisation rate and discount rates metrics, which have expanded (increased), and the growth
rates, which have contracted (decreased), having an effect of lowering the fair value. The lower end of the growth rate range
for the mixed-use and retail portfolios can be seen to be very negative. These metrics indicate a range across all assets in that
portfolio, so don’t affect all properties, and typically relate to the early year or years of the cashflow so don’t continue across
the full discounted cash flow horizon.
Class of
propertyInputs used to measure fair value
Range of significant unobservable
inputs
2020 2019
Mixed-use
Core capitalisation rate 5.5%– 6.6%5.4%– 6.4%
Other income capitalisation rate 6.2%– 8.3%5.4%– 6.5%
Discount rate 7.3%– 8.3% 7.3%– 7.6%
Terminal capitalisation rate 5.5%– 6.8% 5.5%– 7.0%
Gross market rent (per sqm)
1
$371– $786 $359– $769
Rental growth rate (per annum) -14.6% – 7.4% -0.4%– 3.5%
Retail
Core capitalisation rate 6.6% – 11.3% 6.4%– 10.3%
Other income capitalisation rate 6.6% – 11.3% 6.4%– 15.0%
Discount rate 8.3%– 10.6% 7.8%– 9.8%
Terminal capitalisation rate 8.1% – 12.3% 6.5%– 11.3%
Gross market rent (per sqm)
1
$263– $638 $276– $634
Rental growth rate (per annum) -15.3% – 6.5% -2.7%– 2.5%
Office
Core capitalisation rate 5.3%– 6.4% 5.1%– 6.5%
Other income capitalisation rate 0.0% 7.0%
Discount rate 6.8%– 7.4% 7.5%– 8.3%
Terminal capitalisation rate 5.3% – 6.8% 5.3%– 7.0%
Gross market rent (per sqm)
1
$492– $668 $465– $653
Rental growth rate (per annum) 0.0%– 4.0% 2.0%– 3.5%
1. Weighted average by property.
These key inputs are explained on page 38.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.2 Investment properties (continued)
Valuation sensitivity
A sensitivity analysis that shows how a change to capitalisation and discount rates affects the value of the Group’s mixed-use,
retail and office portfolios is provided below. The metrics chosen are those single-value inputs where movements are likely
to have the most significant impact on fair value of investment properties.
The capitalisation rate relates to the income capitalisation approach and the discount rate relates to the discounted cash flow
approach. Generally, a change in the capitalisation rate is accompanied by a directionally similar change in the discount rate.
The table below assesses each of these inputs in isolation and assumes all other inputs are held constant.
31 March 2020
Adopted
value
Capitalisation
rate
- 25bp
Capitalisation
rate
+ 25bp
Discount
rate
- 25bp
Discount
rate
+ 25bp
Mixed-use
Actual valuation ($000) 1,499,300
Impact of assumption change ($000) 70,100 (63,500) 37,500 (34,900)
Impact of assumption change (%) 4.7 (4.2) 2.5 (2.3)
Retail
Actual valuation ($000) 480,500
Impact of assumption change ($000) 17,200 (14,800) 8,700 (8,500)
Impact of assumption change (%) 3.6 (3.1) 1.8 (1.8)
Office
Actual valuation ($000) 910,400
Impact of assumption change ($000) 44,700 (39,800) 16,800 (16,500)
Impact of assumption change (%) 4.9 (4.4) 1.8 (1.8)
31 March 2019
Adopted
value
Capitalisation
rate
- 25bp
Capitalisation
rate
+ 25bp
Discount
rate
- 25bp
Discount
rate
+ 25bp
Mixed-use
Actual valuation ($000) 1,533,500
Impact of assumption change ($000) 76,700 (67,600) 30,700 (30,600)
Impact of assumption change (%) 5.0 (4.4) 2.0 (2.0)
Retail
Actual valuation ($000) 597,500
Impact of assumption change ($000) 17,000 (23,500) 10,600 (10,400)
Impact of assumption change (%) 2.8 (3.9) 1.8 (1.7)
Office
Actual valuation ($000) 893,000
Impact of assumption change ($000) 42,700 (39,800) 16,500 (16,000)
Impact of assumption change (%) 4.8 (4.5) 1.8 (1.8)
3.2 Investment properties (continued)
The valuation of investment properties are complex with a number of interrelated key inputs and assumptions.
When calculating the income capitalisation value, the gross market rent has a strong interrelationship with the core capitalisation
rate. An increase in the gross market rent and an increase in the core capitalisation rate could potentially offset the impact to 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 calculating the discounted cash flow value, the discount rate has a strong interrelationship with the terminal capitalisation
rate. An increase in the discount rate and an decrease in the terminal capitalisation rate could potentially offset the impact to 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.
Market rental and growth rates are asset specific and the impacts (if any) from economic effects as a result of COVID-19,
will become more evident in coming months. Given the significant uncertainties and complex interrelationships these inputs
have not been included within the sensitivity table above.
Looking ahead, it could reasonably be expected that there could be less upside potential and more downside risk for some
property sectors. This could apply to the Group’s mixed-use and retail sectors which, as described above, are more susceptible
to COVID-19 related impacts and may be more likely to experience a reduction in net income from increased vacancy, reduced
rentals, increased letting-up allowances and lower growth rates. Any one of these changes could result in a lower fair value
of an investment property.
Given the material uncertainty created by COVID-19, likely future movement in the fair value of investment properties is
unknown. As described above, the Group intends to procure more frequent valuation updates from its panel of registered
valuers to mitigate this material uncertainty until property values can be demonstrated to have stabilised.
Subsequent events
At the date of our issuing these financial statements we are at Alert Level 2 and a sense of normality is returning to society.
If COVID-19 case numbers remain low and community transmission of the disease is contained, we may remain at Alert Level 2
for a period before dropping back to Alert Level 1 which essentially represents pre COVID-19 societal conditions.
If this is not the case and the disease re-emerges, we could see an advancement back up the scale to Alert Levels 3 and 4.
The future value of the Group’s Investment property value will depend on how the disease tracks and the resultant Alert Levels
imposed on society. If we advance upwards through the Alert Levels, value may deteriorate further but if we track downwards,
as we are now, value could recover, notwithstanding impacts, described above, that may arise due to consequential economic
conditions.
In May 2020, the Group sought valuation advice to determine if any material change in the fair value of investment properties
was likely to have occurred. This advice indicated that there was no material movement between 31 March 2020 and the date
of signing these financial statements. Notwithstanding this, the material valuation uncertainties remain until investment markets
become active and subsequent transactional evidence demonstrates a trend in current pricing.
KIWI PROPERTY ANNUAL REPORT 20203637
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.2 Investment properties (continued)
The table below explains the key inputs used to measure fair value for investment properties.
Valuation techniques
Income capitalisation approachA valuation technique which determines fair value by capitalising a property’s core 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 which 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 which 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 for which 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, which is applied to a property’s core net income to derive value.
Other income capitalisation rateThe rate of return which 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 which is applied to a property’s core 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.
3.3 Deferred tax
2020
$000
2019
$000
Deferred tax assets
Interest rate derivatives 6,285 6,898
Deferred tax liabilities
Depreciation recoverable (80,937) (86,664)
Deferred leasing costs and other temporary differences (8,565) (8,775)
(89,502) (95,439)
Net deferred tax liabilities (83,217) (88,541)
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
property, it is assumed that the carrying amounts of investment property will be recovered through sale. Deferred tax is disclosed
on a net basis, as the deferred tax assets and the deferred tax liabilities relate to the same taxation authority.
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.
KIWI PROPERTY ANNUAL REPORT 20203839
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.4 Funding
3.4.1 Interest bearing liabilities
The Group’s secured interest bearing liabilities are as follows:
2020
$000
2019
$000
Bank loans – total facilities 825,000 825,000
Bank loans – undrawn facilities (291,000) (298,000)
Bank loans – drawn facilities 534,000 527,000
Fixed-rate bonds 475,000 475,000
Unamortised capitalised costs on fixed-rate bonds 867 (312)
Interest bearing liabilities 1,009,867 1,001,688
Weighted average interest rate for drawn debt
(inclusive of bonds, active interest rate derivatives, margins and line fees)4.35%4.80%
Weighted average term to maturity for the combined facilities 3.9 years 3.2 years
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.
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
(unchanged from 31 March 2019).
In March 2020, $361 million of existing bank debt facilities were extended. The facilities, which were due to expire in the
2021 and 2022 financial years, will now expire in the 2024 and 2026 financial years.
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
2020
$000
Fair value
2019
$000
KPG010 125,000 6-Aug-1420-Aug-216.15% February, August 129,762 134,409
KPG020 125,000 7-Sep-167-Sep-234.00% March, September 127,004 128,997
KPG030 125,000 19-Dec-1719-Dec-244.33% June, December 128,922 130,528
KPG040 100,000 12-Nov-1812-Nov-254.06% May, November 101,807 102,447
Fixed-rate bonds 475,000 487,495 496,381
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 (2019: 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.
2020
$000
2019
$000
Interest rate derivative assets – non-current 4,186 1,665
Interest rate derivative liabilities – current (104) (344)
Interest rate derivative liabilities – non-current (26,530) (25,958)
Net fair values of interest rate derivatives (22,448) (24,637)
Notional value of interest rate derivatives – fixed-rate payer – active 245,000 365,000
Notional value of interest rate derivatives – fixed-rate receiver
1
– active 40,000 40,000
Notional value of interest rate derivatives – fixed-rate payer – forward starting 165,000 170,000
Notional values 450,000 575,000
Fixed-rate payer swaps:
Weighted average term to maturity – active

2.3 years 3.2 years
Weighted average term to maturity – forward starting 5.0 years 5.7 years
Weighted average term to maturity 3.4 years 4.0 years
Fixed-rate payer swaps:
Weighted average interest rate – active
2
3.51% 3.63%
Weighted average interest rate – forward starting
2
2.74% 2.90%
Weighted average interest rate3.20% 3.40%
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.
In conjunction with the equity raise (refer to note 1.3), interest rate swaps with a face value of $120 million were closed out during
the year for a payment of $12.1 million. The net fair value loss on the remaining interest rate derivatives for the year was $9.9 million.
The difference between these two amounts represents the movement in the net interest rate derivative liabilities from 31 March 2019
to 31 March 2020.
KIWI PROPERTY ANNUAL REPORT 20204041
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 managed 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. However, the Group actively manages
its debt to its internal treasury policy which sets a target gearing range of 25% to 35%. The Group has complied with its Senior
Facilities Agreement capital requirement at all times throughout the year.
The Group actively manages liquidity risk to ensure that it is able to access sufficient funds on a timely basis to meet operational
expenses, capital and debt expiry commitments as and when they fall due. To enhance its access to a range of funding sources, the
Group has secured credit ratings from S&P Global Ratings. To minimise liquidity risk, the Group ensures that it maintains sufficient
capacity in its overall debt facilities to cover projected debt (current debt plus Board approved capital commitments), has ready
access to sufficient cash reserves or available debt drawdowns, and reliably forecasts its expected cash requirements. Further
detail on liquidity risk is provided in note 4.3.
Given the inherent uncertainty created by the COVID-19 global pandemic, the board has adopted a prudent approach to capital
management and determined that no final dividend will be paid for the year ended 31 March 2020. The board will determine
future dividend payments and make decisions about the resumption of the Group’s dividend payments once the duration
and financial impact of the COVID-19 pandemic is more certain.
Following the decision that no final dividend be paid for the year ended 31 March 2020, the Group has revised its dividend policy.
Future dividend payments will be based on a range of factors, including with particular reference to the Group’s Adjusted Funds
From Operations (AFFO), which will be the primary basis on which dividend amounts will be determined. AFFO is a non-GAAP
performance measure used by the Group to determine underlying and recurring cash flows from operations. AFFO is calculated
with reference to the guidelines established by the Property Council of Australia. In determining a dividend payment, the Group
will have regard to, amongst other things, the solvency requirements under the Companies Act 1993, its banking and bond
covenants and internal financing targets, its future investment plans, current and forecast earnings, operating cash flows,
and the economic climate and competitive environment. Having regard to these matters, the Group will target a dividend
payout ratio of approximately 90% to 100% of AFFO.
The board has also temporarily suspended all non-essential capital expenditure projects until the duration and financial impact
of the COVID-19 pandemic is more certain.
At balance date, the market capitalisation of the Group (being the 31 March 2020 closing share price, as quoted on the NZX Main
Board, multiplied by the number of shares on issue) was below the carrying amount of the Group’s net assets and shareholders’
funds. In considering the difference, the Group notes that 99% of total assets at 31 March 2020 are investment properties which
are carried at fair value based on valuations prepared by independent valuers, as detailed in note 3.2.
Factors that may influence market capitalisation include, amongst other things:
—Broader market and investor sentiment
—Property market segment sentiment, particularly with regard to retail assets
—Effect of leverage of debt funding and including corporate overheads
—The level of uncertainty due to the impact of COVID-19 and its significant impact on the New Zealand and global economies.
In the review of valuations and the considerations around fair value determined by the independent valuers (as disclosed in note 3.2),
and having considered the influencing factors above, the Group considers the carrying amount of net assets is appropriate.
3.4.2 Interest rate derivatives (continued)
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 re-measured 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 (2019: 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 2020 of between 0.49% for the 90-day BKBM and 0.93% for the 10-year swap rate
(2019: 1.85% and 2.16%, respectively).
KIWI PROPERTY ANNUAL REPORT 20204243
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3.6.2 Dividends
Dividends paid during the year comprised:
Date
declared
2020
cps
2020
$000
Date
declared
2019
cps
2019
$000
Cash 3.475 49,790 3.425 48,651
Imputation credits1.070 13,693 0.970 13,779
Final dividend17-May-194.545 63,483 18-May-184.395 62,430
Cash 3.525 55,296 3.475 49,672
Imputation credits0.790 12,393 0.930 11,903
Interim dividend15-Nov-194.315 67,689 16-Nov-184.405 61,575
Cash 7.000 105,086 6.900 98,323
Imputation credits1.860 26,086 1.900 25,682
Total dividends8.860 131,172 8.800 124,005
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. The DRP applied to the final dividend paid for the year ended 31 March 2019, but was suspended and did not
apply to the interim dividend paid for the year ended 31 March 2020.
The board has determined that no final cash dividend will be paid for the year ended 31 March 2020 (if declared this would
have ordinarily occurred in May 2020). This decision has been made after considering the inherent uncertainty surrounding
the financial impact of the COVID-19 pandemic occurring at and around balance date, and the desire to take a prudent
approach to capital management.
3.6.3 Earnings per share
2020 2019
Profit and total comprehensive income after income tax attributable to shareholders ($000) (186,694) 138,092
Weighted average number of shares (000) 1,493,136 1,428,387
Basic and diluted EPS (cents) (12.50) 9.67
3.5 Trade and other payables
2020
$000
2019
$000
Trade creditors 24,264 27,911
Interest and finance charges payable 1,682 2,413
Development costs payable 21,660 24,415
Employment liabilities 4,409 4,310
Rent in advance 768 502
Goods and Services Tax payable 740 794
Trade and other payables 53,523 60,345
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.
3.6 Equity
3.6.1 Share capital
The following table provides details of movements in the Group’s issued shares:
2020
Number
000
2020
Amount
$000
2019
Number
000
2019
Amount
$000
Balance at the beginning of the year 1,432,820 1,449,646 1,420,415 1,432,936
Issue of shares:
Dividend reinvestment 11,475 17,534 12,340 16,779
Retail and Institutional placements 124,793 193,714 - -
Employee share ownership plan – shares issued - - 65 -
Employee share ownership plan – shares vested - 67 - 69
Long-term incentive plan - - - (138)
Balance at the end of the year 1,569,088 1,660,961 1,432,820 1,449,646
1,064,642 shares at a cost of $1.5 million are held by Pacific Custodians (New Zealand) Limited (the LTI Trustee) for the Group’s
long-term incentive plan (2019: 1,510,930 shares, at a cost of $2.1 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.
KIWI PROPERTY ANNUAL REPORT 20204445
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
Exercised
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) -
Total 1,253,846 629,987 (108,138) (264,765) 1,510,930
Key estimates and assumptions: fair value measurement of LTI plan
The fair value of the LTI plans have been determined using a Monte Carlo simulation to model a range of future share price outcomes
for the Company and comparator entities. The fair value at grant date and the measurement inputs used were as follows:
Performance Share Rights LTI Plan
Measurement date
31 March
2020
Weighted average performance share right price at grant date$1.455
Risk-free rate0.98%
Standard deviation of the comparator entities 8.5%-16.7%
Correlation between Company share price and comparator entities5.9%-58.6%
Estimated fair value per share$1.145
Legacy LTI Plan
Measurement date
31 March
2021
31 March
2020
Weighted average share price at grant date$1.368$1.383
Risk-free rate1.92%2.2%
Standard deviation of the comparator entities9.3%-12.1%8.9%-$14.6%
Correlation between Company share price and comparator entities5.3%-57.5%7.5%-69.0%
Estimated fair value per share$0.462$0.508
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. 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 2020 is $955,565 (2019: $246,450)
with a corresponding increase in the share-based payments reserve. The unamortised fair value of the remaining shares
in the legacy LTI plan at 31 March 2020 is $92,522 (2019: $409,557) and the unamortised value of the remaining performance
share rights at 31 March 2020 is $491,024.
3.6.4 Share-based
Long-term incentive plan (LTI plan)
Performance Share Rights LTI Plan
During the year, the Company introduced a new LTI plan to replace the legacy plan for selected senior employees. Currently
both plans have tranches operating. Under the new LTI plan, participants are issued Performance Share Rights (PSRs) for service
periods of one, two and three years. The number of PSRs that can be exercised and converted into shares in the Company
depends on a mix of the Company’s shareholder return relative to comparitor entities and a return-on-capital-employed metric
over a one year performance period. On vesting, the participant is entitled to receive one share upon the valid exercise of
each vested PSR they hold.
Legacy LTI Plan
The Company has previously operated a legacy LTI plan for selected senior employees, which has tranches that remain subject
to vesting. Under the legacy LTI plan, ordinary shares in the Company were purchased on market by Pacific Custodians
(New Zealand) Limited (the LTI Trustee). Participants purchased shares from the LTI 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 shareholder return relative to comparator entities. On vesting, the employee is provided a cash amount which must
be used to repay the loan and the relevant number of shares are then transferred to the participant.
Recognition and measurement
The fair value of the LTI plans 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.
Number of performance share rights
Grant date
Measurement
date
Performance
share right
price at
grant date
Balance
at the
beginning
of the year
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Balance at
the end of
the year
2020
1 April 201931 March 2020$1.455 - 1,126,274 - - 1,126,274
Total - 1,126,274 - - 1,126,274
Number of shares
Grant date
Measurement
date
Share price
at grant date
Balance
at the
beginning
of the year
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Balance at
the end of
the year
2020
1 April 201831 March 2021$1.368 608,068 - - (44,753) 563,315
1 April 201731 March 2020$1.383 513,987 - - (12,680) 501,307
1 April 201631 March 2019$1.466 388,875 - - (388,875) -
Total 1,510,930 - - (446,308) 1,064,622
KIWI PROPERTY ANNUAL REPORT 20204647
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. Financial risk management
FOR THE YEAR ENDED 31 MARCH 2020
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
—Liquidity risk
Financial instruments
The following items in the Consolidated 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 which 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.
In response to the uncertainty caused by the COVID-19 global pandemic, the Group has considered financial risk management

and any additional controls needed. These are discussed further in notes 4.2 and 4.3.
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 which 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 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.
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 which 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 Consolidated 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.
The COVID-19 pandemic has increased credit risk from trade receivables and the Group is working with tenants most vulnerable
to the impacts of the pandemic to agree rent relief and other measures where needed. This is expected to assist tenants in resuming
their business operations as quickly as possible and increase their ability to pay trade receivable balances owing to the Group.
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.
Liquidity risk arising from the COVID-19 pandemic is mitigated through the maintenance of adequate committed credit facilities,
with $291 million of undrawn credit at 31 March 2020 and no bank debt maturities until the 2023 financial year. Liquidity risk is
further managed through the Group’s approach to capital management, as detailed in note 3.4.3.
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.
Consolidated 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
2020
Trade and other payables 45,924 45,924 45,924 - - - -
Interest bearing liabilities 1,009,867 1,145,852 18,534 18,534 156,375 555,846 396,563
Net interest rate derivatives 22,448 24,983 3,095 3,246 6,622 11,644 376
Total financial liabilities 1,078,239 1,216,759 67,553 21,780 162,997 567,490 396,939
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
100 bps increase ($000)100 bps decrease ($000)
(8,221)
(15,040)
(5,919)
2020 – equity
Profit or loss (pre-tax) – 2020
2019 – equityProfit or loss (pre-tax) – 2019
7,712
14,164
5,552
10,198(10,828)
KIWI PROPERTY ANNUAL REPORT 20204849
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
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
2020
Property revenue 109,861 64,109 60,656 6,682 241,308
Less: straight-lining of fixed rental increases 61 246 (1,395) (105) (1,193)
Less: direct property expenses(24,917) (15,418) (12,709) (1,481) (54,525)
Less: ground lease expenses(60) (895) - (69) (1,024)
Segment profit 84,945 48,042 46,552 5,027 184,566
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
5. Other information
FOR THE YEAR ENDED 31 MARCH 2020
2019
2020
mixed-use 46%
retail 26%
office 25%
other 3%
Segment profit
20202019
mixed-use 46%
retail 28%
office 24%
other 2%
Segment profit
5.1 Segment information (continued)
A reconciliation of the segment profit to the (loss)/profit before income tax reported in the consolidated statement of
comprehensive income is provided as follows:
2020
$000
2019
$000
Segment profit 184,566 178,646
Property management fees 2,314 2,202
Rental income resulting from straight-lining of fixed rental increases 1,193 2,016
Interest and other income 180 170
Net fair value (loss)/gain on investment properties (289,969) 47,650
Interest and finance charges (37,014)(37,622)
Employment and administration expenses (22,556)(20,878)
Net fair value loss on interest rate derivatives (9,862)(11,040)
Gain on disposal of investment properties - 971
Ground lease expenses classified as interest and fair value loss on investment properties
(see note 1.5) 1,024
(Loss)/profit before income tax (170,124) 162,115
5.2 Related party transactions
The Group holds its 50% interest in The Base is 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.
An equity contribution of $1.75 million was made by the Group to the unincorporated joint venture in April 2020, subsequent
to balance date.
During the year, the following transactions were undertaken with the joint venture:
2020
$000
2019
$000
Property management fees 1,397 1,288
Expenditure reimbursement 1,181 1,275
Leasing fees 957 691
Development management fees 302 303
Legal fees 63 69
Retail design management fees 74 16
Total related party transactions 3,974 3,642
KIWI PROPERTY ANNUAL REPORT 20205051
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.3 Key management personnel
2020
$000
2019
$000
Directors’ fees 772 701
Short-term employee benefits 4,535 6,651
Other long-term benefits 8 21
Termination benefits - 945
Share-based payments 754 392
Key management personnel costs 6,069 8,710
There was a change in structure of the executive team in March 2019. Key management personnel costs for the year ending
31 March 2020 reflect the new structure.
Additional disclosures relating to key management personnel are set out in the remuneration report on page 60.
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:
2020
$000
2019
$000
Development costs at Sylvia Park 63,572 124,858
Development costs at LynnMall 5,605 -
Development costs at The Plaza - 807
Development costs at The Base
1
1,080 -
Development costs at Northlands 765 1,648
Drury infrastructure 1,913 1,913
Commitments 72,935 129,226
1. Represents the Group’s 50% ownership interest. Refer to note 1.4 for further information.
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. This right may be exercised within
three months of receipt of the independent valuation for the years ending 31 March 2020 and 31 March 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 (2019: $1.0 million). The leases terminate between November 2026 and March 3007.
The ground leases are accounted for in line with NZ IFRS 16, adopted by the Group from 1 April 2019. See note 1.5 for further details.
5.5 Subsequent events
In response to the COVID-19 global pandemic, subsequent to 31 March 2020 the Group has agreed a rent relief framework which
is being implemented across the majority of the Group’s tenants. This framework includes rental deferrals (for 18 – 24 months)
and rental abatements across April, May and June 2020 rental income. These changes are accounted for as lease modifications
under NZ IFRS, with the change in lease payments amortised over the remaining terms of the leases. It is expected that
abatements offered will be approximately $20 million for the year ending 31 March 2021.
Given the inherent uncertainty created by the COVID-19 global pandemic, subsequent to balance date in April 2020 the Group
determined that no final dividend is to be paid for the year ended 31 March 2020, as detailed in note 3.4.3. The board will make
a decision regarding future dividend payments once the duration and financial impact of the COVID-19 pandemic is more certain.
Following the decision that no final dividend will be paid for the year ended 31 March 2020, the Group has also revised its
dividend policy, as detailed in note 3.4.3.
There have been no other events subsequent to 31 March 2020 that materially impact on the results reported.
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We have audited the consolidated financial statements which comprise:
—the consolidated statement of financial position as at 31 March 2020;
—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 2020,
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, procedures over the voting at the annual shareholders meeting, agreed upon procedures in respect
of a specified remuneration metric, and the benchmarking of 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.
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. We have
determined there is one key audit matter, material valuation uncertainty in investment property valuations relating to COVID-19.
Independent auditor’s report
TO THE SHAREHOLDERS OF KIWI PROPERTY GROUP LIMITED
Material valuation uncertainty in investment property valuations relating to COVID-19
Description of key audit matterHow our audit addressed the key audit matter
As disclosed in note 3.2 of the consolidated financial
statements the Group’s investment properties
comprise mixed-use, retail, office and other
portfolios and was valued at $3.1 billion as at

31 March 2020.
The valuation of the Group’s property portfolio is
inherently subjective and is given specific audit focus
and attention due to the existence of significant
estimation uncertainty. A small percentage difference
in a single or multiple input assumption could result

in material misstatement of the valuation.
The valuations were performed by independent
registered valuers.
As at the 31 March 2020 valuation date, the
independent registered valuers have included a
material valuation uncertainty clause in their report

as a result of the COVID-19 pandemic. This clause
highlights the difficulties in undertaking valuations
due to the absence of relevant transactional evidence
that demonstrates current market pricing. Therefore,
less certainty and a higher degree of caution, should
be attached to the point estimate valuation. This
represents an increase in the significant estimation
uncertainty in the valuation of investment properties.
The Group has adopted the assessed values
determined by the valuers.
In determining a property’s valuation, two approaches
are generally used to determine the fair value of

an investment property: the income capitalisation
approach and the discounted cash flow approach,

to arrive at a range of valuation outcomes from
which the valuers derive a point estimate.
The valuers take into account property specific
information such as the contracted tenancy
agreements and rental income earned by the asset.
They apply assumptions in relation to capitalisation
rates, discount rates and market rent and the
anticipated growth, based on market data and
transactions where available. These assumptions
were adjusted to recognise the estimated impact

of COVID-19, with greater adjustments for the
mixed-use and retail properties.
For properties that have development work ongoing
at 31 March 2020, the residual approach is adopted.
The costs required to complete the developments
are estimated by management and adjusted against
the value determined by the valuers along with profit
and risk and stabilisation allowances.
Management verifies all major inputs to the
valuations, assesses property valuation movements
since prior year and holds discussions with the
independent valuers, to assess the reasonableness

of the valuations, and the Directors on the process
and results of the valuations.
Given the subjectivity involved in determining valuations for individual
properties, including alternative assumptions and valuation methods,

there is a range of values that could be considered reasonable. The impact
of COVID-19 at 31 March 2020 has resulted in a wider range of possible
values than at past valuation points.
We considered the adequacy of the disclosures made in note 1.3 Significant
changes during the year - COVID-19 global pandemic and note 3.2 Investment
properties, to the financial statements, which sets out the key judgements

and estimates. These notes explain that there is material estimation uncertainty
and there has been a material impact on the valuation of investment properties.
We discussed with management and obtained sufficient appropriate audit
evidence to demonstrate that management’s assessment of the suitability
of the inclusion of the valuation in the statement of financial position and
disclosures made in the financial statements was appropriate.
In assessing the valuation of investment properties, we performed the
procedures outlined below.
We held discussions with management to understand:
— movements in the Group’s investment property portfolio,
— changes in the condition of each property,
— the controls in place over the valuation process, and
— the impact that COVID-19 has had on the Group’s investment property
portfolio including on tenant rent abatements and tenant occupancy risk.
For all properties, the carrying value was agreed to the external valuation
reports and we held discussions with the valuers. These discussions
included the impact that COVID-19 has had on market activity and how

the valuers had factored this into key assumptions such as the capitalisation,
discount or growth rate and future forecast rentals. We also sought to
understand and consider restrictions imposed on the valuation process

(if any) and the market conditions at balance date.
Applying a risk-based approach, we read and evaluated the valuations

of specific properties.
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 2020.
We assessed the valuers’ qualifications, expertise and their objectivity

and we found no evidence to suggest that the objectivity of any valuer
was compromised in their performance of the valuations.
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.
Our work over the assumptions used in the valuations 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 and real estate specialists
to assess the methodologies and critique and challenge the key assumptions
used by the valuers to market evidence and current market conditions, including
the appropriateness of the assumptions made for COVID-19 impacts.
We obtained management’s estimates of costs to complete on the properties
under development. We compared these estimates to internal budgets
developed by the Group’s project team and submitted to the Directors

for approval and external quantity surveyors’ reports.
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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 consolidated financial statements is located at the External
Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s Shareholders, as a body. Our audit work has been undertaken so that we might
state those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
Shareholders, as a body, for our audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Jonathan Skilton.
For and on behalf of:
Chartered Accountants Auckland
22 May 2020
Our audit approach
Overview
An audit is designed to obtain reasonable assurance whether the financial statements are free
from material misstatement.
Overall Group materiality: $6,558,000, which represents 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 a benchmark against which the performance
of the Group is commonly measured by users.
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
Information other than the consolidated 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.
Materiality
Audit scope
Key audit

matters
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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 2020
except, to the extent set out in the Kiwi Property FY20
Corporate Governance Statement, which is available on
our website kp.co.nz/about-us/corporate-governance.
This statement is current as at 31 March 2020 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 2020 are summarised,
or referred to, in the Kiwi Property FY20 Corporate
Governance Statement.
The following disclosures are required to be made in this
Annual Report by the 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 2020, all directors of the
Company were independent: Mary Jane Daly, Richard
Didsbury, Mark Ford, Jane Freeman, Mark Powell, Simon
Shakesheff 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 not 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 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 Richard Didsbury’s 27 year length of tenure
on the Board and that Jane Freeman had previously disclosed
her family connection to NZ Strong Construction. The Board
concluded that Richard Didsbury’s 27 year length of tenure
on the Board and Jane Freeman’s family connection to
NZ Strong Construction 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 Corporate Governance 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,
Simon Shakesheff and Mike Steur.
The members of the Company’s Remuneration
and Nominations Committee are Richard Didsbury,
Mark Ford, Jane Freeman (Chair), and Mike Steur.
The members of the Company’s Environmental, Social
and Governance Committee are Mark Ford, Mark Powell
(Chair), and Simon Shakesheff.
Diversity policy
The Board has evaluated the performance of the Company
against its Diversity and Equal Employment Opportunity
Policy and considers that the Company has complied with
the policy except in relation to the appointment of one role
that reports to a member of the Executive Team. Despite
the efforts of the Company, it was not possible to identify
a female candidate for a short-list for that role.
More information concerning the Company’s Diversity
and Equal Employment Opportunity Policy can be found
in the Company’s FY20 Corporate Governance Statement,
which is available on our website kp.co.nz/about-us/
corporate-governance.
Gender diversity
The following table provides a breakdown of the gender
composition of the directors and officers of the Company,
together with all employees as at the current and prior
balance dates:
2020
NumberProportion %
FemaleMaleFemaleMale
Directors252971
Officers262575
All employees109576634
2019
NumberProportion %
FemaleMaleFemaleMale
Directors243367
Officers252971
All employees116566733
Corporate governance
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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
—Return on capital employed (ROCE)
and total shareholder return (TSR).
—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)
Performance Share
Rights plan (PSR)
Restricted Share Rights
Plan (RSR)
—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, team 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.
—Introduced in FY20 in place
of the Long Term Incentive
scheme, the PSR is a
discretionary share plan
for officers and employees
(by invitation), with one,
two and three-year
vesting periods.
—Reflects reward for
delivery of results over
the performance period.
—The PSR performance
hurdles consist of return on
capital employed (ROCE)
and total shareholder
return (TSR), measured
independently of each
other over a one-year
performance period.
—Assists in employee
retention objectives.
—Introduced in FY20 in place
of the Employee Share
Ownership Scheme, the
RSR is a discretionary share
rights plan that
automatically vests after
three years at no cost to
the employee, as long as
they are employed by Kiwi
Property. At the time of
vesting, the Company will
issue or transfer to the
employee one ordinary
share for each vested RSR.
—Provides our people with
an opportunity to take an
ownership stake in the
business.
—Assists in employee
retention objectives.
Short term incentive (STI)
The STI potential for our people has a component linked to the Company’s performance, team performance and personal
performance against specific stretch goals.
Measures may change year on year to drive business objectives and performance. Incentives are set around the market
median on upper quartile 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.
Team performance
—Our executive employee’s team performance portion is measured against the ‘one team goals’, which are aligned to strategy
and approved by the Board for the performance measurement period.
—Other employees’ team performance portion is measured against a ‘plan on a page’, which feeds into the ‘one team goals’.
Individual performance
—Our executive team’s individual performance is measured against the performance of their team’s ‘plan on a page’.
—Other employees’ individual performance is measured against the goals approved by the employee’s team manager.
—Each employee’s individual performance measures are agreed with (as applicable) the Board, CEO or manager (the
‘Employee’s Manager’), in-line with the following principles:

– Measures will be quantifiable, objective and able to be measured by existing systems/reporting in the business, and

– All goals and performance indicators will be agreed at the start of the performance measurement period or as soon
as reasonably practicable following the start of the period.
Remuneration report
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Legacy LTI plan
The Company’s legacy LTI plan has grants that remain subject to vesting. The final vesting date under the legacy plan
is 31 March 2021. The hurdles for this scheme have been described in previous reports.
Relative weightings of remuneration components for officers
—Officers (as defined by the NZX Listing Rules) of the Company comprise the Chief Executive Officer, GM Asset Management,
GM Development, GM Funds Management and Capital Markets, GM Income and Leasing, GM People and Communications,
GM Finance and Shared Services and GM Property Investment.
—The total remuneration package for each of our officers comprises FAR, STI, PSR and RSR.
—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 team performance
% of STI attributed to
individual performance
Chief Executive Officer60% 50% 25%25%
Other officers40% 50% 25%25%
—The LTI for our officers, in the reporting period, was as follows:
LTI % of FAR
Chief Executive Officer 50%
Other officers 25 – 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.
Long term incentive (LTI) plan
Performance Share Rights plan
In FY20, the Company introduced a Performance Share Rights (PSR) plan to replace the legacy LTI scheme. PSR’s, once vested
and exercised, entitle the participant to receive shares in the Company. The participant is entitled to receive one share upon
the valid exercise of each Vested Share Right they hold.
A grant vests proportionately over a three year period, whereby one-third of the PSR grant has a one year Vesting Period,
one-third has a two year Vesting Period and one-third has a three year Vesting Period.
The vesting of PSR’s is subject to the satisfaction of the component measures outlined in the table below, measured independently
of each other.
The Company’s officers and certain other employees may be invited to join the Company’s PSR plan on an annual basis.
Component LTI grantComponent measure
Return on
capital employed
75% —The Company’s ROCE over the Performance Period must be greater than
96% of the target ROCE set by the Board for the Performance Period.
—The ROCE target is set by the Board in conjunction with the budget approval
process. ROCE is calculated as adjusted funds from operations divided by
the weighted average contributed equity over the Performance Period.
—If the ROCE outcome meets a certain percentage of the target (i.e. 96%), 50%
this target component is eligible to vest. If 100% of the target is met, 100% of
this target component is eligible to vest.
—Vesting between 96% and 100% of the target will occur on a straight-line
progression basis.
Relative TSR hurdle25% —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.
—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.
—There is a straight-line progression and apportionment between these
two points.
Remuneration report (continued)
KIWI PROPERTY ANNUAL REPORT 20206263
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LT I
Performance Share Rights that have been granted, vested or forfeited by participants (being the officers of the Company and
other invited employees, but excluding the Chief Executive Officer) as at 31 March 2020 are detailed in the following table:
Grant date
Measurement
date
Total
participants
Grant
value
Number of
shares granted
Number of
shares forfeited
Number of
shares vested
1 April 201931 March 202011$921,798694,921-
Not yet
applicable
Under the legacy LTI scheme, LTIs that have been granted, vested or forfeited by participants (being the officers of the Company
and other invited employees, but excluding the Chief Executive Officer) as at 31 March 2020 are detailed in the following table:
Grant date
Measurement
date
Total
participants
Grant
value
Number of
shares granted
Number of
shares forfeited
Number of
shares vested
1 April 201631 March 201912$1,006,135459,785(459,785)-
1 April 201731 March 202012$1,148,713556,610(55,303)
Not yet
applicable
1 April 201831 March 202114$1,241,603608,068(44,753)
Note 3.6.4 of the financial statements on pages 46 and 47 provides further details of the number of shares granted,
forfeited and vested.
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 2020 includes salary, employer’s contributions to KiwiSaver and the cost of providing insurance
plans and sundry benefits, STI, PSR and RSR grants.
Clive’s annual base salary as at 31 March 2020 was $680,000. The remuneration he received for the financial year comprised
the following:
Base salaryKiwiSaver Insurance
Fixed Annual
RemunerationSTI paymentPSR grantRSR grant
$680,000$20,400$18,033$718,433$ 287, 4 42
1
$572,178
2
$1,164
3
1. As Clive took up the role of CEO in July 2018 his STI potential was pro-rated for 9 months. The pro-rata value at 100% achievement was $284,315.
2. As disclosed in the previous report, Clive would be receiving a pro-rata LTI for the year ending 31 March 2019 in the current financial year. The value of the pro-rata
grant was $212,962 and he was granted 160,547 PSR’s. For the year ending 31 March 2020, the grant value was $359,216 he was granted 270,805 PSR’s.
3. The RSR is a discretionary share rights plan that automatically vests after three years. Clive received 916 restricted share rights under this plan.
Remuneration outcomes for the year
Employee remuneration
During the reporting period, there were 86 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 employees
100,000 – 110,0008
110,001 – 120,0008
120,001 – 130,0007
130,001 – 140,0009
140,001 – 150,0002
150,001 – 160,0005
160,001 – 170,0003
170,001 – 180,0002
180,001 – 190,0003
190,001 – 200,0002
200,001 – 210,0005
210,001 – 220,0001
220,001 – 230,0001
230,001 – 240,0002
240,001 – 250,0002
250,001 – 260,0003
260,001 – 270,0003
270,001 – 280,0001
290,001 – 300,0001
300,001 – 310,0001
310,001 – 320,0002
320,001 – 330,0003
350,001 – 360,0002
380,001 – 390,0002
390,001 – 400,0002
410,001 – 420,0001
440,001 – 450,0001
460,001 – 470,0001
530,001 – 540,0001
830,001 – 840,0001
1,000,0001 – 1,010,0001
Total employees earning $100,000+86
Employees included but no longer employed by Kiwi Property8
Remuneration report (continued)
KIWI PROPERTY ANNUAL REPORT 20206465
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From 1 April 2020, the total directors’ fee pool will be allocated as follows:
Fee
Number of persons
holding office
Total 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$11,5001$11,500
Chair of the Remuneration and Nominations Committee$20,0001$20,000
Remuneration and Nominations Committee member$11,5001$11,500
Chair of Environmental, Social and Governance Committee member$20,0001$20,000
Environmental, Social and Governance Committee member$11,5001$11,500
Discretionary pool$500
Tot al$ 73 7, 5 0 0
—Directors have taken a temporary 20% reduction in fees from 1 April 2020.
—Environmental, Social and Governance Committee established 1 April 2020.
—Mike Steur will retire from the Board at the Company’s annual shareholder meeting on 29 June 2020 and until then will
continue to be paid director’s fees. The allocation of the total directors fees pool set out above does not include the fees
payable to Mike Steur because he will retire from the Board part way through the 2021 financial year.
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. Following the
appointment of Simon Shakesheff as an independent director on 1 November 2019, the directors’ fee pool was subsequently
increased, by operation of Listing Rule 2.11.3, to $834,000 plus GST (if any) per annum. This increase did not require shareholder
approval, as it was made to enable the Company to pay the additional director remuneration not exceeding the average amount
then being paid to each of the other independent directors (other than the Chair). Whilst there was an effective increase in the
directors’ fee pool, the allocation to each individual director did not change and remained in line with the table set out below:
During the year ended 31 March 2020, the Board allocated the directors’ fee pool as follows:
Fee
Number of persons
holding office
Total
fee pool
Chair (including membership of all committees)$172,5001$172,500
Director (excluding the Chair)$94,0006$564,000
Chair of the Audit and Risk Committee $20,0001$20,000
Audit and Risk Committee member$11,5003$34,500
Chair of the Remuneration and Nominations Committee$20,0001$20,000
Remuneration and Nominations Committee member$11,5002$23,000
Tot al$834,000
The fees paid to our directors during the year ended 31 March 2020 are outlined below:
DirectorsDutiesFees
Mary Jane DalyDirector
Chair of the Audit and Risk Committee
$114,000
Richard DidsburyDirector
Member of the Remuneration and Nominations Committee
$105,500
Mark FordChair
Member of the Audit and Risk Committee
Member of the Remuneration and Nominations Committee
$172,500
Jane FreemanDirector
Chair of the Remuneration and Nominations Committee
$114,000
Mark PowellDirector
Member of the Audit and Risk Committee
$105,500
Mike SteurDirector
Member of the Audit and Risk Committee
Member of the Remuneration and Nominations Committee
$117,000
Simon Shakesheff
1
Director
Member of the Audit and Risk Committee
$43,958
1. Simon Shakesheff was appointed to the Board on 1 November 2019.
Remuneration report (continued)
KIWI PROPERTY ANNUAL REPORT 20206667
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NameName of company/entityNature of interest
Mary Jane DalyAirways Corporation of New Zealand Limited
2
Deputy Chair
Airways International Limited
2
Director
Auckland TransportDirector
Cigna Life Insurance New Zealand LimitedDirector
Earthquake CommissionDeputy Chair
Onepath Life (NZ) Limited
2
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
Commitee for Auckland
2
Trustee
NX2 Hold GP Limited (Northern Express consortium)Chair
SkyCity Entertainment Group Limited
2
Director and Shareholder
Mark FordDexus Property GroupDirector
Global Apartment Advisors Australia
1
Consultant
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 FundDirector
Jane FreemanFoodstuffs North Island LimitedDirector
Jane Freeman Consulting LimitedDirector and Shareholder
NZ Strong ConstructionSpouse of Director (Christopher Hunter)
Mark PowellAuckland University Graduate School of ManagementAdjunct Professor
Carey Baptist Theological CollegeElected board member
JB Hi-Fi Group LimitedDirector
Stihl Shop NZAdvisory board member
The Parenting Place
2
Trustee
Trinity Lands LimitedDirector
Venn Foundation NZ
2
Chair
Simon ShakesheffCBUS Property
1
Director
Assembly Funds Management
1
Director
Management Investment Committee of NSW TCorp
(formerly NSW Treasury)
1
Member
SGCH
1
Director
SS & AR Pty Limited
1
Director
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), listed below are the directors of the Company who had a relevant interest in quoted
financial products of the Company as at 31 March 2020.
DirectorNumber of quoted financial products
Mark Powell 50,095 ordinary shares in the Company
Simon Shakesheff 26,000 ordinary shares in the Company
Mike Steur 200,000 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.
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 KPG40).
Further information about S&P Global Ratings’ credit rating
scale is available at www.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 the date
of this annual report and may be subject to suspension,
revision or withdrawal at any time by S&P Global Ratings.
Changes in the nature of the business
There were no changes to the nature of the Company’s
business during the year.
NZX waiver
During the year ended 31 March 2020 NZX did not grant and
publish any waivers following an application by the Company
and the Company did not rely on any NZX waivers.
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 2020 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 and sponsorship
During the year, the Company made no donations.
The Company is a longstanding corporate sponsor
(currently $18,000 per annum) of Keystone Trust. Keystone
is a charitable trust that assists tertiary students from
disadvantaged backgrounds to further their education
in property related fields.
Directors of the Company’s subsidiaries
As at 31 March 2020, 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, Steve Cooper and Trevor Wairepo.
During the year to 31 March 2020, Stuart Tabuteau ceased
to hold office as a director of the subsidiary companies
and Steve Cooper was appointed as director 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 shareholder will be held
as a virtual meeting on Monday, 29 June 2020.
Interest register entries
In accordance with section 211(1)(e) of the Companies Act
1993, listed below are details of the entries made in the
Interests Register of the Company during the year, together
with the existing entries as at 31 March 2020.
Other investor information
KIWI PROPERTY ANNUAL REPORT 20206869
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Twenty largest shareholders
shareholder
Number
of shares
% of total
issued shares
HSBC Nominees (New Zealand) Limited 155,418,176 9.91%
Accident Compensation Corporation 149,367,207 9.52%
Citibank Nominees (NZ) Limited 126,597,451 8.07%
HSBC Nominees (New Zealand) Limited 95,577,916 6.09%
JPMorgan Chase Bank 72,251,420 4.60%
Premier Nominees Limited 66,790,441 4.26%
Cogent Nominees Limited 59,444,253 3.79%
FNZ Custodians Limited 48,397,739 3.08%
Investment Custodial Services Limited 43,346,890 2.76%
Forsyth Barr Custodians Limited 41,679,527 2.66%
BNP Paribas Nominees NZ Limited <BPSS40> 41,156,279 2.62%
National Nominees New Zealand Limited 37,992,580 2.42%
New Zealand Depository Nominee Limited 34,293,086 2.19%
JBWere (NZ) Nominees Limited 33,392,587 2.13%
New Zealand Superannuation Fund Nominees Limted 31,431,013 2.00%
TEA Custodians Limited 26,445,815 1.69%
Premier Nominees Lmited <Armstrong Jones Property Securities Fund> 24,371,370 1.55%
NZ Permanent Trustees Limited <Group Investment Fund No 20> 21,545,706 1.37%
MFL Mutual Fund Limited 16,517,683 1.05%
Custodial Services Limited 15,338,481 0.98%
Total 1,141,355,620 72.74%
Total shares on issue 1,569,087,532
Spread of shareholders
Size of holding
Number
of holders
% of total
holders
Number
of shares
% of total
issued shares
1–1,000 769 6.67% 377,132 0.02%
1,001–5,000 1,845 16.01% 5,666,434 0.36%
5,001–10,000 2,106 18.28% 16,028,120 1.02%
10,001–50,000 5,415 47.00% 124,195,673 7.92%
50,001–100,000 859 7.46% 58,573,006 3.73%
100,001 and over 527 4.57% 1,364,247,167 86.95%
Total 11,521 100.00% 1,569,087,532 100.00%
Twenty largest bondholders
Bondholder
Number
of bonds
% of total
issued bonds
FNZ Custodians Limited 41,503,000 8.74%
Forsyth Barr Custodians Limited <1 Custody> 36,843,000 7.76%
Custodial Services Limited <3> 34,618,000 7.29%
Custodial Services Limited <4> 33,434,500 7.04%
Citibank Nominees (NZ) Limited 27,345,000 5.76%
Custodial Services Limited <2> 23,688,500 4.99%
Investment Custodial Services Limited 21,218,000 4.47%
JPMorgan Chase Bank 19,875,000 4.18%
Cogent Nominees Limited 16,329,000 3.44%
Custodial Services Limited <1> 14,634,000 3.08%
HSBC Nominees (New Zealand) Limited 12,900,000 2.72%
Custodial Services Limited <18> 11,964,000 2.52%
JBWere (NZ) Nominees Limited 9,090,000 1.91%
New Zealand Permanent Trustees Limited <Group Investment Fund No 20> 8,780,000 1.85%
BNP Paribas Nominees NZ Limited <BPSS40> 7,475,000 1.57%
New Zealand Permanent Trustees Limited <NZPT44> 6,791,000 1.43%
TEA Custodians Limited 6,141,000 1.29%
FNZ Custodians Limited <DTA Non Resident> 5,826,000 1.23%
Custodial Services Limited <16> 5,813,000 1.22%
Forsyth Barr Custodians Limited <1 E> 5,196,000 1.09%
Total 349,464,000 73.57%
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 - 0.00% - 0.00%
1,001–5,000 119 9.79% 595,000 0.48%
5,001–10,000 295 24.28% 2,825,000 2.26%
10,001–50,000 658 54.16% 18,040,000 14.43%
50,001–100,000 76 6.26% 6,409,000 5.13%
100,001 and over 67 5.51% 97,131,000 77.70%
Total 1,215 100.00% 125,000,000 100.00%
Shareholder statistics
AS AT 31 MARCH 2020
Bondholder statistics
AS AT 31 MARCH 2020
KIWI PROPERTY ANNUAL REPORT 20207071
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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 - 0.00% - 0.00%
1,001–5,000 42 7.50% 210,000 0.17%
5,001–10,000 117 20.89% 1,137,000 0.91%
10,001–50,000 299 53.39% 8,680,000 6.94%
50,001–100,000 43 7.68% 3,722,000 2.98%
100,001 and over 59 10.54% 111,251,000 89.00%
Total 560 100.00% 125,000,000 100.00%
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 0.19% 1,000 0.00%
1,001–5,000 38 7.25% 190,000 0.15%
5,001–10,000 105 20.04% 1,029,000 0.82%
10,001–50,000 278 53.05% 7,688,000 6.15%
50,001–100,000 41 7.82% 3,320,000 2.66%
100,001 and over 61 11.64% 112,772,000 90.22%
Total 524 100.00% 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 - 0.00% - 0.00%
1,001–5,000 19 6.67% 95,000 0.10%
5,001–10,000 56 19.65% 552,000 0.55%
10,001–50,000 160 56.14% 4,020,000 4.02%
50,001–100,000 20 7.02% 1,702,000 1.70%
100,001 and over 30 10.53% 93,631,000 93.63%
Total 285 100.00% 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 2020. The total number of ordinary shares on issue at 31 March 2020 was 1,569,087,532.
Name
Number of
shares held at
date of notice
Date of
notice
Accident Compensation Corporation 144,453,517 25-Mar-20
ANZ New Zealand Investments Limited
1,2
119,795,933 2-Aug-19
Salt Funds Management Limited79,553,48615-Nov-19
1. 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 acquire or dispose of the financial products.
2. 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.
This annual report is dated 22 May 2020 and is signed on behalf of the Board by:
Bondholder statistics (continued)
AS AT 31 MARCH 2020
Mark Ford
Chair
Mary Jane Daly
Chair of the Audit
and Risk Committee
KIWI PROPERTY ANNUAL REPORT 20207273
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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 SUPERVISOR
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
Directory
KIWI PROPERTY ANNUAL REPORT 202074
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kp.co.nz

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Kiwi Property annual result presentation 2020
2
Kiwi Property >
Type Presentation Name > Date
Kiwi Property annual result presentation FY20
2
Disclaimer
Kiwi Property Group Limited has prepared this document. By accepting this document and to the maximum extent permitted by law, youacknowledge and agree to the following matters.
No liability
Kiwi Property Group Limited, its advisers, affiliates, related bodies corporate, directors, officers, partners, employees andagents (together ‘Kiwi Property’) expressly exclude and disclaim any and all
liability which may arise from this document, any information provided in connection with this document, any errors in or omissi ons from this document, from relying on or using this document or
otherwise in connection with this document.
No representation
Kiwi Property makes no representation or warranty, express or implied, as to the accuracy, completeness, reliability or sufficiency of the information in this document or the reasonableness of the
assumptions in this document. All images (including any dimensions) are for illustrative purposes only and are subject to changeat any time and from time to time without notice.
Not advice
This document does not constitute advice of any kind whatsoever (including but without limitation investment, financial, tax,accounting or legal advice) and must not be relied upon as such. This
document is intended to provide general information only and does not take into account your objectives, situation or needs. Youshould assess whether the information in this document is
appropriate for you and consider talking to a professional adviser or consultant.
Not an offer
This document is for information purposes only and is not an invitation or offer of financial products for subscription, purchase or sale in any jurisdiction. This document is not a prospectus or product
disclosure statement or other offering document under New Zealand law or any other law. This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the
United States and will not be lodged with the U.S Securities Exchange Commission.
Past performance
Past performance information given in this document is given for illustrative purposes only and should not be relied upon as (and is not) an indication or guarantee of future performance.
Future performance
This document contains certain "forward-looking statements" such as indications of, and guidance on, future earnings and financial position and performance. Forward-looking statements can
generally be identified by the use of forward-looking words such as, 'expect', 'anticipate', 'likely', 'intend', 'could', 'may','predict', 'plan', 'propose', 'will', 'believe', 'forecast', 'estimate', 'target',
'outlook', 'guidance' and other similar expressions. The forward-looking statements contained in this document are not guarantees or predictions of future performance and involve known and
unknown risks and uncertainties and other factors, many of which are beyond the control of Kiwi Property, and may involve signif icant elements of subjective judgement and assumptions as to
future events which may or may not be correct. There is no assurance or guarantee that actual outcomes will not materially differ from these forward-looking statements. A number of important
factors could cause actual results or performance to differ materially from the forward-looking statements. Investors should consider the forward-looking statements contained in this document in
light of this information. The forward-looking statements are based on information available to Kiwi Property as at the date of this document.
Investment risk
An investment in the financial products of Kiwi Property Group Limited is subject to investment and other known and unknown risk s, some of which are beyond the control of Kiwi Property Group
Limited. Kiwi Property Group Limited does not guarantee its performance or the performance of any of its financial products unless and to the extent explicitly stated in a prospectus or product
disclosure statement or other offering document.
No duty to update
Statements made in this document are made only as the date of this document unless another date is specified. Except as requiredby law or regulation (including the NZX Listing Rules), Kiwi
Property undertakes no obligation to provide any additional or updated information or revise or reaffirm the information in thisdocument whether as a result of new information, future events,
results or otherwise. Kiwi Property Group Limited reserves the right to change any or all of the information in this documentatany time and from time to time without notice.
Caution regarding sales information
Any sales information included in this document has been obtained from third parties or, where such information has not been provided by third parties, estimated by Kiwi Property based on
information available to it. The sales information has not been independently verified. The sales information included in this document will not be complete where third parties have not provided
complete sales information and Kiwi Property has not estimated sales information. You are cautioned that this document shouldnot be relied upon as a representation, warranty or undertaking in
relation to the currency, accuracy, reliability or completeness of the sales information contained in this document.
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Real Estate Agents Act 2008
Kiwi Property Group Limited is licensed under the Real Estate Agents Act 2008.

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Contents
This annual result presentation, for the year ended 31 March 2020, should be read in conjunction with the NZX announcement and financial statements also released on 25 May 2020. Refer to our
website kp.co.nz/annual-result or nzx.com. Property statistics within this presentation represent owned assets only; property interests managed on behalf of third parties are excluded. Unless otherwise
indicated, all of the numerical data provided in this presentation is stated for the year ended and/or as at 31 March 2020 unless otherwisespecified. All amounts are in New Zealand dollars. Due to
rounding, numbers within this presentation may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Refer to Appendix 3 of this presentation for
a glossary of terms. The non-GAAP financial information does not have a standardised meaning prescribed by GAAP and therefore may not be comparableto similar financial information presented
by other entities. The GAAP financial information has been subject to audit.
TitlePage
COVID-19 update4
FY20 result10
Appendix 1: Property update18
Appendix 2: Financial update35
Appendix 3: Glossary50

Kiwi Property annual result presentation 2020
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COVID-19 update

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COVID-19: Responding to the pandemic
Keeping stakeholders safeStrengtheningthe balance
sheet
Driving cost control
•New working practices
implemented to protect staff and
ensure business continuity.
•Multi-point safety plan implemented
across all assets, underpinned by
extensive cleaning and social
distancing measures.
•Working closely with tenants to
enable delivery of business-specific
safety protocols.
•Extended $361 million of bank debt
facilities on three and five year
terms.
•No bank debt maturities until FY23
and weighted average debt term is
3.9 years.
•$291 million in available undrawn
credit and gearing at 32%, within
target range.
•Approximately 30% of debt benefits
from current low floating interest
rates, providing earnings tailwind.
•Comprehensive cost control
programme implemented in March
2020.
•Board and Executive Team agreed
to temporary 20% pay cut.
•Employee salaries and recruitment
frozen.
•All non-essential capital projects
and operating expenditure
suspended.
•~$2 million property operating
expense savings anticipated.

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COVID-19: Rental impact
•Working with tenants to share a fair proportion of
the financial impact of COVID-19.
•Core focus on supporting SMEs and retail tenants
unable to trade during the lockdown.
•Measures include a combination of rental
abatements and deferrals. Abatements apply to
Q1 FY21 and are expected to impact FFO by
$20 million ($14 million on an after tax basis),
equivalent to around 8% of FY20 gross rental
income.
•Rental abatements will be amortised over the
remaining term of the lease.
•Cost will be partially offset by the reintroduction
of depreciation allowances for building structures,
worth approximately $4.5m in FY21 or
considerably more if valued into perpetuity.
•Lower floating interest rates also helping to
partially offset the cost of rent relief.

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COVID-19: Business impact
Property valuationsGalleria timelineDividend
•Fair value of property portfolio
decreased by 8.5% or $290 million to
$3.1 billion as at 31 March 2020.
•Independent valuers’assumptions
softened due to considerable
uncertainty regarding the financial
impacts of COVID-19.
•Office portfolio highly resilient,
recording a $15 million valuation
gain.
•New ~19,000 sqmgalleria retail level
featuring ~60 new stores.
•Progressive opening from Q4 2020
following lockdown-related delays.
•Extension of development timeline
not expected to increase
construction costs.
•Strong continued interest from key
retail tenants, although some
launches may be deferred until
early 2021.
•Board made the difficult decision
not to pay a final dividend for FY20
to protect the balance sheet given
uncertainty caused by COVID-19.
•Dividend policy revised to ensure
payments are AFFO covered.
Targeting AFFO payout of 90-100%.
•Aim to resume paying a dividend, as
appropriate, once the financial
impact of COVID-19 on the
Company is clear.

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•Flexible office
•Responsive retail
•Targeted development
COVID-19: Navigating the ‘new normal’
Resilient business
Resilient strategy
Resilient assets
•Safe operations
•Strong tenants
•Cost control
•Mixed-use
•Portfolio diversification
•Customer focus

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Maintaining flexibility for the future
south
carpark
Investment agilityAsset diversificationTargeted development
•Planning for the Sylvia Tower office
and mixed-use development is
ongoing.
•Construction to begin in line with
tenant demand and prevailing
market conditions.
•Nomajor development capex
commitments following galleria
completion, providing flexibility to
wait for market stabilisation before
pursuing new opportunities.
•Market conditions may support
opportunistic acquisitions.
•Large landholdings at mixed-use
assets have significant potential for
intensification, including
12ha
adjacent to Sylvia Park.
•Strategicfocus on diversification with
aim of decreasing pure retail as
proportion of portfolio. Residential,
industrial and office all possible
opportunities. Agility is key.
•First build-to-rent concept design
progressing, following strong market
interest in this new assetclass.
•Development of a 30-year Sylvia
Park masterplan now complete.
•Drury has been identified as a key
development node and forecast to
be home to ~60,000 residents.
•Governmentallocated $2.4 billion
to South Auckland infrastructure in
Jan2020 to accelerate progress.
•Plan Changes submitted by Kiwi
Property, Fulton Hogan and Oyster
Capital in Dec-19.
•If successful,constructioncould
begin as early as 2023 (subject to
market conditions).
galleria
September 2019
Photo credit: Kmart
Artist’s impression
Artist’s impression