FY21 Results
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Annual Report
2021
Contents
Investore has been designated as a “Non-Standard”
(NS) issuer by NZX. A copy of the waivers granted by
NZX from NZX Listing Rules 2.21 to 2.8.1 and 2.10.1
in respect of Investore’s “NS” designation can be
found at www.nzx.com/companies/IPL/documents
2 FY21 Highlights
4 Portfolio
6 Chair’s Letter
10 Board of Directors
12 Manager’s Report
14 Targeted Growth
16 Investore’s Portfolio
18 Continued Optimisation of the Portfolio
20 Proactive Capital Management
22 Sustainability
26 Financial Summary
28 Financial Statements
63 Independent Auditor’s Report
68 Corporate Governance
85 Statutory Disclosures
92 Glossary
93 Corporate Directory
Investore Property Limited Annual Report 2021
1
Investore Property Limited Annual Report 2021
FY21 Highlights
For 12 months ended 31 March 2021 (FY21)
1. See glossary on page 92.
2. Based on debt facility limits.
Investore has performed strongly
during FY21, as a result of its focus on
quality large format retail properties, a
class of assets that has demonstrated
earnings and value resilience during
the COVID-19 period
$29.9m
profit before other income
/ (expense) and income tax
from FY20 ($26.7m)
Up $3.2m
$29.1m
distributable profit
1
after
current income tax
from FY20 ($21.1m)
Up $8.0m
$161.3m
profit after income tax
from FY20 ($28.6m)
Up $132.6m
$105m
equity capital raised in April
and May 2020, with net
proceeds used to pay down
debt and position Investore
to continue its targeted
growth strategy
$125m
listed bonds issued in August
2020, providing a balanced
debt profile, with 53% bank
debt and 47% listed bonds
2
7.60 cents
per share cash dividend
for FY21
4.04%
weighted average interest
rate as at 31 March 2021
Bunnings, Te Rapa
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
23
Portfolio
1. Portfolio value excludes: (1) $7.0 million of seismic works to be completed by SPL
on the three large format retail properties acquired from SPL on 30 April 2020, and
the balance of the rental guarantee of $0.1 million from SPL; and (2) lease liabilities.
Portfolio value includes the property at 35 MacLaggan Street, Dunedin, which is
classified as property held for sale in the financial statements.
2. Compared to Investore’s property portfolio as at 31 March 2020, and including the
three properties acquired from SPL as if those properties had been acquired as at
that date, based on independent valuations of those three properties obtained in
preparation for the acquisition in April 2020.
3. See glossary on page 92.
4. LVR is calculated based on independent valuations, which include seismic works and
rental underwrites to be funded by SPL in relation to the three properties acquired
from SPL and settled in April 2020.
(all values are as at 31 March 2021, unless
otherwise stated)
$1.038bn
portfolio value
1
$139.3m
or 15.5% net valuation
gain for the 12 months
ended 31 March 2021
2
,
testament to Investore’s
singular focus on large
format retail property
9.8 years
W A LT
3
26.8%
loan to value ratio
4
since 31 March 2020
Down 4.5%
43 properties
across the country, from
Kerikeri to Invercargill
32 properties (82%)
located in North Island
11 properties (18%)
located in South Island
56 rent reviews
completed across 7 7,500 sqm,
resulting in a 2.3% increase to
previous rentals
5.23%
average portfolio
capitalisation rate
Following balance date,
Investore has agreed to
acquire Countdown Petone for
$37.3m and has a conditional
agreement to acquire Waimak
Junction development land
for $10.5m. Investore has
agreed in principle to construct
a Countdown supermarket
on part of this land, with the
site estimated to have a total
cost on completion of the
Countdown supermarket
of $31m, and further land
available for development
Countdown, Petone
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
45
Chair’s Letter
Large format retail property has performed
exceptionally well during the period impacted
by COVID-19, as tenants in these types of
properties are primarily supermarkets and other
national retailers that thrived during the year.
Investore has benefited from this strong market
demand with its net portfolio valuation increasing
by $139.3 million or 15.5% in the 12 months
to 31 March 2021. Investore’s portfolio is now
valued in excess of $1 billion.
This market demand for large format retail
properties has endorsed Investore’s strategy of
focussing solely on this asset class, but has also
made for a competitive market when seeking
to deploy funds. As investors will be aware,
Investore raised $105 million in additional equity
capital in April and May 2020 for the purpose
of providing funding flexibility to continue
Investore’s growth strategy. The Board is
committed to ensuring that Investore remains
disciplined in its approach to acquisitions and
will only deploy capital for acquisitions where
the metrics complement Investore’s existing
portfolio and where Investore can deliver on its
strategy of maximising returns to investors over
the medium to long term.
Investore was very pleased therefore to be able
to further its growth strategy with agreements to
acquire two additional properties post balance
date, both of which are attractive opportunities
for Investore.
Acquisitions
Post balance date Investore has entered into an
unconditional agreement to acquire a property
at Petone in Wellington for $37.3 million. This
property is anchored by Countdown, has a long
WA LT
1
of 11 year, and is 100% occupied, and
accordingly aligns well with the existing
Investore portfolio.
In addition, Investore has a conditional
agreement to acquire a 3.5ha parcel of land at
Waimak Junction, Kaiapoi, North Canterbury, for
$10.5 million. Investore has agreed in principle
with Countdown to construct a new supermarket
on this site, leaving the balance of the land for
future development. This acquisition remains
conditional on receipt of resource consents
for the development and concluding a final,
1. See glossary on page 92.
documented agreement to lease with Countdown.
The Waimak Junction development will be held as a
long-term investment by Investore.
Investore expects the capital commitment for these
two acquisitions, together with the cost of the first
stage of development of the Waimak Junction land,
to be approximately $68.5 million. Investore will fund
this capital expenditure from available debt facilities,
which will take Investore’s LVR
1
on a pro forma basis
as at 31 March 2021, as if all acquisitions and current
and planned developments were completed as at that
date, to 31.2%. The Board considers this level of LVR
to be conservative given the stable nature of Investore’s
portfolio, with its relatively long WALT
1
.
Financial Performance
Investore’s financial results for FY21 have been
very pleasing considering the challenging economic
environment created by COVID-19.
Profit after income tax at $161.3 million is
considerably higher than FY20 (FY20: $28.6 million),
primarily due to the net valuation gain across the portfolio
of $139.3 million for FY21, compared with FY20.
Contributing to this improved profit position is higher
net rental income, being $7.7 million higher than FY20
(FY21: $55.8 million; FY20: $48.1 million). This increased
net rental income is largely due to the addition to the
portfolio of the three properties acquired from SPL in
April 2020. In addition, Investore has benefited from
improved turnover rent in FY21, up $0.45 million
from FY20.
Investore’s portfolio has a strong weighting to
Countdown branded supermarkets, with Countdowns
representing 64% of Investore’s portfolio by Contract
Rental
1
as at 31 March 2021. Countdown performed very
strongly during 2020, contributed to by the COVID-19
lockdown periods, with supermarket sales benefiting
from most other forms of retail requiring to be closed.
Countdown New Zealand reported a 7.1% increase in
sales for the year to 28 June 2020, and a 36.8% increase
in online sales over the same period. However, while
online sales are growing significantly, they still represent
only 9.1% of Countdown’s total sales. Investore has
benefited from these improved sales, through higher
turnover rental, up 81% to $1.0 million for the year
ended 31 March 2021. Investore proactively works with
Countdown to facilitate online sales where appropriate,
including through upgrading facilities to enable pickup
bays for online customers.
Somewhat offsetting the higher net rental income were
increased corporate expenses, plus swap termination
expense of $3.5 million, resulting in profit before other
income/(expense) and income tax of $29.9 million
(FY20: $26.7 million). Corporate expenses at
$9.2 million were $1.8 million higher than FY20 (FY20:
$7.5 million), largely due to increased management
expenses. The higher base management fees are a
result of Investore’s higher portfolio value, although with
a higher portfolio value Investore benefits from a lower
rate for asset management fees of 0.45% of portfolio
value over $750 million. The expenses relating to swap
terminations were associated with the issue of the
second listed bond in August 2020, the net proceeds
of which were used to pay down debt and consequently
interest rate swaps that related to that debt were
terminated, with a resulting cost.
The financial statements incorporate the effects of
COVID-19, with gross rental receivables $0.9 million
lower than they would otherwise have been due to rent
relief provided to tenants, offset by income tax expense
being $2.2 million lower than it would otherwise have
been due to the reintroduction of building depreciation
deduction claims for commercial properties from April
2020. The rent relief provided to tenants exceeded that
which Investore was contractually obliged to provide,
but the Investore Board determined it was important to
assist smaller tenants that were required to close due
to Government-imposed restrictions. In addition, as
explained on the following page, in many cases Investore
obtained an extension to its lease term in recognition of
its support for the tenant.
Proactive Capital Management
As shareholders are aware, one of Investore’s strategic
pillars is the proactive management of capital in order to
maintain a healthy and flexible balance sheet for growth,
while preserving sustainable returns to investors.
Investore has delivered on this commitment during
FY21 through raising additional equity capital of
$105 million in April and May 2020, issuing a new listed
bond in August 2020, which raised $125 million of
gross proceeds with net proceeds used to pay down
debt, extending bank facilities and securing new bank
debt facilities of $80 million.
Dear Investors,
The Board of Directors of Investore is
pleased to present the Annual Report of
Investore for the year to 31 March 2021
(FY21). FY21 has presented a number
of opportunities and challenges for
Investore. Investore’s financial position is
a testament to the opportunities taken by
Investore during FY21, and the company
is in an excellent position to continue to
pursue its growth strategy.
Mike Allen
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
67
The issue of the second listed bond, following Investore’s
first bond issue in April 2018, extended the tenor of
Investore’s debt to 3.8 years as at 31 March 2021.
The IPL020 bond has a term of seven years and a fixed
interest rate of 2.4%, which was the lowest New Zealand
unrated bond issuance at the time of issue, providing
further evidence of the strength of Investore’s business
and support for its strategy of investing in large format
retail property.
The Investore Board considers that the longer term of
listed bonds aligns well with the relatively long WALT
1
of
Investore’s portfolio, and the Board will look to maintain
a balance of debt sources as the company grows.
Portfolio
Investore’s portfolio of 43 properties as at 31 March
2021 continues to demonstrate strong metrics, with a
portfolio value in excess of $1 billion, a relatively long
WALT of 9.8 years, and 99.1% occupancy.
Investore has continued to improve its portfolio during
FY21, although some capital projects were put on hold
at the request of the tenant due to the need to manage
the impacts of COVID-19. However, we are now seeing
these capital projects recommencing, and we expect to
undertake further refurbishments to continue to optimise
the portfolio over the coming financial year.
Governance
The Investore Board has been very active during FY21,
guiding the company through an equity capital raise in
April and May 2020, and a listed bond issue in August
2020. In addition, the Board very closely monitored the
business during the period impacted by COVID-19, to
ensure that the potential impacts of the lockdown periods
were understood and the market was kept informed.
The Board engaged an external adviser to review and
report on the Board’s operations during the year. While
the Board considers that it functions well and is effective,
the Board is always seeking to improve its performance
for the benefit of shareholders. The review confirmed
that the Investore Board is characterised by a healthy,
collaborative, open dynamic and made some suggestions
for continuous improvement. As a result of this review,
the Board has revised some of its processes, including
making more time for strategic discussions.
The Manager and Management Fees
Investore’s Manager, Stride Investment Management
Limited (SIML), has provided an excellent level of service
during the period impacted by COVID-19, which presented
a number of challenges. SIML undertook negotiations
with tenants that were forced to close due to COVID-19
lockdown restrictions, and the Board is pleased with the
outcome of those arrangements, with rent abatements
and deferrals being offset in many cases by an increased
lease term. Investore also had a high proportion of tenants
that were able to remain open and trading, such as
supermarkets, and this presented its own challenges in
ensuring that these tenants were able to continue to operate
safely and efficiently. The Investore Board considers that the
SIML team dealt with the varying challenges presented by
COVID-19 in a capable and efficient manner.
During the year in review, the Board commissioned an
independent review of fees charged by the Manager,
to provide comfort to the Board that the fees are fair
Chair’s Letter
COVID-19
Investore’s singular focus on large format retail
property with tenants that primarily fall within
the “everyday needs” category means that a high
proportion of tenants were able to remain open
and trading under all Alert Levels. Supermarket
tenants in particular were extremely busy managing
demand during the lockdown periods, while other
tenants were not able to trade during Alert Levels
3 or 4. Investore therefore took a tenant-by-tenant
approach to arrangements agreed with tenants for
these periods, seeking to support smaller tenants
where possible, while also seeking a benefit for
Investore through an extension to the lease term
where it provided rent relief that the tenant may not
otherwise have been entitled to. As a result of these
negotiations, Investore has achieved a weighted
average lease extension of seven months across all
COVID-19 arrangements agreed with tenants.
Having completed all rent abatement negotiations
with tenants to date, these arrangements have
resulted in a reduction in gross rent receivables
for FY21 of $0.9 million. Offsetting this FY21 cost,
Investore has benefited from the reintroduction
of building depreciation deduction claims for
commercial properties at a level of two percent a
year on diminishing value, which commenced in April
2020. This resulted in a reduction in current tax of
$2.2 million for FY21, more than offsetting the rent
abatement arrangements agreed with tenants.
Countdown, Newtown
1. See glossary on page 92.
and reasonable, and consistent with fees charged
for similar services in the market. The Board is
pleased to report that the independent review
concluded that, relative to scale, Investore’s current
management expense ratio is favourable to its peers,
and Investore’s current management fees are fair
and consistent with both other New Zealand listed
property vehicles and Investore’s Australian large
format retail peers.
Outlook
Looking forward, Investore will continue with its
strategy of targeted growth, as market conditions
allow. With available debt facilities of
$127.7 million (after allowing for current
commitments for acquisitions and developments),
the Investore Board considers that it is well placed
to continue to grow its portfolio of large format retail
properties. In doing so, the Board will ensure a clear
focus is maintained on managing capital so as to
ensure Investore continues to maximise returns to
investors over the medium to long term.
The growth in Investore’s portfolio will also come
from improving and enhancing current properties,
through developments or capital refurbishments, and
Investore expects to continue its strategy of portfolio
optimisation over the coming year.
Investore currently expects to pay a cash dividend of
7.60 cents per share for FY22, in accordance with its
dividend policy of paying between 95 and 100% of
distributable profit
1
. The Board will continue to review
dividend guidance as and when acquisitions occur.
On behalf of the Board, I would like to thank investors
for their continued support of Investore.
Mike Allen
Chair of the Board
Independent Director
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
89
Board of
Directors
Mike Allen
Chair of the Board
and Independent,
Non-Executive Director
Appointed 9 June 2016, last
elected 2019
Mike is the independent Chair of
Investore and has considerable
governance experience across a
range of listed and unlisted entities.
Mike is currently a director of China
Construction Bank (New Zealand)
Limited and Taumata Plantations
Limited, Chair of QuayStreet Asset
Management Limited, and is an
advisor to a number of private
companies. Prior to his governance
career, Mike had an executive career
in investment banking and general
management in New Zealand and
the United Kingdom.
Gráinne Troute
Chair of the Audit and Risk
Committee and Independent,
Non-Executive Director
Appointed 19 April 2018, last
elected 2018
Gráinne is an independent Director
of Investore and is the Chair of the
Audit and Risk Committee. Prior to
commencing a governance career
Gráinne had extensive experience
in highly competitive and customer-
focussed sectors, in listed and
unlisted organisations, including
at McDonald’s New Zealand and
SKYCITY Entertainment Group.
Gráinne is currently a director
of Tourism Holdings Limited,
Summerset Group Holdings
Limited and Chair of Tourism
Industry Aotearoa.
Adrian Walker
Independent,
Non-Executive Director
Appointed 3 April 2020, last
elected 2020
Adrian is a very experienced
commercial property executive, with
over 30 years’ experience in the
property sector, including 20 years
as the General Manager of Property
at Woolworths NZ (owner of
Countdown brand supermarkets).
Adrian has a deep knowledge of the
New Zealand property industry and
the supermarket sector, and has
a strong background in property,
financial planning, and strategic
management.
Tim Storey
SIML Nominee and
Non-Executive Director
Tim has extensive experience
across a range of business sectors,
having practiced as a lawyer in
both New Zealand and Australia.
Tim was a partner in the Bell Gully
partnership before retiring in 2006.
Tim is Chair of Stride Property
Limited and Stride Investment
Management Limited and is Chair of
ASX listed LawFinance Limited.
John Harvey
SIML Nominee and
Non-Executive Director
John has over 35 years’
professional experience as a
chartered accountant, including
at PwC where he was a partner
for 23 years and held a number of
management and governance roles.
John retired from PwC in 2009 to
pursue a governance career. He
is currently a director of Stride
Property Limited, Stride Investment
Management Limited, Kathmandu
Holdings Limited, Heartland Bank
Limited, and Port of Napier Limited.
Emma McDonald
Future Director
Emma has been appointed as
a future director programme
participant by Investore under
the Institute of Directors’ future
directors programme. Emma is a
director of Pragmatix Limited, a
project management business,
and has considerable experience
in project management, having
previously been in project
management and bid management
roles with Fletcher Construction
and Shell International. Emma brings
valuable insights and experience to
the Investore Board and participate
in Board meetings but does not
vote or have any role as a director.
1
6
4
5
2
3
1
4
2
5
3
6
Investore Property Limited Annual Report 2021
11
Investore Property Limited Annual Report 2021
10
Finally, SIML has been very pleased to assist Investore to
continue to execute its strategy of targeted growth, with
agreements to acquire two new properties announced
in May 2021. These transactions are the outcome of
several months’ work by SIML on behalf of Investore in
negotiating terms and completing due diligence, and
we are pleased to be able to deliver high quality
acquisitions that complement Investore’s portfolio. We
look forward to continuing to support Investore in its
targeted growth strategy.
Thank you for your continued support of Investore and of
Stride Investment Management Limited as Manager.
Philip Littlewood
Chief Executive Officer
Stride Investment Management Limited
Fabio Pagano
Investore Fund Manager
Stride Investment Management Limited
Manager’s
Report
Dear Investors,
Stride Investment Management Limited
(SIML) is very proud to have managed
Investore during FY21, a period that saw
an unparalleled level of activity as a result
of the impacts of COVID-19.
The SIML team has been very active during FY21,
assisting Investore in undertaking its capital management
initiatives, including the equity capital raise, second listed
bond issue, and navigating the impacts of COVID-19
across the portfolio.
On behalf of Investore, SIML has completed
86 negotiations with tenants in relation to the COVID-19
lockdown periods and achieved a weighted average
lease extension of seven months across all COVID-19
arrangements agreed with tenants.
While a lot of attention has been on managing the
COVID-19 impacts during FY21, SIML is also focused
on assisting Investore to achieve its strategic objective
of optimisation of the portfolio, and during FY21 SIML
completed a number of key transactions in this area,
including:
• Undertaking capital upgrade works at the Mt
Wellington Shopping Centre, including upgrading
the basement carpark. There has been a noticeable
improvement in the usage of the basement carpark
since these works have been completed, which
benefits tenants in encouraging customers to visit
the centre.
• In conjunction with these capital upgrade works to
Mt Wellington Shopping Centre, Countdown has
agreed to extend the lease of the Mt Wellington
Countdown for a further six years to December
2026. This has resulted in an improvement in the
valuation of this property.
• Completion of the refurbishment of the Browns
Bay Countdown, continuing the programme of
coordinated refurbishments with Countdown across
the portfolio.
• Completing 65 lease transactions during FY21
(excluding COVID-19 transactions), including
56 rent reviews over 77,500 sqm, resulting in a
2.3% increase to previous rentals.
As Manager, it is important to SIML that its managed
entities are adopting a responsible approach to asset
ownership and management and that SIML assists
Investore to meet its sustainability objectives. To that
end, during FY21 SIML has worked with the Investore
Board to refresh the Investore sustainability strategic
plan, and to focus efforts on those areas of sustainability
that SIML and Investore consider will have the greatest
benefits for Investore, its tenants, its investors, and the
environment. By way of example, SIML has worked with
Tesla to install new supercharger charging stations at
Johnsonville Countdown. These charging stations enable
a vehicle to be charged in around 30 minutes, which is
perfect for customers completing their supermarket
shopping. On behalf of Investore, we hope to continue to
install EV charging stations across the portfolio. Other
initiatives completed in this area, as well as a description
of the sustainability strategic plan, can be found on pages
22 to 25.
Philip LittlewoodFabio Pagano
Mitre 10 MEGA, Botany
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
1213
Targeted Growth
One of Investore’s strategic pillars is
to undertake considered acquisitions
and developments which deliver
growth, while continuing to enhance
geographical and/or tenant portfolio
diversification, and where appropriate,
consider disposals to maintain balance
sheet capacity and optionality.
Investore’s singular focus on large format retail property
means that over 80% of Investore’s portfolio (by Contract
Rental
1
) was able to remain open and trading under all
COVID-19 Alert Levels, and an even greater proportion
was able to open for click and collect sales under
Alert Level 3.
This ability to withstand the lockdown restrictions has
meant that large format retail property is in high demand
for investors, which has resulted in strong market
conditions for large format retail property. This has been
seen in the strong valuation gains that Investore has
experienced during FY21. It has also made execution of
Investore’s growth strategy challenging as there is a lot of
competition for large format retail property in the market,
driving up prices. Investore seeks to ensure that its
growth is managed in a considered manner and provides
value to shareholders.
Post balance date Investore has entered into an
unconditional agreement to acquire a property at
Petone in Wellington which is anchored by Countdown.
This property has a long WALT
1
of 11 years, and is
100% occupied, and accordingly aligns well with
the Investore portfolio. In addition, Investore has a
conditional agreement to acquire a 3.5ha parcel of land
at Waimak Junction, Kaiapoi, for $10.5 million. Investore
has agreed in principle to construct a Countdown
supermarket on this site, leaving 1.6ha for future
development. This acquisition remains conditional on
receipt of resource consents and concluding a final
documented agreement to lease with Countdown.
Waimak Junction
Development Land
This 3.5ha site at Waimak Junction, Kaiapoi, provides
an opportunity for Investore to develop a large format
retail centre, with the first stage to be anchored by
a Countdown supermarket. Investore has reached
agreement in principle with Countdown to develop a
new supermarket on the site. The site also includes an
already completed McKeown’s self-service fuel station.
The estimated total committed development cost,
including the land cost and expected cost of the stage 1
development, is $31 million, with stage 1 expected to be
completed in 2023. This development will be held as a
long-term investment by Investore. The remainder of the
site, being an area of 1.6ha, will be held for future large
format retail development.
1. See glossary on page 92.
$37.3m purchase price
WA LT
1
11 years
100% occupied
5 specialty tenants across 600 sqm
NLA
1
, including Westpac, St Pierre’s Sushi,
Pita Pit, Spice Traders and a local bakery
Settlement expected 21 May 2021
Countdown Petone
Countdown, Petone
Waimak Junction Concept Plan, Kaiapoi
Stage 2
Stage 1
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
1415
Investore’s
Portfolio
Investore’s portfolio
demonstrates a number
of characteristics that
have resulted in it
benefiting from the
market conditions
created by COVID-19 over
the past 12 months.
As at
31 March 2021
As at 31 March 2020
including three
properties acquired
from SPL
1
As at
31 March 2020
Number of Properties434340
Number of Tenants13013078
Net Lettable Area (NLA)
(sqm)
246,272246,176208,125
Net Contract Rental
2
($m)
57.156.247.5
WA LT
2
(years)9.810.411.5
Market Capitalisation
Rate (%)
5.236.086.06
Occupancy Rate
by Area
99.199.799.7
Portfolio Value ($m)1,037.9
3
895.2
3
761.4
4
A focus on large format retail
property means that Investore’s
portfolio has a relatively long
WA LT
2
, at 9.8 years. Investore
negotiated rent abatement and
deferral arrangements with
some tenants that were not able
to continue to trade during the
COVID-19 lockdown periods,
and in return Investore sought
extensions to lease terms or an
early renewal of the lease. This
resulted in a weighted average
lease extension of seven months
being achieved across COVID-19
rent arrangements, which has
contributed to Investore’s WALT.
Pak’nSave, New Plymouth
1. As at 31 March 2020, as if the acquisition of the three properties from SPL on 30 April 2020 had settled as at 31 March 2020.
2. See glossary on page 92.
3. Excludes lease liabilities. Under the sale and purchase agreement between SPL and Investore related to three large format retail properties acquired by Investore in April 2020, SPL is to
complete seismic works of $7.0m and has provided a rental guarantee. The valuations of the three large format retail properties have been prepared on the basis that the seismic works
had been completed, and the seismic strengthening costs have been recorded as a $7.0m non-current prepayment. The value of the rental guarantee (FY21: $0.1m; Pro forma as at 31
March 2020: $0.5m) has also been recorded as a non-current prepayment. Portfolio value as at 31 March 2021 includes the property at 35 MacLaggan Street, Dunedin, which is classified
as property held for sale in the financial statements.
4. Excludes lease liabilities.
*Numbers may not sum due to rounding
15.0%
WA LT
9.8 years
5.4%
18.1%
29.6%
3.5%
0.9%
3.1%
1.3%
3.7%
4.7%
2.7%
3.9%
7.0%
1.2%
FY35FY34FY33FY32FY31FY30FY29FY28FY27FY26FY25FY24FY23FY22
Vacant
Lease Expiry Profile by Contract Rental
2
as at 31 March 2021
0.0%
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
1617
Continued Optimisation
of the Portfolio
This strategic pillar
focuses on development
of existing properties to
meet the needs of tenants
and the surrounding
catchment, which may
include acquiring sites
adjacent to existing
assets, to provide
development options
for the future, focusing on
increasing rental returns
from the portfolio.
Investore’s portfolio
continues to have a
very high proportion
(by Contract Rental
1
) of
tenants that are focused
on “everyday needs”. This
concentration, together
with the relatively
long WALT
1
, ensures
Investore’s portfolio
delivers long term
sustainable outcomes.
Investore has conducted a programme of refurbishing its supermarkets in
conjunction with Countdown. However, during FY21, these refurbishments
were largely put on hold due to the requirements of the supermarkets in
meeting the needs of customers, particularly during the lockdown periods.
Given the uncertainty of when or where a lockdown may arise, supermarket
operators elected to defer significant capital upgrades.
Investore was also focused on supporting its tenants during the lockdown period,
with different tenant groups requiring different support. The busy tenants sought
additional assistance with, for example, security, and ensuring the premises were
suitable for the different patronage required by COVID-19, including physical
separation and reduced numbers of persons allowed in the store.
Notwithstanding this uncertain period, the internal refurbishments of
Countdown Newtown and Countdown Browns Bay were completed during
FY21. It is Investore’s experience that refurbished stores generate more traffic
and higher sales.
As life slowly returns to something more normal, Investore is seeing capital
expenditure programmes recommence, with the supermarkets starting to
recommit to these upgrade programmes. Investore looks forward to resuming
its collaborative approach of refurbishing and revitalising its supermarket
portfolio with supermarket operators during FY22.
1. See glossary on page 92.Tesla charging station, Johnsonville
Corner site acquired adjacent to Investore’s
Countdown Papakura, with the structures
demolished to improve carparking for
Countdown and enhance the overall amenity
of the site
Works completed on the basement carpark
at Mt Wellington Shopping Centre, following
the acquisition of this property from SPL.
These works improved the ambience and
safety of the site and has resulted in higher
numbers of customers using the carpark.
Countdown has subsequently renewed its
lease on this site for a 6-year period to 2026
Tesla EV supercharger stations have been
installed at Johnsonville Countdown, and
became operational in May 2021. These
charging stations enable Tesla vehicles to be
recharged in around 30 minutes, perfect for
a supermarket visit
Portfolio Tenant Classification by
Contract Rental
1
as at 31 March 2021
Anchor Tenant Concentration by
Contract Rental
1
as at 31 March 2021
Hardware
16%
Everyday Needs
72%
Food / Beverage
3%
General
Merchandise /
Retail
9%
Countdown64%
Bunnings13%
Foodstuffs5%
Mitre 103%
The Warehouse Group1%
Briscoes Group1%
NZ Post1%
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
1819
Proactive Capital
Management
Capital management is
an important focus for
the Board of Investore,
to maintain a healthy
and flexible balance
sheet for growth, while
preserving sustainable
returns to investors.
Investore’s stable portfolio and relatively long WALT aligns with a more stable
and balanced debt profile, which assists to provide sustainable returns
for Investore’s shareholders. During FY21 Investore undertook a number
of key capital management initiatives aimed at extending Investore’s debt
expiry profile and maintaining a prudent approach to capital management,
particularly given the uncertainty surrounding the impact of COVID-19.
These transactions included:
Investore has committed, post balance date, to acquiring Countdown
Petone for $37.3m, and has a conditional agreement to purchase a parcel of
development land at Waimak Junction, with Investore agreeing in principle
to develop a Countdown supermarket on that site. The total commitment
associated with these initiatives is $68.5m, which Investore will fund through
available debt facilities. Taking this commitment into account, as if the
expenditure had occurred as at 31 March 2021, Investore’s pro forma LVR
1
would be 31.2% and it would have undrawn debt facilities of $128 million.
1. See glossary on page 92.
2. The unexpired lease term in a property or portfolio,
assuming the property or portfolio is fully leased.
This is weighted by the income applicable to each
lease and a current market rental with nil term for
vacant space.
Debt maturity profile as at 31 March 2021
Key Debt Metrics
As at
31 March 2021
As at
31 March 2020
Facility limit$476m$370m
Debt facilities drawn$280m$238m
Weighted average debt maturity (years)3.82.2
LV R
1
(%) (Covenant: ≤ 65%)26.831.3
Interest cover ratio (Covenant: ≥ 1.75x)3.1x2.7x
WA LT
2
(Covenant: > 6.0 years)9.711.4
% of drawn debt fixed100%94%
Weighted average fixed rate maturity (years)3.92.4
FY22FY27FY23
$70m
FY24
$30m
FY26
$50m
FY28
$125m
FY25
$101m
$100m
Bank facilities
IPL010 bonds
IPL020 bonds
$105m
gross proceeds from equity capital
raising undertaken during April and
May 2020, with net proceeds used
to pay down bank debt and provide
funding flexibility for future growth
$80m
of new bank debt facilities
secured and $101m of bank debt
facilities extended to June 2024
$125m
of 7-year listed bonds issued in
August 2020 with a fixed interest
rate of 2.4%. The net proceeds of
the offer were used to pay down
bank debt and provide a more
balanced debt profile between
bank debt and listed bonds
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
2021
Transition Risks – risks
associated with transitioning
to a low-carbon economy
RiskDescriptionPotential impact
Current and
emerging regulatory
changes
Regulatory changes/
increased standards
around climate change
• Increased costs for development or
maintenance
• More restrictive requirements e.g.
planning/consent requirements
Changes to
energy prices
Potential supply
constraint from climate
impact on supply
Impact on energy
infrastructure due to
climate change
• Increased operational costs for
Investore and its tenants, leading
to higher total cost of occupation
for tenants
Changing
customer behaviour
Reduced demand from
customers for tenants
in carbon-intensive
industries
Customers choosing
more climate friendly
properties to work in
and/or visit
• Reduced revenue
• Increased vacancies
• Increased cost to ensure assets
remain competitive
Increased
expectations
from investors
and tenants
Investors and tenants
require buildings/
portfolios to reduce their
carbon impact
• Reduced demand for Investore’s
buildings if they have not sought to
manage carbon footprint, leading to
reduced revenue
• Unable to attract key investors
• Increased costs from transition
to more efficient buildings &
technologies
Increased
litigation exposure
Climate change litigation
occurs due to inadequate
or mis-timed climate
change response
• Increased costs from litigation
• Ability to insure against loss
compromised/not available
• Damage to reputation
Insurability of assets
compromised
Assets may become
uninsurable due to
exposure to climate
change events
• Increased costs from self-insurance
• Stranded assets if tenants/
Investore unable to obtain
insurance
Sustainability
Investore works
closely with its
Manager, SIML,
in its approach to
sustainability.
During FY21,
SIML refreshed
its approach to
sustainability and
established a Board
Sustainability
Committee to ensure
a dedicated focus on
the impact of climate
related issues and
the sustainability
performance of SIML
and its managed
entities, including
Investore.
Sustainability Strategic Plan
Objective
Contribute to a
resilient community
Develop shared
prosperityProtect the planet
Description
We want to ensure
leading health and
safety performance
and support a
connected and
inclusive society
We want to foster
long-term prosperity
by investing in and
managing outstanding
places that reward
everyone connected
with them
We want to create
efficient, climate-
resilient places that
deliver long term
value and support a low
carbon future
UN
Sustainable
Development
Goals
During FY21 the Investore Board considered the key risks, at a high level, that
may be faced by Investore in relation to climate change, and, in accordance with
the Taskforce on Climate-related Financial Disclosures, categorised those risks
into two categories – transition risks, being those associated with transitioning
to a low-carbon economy; and physical risks, being risks arising as a result of
changes in the physical climate and acute climate events.
A summary of the key climate change risks assessed by the business is set out
below. Investore will work with SIML during FY22 to undertake further work to
refine and develop these risks to form a detailed and comprehensive climate
risk assessment for Investore.
Bunnings, Te Rapa
Risk ManagementGovernance
Strategy
At Investore, the Board as a whole
considers sustainability issues as they
affect Investore’s business. The Investore
Board works closely with the SIML
Sustainability Committee to ensure that
the Investore Board is aware of and
considers the key sustainability issues for
its business.
The Investore sustainability strategic plan
was refreshed during FY21, in conjunction
with SIML, and three distinct goals were
established, with a series of objectives and
actions which flow from these goals.
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
2223
Sustainability
Achievements
Key achievements for FY21 have been:
• Investore has started measuring its greenhouse gas emissions through the
BraveGen software system implemented by its Manager, SIML.
• An initial list of climate related risks has been developed and these are
reported on the previous pages. During FY22 Investore will work with its
Manager, SIML, to complete further work to formalise this climate risk
assessment, in preparation for reporting against the Taskforce on Climate-
related Financial Disclosures (TCFD) framework.
• New Tesla superchargers have been installed at Investore’s Johnsonville
Countdown supermarket, and these became operational in May 2021.
These superchargers are ideal for a supermarket environment as they
enable a car to be fully charged in around 30 minutes. Investore is now
exploring options to install more EV charging stations at other sites, as well
as electric bicycle facilities across its network.
• Investore is preparing to complete the Global Real Estate Sustainability
Benchmarking (GRESB) assessment for FY22, which will require Investore
to obtain energy consumption data from tenants.
Investore is in discussions with its major tenants to trial solar panels on the
roof of single tenant stores, which will materially reduce the tenant’s electricity
costs, while also reducing demand for electricity from the national network.
Metrics
Investore has commenced the process of gathering emissions data to enable
it to record and report on its greenhouse gas emissions. Investore has control
over a small portion of emissions from its portfolio due to the fact that a high
proportion of properties owned by Investore are standalone and with a sole
tenant, and accordingly the tenant is responsible for all energy consumption
within the building. Investore is working with its tenants to understand their
emissions, to the extent this information is available. Investore, through its
Manager, SIML, is using the New Zealand-developed BraveGen software to
capture greenhouse gas emissions data.
Once Investore’s baseline year data has been fully determined, this data will
be independently audited to ensure Investore is able to confidently report and
record progress against its baseline emissions.
Investore, as part of the group of entities managed by SIML, has elected
to adopt the operational control method of reporting its greenhouse gas
emissions. This means that the Manager, SIML, will report Investore’s
emissions as part of its greenhouse gas reporting. However, the emissions of
each entity managed by SIML, including Investore, will be separately tracked
and reported, meaning that Investore will also be able to manage and report on
its own emissions, although Investore notes that this will necessarily involve an
element of double counting.
Physical Risks – risks
from changes in the
physical climate and
acute climate events
RiskDescriptionPotential impact
Increased frequency
of severe/extreme
weather events
Extreme weather events
causing damage to
assets increases e.g.
storms, floods, rainfall,
cyclones
• Ability to obtain insurance
compromised and/or increased
insurance costs
• Disruption to operations
• Higher operating and capital costs
to repair damage and improve
resilience of assets
Increased frequency
of fire events
Due to droughts,
heatwaves, and
similar events
• Threat to physical assets
• Disruption to operations
• Impact to air quality, surrounding
infrastructure e.g. roads, power
supply
• Increased insurance costs
Rising mean
temperatures
Average temperature
rises and increased
extreme heat events
• Increased operating expenses for
cooling buildings
• Increased expenditure to install/
upgrade cooling systems
• Spot price of electricity more
volatile
• Productivity of outdoor work
reduces, with impact on
construction costs, timeframes
• Cost of water increases
Sea level rise
Rising sea levels over
time may impact on
assets close to
waterfront
• Costs of repair from damage due to
sea surges, inundation
• Ability to insure assets
compromised
• Reduced asset life leading to early
write-off, stranded assets
• Assets inaccessible, isolated due to
damaged infrastructure e.g. roads,
rail, power
Water stressEase of access to water
reduced
• Water unavailable to undertake
business operations
• Cost of water increases
• Increased regulatory requirements
around use of water
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
2425
Financial Summary
FY21 represents five years since Investore commenced
operations, with its listing on the NZX on 12 July 2016.
Accordingly, Investore is pleased to present its first five
year financial summary table, enabling investors to
understand trends for key financial metrics.
The Five Year Financial Summary table reflects the numbers in the financial statements
for each respective year.
Five Year Financial Summary
2021
($m)
2020
($m)
2019
($m)
2018
($m)
2017
($m)
Net rental income
55.8
48.147.444.235.0
Profit before net finance expense, other income/(expense)
and income tax
46.6
40.641.438.730.4
Net finance expense
(16.6)
(13.9)(14.4)(11.9)(13.3)
Profit before other income/(expense) and income tax
29.9
26.727.026.817.1
Other income/(expense)
139.0
7.717.126.113.7
Profit before income tax
169.0
34.444.152.930.8
Income tax expense
(7.7)
(5.8)(5.5)(6.7)(2.3)
Profit after income tax
161.3
28.638.646.228.5
Basic earnings per share - weighted
44.60 cents
10.40 cents14.78 cents17.64 cents15.12 cents
Distributable profit
1
before income tax
33.1
26.326.326.021.2
Distributable profit after income tax
29.1
21.120.920.517.6
Basic distributable profit after income tax per share -
weighted
8.05 cents
7.66 cents8.01 cents7.85 cents9.35 cents
Investment properties value
1,037.9
2
761.4761.2738.3660.4
Drawn debt facilities
280.0
238.4318.5307.4261.0
Borrowings loan to value ratio
26.8%
3
31.3%41.8%41.6%39.5%
NTA per share
4
$2.08
$1.73$1.70$1.64$1.55
Adjusted NTA per share
5
$2.08
$1.74$1.71$1.64$1.54
The Five Year Financial Summary table reflects the numbers in the financial statements for each respective year. On
11 July 2016, Stride Property Limited (SPL) distributed shares in its subsidiary Investore Property Limited (Investore) to
SPL shareholders and Investore issued shares to investors in connection with its initial public offer (IPO). Investore entered
into a listing agreement with NZX Limited (NZX) and its ordinary shares were quoted and commenced trading on the main
board equity security market of NZX on 12 July 2016.
Values in the table above are calculated based on the numbers in the financial statements for each respective financial year and may not sum accurately due to rounding.
1. See glossary on page 92.
2. Includes 35 MacLaggan Street, Dunedin, which is held as property intended for sale at $9.4 million and excludes the seismic works and rental underwrites (total $7.1
million) to be funded by SPL in relation to the three properties acquired from SPL and settled on 30 April 2020.
3. Includes the seismic works and rental underwrites (total $7.1 million) to be completed by SPL in relation to the three properties acquired from SPL and settled on
30 April 2020.
4. Excludes intangible assets.
5. Excludes intangible assets and after tax fair value of interest rate derivatives.
Countdown, Palmerston North
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
2627
Statement of Comprehensive Income
For the year ended 31 March 2021
Notes
2021
$000
2020
$000
Gross rental income
64,514
54,416
Direct property operating expenses
(8,701)
(6,342)
Net rental income2.155,813
48,074
Less corporate expenses
Asset management fee expense
4.0(4,965)
(4,109)
Performance fee expense
4.0(2,076)
(1,523)
Administration expenses
(2,183)
(1,819)
Total corporate expenses(9,224)
(7,451)
Profit before net finance expense, other income/(expense) and income tax46,589
40,623
Finance income
4
52
Finance expense
(13,091)
(13,727)
Finance expense - swap termination expense
(3,553)
(199)
Net finance expense5.3(16,640)
(13,874)
Profit before other income/(expense) and income tax29,949
26,749
Other income/(expense)
Net change in fair value of investment properties
2.2139,287
7,716
Loss on rental guarantee
(294)
-
Net change in fair value of derivative financial instruments
24
(18)
Profit before income tax168,966
34,447
Income tax expense
7.3(7,706)
(5,832)
Profit after income tax attributable to shareholders161,260
28,615
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Movement in cash flow hedges, net of tax
5.53,051
(464)
Total comprehensive income after tax attributable
to shareholders
164,311
28,151
Basic and diluted earnings per share (cents)3.144.60
10.40
The attached notes form part of and are to be read in conjunction with these financial statements.
29 Statement of Comprehensive Income
30 Statement of Changes in Equity
31 Statement of Financial Position
32 Statement of Cash Flows
34 Notes to the Financial Statements
Financial
Statements
Investore Property Limited Annual Report 2021
29
Investore Property Limited Annual Report 2021
28
Notes
Cents
per
share
Number
of shares
000
Share
capital
$000
Retained
earnings
$000
Cash flow
hedge
reserve
$000
Total
$000
Balance 31 Mar 20304,499455,64173,744(2,694)526,691
Transactions with shareholders:
Q4 2020 final dividend
1.900--(6,995)-(6,995)
Q1 2021 interim dividend
1.900--(6,995)-(6,995)
Q2 2021 interim dividend
1.900--(6,995)-(6,995)
Q3 2021 interim dividend
1.900--(6,995)-(6,995)
New shares issued
5.463,636102,652--102,652
Total transactions with shareholders63,636102,652(27,980)-74,672
Other comprehensive income:
Movement in cash flow hedges, net of tax
5.5---3,0513,051
Total other comprehensive income---3,0513,051
Profit after income tax
--161,260-161,260
Total comprehensive income--161,2603,051164,311
Balance 31 Mar 21368,135558,293207,024357765,674
Balance 31 Mar 19
260,076379,60965,830(2,230)443,209
Transactions with shareholders:
Q4 2019 final dividend1.935--(5,033)-(5,033)
Q1 2020 interim dividend1.900--(4,941)-(4,941)
Q2 2020 interim dividend1.900--(4,941)-(4,941)
Q3 2020 interim dividend1.900--(5,786)-(5,786)
New shares issued44,42376,032--76,032
Total transactions with shareholders
44,42376,032(20,701)-55,331
Other comprehensive income:
Movement in cash flow hedges, net of tax
5.5
---(464)(464)
Total other comprehensive income
---(464)(464)
Profit after income tax--28,615-28,615
Total comprehensive income
--28,615(464)28,151
Balance 31 Mar 20
304,499455,64173,744(2,694)526,691
Statement of Changes in Equity
For the year ended 31 March 2021
Statement of Financial Position
As at 31 March 2021
Notes
2021
$000
2020
$000
Current assets
Cash at bank
6,800
4,229
Trade and other receivables
7.4451
543
Prepayments
286
53
Other current assets
1,172
1,227
8,709
6,052
Investment properties classified as held for sale
2.59,400
-
18,109
6,052
Non-current assets
Investment properties
2.21,043,872
772,547
Deposit and other prepayments on investment property
2.27,081
5,385
Derivative financial instruments
5.21,788
2,323
Deferred tax asset
7.3-
318
1,052,741
780,573
Total assets1,070,850
786,625
Current liabilities
Trade and other payables
7.55,723
5,914
Current tax liability
734
1,085
Lease liabilities
2.355
52
Derivative financial instruments
5.2498
231
7,010
7,282
Non-current liabilities
Borrowings
5.1277,363
236,946
Lease liabilities
2.315,363
11,065
Derivative financial instruments
5.2900
4,641
Deferred tax liability
7.34,540
-
298,166
252,652
Total liabilities305,176
259,934
Net assets765,674
526,691
Share capital
558,293
455,641
Retained earnings
207,024
73,744
Reserve
5.5357
(2,694)
Equity765,674
526,691
Mike Allen
Chair of the Board
Gráinne Troute
Chair of the Audit and Risk Committee
For and on behalf of the Board of Directors, dated 18 May 2021:
The attached notes form part of and are to be read in conjunction with these financial statements.The attached notes form part of and are to be read in conjunction with these financial statements.
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
3031
Reconciliation of profit after income tax attributable to shareholders to net cash flows from operating activities
Notes
2021
$000
2020
$000
Profit after income tax attributable to shareholders161,260
28,615
Add/(less) non-cash items:
Movement in deferred tax
7.34,054
273
Current tax movement in cash flow reserve
7.3(392)
392
Net change in fair value of investment properties
(139,287)
(7,716)
Loss on rental guarantee
294
-
Spreading of fixed rental increases
(179)
(1,095)
Capitalised lease incentives - rent free
(54)
(20)
Lease incentives amortisation -rent free
9
5
Capitalised lease incentives - cash incentives
(32)
(30)
Lease incentives amortisation - cash incentives
11
3
Capitalised lease incentives - COVID-19 abatements
(857)
-
Lease incentives amortisation - COVID-19 abatements
126
-
Movement in loss allowance
7.432
17
Borrowings establishment costs amortisation
683
486
Accrued interest movement in derivative financial instruments
5.2(69)
63
Amortisation of swap termination expense
1,401
-
Net change in fair value of derivative financial instruments
5.2(24)
18
26,976
21,011
(Less)/add activities reclassified (to)/from operating activities
Movement in borrowings/bond transaction costs classified as
operating activities
(1,863)
(1,604)
Movement in working capital items relating to investing activities
1,006
(1,827)
Movement in working capital items relating to financing activities
1,441
-
27,560
17,580
Movement in working capital:
Decrease/(increase) in trade and other receivables
92
(145)
Increase in prepayments and other current assets
(178)
(601)
(Decrease)/increase in trade and other payables
(191)
1,721
Decrease in current tax liability
(351)
(221)
Net cash provided by operating activities26,932
18,334
Statement of Cash Flows
For the year ended 31 March 2021
Statement of Cash Flows (continued)
For the year ended 31 March 2021
Notes
2021
$000
2020
$000
Cash flows from operating activities
Gross rental received
64,003
52,754
Direct property operating and corporate expenses
(15,235)
(11,982)
Performance fee expenses
(1,961)
(1,501)
Rental guarantee
(558)
-
Interest received
4
52
Interest paid
(10,907)
(13,998)
Swap termination expenses
5.2(2,153)
(1,563)
Fixed rate bond issuance expenses
(1,418)
-
Refinancing of bank borrowings
(448)
(41)
Income tax paid
(4,395)
(5,387)
Net cash provided by operating activities26,932
18,334
Cash flows from investing activities
Capital expenditure on investment properties
(4,710)
(1,436)
Acquisition of investment properties
(135,858)
(6,984)
Deposit on investment properties
-
(5,000)
Proceeds from disposal of investment properties
-
19,046
Net cash (applied to)/provided by investing activities(140,568)
5,626
Cash flows from financing activities
Proceeds from equity issued
105,000
77,740
Capital raising expenses
(2,348)
(1,708)
Repayment of bank borrowings from capital raise
(102,000)
(75,800)
Proceeds from issuance of fixed rate bonds
125,000
-
Repayment of bank borrowings from fixed rate bonds issuance
(118,650)
-
Drawdown of bank borrowings
137,250
14,700
Repayment of bank borrowings
-
(19,030)
Dividends paid
(27,980)
(20,701)
Lease liabilities payments
(65)
(43)
Net cash provided from/(applied to) financing activities116,207
(24,842)
Net increase/(decrease) in cash and cash equivalents held2,571
(882)
Opening cash and cash equivalents
4,229
5,111
Closing cash and cash equivalents6,800
4,229
Cash and cash equivalents at year end comprises:
Cash at bank
6,800
4,229
Cash and cash equivalents at year end6,800
4,229
The attached notes form part of and are to be read in conjunction with these financial statements.The attached notes form part of and are to be read in conjunction with these financial statements.
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
3233
Notes to the Financial Statements
For the year ended 31 March 2021
1.0 General information 35
1.1 Reporting entity 35
1.2 Basis of preparation 35
1.3 New standards, amendments and interpretations 35
1.4 Fair value estimation 35
1.5 Significant accounting policies, estimates and judgements 35
1.6 COVID-19 impacts 35
1.7 Significant events and transactions 36
1.8 Non-GAAP measures 36
2.0 Property 37
2.1 Net rental income 37
2.2 Investment properties 38
2.3 Lease liabilities 44
2.4 Capital expenditure commitments contracted for 45
2.5 Investment properties classified as held for sale 45
3.0 Investor returns 46
3.1 Basic and diluted earnings per share (EPS) 46
3.2 Distributable profit 47
4.0 Related party disclosures 48
5.0 Capital structure and funding 49
5.1 Borrowings 49
5.2 Derivative financial instruments 51
5.3 Net finance expense 53
5.4 Share capital 54
5.5 Reserve 54
5.6 Capital risk management 54
6.0 Financial instruments and risk management 55
6.1 Financial assets at amortised cost 55
6.2 Financial liabilities at amortised cost 56
6.3 Financial risk management 56
6.4 Interest rate risk 56
6.5 Credit risk 57
6.6 Liquidity risk 57
6.7 Fair values 57
7.0 Other 58
7.1 Operating segments 58
7.2 Corporate expenses 58
7.3 Tax 59
7.4 Trade and other receivables 61
7.5 Trade and other payables 61
7.6 Contingent liabilities 62
7.7 Subsequent events 62
This section sets out Investore’s accounting policies that relate to the financial statements as a whole. Where an accounting policy
is specific to a note, the policy is described within the note to which it relates.
1.1 Reporting entity
The financial statements presented are those of Investore Property Limited (Investore). Investore is domiciled in New Zealand and is registered under the
Companies Act 1993. Investore is also an FMC reporting entity under Part 7 of the Financial Markets Conduct Act 2013.
Investore’s principal activity is property investment in New Zealand. Investore is managed by Stride Investment Management Limited (SIML).
The financial statements were approved for issue by the Board of Directors of Investore (the Board) on 18 May 2021.
1.2 Basis of preparation
The financial statements have been prepared in accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013, the NZX Main
Board Listing Rules (NZX Listing Rules) and New Zealand Generally Accepted Accounting Practice (NZ GAAP). The financial statements comply with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS), other New Zealand accounting standards and authoritative notices that are
applicable to entities that apply NZ IFRS. The financial statements also comply with International Financial Reporting Standards (IFRS). Investore is a for-
profit entity for the purposes of financial reporting.
The financial statements have been prepared under the historical cost basis except for assets and liabilities stated at fair value as disclosed.
The financial statements have been presented in New Zealand dollars and have been rounded to the nearest thousand, unless stated otherwise.
1.3 New standards, amendments and interpretations
At the date of approval of the financial statements, there were no relevant standards in issue but not applied.
1.4 Fair value estimation
Investore classifies its fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making 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 (as prices) or indirectly
(derived from prices); and
Level 3 - inputs for the asset or liability that are not based on observable market data.
1.5 Significant accounting policies, estimates and judgements
In the application of NZ IFRS, the Board and SIML are required to make judgements, estimates and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on experience and other factors that
are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from the
estimates, judgements and assumptions made by the Board and SIML.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
Judgements made by the Board and SIML in the application of NZ IFRS that have significant effects on the financial statements and estimates with a
significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. In particular
information about significant areas of estimation uncertainty that have the most significant effect on the amount recognised in the financial statements is
disclosed in the relevant notes as follows:
• Investment properties (note 2.2);
• Derivative financial instruments (note 5.2);
• Lease liabilities (note 2.3); and
• Deferred tax (note 7.3).
1.6 COVID-19 impacts
The global COVID-19 pandemic and resulting impacts on credit and property markets has increased the level of uncertainty around certain estimates in
these financial statements.
As at 31 March 2021, Investore has provided rent abatements of $0.9 million. Rental abatements have been accounted for as lease modifications. In
addition, Investore has provided for $0.1 million rental income abatements yet to be formally agreed with the affected tenants.
As at 31 March 2020, the independent valuations of Investore’s portfolio were reported on the basis of ‘material valuation uncertainty’, meaning less
certainty and a higher degree of caution should be applied. As at 31 March 2021, the ‘material valuation uncertainty’ clause has been removed on all of the
independent valuations.
1.0 General Information
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
3435
1.7 Significant events and transactions
The financial position and performance of Investore was affected by the following events and transactions that occurred during the reporting period:
Acquisition of three properties from Stride Property Limited (SPL)
On 30 April 2020, Investore settled on the acquisition of three large format retail properties from SPL for $140.75 million (refer note 2.2).
Equity capital raise
During April and May 2020, Investore undertook an equity capital raise which resulted in a gross amount of $105 million raised, with 63,636,364 shares
issued at $1.65 per share (refer note 5.4). The net proceeds were used to repay $102 million of Investore’s bank borrowings.
Issuance of fixed rate bonds (IPL020)
On 31 August 2020, Investore issued $125 million of fixed rate bonds with a 7-year term, paying an interest rate of 2.40% (refer note 5.1). The net
proceeds were used to repay $119 million of Investore’s bank borrowings. In relation to this transaction, on 31 August 2020, Investore terminated interest
rate derivative contracts with a notional value of $40 million for a cost of $2.2 million (refer note 5.2).
Bank refinancing
Effective from 16 April 2020, Investore refinanced $101 million of debt facility, extending this facility for a further three years to 9 June 2024. In addition,
during the year, Investore secured a new $50 million, 5-year facility and a new $30 million 3-year facility (refer note 5.1).
Revaluation of investment properties
Investore undertook independent valuations of the entire portfolio as at 31 March 2021, which resulted in a net change in fair value of investment
properties of $139.3 million (2020: $7.7 million) (refer note 2.2).
1.8 Non-GAAP measures
The statement of comprehensive income includes two non-GAAP measures; Profit before net finance expense, other income/(expense) and income
tax; and Profit before other income/(expense) and income tax. These non-GAAP measures have been presented to assist investors in understanding the
different aspects of Investore’s financial performance.
Note 3.2 sets out Investore’s calculation for distributable profit and Adjusted Funds From Operations (AFFO) which are both non-GAAP measures.
Distributable profit is presented to enable investors to see an earnings measure which more closely aligns to Investore’s underlying and recurring earnings
from its operations. AFFO is intended as a supplementary measure of operating performance. Cash spent during the period on capital expenditure as part
of maintaining a building’s grade / quality, but not expensed as part of distributable profit after tax, is adjusted to reflect cash earnings for the year.
These non-GAAP measures do not have a standard meaning prescribed by GAAP and therefore may not be comparable to information presented by other
entities.
1.0 General Information (continued)
This section covers property assets, being large format retail properties, which generate Investore’s trading performance.
2.1 Net rental income
Accounting Policy
Investment property is leased by Investore to tenants under operating leases with rent payable monthly. Rental income from investment properties is
recognised on a straight-line basis over the lease term. Lease incentives provided in relation to letting the investment properties are capitalised to the
respective investment properties or investment properties classified as held for sale in the statement of financial position and amortised on a straight-
line basis over the non-cancellable portion of the lease to which they relate, as a reduction of rental income. Where a lease provides for fixed rental
increases over the term of the lease, they are amortised on a straight-line basis over the non-cancellable portion of the lease to which they relate.
Income generated from service charges recovered from tenants is included in the gross rental income with the service charge expenses to tenants
shown in the direct property operating expenses. Such revenue is recognised in the accounting period the underlying expenses are incurred in
accordance with the contractual terms.
2021
$000
2020
$000
Gross rental income
Rental income
57,805
49,401
Service charge income recovered from tenants
5,832
3,905
Spreading of fixed rental increases
179
1,095
Capitalised lease incentives
54
20
Lease incentives amortisation
(9)
(5)
Capitalised lease incentives - COVID-19 abatements
857
-
Lease incentives amortisation - COVID-19 abatements
(126)
-
Rental income abatement provision due to COVID-19
(78)
-
Total gross rental income64,514
54,416
Direct property operating expenses
Service charge expenses to tenants
(7,177)
(4,616)
Movement in loss allowance
(32)
(17)
Other non-recoverable property operating expenses
(1,492)
(1,709)
Total direct property operating expenses(8,701)
(6,342)
Net rental income55,813
48,074
Other non-recoverable property operating expenses represent property maintenance and operating expenses not recoverable from tenants and property
leasing expenses.
Accounting Policy
Lessors classify each of its leases as either an operating or finance lease based on the economic substance of the agreement so as to reflect the risks
and rewards incidental to ownership. Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as
operating leases.
Properties leased out under operating leases are included in investment properties and investment properties classified as held for sale as separately
disclosed in the statement of financial position.
As a lessor, Investore has determined that it retains substantially all the risks and rewards of ownership of properties and has therefore classified all leases
as operating leases.
The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows:
2021
$000
2020
$000
Within one year
57,976
49,848
Between one and two years
57,109
49,033
Between two and three years
55,848
48,701
Between three and four years
54,009
48,358
Between four and five years
51,145
47,201
Later than five years
308,231
343,623
Future rentals receivable584,318
586,764
2.0 Property
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
3637
2.2 Investment properties
Accounting Policy
Investment properties are held either to earn rental income or for capital appreciation or both. Investment property is initially stated at cost, including
related transaction costs, and then at fair value as determined at least every 12 months by an independent registered valuer.
The fair value of an investment property represents the estimated price for which a property could be sold for at the date of valuation in an orderly
transaction between market participants. The predominant methods for assessing the current fair value of an investment property are the Income
Capitalisation and the Discounted Cash Flow approaches. Each approach derives a value based on market inputs, including:
• recent comparable transactions where available;
• forecast future rentals, based on the actual location, type and quality of the investment property, and supported by the terms of any existing
lease, other contracts or external evidence such as current market rents for similar properties;
• vacancy assumptions based on current and expected future market conditions after expiry of any current lease; and
• appropriate discount rates derived from recent comparable market transactions reflecting the uncertainty in the amount and
timing of cash flows.
In addition, consideration is given to the maintenance and capital requirements including necessary investments to maintain functionality of the
property for its expected useful life.
Any gain or loss arising from a change in the fair value of the investment property is recognised in the statement of comprehensive income within net
change in fair value of investment properties. Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future
economic benefits associated with the item will flow to Investore and the cost of the item can be measured reliably. All other repairs and maintenance
costs are expensed to the statement of comprehensive income during the period in which they are incurred.
Investment properties are de-recognised when they have been disposed of. The net gain or loss on disposal is calculated as the difference between
the carrying amount at the time of the disposal and the net proceeds on the disposal and is included in the statement of comprehensive income in the
reporting period in which the disposal occurs.
Investore leases various properties under non-cancellable operating lease agreements. At the inception of a lease contract where Investore is the
lessee, Investore assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for consideration.
Right-of-use assets are measured on initial recognition as the initial lease liability, plus any initial indirect costs incurred, less any lease incentives
received. Right-of-use assets that meet the definition of investment property are presented within investment property. Investore applies the fair value
model to investment property, including right-of-use assets that meet the definition of investment property.
Investment property is adjusted for cash flows relating to lease liabilities already recognised separately on the statement of financial position and also
reflected in the investment property valuations.
As at 31 March 2020, a $5 million deposit had been paid in relation to the purchase of three large format retail properties, being Bunnings Mt Roskill,
Auckland, Mt Wellington Shopping Centre, Auckland, and Bay Central Shopping Centre, Tauranga, from SPL for $140.75 million. Settlement of the
acquisitions was completed on 30 April 2020. Under the sale and purchase agreement, SPL is to complete seismic works of $7.0 million and provided
a rental guarantee of $0.5 million. As at 31 March 2021, the seismic works had not commenced and $0.1 million of the rental guarantee had not been
utilised. The valuations as at 31 March 2021 for these properties were prepared on the basis that the seismic works had been completed. Consequently,
$7.1 million has been recognised as a prepayment on investment property (non-current asset).
2.0 Property (continued)2.0 Property (continued)
2.2 Investment properties (continued)
2021
$000
2020
$000
Opening balance772,547
742,125
Initial add back of lease liabilities
-
11,160
Re-assessment of lease liabilities
4,366
-
Property acquisitions
133,647
6,984
Transfer to investment properties classified as held for sale
(9,400)
-
Net change in fair value
139,287
7,716
Subsequent capital expenditure
2,449
3,425
Spreading of fixed rental increases
179
1,095
Capitalised lease incentives
86
50
Lease incentives amortisation
(20)
(8)
Capitalised lease incentives - COVID-19 abatements
857
-
Lease incentives amortisation - COVID-19 abatements
(126)
-
Closing balance1,043,872
772,547
Comprising:
Investment property per independent valuations
1,035,535
761,430
Less prepayment on investment property
(7,081)
-
1,028,454
761,430
Lease liabilities
15,418
11,117
Total1,043,872
772,547
The net change in fair value of $139,287,000 (2020: $7,716,000) includes ($65,000) (2020: ($43,000)) in relation to the change in the value of the lease
liabilities.
Valuations are performed by independent registered valuers who hold an annual practising certificate with the Valuers Registration Board and are members
of the New Zealand Institute of Valuers. Valuers are engaged on terms ensuring that no valuer values the same investment property for more than three
consecutive years. All valuations are dated effective 31 March 2021.
As at 31 March 2020, the independent valuations of Investore’s portfolio were reported on the basis of ‘material valuation uncertainty’, meaning less
certainty and a higher degree of caution should be applied. As at 31 March 2021, the ‘material valuation uncertainty’ clause has been removed on all of the
independent valuations.
At each reporting date, SIML’s asset managers verify all major inputs to the independent valuation report and assess property valuation movements when
compared to the prior year valuation report. SIML’s executive team review the valuations performed by the independent registered valuers for financial
reporting purposes. This team reports directly to the SIML Chief Executive Officer. Discussions of valuation processes and results are held between
members of the executive team and the independent valuers, and the SIML Chief Executive Officer and Investore’s Audit and Risk Committee, at least
once every six months, in line with Investore’s reporting dates. This review includes review of specific independent valuations and discussions with the
independent valuers as considered necessary. Ultimately, Investore’s Directors are responsible for reviewing and approving the investment property
valuations.
Investment property measurements are categorised as Level 3 in the fair value hierarchy. During the year, there were no transfers of investment properties
between levels of the fair value hierarchy (2020: nil transfers).
The following tables provide a summary of the valuation of the individual investment properties, their net lettable area (NLA), market capitalisation rate (cap
rate), contract yield, occupancy and weighted average lease term (WALT) for the purpose of providing further detail of the assets which are considered to be
the most relevant to the operations of Investore. Colliers
1
refers to the valuer CVAS (NZ) Limited and Colliers
2
refers to the valuer CVAS (WLG) Limited.
The cap rate %, contract yield %, occupancy % and WALT years for the total of investment properties in the following tables are weighted averages. The
totals may not sum due to rounding.
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
3839
2.2 Investment properties (continued)
As at 31 Mar 21Valuer
NLA
m
2
$000
Cap
rate
%
Contract
yield
%
Occupancy
%
WA LT
years
Auckland
24 Anzac RoadCBRE4,382
28,900
4.63 4.51 100.0 13.9
326 Great South RoadCBRE4,633
41,200
4.38 4.34 100.0 13.9
35A St Johns RoadColliers
1
4,457
25,200
4.75 5.27 100.0 13.9
507 Pakuranga RoadColliers
1
4,812
23,800
4.63 4.76 100.0 13.9
3 Averill StreetJLL5,435
18,000
7.50 8.08 100.0 13.4
Cnr Church & Selwyn StreetsJLL2,011
13,400
4.88 4.90 100.0 3.9
Cnr Te Irirangi Drive & Bishop Dunn PlaceBayleys12,205
41,500
4.38 4.45 100.0 9.7
112 Stoddard RoadSavills4,200
29,700
4.68 4.86 100.0 6.9
226 Great South RoadSavills7,362
42,000
5.75 5.98 100.0 8.8
20-24 Neville StreetSavills3,816
29,000
4.88 4.92 100.0 11.0
2 Carr RoadCBRE11,693
53,400
4.13 4.58 100.0 6.2
295 Penrose RoadCBRE9,014
40,300
6.00 6.64 100.0 4.7
Waikato
66-76 Studholme Street, MorrinsvilleColliers
1
1,724
7,400
5.88 6.24 100.0 3.9
Cnr Anglesea & Liverpool Streets, HamiltonSavills5,265
8,700
10.25 10.63 100.0 2.8
Cnr Bridge & Anglesea Streets, HamiltonSavills4,200
22,300
5.25 5.19 100.0 12.1
Cnr Hukanui & Thomas Roads, HamiltonSavills4,506
18,900
5.63 5.70 100.0 10.8
446 Te Rapa Road, HamiltonBayleys12,763
40,000
4.50 4.47 100.0 8.9
Bay of Plenty
230 - 240 Fenton Street, RotoruaSavills5,172
23,700
5.00 4.81 100.0 9.4
26-48 Old Taupo Road, RotoruaBayleys13,940
33,900
4.75 4.89 100.0 8.9
65 Chapel Street, TaurangaJLL17,360
52,500
6.63 6.91 99.6 4.4
Wellington
47 Bay RoadColliers
2
3,460
16,000
4.75 4.77 100.0 13.9
91 Johnsonville RoadJLL6,316
21,500
6.13 4.20 75.0 9.9
13 - 19 Queen Street, Upper HuttColliers
2
3,427
13,000
5.25 5.93 100.0 13.9
14 Russell Street, Upper HuttJLL3,037
10,300
6.13 7.27 100.0 3.9
261 High Street, Lower HuttColliers
2
5,078
23,750
5.00 5.23 100.0 13.9
Cnr Hanson Street, John Street & Adelaide RoadColliers
2
4,882
28,500
4.90 5.85 98.7 10.4
3 Main RoadJLL4,200
22,000
5.00 5.30 100.0 11.9
Other North Island
Cnr Butler & Kerikeri Roads, KerikeriSavills3,887
23,300
5.00 5.11 100.0 11.7
53 Leach Street, New PlymouthColliers
1
8,522
37,200
4.75 4.73 100.0 8.5
9 Gloucester Street, NapierColliers
1
4,386
21,400
4.75 4.71 100.0 8.5
Cnr Fernlea Avenue & Roberts Line,
Palmerston North
Colliers
2
3,611
16,250
5.49 5.71 100.0 10.6
Cnr Tremaine Avenue & Railway Road, Palmerston
North
Colliers
2
13,730
31,000
5.25 5.59 100.0 8.9
Canterbury
87 - 97 Hilton Street, KaiapoiCBRE3,025
14,700
5.88 6.06 100.0 13.9
219 Colombo Street, ChristchurchCBRE3,976
22,100
5.13 5.47 100.0 13.9
Cnr Victoria & Browne Streets, TimaruJLL4,032
12,435
5.99 6.28 85.0 13.2
40 - 50 Ivory Street, RangioraSavills3,786
18,900
5.63 5.70 100.0 11.7
Cnr Rolleston & Masefield Drives, RollestonSavills4,251
24,500
5.00 4.92 100.0 11.7
24 Brighton Mall, ChristchurchColliers
1
2,207
6,300
6.00 6.33 100.0 7.4
Other South Island
Cnr Putaitai Street & Main Road, NelsonCBRE2,659
15,000
5.38 5.79 100.0 11.7
51 Arthur Street, BlenheimCBRE3,136
12,700
5.88 6.12 100.0 13.9
309 Cumberland Street, DunedinJLL4,123
25,100
5.00 4.97 100.0 13.9
172 Tay Street, InvercargillJLL5,161
25,800
5.63 5.88 100.0 12.5
Total239,8401,035,5355.205.4299.09.9
2.0 Property (continued)
2.2 Investment properties (continued)
As at 31 Mar 20Valuer
NLA
m
2
$000
Cap
rate
%
Contract
yield
%
Occupancy
%
WA LT
years
Auckland
24 Anzac RoadCBRE 4,382 24,100 5.38 5.40 100.0 14.9
326 Great South RoadCBRE 4,633 36,300 4.88 4.93 100.0 14.9
35A St Johns RoadColliers
1
4,457 21,400 5.63 6.24 100.0 14.9
507 Pakuranga RoadColliers
1
4,812 18,600 5.88 5.99 100.0 14.9
3 Averill StreetJLL 5,435 17,000 7.63 8.50 100.0 13.7
Cnr Church & Selwyn StreetsJLL 2,011 11,000 5.75 5.95 100.0 4.9
Cnr Te Irirangi Drive & Bishop Dunn PlaceCBRE 12,124 35,000 5.00 5.28 100.0 10.7
112 Stoddard RoadSavills 4,200 23,300 5.88 6.24 100.0 7.9
226 Great South RoadSavills 7,362 37,500 6.38 6.68 100.0 8.7
20-24 Neville StreetSavills 3,816 23,200 6.00 6.14 100.0 11.7
Waikato
66-76 Studholme Street, MorrinsvilleColliers
1
1,724 6,500 6.50 7.10 100.0 4.9
Cnr Anglesea & Liverpool Streets, HamiltonSavills 5,265 7,500 11.25 11.17 100.0 3.8
Cnr Bridge & Anglesea Streets, HamiltonSavills 4,200 18,100 6.63 6.50 100.0 13.1
Cnr Hukanui & Thomas Roads, HamiltonSavills 4,506 16,300 6.50 6.73 100.0 10.8
446 Te Rapa Road, HamiltonJLL 12,763 31,250 5.50 5.58 100.0 9.7
Bay of Plenty
230 - 240 Fenton Street, RotoruaSavills 5,172 18,200 6.25 6.26 100.0 10.4
26-48 Old Taupo Road, RotoruaJLL 13,940 27,000 5.75 5.99 100.0 9.7
Wellington
47 Bay RoadColliers
2
3,460 12,850 6.00 5.94 100.0 14.9
91 Johnsonville RoadJLL 6,316 20,750 6.50 7.28 100.0 9.9
13 - 19 Queen Street, Upper HuttColliers
2
3,427 10,900 6.38 6.94 100.0 14.9
14 Russell Street, Upper HuttJLL 3,037 9,500 7.25 7.28 100.0 4.9
261 High Street, Lower HuttColliers
2
5,078 19,150 6.00 6.26 100.0 14.9
Cnr Hanson Street, John Street & Adelaide RoadColliers
2
4,882 26,250 6.00 6.37 98.7 11.1
3 Main RoadJLL 4,200 19,500 5.75 5.92 100.0 12.9
Other North Island
Cnr Butler & Kerikeri Roads, KerikeriSavills 3,887 18,600 6.38 6.54 100.0 12.7
53 Leach Street, New PlymouthColliers
1
8,522 28,900 5.88 5.97 100.0 9.5
9 Gloucester Street, NapierColliers
1
4,386 16,800 5.88 5.89 100.0 9.5
Cnr Fernlea Avenue & Roberts Line,
Palmerston North
Colliers
2
3,611 14,000 6.50 6.61 100.0 11.3
Cnr Tremaine Avenue & Railway Road, Palmerston
North
Colliers
2
13,730 26,200 6.25 6.48 100.0 9.7
Canterbury
87 - 97 Hilton Street, KaiapoiCBRE 3,025 13,200 6.25 6.76 100.0 14.9
219 Colombo Street, ChristchurchCBRE 3,976 19,400 5.63 6.23 100.0 14.9
Cnr Victoria & Browne Streets, TimaruJLL 4,032 11,930 6.33 6.16 85.0 14.1
40 - 50 Ivory Street, RangioraSavills 3,786 17,200 6.13 6.30 100.0 12.7
Cnr Rolleston & Masefield Drives, RollestonSavills 4,251 19,600 6.13 6.14 100.0 12.7
24 Brighton Mall, ChristchurchColliers
1
2,207 6,100 6.50 6.73 100.0 8.4
Other South Island
Cnr Putaitai Street & Main Road, NelsonCBRE 2,659 12,800 6.13 6.36 100.0 12.7
51 Arthur Street, BlenheimCBRE 3,136 11,200 6.50 6.94 100.0 14.9
35 MacLaggan Street, DunedinColliers
1
6,433 9,900 7.75 8.42 100.0 1.3
309 Cumberland Street, DunedinJLL 4,123 21,500 5.75 5.74 100.0 14.9
172 Tay Street, InvercargillJLL 5,161 22,950 6.25 6.49 100.0 13.5
Total
208,125761,430 6.06 6.29 99.7 11.5
2.0 Property (continued)
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
4041
2.0 Property (continued)
2.2 Investment properties (continued)
Breakdown of valuations by valuer
2021
$000
2020
$000
CBRE Limited (CBRE)
228,300
152,000
CVAS (NZ) Limited (Colliers
1
)
121,300
108,200
CVAS (WLG) Limited (Colliers
2
)
128,500
109,350
Jones Lang LaSalle (JLL)
201,035
192,380
Savills (NZ) Limited (Savills)
241,000
199,500
Bayleys Valuations Limited (Bayleys)
115,400
-
Investment property per independent valuations1,035,535
761,430
A valuation is determined based on a range of unobservable inputs. They are unobservable as they are not freely available or explicit in the market and are
developed by analysing transactional data. Key unobservable inputs are the capitalisation rate, discount rate, gross market rent, rental growth rates and
terminal yield. The following table details the key unobservable inputs and the ranges adopted:
Cap
rate
%
Discount
rate
%
Gross
market
rental
$/m
2
Rental
growth
rate
%
Terminal
yield
%
As at 31 Mar 214.13-10.253.50-7.75147-488(0.04)-2.724.63-10.25
As at 31 Mar 20
4.88-11.254.75-9.50114-4010.05-3.245.38-10.50
The estimated sensitivity of the fair value of the total investment property portfolio to changes in the market capitalisation rate and discount rate, assuming
the capitalisation rate or discount rate moved equally on all the properties, is provided below. The metrics chosen are those where movements are likely to
have the most significant impact on fair value. In the prior year, as a result of COVID-19, Investore increased the range in the sensitivities (shown as ‘N/A’ in
the current year).
Cap rate %Discount rate %
-0.50-0.25+0.25+0.50-0.50-0.25+0.25+0.50
As at 31 Mar 21
Change $000
N /A52,073(50,333)N /AN /A18,510(20,194)N /A
Change %
N /A5(5)N /AN /A2(2)N /A
As at 31 Mar 20
Change $00071,02533,516(30,411)(59,197)37,33318,304(17,138)(33,540)
Change %94(4)(8)52(2)(4)
Valuation techniques used:
• Income Capitalisation approach - is based on the current contract and market income and an appropriate market yield or return for the particular
investment property. Adjustments are then made to the value to reflect under or over renting, pending capital expenditure, and upcoming expiries,
including allowance for lessee incentives and leasing expenses.
• Discounted Cash Flow approach - adopts a ten-year investment horizon and makes appropriate allowances for rental income growth and leasing
expenses on expiries, with an estimated terminal value at the end of the investment period. The terminal yield is used to derive the terminal value.
Terminal yield rate estimates are based on comparable transaction data and also consider matters such as building age and the market environment
at the end of the investment period (10 years). The present value reflects the market based income and expenditure projections, discounted at a
rate of return referred to as a discount rate. In selecting the discount rate many factors are considered, including the degree of apparent risk, market
attitudes toward future inflation, the prospective rates of return for alternative investments and the rates of return earned by comparable properties in
the past.
2.0 Property (continued)
2.2 Investment properties (continued)
In deriving a market value under each approach, all assumptions are based, where possible, on market based evidence and transactions for properties with
similar locations, construction detail and quality of lessee covenant. The adopted market value is a combination of both the Income Capitalisation and the
Discounted Cash Flow approaches. There were no changes to the valuation techniques during the year.
The key inputs used to measure fair value of investment properties, along with their sensitivity to significant increase or decrease, are stated below:
Fair value measurement
sensitivity to significant:
Significant inputDescription
Increase
in input
Decrease
in inputValuation method
Cap rateThe cap rate is applied to the market income to assess an
investment property’s value. It is derived from detailed analysis
of factors such as comparable sales evidence and leasing
transactions in the open market taking into account location,
tenant covenant - lease term and conditions, WALT, size and
quality of the investment property.
DecreaseIncreaseIncome
Capitalisation
Discount rateThe discount rate is applied to future cash flows of an
investment property to provide a net present value equivalent.
The discount rate adopted takes into account recent
comparable market transactions, prospective rates of return for
alternative investments and apparent risk.
DecreaseIncreaseDiscounted
Cash Flow
Gross market rentalThe valuer’s assessment of gross market rental for both
occupied and vacant areas of the investment property.
IncreaseDecreaseIncome
Capitalisation
and Discounted
Cash Flow
Rental growth rate The rental growth rate applied to the market rental in the
10-year cash flow projection.
IncreaseDecreaseDiscounted
Cash Flow
Terminal yieldThe rate used to assess the terminal value of the property.DecreaseIncreaseDiscounted
Cash Flow
Generally, a change in the assumption made for the adopted cap rate is accompanied by a directionally similar change in the adopted discount rate. It may
also result in an adjustment to the terminal yield.
When calculating fair value using the Income Capitalisation approach, the gross market rent has a strong interrelationship with the adopted cap rate, given
the methodology involves assessing the total gross market income receivable from the investment property and capitalising this in perpetuity to derive a
capital value. In theory, an increase in the gross market rent and an increase (softening) in the adopted cap rate could potentially offset the impact to the fair
value. A decrease in the gross market rent and a decrease (tightening) in the adopted capitalisation rate could also potentially offset the impact to fair value.
A directionally opposite change in the gross market rent and the adopted capitalisation rate could potentially magnify the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and adopted terminal yield have a strong interrelationship in deriving a fair value, given
the discount rate will determine the rate in which the terminal value is discounted to the present value.
An increase (softening) in the adopted discount rate and a decrease (tightening) in the adopted terminal yield could potentially offset the impact to the fair
value. A decrease (tightening) in the discount rate and an increase (softening) in the adopted terminal yield could also potentially offset the impact to fair
value. A directionally similar change in the adopted discount rate and the adopted terminal yield could potentially magnify the impact to the fair value.
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
4243
2.3 Lease liabilities
Accounting Policy
Investore leases as lessee various properties under non-cancellable operating lease agreements. At the inception of a contract, Investore assesses
whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration.
Lease liabilities are measured based on the present value of the fixed and variable lease payments, less any cash lease incentives receivable. Each
lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a
constant rate of interest on the remaining balance of the liability for each period.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case
for leases in Investore, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Investore is committed under eleven (2020: eleven) leases where Investore is the lessee:
• Corner of Anglesea and Liverpool Streets, Hamilton (seven);
• 3 Averill Street, Auckland (one);
• 70 Studholme Street, Morrinsville (one);
• 51 Arthur Street, Blenheim (one); and
• Corner of Bridge and Anglesea Streets, Hamilton (one).
The leases relate to ground rent on leasehold properties and contain renewal and termination options exercisable only by Investore. In determining
the lease term, Investore considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a
termination option. Extension options are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
The lease term is reassessed if an option is actually exercised (or not exercised) or Investore becomes obliged to exercise (or not exercise) it. The
assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and
that is within the control of the lessee.
During the year, Investore executed the right of renewal for one of the seven ground leases at the investment property at the corner of Anglesea and
Liverpool Streets, Hamilton, for a further 21 years. As at 31 March 2021, the lease liabilities and right-of-use asset has been re-assessed by $4,366,000 to
reflect the rent review. The remaining six leases at this investment property have a right of renewal date of January 2024.
Right of use asset
2021
$000
2020
$000
Opening balance11,117
11,160
Re-assessment on rent review
4,366
-
Depreciation
(65)
(43)
Closing balance15,418
11,117
Lease liabilities
Opening balance11,117
11,160
Re-assessment on rent review
4,366
-
Cash lease payments
(847)
(705)
Finance lease interest
782
662
Closing balance15,418
11,117
Current liabilities
55
52
Non-current liabilities
15,363
11,065
Total lease liabilities15,418
11,117
2.0 Property (continued)
2.4 Capital expenditure commitments contracted for
As at 31 March 2021, Investore had the following commitment (2020: $0.576 million in addition to the balance of the acquisition cost of
$135.75 million to purchase three large format properties from SPL):
• $0.246 million for the completion of the roof replacement at the property at 172 Tay Street, Invercargill.
Investore has no other material commitments as at balance date.
2.5 Investment property classified as held for sale
Accounting Policy
Investore reclassifies an investment property to investment properties classified as held for sale when:
• the carrying value of the property is expected to be recovered through sale;
• the property is available for sale immediately subject only to terms that are usual and customary for such transactions; and
• the transaction is highly probable to occur.
The carrying value of the investment properties held for sale is the contracted sale price, being the best indicator of fair value. If a contracted price is
not available, the fair value is determined by an independent valuation.
Any gain or loss arising from a change in the fair value to the contracted price is recognised in the statement of comprehensive income within net
change in fair value of investment properties.
During the current year, the Board approved disposing the property at 35 MacLaggan Street, Dunedin. Upon the change in intention from holding the
investment property to disposing it, Investore reclassified the property from investment properties to investment properties classified as held for sale. The
investment property was valued by CVAS (NZ) Limited at $9.4 million as at 31 March 2021.
2.0 Property (continued)
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
4445
This section sets out Investore’s earnings per share and how distributable profit is calculated. Distributable profit is a non-GAAP
measure and is used by Investore to calculate profit available for distribution to shareholders by way of dividends.
3.1 Basic and diluted earnings per share (EPS)
Accounting Policy
Basic and diluted earnings per share amounts are calculated by dividing profit after income tax attributable to shareholders by the weighted average
number of shares on issue.
2021
$000
2020
$000
Profit after income tax attributable to shareholders161,260
28,615
Weighted average number of shares for purpose of basic and diluted EPS
361,535
275,192
Basic and diluted EPS - weighted (cents)44.60
10.40
3.0 Investor Returns
3.2 Distributable profit
Accounting Policy
Investore’s dividend policy is to target a cash dividend to shareholders that is between 95% and 100% of its distributable profit. Distributable profit
is presented to enable investors to see an earnings measure which more closely aligns to Investore’s underlying and recurring earnings from its
operations. Distributable profit is a non-GAAP measure and consists of profit/(loss) before income tax, adjusted for determined non-recurring and/or
non-cash items (including non-recurring adjustments for incentives payable to anchor tenants for lease extensions) and current tax.
Adjusted Funds From Operations (AFFO) is also a non-GAAP measure and is intended as a supplementary measure of operating performance.
Although there is no standard meaning or measure per GAAP, AFFO has been determined based on guidelines established by the Property Council
of Australia. Cash spent during the period on capital expenditure as part of maintaining a building’s grade / quality, but not expensed as part of
distributable profit after current income tax, is adjusted to enable the investors to see the cash generating ability of the business.
2021
$000
2020
$000
Profit before income tax 168,966
34,447
Non-recurring, non-cash and other adjustments:
Net change in fair value of investment properties
(139,287)
(7,716)
Reversal of lease liabilities movement in investment properties
(65)
(43)
Net change in fair value of derivative financial instruments
(24)
18
Loss on rental guarantee
294
-
Spreading of fixed rental increases
(179)
(1,095)
Capitalised lease incentives - rent free
(54)
(20)
Lease incentives amortisation - rent free
9
5
Capitalised lease incentives - cash incentives
(32)
(30)
Lease incentives amortisation - cash incentives
11
3
Capitalised lease incentives - COVID-19 abatements
(857)
-
Lease incentives amortisation - COVID-19 abatements
126
-
Borrowings establishment costs amortisation
683
486
Finance expense- swap termination expense
3,553
199
Distributable profit before current income tax33,144
26,254
Current tax expense
(3,652)
(5,559)
Adjusted for:
Income tax movement in cash flow hedges (note 7.3)
(392)
392
Distributable profit after current income tax29,100
21,087
Adjustments to funds from operations:
Maintenance capital expenditure
(1,299)
(3,231)
Adjusted Funds From Operations (AFFO)27,801
17,856
Weighted average number of shares for purpose of basic and diluted
distributable profit per share (000)
361,535
275,192
Basic and diluted distributable profit after current income tax per share -
weighted (cents)
8.05
7.66
AFFO basic and diluted distributable profit after current income tax per
share - weighted (cents)
7.69
6.49
3.0 Investor Returns (continued)
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
4647
This section sets out the transactions that have occurred during the relevant periods between Investore and SIML, as manager of
Investore, and SPL, which owns a cornerstone shareholding in Investore. The shares in each of SIML and SPL are Stapled Securities
and together they comprise the Stride Property Group.
The following transactions with a related party took place
2021
$000
2020
$000
SIML
Asset management fee expense
(4,965)
(4,109)
Performance fee expense
(2,076)
(1,523)
Leasing fee expense
(449)
(45)
Building management fee expense
(428)
(396)
Accounting fee expense
(250)
(250)
Project management fee expense
(96)
(131)
Capital raising fee expense
(89)
-
Maintenance fee expense
(40)
(33)
Disposal fee expense
-
(97)
Total(8,393)
(6,584)
SPL
Dividends paid
(5,259)
(4,095)
Consideration paid on the acquisition of investment properties (note 2.2)
(135,750)
(5,000)
Consideration received for issue of shares in capital raise
16,522
12,944
The following balance was payable to a related party
SIML
(707)
(617)
Investore has appointed SIML as its exclusive provider of ongoing real estate investment management services. Investore does not have any employees,
accordingly, there are no senior managers of Investore who have a relevant interest in the shares of Investore.
The performance fee expense is calculated and payable on a quarterly basis as 10% of the actual increase in shareholder returns (being share price,
adjusted for dividends, and other changes in capital structure), which is above 2.5% and under 3.75% in a quarter. Where shareholder returns exceed
3.75% in a quarter, no payment is due for the actual amount of the increase above 3.75% but the amount of the increase above 3.75% is carried forward
and added to the calculation of shareholder returns in the next seven quarters. However, if shareholder returns are less than 2.5% in a quarter, the deficit
is carried forward and subtracted from the calculation of shareholder returns in the next seven quarters. Additionally, the performance fee for any twelve
month period is capped at 0.2% of the value of Investore’s portfolio value, and any excess performance fee is carried forward into the following quarter.
SIML received performance fees of $775,494 for the quarter ended 30 June 2020 (quarter ended 30 June 2019: $523,110), $670,205 for the
quarter ended 30 September 2020 (quarter ended 30 September 2019: $484,808) and is due to receive a performance fee of $630,009 for the
quarter ended 31 March 2021 (quarter ended 31 March 2020: $514,942). The performance fee for the year ended 31 March 2021 was capped at
$2,075,708, being 0.2% of Investore’s portfolio value as at 31 March 2021, with $2,258,399 of excess performance fee to be carried forward into
subsequent quarters. The carried forward return for the performance fee calculation for the quarter ended 30 June 2021 is a positive 0.02% (quarter
ended 30 June 2020: deficit of 3.16%) which has been calculated in accordance with the management agreement.
As part of Investore’s $105 million equity capital raise (refer note 5.4), SPL paid Investore $16,522,301 to acquire 10,013,516 shares on 5 May 2020.
Following that capital raising SPL’s shareholding in Investore became 18.8%, being 69,201,977 shares (2020: 19.4%, being 59,188,461 shares). SPL is not
subject to any escrow arrangements that prevent it from selling or otherwise disposing of any shares that it holds.
In the current year, Directors in total received dividends of $14,341 (2020: $8,840). Directors’ fees recognised in administration expenses comprise the
following:
2021
$000
2020
$000
Directors' fees
187
143
Chair's fees
85
81
272
224
No other benefits have been provided by Investore to a Director for services as a Director or in any other capacity, other than those amounts disclosed
above.
4.0 Related Party Disclosures
Investore’s capital structure includes debt and equity, comprising shares and retained earnings as shown in the statement of
financial position. This section sets out how Investore manages its capital structure, funding exposure to interest rate risk and
related financing costs.
5.1 Borrowings
Accounting Policy
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over
the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless Investore has an unconditional
right to defer settlement of the liability for at least 12 months after the reporting date.
2021
$000
2020
$000
Non-current
Bank facility drawn down
55,000
138,400
Fixed rate bonds
225,000
100,000
Unamortised borrowings establishment costs
(2,637)
(1,454)
Total net borrowings277,363
236,946
Weighted average interest rate for debt (inclusive of current interest rate derivatives, bonds,
margins and line fees) at balance date
4.04%
4.63%
Interest rate on the bank facility (excluding margin) at balance date
1.64%
2.53%
31 Mar 21
Issue
date
Expiry
dateInterest rate
Total
$000
Undrawn
facility
$000
Drawn/
amount
$000
Fair value
$000
Bank Facility A-31 Aug 2022Floating
70,00040,00030,00030,000
Bank Facility D-16 Apr 2025Floating
50,00050,000--
Bank Facility E-9 Jun 2024Floating
101,16376,16325,00025,000
Bank Facility F-4 Nov 2023Floating
30,00030,000--
Bonds IPL01018 Apr 201818 Apr 20244.40%
100,000-100,000106,971
Bonds IPL02031 Aug 202031 Aug 20272.40%
125,000-125,000121,404
476,163196,163280,000283,375
31 Mar 20
Bank Facility A-31 Aug 2022Floating70,000-70,00070,000
Bank Facility B-9 Jun 2021Floating165,000131,60033,40033,400
Bank Facility C-9 Jun 2021Floating35,000-35,00035,000
Bonds IPL01018 Apr 201818 Apr 20244.40%100,000-100,000102,494
370,000131,600238,400240,894
5.0 Capital Structure And Funding
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
4849
5.0 Capital Structure And Funding (continued)
5.1 Borrowings (continued)
Bank borrowings
Investore’s bank borrowings are via syndicated senior secured facilities with ANZ Bank New Zealand Limited, Bank of New Zealand, Commonwealth
Bank of Australia, Westpac New Zealand Limited, China Construction Bank, New Zealand Branch and Industrial and Commercial Bank of China Limited,
Auckland Branch.
In April 2020, Investore refinanced $101 million of debt facility extending this facility for a further three years to June 2024 and secured a new $50 million,
5-year facility. On 31 August 2020, following the issuance of $125 million fixed rate bonds, Investore cancelled $99 million of bank facility that was due to
expire in June 2021.
On 3 November 2020, Investore secured a new $30 million 3-year facility.
Fixed rate bonds
On 31 August 2020, Investore issued $125 million of fixed rate bonds with a 7-year term, expiring on 31 August 2027, paying an interest rate of
2.40% (IPL020). The fixed rate bonds are quoted on the NZX Debt Market and their fair value is based on their listed market price as at balance date.
Interest on the 6 year fixed rate bonds issued in 2018 (IPL010), paying an interest rate of 4.40% is payable quarterly in April, July, October and January in
equal instalments, whilst interest on IPL020 is payable quarterly in August, November, February and May also in equal instalments.
Security
The bank borrowings and fixed rate bonds are managed through a security agent who holds a first registered mortgage on all the investment properties
owned by Investore and a registered first ranking security interest under a General Security Deed over substantially all the assets of Investore.
Net debt reconciliation
Below sets out an analysis of net debt and the movements in net debt.
2021
$000
2020
$000
Cash and cash equivalents
6,800
4,229
Borrowings
(277,363)
(236,946)
Lease liabilities
(15,418)
(11,117)
Net debt(285,981)
(243,834)
Liabilities from financing activities
Borrowings
$000
Leases
$000
Sub-total
$000
Cash
$000
Total
$000
As at 1 Apr 19
(316,631)(11,166)(327,797)5,111(322,686)
Cash flows80,13070580,835(882)79,953
Other changes (445)(656)(1,101)-(1,101)
As at 31 Mar 20(236,946)(11,117)(248,063)4,229(243,834)
Cash flows
(41,597)847(40,750)2,571(38,179)
Re-assessment on rent review
-(4,366)(4,366)-(4,366)
Other changes
1,180(782)398-398
As at 31 Mar 21(277,363)(15,418)(292,781)6,800(285,981)
5.0 Capital Structure And Funding (continued)
5.2 Derivative financial instruments
Accounting Policy
Interest rate derivatives (derivative financial instruments) are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently measured at their fair value at each reporting date. Fair value of over-the-counter derivatives, such as interest rate swaps, is determined
using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure
that an economic relationship exists between the hedged item and hedging instrument.
Hedge ineffectiveness for interest rate swaps may occur due to:
• the credit value/debit value adjustment on the interest rate swaps which is not matched by the loan; and
• differences in critical terms between the interest rate swaps and loans.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the cash flow
hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within the statement of
comprehensive income.
When a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in profit or loss.
2021
$000
2020
$000
Notional value of interest rate derivatives - fixed rate payer
80,000
150,000
Notional value of interest rate derivatives - fixed rate receiver
25,000
25,000
Total105,000
175,000
Interest rate derivative assets - non-current
1,788
2,323
Interest rate derivative liabilities - current
(498)
(231)
Interest rate derivative liabilities - non-current
(900)
(4,641)
Fair values of interest rate derivatives390
(2,549)
Fixed interest rates payer range
2.27%-2.54%
2.27%-3.01%
Fixed interest rate receiver
4.40%
4.40%
Weighted average fixed interest rate (excluding margins)
2.14%
2.64%
Percentage of drawn debt fixed
100%
94%
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
5051
5.0 Capital Structure And Funding (continued)
5.2 Derivative financial instruments (continued)
Investore enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate, reset dates, payment dates, maturities
and notional amount. Investore hedged 100% of its floating rate borrowings as at 31 March 2021 (2020: 94%). As all critical terms matched during the
period, the economic relationship was 100% effective, with the exception of the $25 million fixed rate receiver interest rate swap.
On 21 March 2018, Investore entered into a $25 million forward start fixed rate receiver swap for the duration of the IPL010 fixed rate bonds with the
effect of converting a portion of the IPL010 $100 million fixed rate bonds to floating interest rate. The life to date ineffective portion on the receiver swap,
due to the misalignment to the fixed rate bonds as a result of the bonds commencing on 18 April 2018, is a fair value loss of $44,128 (2020: fair value loss
of $68,346), resulting in a fair value gain movement of $24,218 (2020: fair value loss movement of $18,026) being recognised in the current year in the
statement of comprehensive income.
On 25 November 2019, Investore terminated interest rate derivative contracts with a notional value of $30 million for a cost of $1,562,453. Of the total
swap termination expense incurred, $161,915 was recognised as finance expense in the period ended 31 March 2020 and $1,400,538 had been
recognised in equity as other reserve as at 31 March 2020. Following the repayment of bank debt on the receipt of the $125 million from the fixed rate
bonds and the cancellation of the $99 million bank facility, the amount remaining in other reserve has been expensed in the current period to finance
expense as the hedged future cashflows are no longer expected to occur.
On 31 August 2020, Investore terminated interest rate derivative contracts with a notional value of $40 million for a cost of $2,152,916. This cost has been
expensed to the statement of comprehensive income as the hedged future cashflows are no longer expected to occur.
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 (2020: Level 2). 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 as at balance date. Fair values also reflect the current creditworthiness of the derivative
counterparties. The valuations were based on market rates at 31 March 2021 of between 0.35% for the 90-day BKBM, and 1.95% for the 10-year swap
rate (2020: 0.49% and 0.91% respectively). There were no changes to these valuation techniques during the reporting period.
As at 31 March 2021, the fair value of the interest rate derivatives includes an accrued interest liability of $44,075 (2020: $113,085).
The following sensitivity analysis represents the change in fair value of the interest rate derivatives and shows the effect on equity if the floating interest
rates on swaps (hedged bank borrowings) had been 0.25% higher or lower, with other variables remaining constant.
2021 2020
Gain/(loss)
on +0.25%
$000
Gain/(loss)
on -0.25%
$000
Gain/(loss)
on +0.25%
$000
Gain/(loss)
on -0.25%
$000
Impact on equity(66)67
315(316)
There would have been no impact on profit or loss in either year as the change in fair value is taken to the cash flow hedge reserve. The interest rate
sensitivity analysis is performed by using an instantaneous parallel shift in the yield curve at the testing date.
Investore does not hold derivative financial instruments for trading purposes.
5.0 Capital Structure And Funding (continued)
5.3 Net finance expense
Accounting Policy
Interest income is recognised on a time-proportional basis using the effective interest rate. Borrowing costs are expensed when incurred and are
recognised using the effective interest rate.
2021
$000
2020
$000
Finance income
Bank interest income
4
49
Other finance income
-
3
Total finance income4
52
Finance expense
Bank borrowings interest
(6,150)
(8,670)
Fixed rate bonds interest
(6,159)
(4,395)
Lease liability interest
(782)
(662)
(13,091)
(13,727)
Finance expense - swap termination expense (note 5.2)(3,553)
(199)
Total finance expense(16,644)
(13,926)
Net finance expense(16,640)
(13,874)
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
5253
5.0 Capital Structure And Funding (continued)
5.4 Share capital
Accounting Policy
Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
There is only one class of shares, being ordinary shares, and they rank equally with each other. All issued shares are fully paid and have no par value.
Investore had 368,135,033 shares on issue as at 31 March 2021 (2020: 304,498,669).
Investore undertook an equity capital raise during April and May 2020 which resulted in a gross amount of $105 million raised, $85 million from an
institutional placement which settled on 5 May 2020, and $20 million from a share purchase plan which settled on 20 May 2020, resulting in 63,636,364
shares being issued at $1.65 per share.
5.5 Reserve
Cash flow hedge reserve
2021
$000
2020
$000
Opening balance(2,694)
(2,230)
Swap termination
3,553
-
Swap termination taxation benefit
(995)
-
Movement in fair value of interest rate derivatives
718
(669)
Tax on fair value movement
(201)
187
Transferred to profit or loss
(24)
18
Closing balance357
(2,694)
Gains and losses recognised in the cash flow hedge reserve on interest rate derivative contracts (interest rate swaps) as at 31 March 2021 will be
reclassified in the same period in which the hedged forecast cash flows affect profit or loss, until the repayment of the bank borrowings.
5.6 Capital risk management
Investore’s objectives when managing capital are to safeguard Investore’s ability to continue as a going concern in order to provide returns for shareholders,
and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, Investore may adjust the
amount of dividends paid to shareholders, return capital to shareholders, buy back shares, issue new shares or sell assets to reduce borrowings. As part of
its capital risk management, Investore is required to comply with covenants imposed under its banking facility and its fixed rate bonds (note 5.1). The Board
regularly monitors these covenants and provides six monthly compliance certificates to the banks and the Bond Supervisor as part of this process. Investore
has complied with these covenants during the relevant periods.
This section sets out Investore’s exposure to financial assets and liabilities that potentially subject Investore to financial risk and
how Investore manages those risks.
Accounting Policy
A financial instrument is recognised if Investore becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised
if Investore’s contractual rights to the cash flows expire, or if Investore transfers them without retaining control or substantially all risks and rewards of
the asset. Financial liabilities are de-recognised if Investore’s obligations specified in the contract are extinguished.
Investore classifies its financial assets and financial liabilities in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss); and
• those to be measured at amortised cost.
Summary of financial instruments
2021
$000
2020
$000
Financial assets at amortised cost
Cash at bank
6,800
4,229
Trade and other receivables
451
543
NZX bond
75
75
Derivative financial instruments
Used for hedging
1,764
2,323
Held for trading at fair value through profit and loss
24
-
Total financial assets9,114
7,170
Financial liabilities at amortised cost
Trade and other payables
5,723
5,914
Lease liabilities
15,418
11,117
Borrowings
277,363
236,946
Derivative financial instruments
Used for hedging
1,398
4,854
Held for trading at fair value through profit and loss-18
Total financial liabilities299,902
258,849
6.1 Financial assets at amortised cost
Accounting Policy
Depending on the purpose for which the assets were acquired, Investore classifies its assets as financial assets at fair value through profit or loss and
financial assets at amortised cost. Classification is determined at initial recognition and this designation is re-evaluated at every reporting date.
Financial assets at amortised cost are those assets with fixed or determinable payments that are not quoted in an active market. They are included in current
assets, except for those with maturities greater than 12 months after balance date, which are classified as non-current assets.
On initial recognition of a financial asset, Investore assesses on a forward-looking basis the expected credit loss associated with its financial assets carried
at amortised cost. At each reporting date, the credit risk on a financial asset, apart from trade receivables, is assessed to determine whether there has been
a significant increase in the credit risk by considering both forward-looking information and the financial history of counterparties to assess the probability
of default or likelihood that full settlement is not received.
6.0 Financial Instruments And Risk Management
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6.0 Financial Instruments And Risk Management (continued)
6.2 Financial liabilities at amortised cost
Liabilities in this category are measured at amortised cost and include borrowings and trade and other payables.
6.3 Financial risk management
Investore’s activities expose it to a variety of financial risks: interest rate risk, credit risk and liquidity risk. Investore’s overall risk management strategy
focuses on minimising the potential negative economic impact of unpredictable events on its financial performance.
Risk management is the responsibility of the Board. The Board identifies and evaluates financial risks in close co-operation with SIML. The Board has
a policy for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and investing excess liquidity.
6.4 Interest rate risk
As Investore has no significant interest bearing assets, its income and operating cash flows are substantially independent of changes in market interest
rates.
Investore’s interest rate risk arises from bank borrowings (note 5.1) which are issued at variable rates and expose Investore to cash flow interest rate risk.
The long term interest rate policy provides bands that are applied on a rolling basis, which provide for both a high level of fixed interest rate cover over the
near term, as well as a lengthy period of known fixed interest rate cover for a portion of term debt. Investore manages its cash flow interest rate risk by
predominately using floating to fixed interest rate derivatives which have the economic effect of converting bank borrowings from floating to fixed rates.
As Investore holds interest rate derivatives, there is a risk that their economic value will fluctuate because of changes in market interest rates. The value of
interest rate derivatives is disclosed in note 5.2.
At balance date, the total drawn bank debt was fully hedged (2020: $13.4 million drawn debt not hedged). In the prior period, if floating interest rates were
1% higher or 1% lower, with other variables remaining constant, the 12-month finance expense would have been higher or lower by $96,480 after tax
respectively on the amount of drawn debt not hedged.
Investore’s exposure to variable interest rate risk and the weighted average interest rate for interest bearing financial assets and liabilities is as follows:
2021
$000
2020
$000
Financial assets
Cash at bank
6,800
4,229
Financial liabilities
Bank borrowings
55,000
138,400
Fixed rate bonds
225,000
100,000
Interest rates applicable at balance date
Cash at bank
0.05%
0.05%
Bank borrowings
1.58%
2.05%
Fixed rate bonds IPL010
4.40%
4.40%
Fixed rate bonds IPL020
2.40%
-
Weighted average interest rate for drawn debt (inclusive of current interest rate derivatives,
margins and line fees) of the bank borrowings
4.04%
4.63%
Trade and other receivables and payables are interest free and have settlement dates within one year. All other assets and liabilities are non-interest
bearing.
6.5 Credit risk
Investore incurs credit risk from trade receivables and transactions with financial institutions including cash balances and interest rate derivatives.
The risk associated with trade receivables is managed with a credit policy which includes performing credit evaluations on customers requiring credit and
ensures that only those customers with appropriate credit histories are provided with credit. In addition, receivable balances are monitored on an ongoing
basis, with the result that Investore’s exposure to bad debts is not significant. Amounts which are past due are not considered impaired as the majority are
due from tenants who have demonstrated a good payment history.
As Investore’s tenant, General Distributors Limited (GDL), contributes most of Investore’s portfolio contract rental, Investore is exposed to a significant
concentration of credit risk. GDL is a large national retailer, the operator of Countdown supermarkets in New Zealand and an ultimate subsidiary of
Woolworths Group Limited.
The risk from financial institutions is managed by placing cash and deposits with high credit quality financial institutions only. Investore has placed its cash
and deposits with Westpac New Zealand Limited, which is AA- rated (Standard & Poor’s).
With respect to the credit risk arising from interest rate swap agreements, there is limited risk as all counterparties are registered banks in New Zealand
whose credit ratings are all AA- (Standard & Poor’s).
Investore is not exposed to any other concentrations of credit risk. The maximum exposure to credit risk is the carrying amount of each class of financial
assets as reported in note 6.0.
6.6 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities,
and the ability to close out market positions. Investore’s liquidity position is monitored on a regular basis and is reviewed quarterly by the Board to ensure
compliance with internal policies and covenants per Investore’s banking facility and fixed rate bonds.
Investore generates sufficient cash flows from its operating activities to meet its obligations arising from its financial liabilities and has the bank facility
available to cover potential shortfalls. Further detail about the undrawn bank facility available is given in note 5.1.
The following table outlines Investore’s liquidity profile, as at 31 March, based on contractual non-discounted cash flows.
Total
$000
0-6 mths
$000
6-12 mths
$000
1-2 yrs
$000
2-5 yrs
$000
>5 yrs
$000
31 Mar 21
Trade and other payables
5,7235,723----
Secured bank borrowings
65,4551,3671,36734,78227,939-
Fixed rate bonds
257,6703,7003,7007,400113,620129,250
Lease liabilities
35,7826902989694,47529,350
Derivative financial instruments
(424)307(35)(285)(411)-
364,20611,7875,33042,866145,623158,600
31 Mar 20
Trade and other payables5,9145,914----
Secured bank borrowings145,4692,1062,10670,56070,697-
Fixed rate bonds117,8202,2002,2004,400109,020-
Lease liabilities27,7782622985592,40924,250
Derivative financial instruments2,166835719928(316)-
299,14711,3175,32376,447181,81024,250
6.7 Fair values
The carrying value of the following financial assets and liabilities approximate their fair value: cash at bank, trade and other receivables, NZX bond, trade and
other payables and bank borrowings. The fair value of the fixed rate bonds is disclosed in note 5.1.
6.0 Financial Instruments And Risk Management (continued)
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This section contains additional information to assist in understanding the financial performance and position of Investore.
7.1 Operating segments
Accounting Policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker has been identified as the Board, as it makes all key strategic resource allocation decisions (such as those concerning
acquisitions, divestments and significant capital expenditure).
Investore is reported as a single operating segment, being large format retail properties. Investore’s revenue streams are earned from investment
properties owned in New Zealand, with no specific exposure to geographical risk. One tenant, General Distributors Limited (Countdown), contributes
64% of Investore’s portfolio contract rental as at 31 March 2021 (2020: 72%).
7.2 Corporate expenses
2021
$000
2020
$000
Administration expenses includes:
Auditor’s remuneration
Audit and review of financial statements
157
166
Other assurance services - operating expense audits
15
13
172
179
Other services - agreed procedures for proxy vote
-
4
Total Auditor’s remuneration172
183
7.0 Other7.0 Other (continued)
7.3 Tax
Accounting Policy
Income tax expense comprises current and deferred tax and is recognised in the statement of comprehensive income for the year. Current and
deferred tax is calculated on the basis of the laws enacted or substantively enacted at the reporting date.
Investore is a listed Portfolio Investment Entity (PIE) for the purposes of the Income Tax Act 2007 and is required to pay tax to Inland Revenue as required by
the Income Tax Act 2007.
Income tax
2021
$000
2020
$000
Current tax
(3,652)
(5,559)
Deferred tax
(4,054)
(273)
Income tax expense per the statement of comprehensive income(7,706)
(5,832)
Profit before income tax168,966
34,447
Prima facie income tax using the company tax rate of 28% (47,310)
(9,645)
Decrease/(increase) in income tax due to:
Net change in fair value of investment properties
39,000
2,160
Reversal of lease liabilities movement in investment properties
18
12
Movement in fair value of derivative financial instruments
7
(5)
Non-taxable income
216
311
Other permanent differences
170
-
Depreciation
4,368
1,728
Depreciation recovered on disposal of investment property
-
(53)
Non-deductible expenses
(498)
(98)
Temporary differences
(18)
(65)
Swap termination expense released from reserve
392
46
Over-provision in prior year
3
50
Current tax expense(3,652)
(5,559)
Investment property depreciation
(4,029)
(338)
Other
(25)
65
Deferred tax charged to profit or loss(4,054)
(273)
Income tax expense per the statement of comprehensive income(7,706)
(5,832)
Imputation credits available for use in subsequent reporting periods739
1,290
In the current period, the income tax benefit of $392,280 arising from the swap termination expenses in the cash flow hedges in the prior year has been
recognised in the statement of comprehensive income.
Imputation credits available for use in subsequent reporting periods are based on a rate of 28% and represent the balance of the imputation account as at
the end of the reporting period, adjusted for imputation credits arising from provisional income tax paid.
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7.0 Other (continued)
7.3 Tax (continued)
Accounting Policy
Deferred tax is provided, using the liability method, on all temporary differences between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes. Temporary differences include:
• tax liability arising from accumulated depreciation claimed on investment properties, where applicable;
• tax asset arising from loss allowance;
• tax liability arising from certain prepayments and other assets; and
• tax asset/liability arising from the unrealised gains/losses on the revaluation of interest rate swaps.
For deferred tax liabilities or assets arising on investment property measured at fair value, it is assumed that the carrying amounts of the investment
property will be recovered through sale. Investment properties are independently valued each year and the valuation includes a split between the land
and building components. Deferred tax is provided on the depreciation claimed to date on the building component of the investment properties and
this places reliance on the valuation split provided by the valuers.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset and when the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
2020
$000
Recognised
in profit
or loss
$000
Recognised
in other
comprehensive
income
$000
2021
$000
Deferred tax assets
Derivative financial instruments
1,308-(973)335
Other temporary differences
71(25)-46
1,379(25)(973)381
Deferred tax liabilities
Depreciation on investment properties
(435)(4,029)-(4,464)
Derivative financial instruments
(626)-169(457)
(1,061)(4,029)169(4,921)
318(4,054)(804)(4,540)
2019
$000$000$000
2020
$000
Deferred tax assets
Derivative financial instruments1,242-661,308
Other temporary differences 665-71
1,24865661,379
Deferred tax liabilities
Derivative financial instruments(355)-(271)(626)
Depreciation on investment properties(97)(338)-(435)
(452)(338)(271)(1,061)
796(273)(205)318
As part of its COVID-19 support package the New Zealand Government has reintroduced a 2% diminishing value depreciation deduction for commercial
properties, starting in April 2020 for Investore. This provided a financial benefit to Investore of approximately $2.2 million for the year ended 31 March
2021.
7.0 Other (continued)
7.4 Trade and other receivables
Accounting Policy
Trade and other receivables are recognised at their fair value and subsequently measured at amortised cost using the effective interest rate method.
Investore has applied the simplified approach to measuring expected credit loss as prescribed by NZ IFRS 9, which uses a lifetime expected loss
allowance. A loss allowance is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the
debtor) that Investore will not be able to collect all of the amounts due under the original terms of the invoice.
2021
$000
2020
$000
Current
Trade and other receivables
533
593
Less loss allowance
(82)
(50)
451
543
Carrying amount451
543
Less than 30 days overdue
284
31
Over 30 days overdue
249
562
Less impaired assets
(82)
(50)
Movement in loss allowance
Opening balance(50)
(33)
Additional loss allowance
(82)
(50)
Reduction in loss allowance
50
28
Bad debts written off
-
5
Closing balance(82)
(50)
7.5 Trade and other payables
Accounting Policy
Trade and other payables represent unsecured liabilities for goods and services provided to Investore prior to the end of the financial period which are
unpaid. Trade and other payables are usually paid within 30 days of recognition. The carrying amounts of trade and other payables are assumed to be
the same as their fair values, due to their short-term nature.
2021
$000
2020
$000
Current
Unsecured liabilities
Trade payables
637
274
Related party payables (note 4.0)
707
617
Rent in advance
767
510
Capital expenditure payables and accruals
1,320
2,058
Other accruals and payables
2,292
2,455
5,723
5,914
Other accruals and payables include Goods and Services Tax, interest expense accruals, tenant deposits, direct property operating expense accruals and
other corporate expense accruals.
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6061
7.0 Other (continued)
7.6 Contingent liabilities
Investore has no contingent liabilities at balance date (2020: $nil).
7.7 Subsequent events
On 7 May 2021, Investore entered into an unconditional agreement to acquire the property at 45-49 Jackson Street, Petone, Wellington, for $37.25 million.
This property is anchored by Countdown. Settlement is expected to occur on 21 May 2021.
On 18 May 2021, Investore announced it has entered into a conditional agreement to acquire a 3.5ha parcel of land at Waimak Junction, Kaiapoi,
North Canterbury, for $10.47 million. Investore has reached agreement in principle with Countdown to construct a new supermarket on a portion of this
site, leaving the balance of the land for future development.
Investore expects the capital commitment for these two acquisitions, together with the cost of stage one of the development of the Waimak Junction land, to
be approximately $68.5 million which will be funded from available debt facilities.
On 18 May 2021, Investore declared a cash dividend for the period 1 January 2021 to 31 March 2021 of 1.90 cents per share, to be paid on 2 June 2021
to all shareholders on Investore’s register at the close of business on 26 May 2021. This dividend will carry imputation credits of 0.200611 cents per share.
This dividend has not been recognised in the financial statements.
There have been no other material events subsequent to balance date.
Our opinion
In our opinion, the accompanying financial statements of Investore Property Limited (the Company), present fairly, in all material respects, the financial
position of the Company as at 31 March 2021, 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).
What we have audited
The financial statements comprise:
• the statement of financial position as at 31 March 2021;
• the statement of comprehensive income for the year then ended;
• the statement of changes in equity for the year then ended;
• the statement of cash flows for the year then ended; and
• the notes to the financial statements, which include significant accounting policies and other explanatory information.
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 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.
Independence
We are independent of the Company in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards
Board for Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other services for the Company in the areas of assurance services over operating expense audits. The provision of these other services
has not impaired our independence as auditor of the Company.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
year. We have one key audit matter, which is the valuation of investment property. This matter was addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Independent auditor’s report
To the shareholders of Investore Property Limited
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
6263
Independent auditor’s report (continued)
To the shareholders of Investore Property Limited
Our audit approach
Overview
Materiality
Overall materiality: $1,487,000, which represents approximately 5% of profit before tax excluding the net
change in fair value of investment properties.
We applied this benchmark because, in our view, it is reflective of the metric against which the performance
of the Company is most commonly measured by users.
Key audit matter
As reported above, we have one key audit matter being the valuation of investment property.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we
considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. 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 financial statements as a whole, taking into
account the structure of the Company, the accounting processes and controls, and the industry in which the Company operates.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance about whether the financial
statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the 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 financial statements as a whole.
Description of the key audit matterHow our audit addressed the key audit matter
Valuation of investment property
As disclosed in Note 2.2 of the financial statements, the Company’s
investment properties at valuation totalled $1,035.5 million (excluding
lease liabilities) which represents the majority of the assets held by the
Company as at 31 March 2021.
The valuation of the Company’s property portfolio is inherently subjective
due to, amongst other factors, the individual nature of each property,
location and the expected future rental income for each property. A small
percentage difference in any one of the key individual assumptions used
in the property valuations, when aggregated, could result in a material
misstatement of the overall valuation of investment properties.
The valuations were performed by independent registered valuers,
Bayleys Valuations Limited, CBRE Limited, CVAS (NZ) Limited, CVAS
(WLG) Limited, Jones Lang LaSalle and Savills (NZ) Limited (the Valuers)
as engaged by Stride Investment Management Limited (the Company’s
Manager). The Valuers engaged by the Manager are experienced in the
markets in which the Company operates and are rotated across the
portfolio on a three-yearly cycle.
As discussed in Notes 1.6 and 2.2 of the financial statements, the
‘material valuation uncertainty’ clause presented in the 31 March 2020
valuations due to COVID-19 no longer applies and has been removed
from all of the independent valuations for 31 March 2021.
In determining a property’s valuation, the Valuers generally used two
approaches 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.
For each property, the Valuers take into account property specific
information such as the current tenancy agreements and rental
income earned by the asset. They then apply assumptions in relation to
capitalisation rate, discount rate, gross market rental, rental growth rate
and terminal yield.
Due to the unique nature of each property, the assumptions applied take
into consideration the individual property characteristics at a granular
tenant by tenant level, as well as the qualities of the property as a whole.
Valuation of investment property
The valuation of investment properties is inherently subjective given that
there are alternative assumptions and valuation methods that may result in
a range of values.
We held discussions with the Manager to understand the movements in the
Company’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 Company’s investment property portfolio
including tenant rent abatements and tenant occupancy risk arising from
changes in the estimated churn on lease renewal.
In assessing the individual valuations, we read the valuation reports for all
properties. We also held separate discussions with each of the Valuers in
order to gain an understanding of the assumptions and estimates used
and the valuation methodology applied. We also sought to understand
and consider restrictions imposed on the valuation process (if any) and the
market conditions at the balance date.
We confirmed that the valuation approach for each property was in
accordance with accounting standards and suitable for use in determining
the fair value of investment properties at 31 March 2021.
Our work over the assumptions focused on the largest properties in the
portfolio where the assumptions used and/or year-on-year fair value
movement suggested a possible outlier versus market data. We engaged
our own in-house valuation specialist to critique and independently assess
the work performed and assumptions used by the Valuers on a sample
basis. In particular, we obtained an understanding of the key inputs in the
valuation, agreed contractual rental and lease terms to lease agreements
with tenants, considered whether seismic assessments and/or capital
maintenance requirements had been taken into account in the valuations
with reference to supporting documentation and validated that COVID-19
relief provided to tenants had been factored into the valuations and that
changes in tenant occupancy risk were also incorporated.
We considered whether or not there was a bias in determining significant
assumptions in individual valuations and found no evidence of bias.
We also assessed the Valuers’ qualifications, expertise and their objectivity
and we found no evidence to suggest that the objectivity of any Valuer, in
their performance of the valuations, was compromised.
It was also evident from our discussions with the Manager and the Valuers
and from our review of the valuation reports that close attention had been
paid to each property’s individual characteristics and its overall quality,
geographic location and desirability as a whole.
We considered the appropriateness of disclosures made in the
financial statements.
Independent auditor’s report (continued)
To the shareholders of Investore Property Limited
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
6465
Independent auditor’s report (continued)
To the shareholders of Investore Property Limited
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual report, but does not include
the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the 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 financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the 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 financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’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 Company or
to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-2/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those matters which
we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinions we
have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Samuel Shuttleworth.
For and on behalf of:
Chartered Accountants
18 May 2021
Auckland
Countdown, Rototuna
Investore Property Limited Annual Report 2021
67
Investore Property Limited Annual Report 2021
66
Corporate
Governance
Overview of Investore
Investore is a New Zealand incorporated company,
whose fully paid ordinary shares are quoted on
the NZX Main Board equity securities market
under the ticker code ‘IPL’, with a ‘nonstandard’
(NS) designation. Investore has a ‘non-standard’
designation due to certain waivers that have been
granted from the Listing Rules, which reflect the
nature and operations of Investore. These waivers
are described on pages 90 and 91.
Investore was established by SPL as a separate
listed company in 2016 to invest in large
format retail property throughout New Zealand.
Investore is a listed Portfolio Investment Entity
(PIE) for taxation purposes.
Investore’s assets and operations are externally
managed by SIML, the real estate investment
management business that is part of the NZX
listed stapled group, Stride Property Group.
SIML, as Manager, has appointed two Directors
to the Investore Board.
Management of Investore
Investore does not have any employees of its
own and has appointed SIML as the manager
of Investore’s portfolio and its business
pursuant to a Management Agreement between
Investore and SIML. Under this Management
Agreement, SIML is responsible for the
management and maintenance of Investore’s
property portfolio and its business, negotiating
the acquisition and disposal of property,
development management, treasury and capital
management, and ensuring Investore meets
its financial, reporting, and other statutory and
regulatory obligations.
Corporate Governance
The Board has adopted a corporate governance
framework that is appropriate for the size and
nature of Investore’s operations. The Board
reviews and assesses Investore’s governance
structures and processes to ensure they remain
appropriate and effective and are consistent
with best practice standards. This section of
the Annual Report provides an overview of
Investore’s corporate governance framework and
includes commentary on Investore’s compliance
with each of the eight corporate governance
principles and recommendations of the NZX Code for the
year ended 31 March 2021, together with other legal and
regulatory disclosures.
Investore’s corporate governance framework and
practices are materially consistent with the NZX Code,
subject to the following exceptions, which are consistent
with practices reported in previous years:
• No Remuneration Committee has been established
(NZX Code Recommendation 3.3) and no
Remuneration Policy has been adopted (NZX Code
Recommendation 5.2), due to Investore having no
employees. Director remuneration is considered
by the Board as a whole and then recommended to
shareholders for approval.
• No Nomination Committee has been established
to recommend Director appointments (NZX Code
Recommendation 3.4), as this function is assumed
by the whole Board.
The Board of Investore has established
a framework of policies, practices, and
processes as part of its governance
framework that are intended to ensure
that Investore implements best practice
standards of corporate governance. The
Board sets the strategic direction and
objectives for the business, identifies
and manages risks, and strives to
continuously improve performance.
This section of the Annual Report
provides an overview of those corporate
governance policies, practices and
processes adopted and followed by
Investore. This statement is current as at
1 May 2021.
Investore’s Website:
For additional information
on Investore’s key corporate
governance documents and
policies, please refer to the
Investore website at
www.investoreproperty.co.nz
External Stakeholders
External Auditor
Investore Board of Directors
ShareholdersBondholders
Management Agreement
Audit and Risk Committee
Risk Management
/Internal Controls
Delegations of Authority
Other SIML
Managed Fund
Other SIML
Managed Fund
Investore
Large Format
Retail
SIML/Manager
SIML CEO/Management
Appointment
of Directors
Accountability
Operational Management
Risk Management Framework
SPL 18.8%
(as at 31 March 2021)
Other SIML
Managed Fund
Diagram 1 – Governance Framework
• As there is no Chief Executive of Investore,
the requirement to disclose the remuneration
arrangements in place for the Chief Executive does
not apply (NZX Code Recommendation 5.3).
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6869
Principle 1:
Code of Ethical Behaviour
“Directors should set high standards of
ethical behaviour, model this behaviour
and hold management accountable
for these standards being followed
throughout the organisation.”
The Board sets a standard of ethical behaviour for
the conduct of Investore’s business and adopts an
ethics-based approach to Investore’s operations and
decision-making. This approach is underpinned by a
number of policies, as described below. Investore does
not have a whistleblower policy, as it has no employees.
Code of Ethics
Investore has adopted a Code of Ethics which sets the
standard expected by Investore of its Directors and of
the employees of the Manager when conducting the
business of Investore. Key principles of Investore’s Code
of Ethics:
Act with honesty and integrity and
demonstrate respect for others
Adhere to all legal and compliance
obligations
Protect Investore’s assets and resources,
including its confidential or sensitive
information
Make every effort to protect the reputation
of Investore and avoid a conflict between an
individual’s private financial activities and the
business activities of Investore
The Code of Ethics is supported by other policies,
including the Manager’s Conflicts Policy, Securities
Trading Policy and Market Disclosure Policy (see
Principle 4: Reporting and Disclosure for a description
of the Market Disclosure Policy).
Conflicts of Interest
Investore and the Board remain extremely
conscious of the risk posed by conflicts of
interest, particularly given the relationship
between Investore, Stride Property Group,
and other entities managed by SIML. The
management of perceived and actual conflicts
of interest is an integral feature of Investore’s
day-to-day governance practices. The principles
that govern the management of conflicts
of interest are addressed in a number of
Investore’s governance documents, including
the Constitution, the Board Charter, the Code of
Ethics, and a range of internal policies of SIML,
the Manager. SIML has adopted a Conflicts
Policy which Investore has approved, and
which guides SIML in identifying and managing
conflicts of interest in its operations, including
its management of the business of Investore.
In addition to the standing Conflicts Policy, the
Board and SIML adopt transaction-specific
conflicts protocols as appropriate, particularly
for example, in any transaction involving
Investore and another entity managed by SIML,
such as SPL.
Securities Trading Policy
The Board has adopted a Securities Trading
Policy which contains processes and procedures
governing trading in Investore securities. The
Securities Trading Policy raises awareness about
the insider trading provisions within the Financial
Markets Conduct Act 2013 (FMCA) and
reinforces those requirements with additional
internal compliance requirements. Directors of
Investore and directors and employees of SIML
who wish to trade in quoted financial products
of Investore must comply with the Securities
Trading Policy, which imposes limited trading
windows and requires all persons to whom the
policy applies to obtain approval prior to trading.
Speculative trading is not permitted. A minimum
hold period of six months for any securities
acquired is imposed, except in exceptional
circumstances and with the prior approval of the
Company Secretary.
Principle 2:
Board Composition and
Performance
“To ensure an effective board, there
should be a balance of independence,
skills, knowledge, experience and
perspectives.”
The Board is responsible for overseeing the effective
management and operation of Investore. The Board’s role
is to represent the interests of Investore’s stakeholders
and ensure that the operations of Investore are managed
in a way that is consistent with the achievement of
Investore’s strategy and business objectives, within a
framework of regulatory and ethical compliance.
The Board’s roles and responsibilities are formalised in
a Board Charter, which is available on the Company’s
website. The Board Charter outlines the functions that
are reserved for the Board and those that are formally
delegated to SIML as Manager. Directors review the
Board Charter annually, to ensure it remains consistent
with the Board’s objectives and responsibilities and
sets an appropriate balance between the governance
matters for which the Board retains responsibility and
those operational matters which have been delegated to
the Manager.
The Board retains responsibility for setting the strategic
direction of Investore, overseeing performance and
communicating to the market. The Board delegates the
day-to-day management of Investore’s business to SIML
as Manager by way of the Management Agreement and
sets appropriate operating parameters through formal
delegations of authority.
The relationship between the Board and SIML is a closely
linked one, with regular communication and interaction,
as depicted in Diagram 2.
Diagram 2 – Board and Manager Roles and Responsibilities
Board oversees operations of
Investore and implementation
of strategic objectives
• Ensures Investore has
adequate resources to meet
Investore’s objectives and
obligations
• Reviews and approves
Investore’s budgets, business
plans, dividend policy and
financial forecasts and
oversees Investore’s capital
management
• Monitors the financial
performance of Investore
• Implements effective audit
and risk management
systems
• Reviews and approves market
communications
SIML implements Board’s
strategy and follows approved
policies and procedures
• Oversees day to day operations
of Investore’s property portfolio
and assets
• Ensures Investore is meeting
its legal, regulatory, financial
reporting and other statutory
obligations
• Makes recommendations to the
Board on company strategy and
initiatives
• Reports to the Board on
Investore’s operating
performance, and prepares
budgets and business plans for
Board approval
• Manages business risk in
accordance with the risk appetite
adopted by the Board and
implements health and safety
policies and procedures
Board sets strategic
direction and operating
frameworks
• Adopts policies, processes
and systems to ensure
the business of Investore
is operated in an honest,
ethical, safe and responsible
manner
• Adopts an appropriate risk
management framework
• Delegates day to day
operations to SIML within
a formal delegation of
authority
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Composition of the Board and Director
Independence
Investore’s Constitution requires the Board to have no
less than four and no more than five Directors at any one
time. The Board must comprise:
• At least two Directors who are ‘Independent of the
Manager’ (as described below) where the Board
is comprised of four Directors, and at least three
Directors who are Independent of the Manager
where the Board is comprised of five Directors.
• A non-executive Chair, who holds a casting vote
in respect of Board resolutions in the case of
an equality of votes, provided that the Chair is
Independent of the Manager.
• At least two Directors who are ordinarily resident in
New Zealand.
SIML, as Manager, has the right to appoint and remove two
Directors. The two SIML appointed Directors, Tim Storey
and John Harvey, are also directors of SIML and SPL.
The independent Directors (being both ‘Independent
of the Manager’ and independent Directors pursuant to
the Listing Rules) are appointed and subject to removal
in the normal manner by Investore shareholders who
are not associated with SIML. This means that SPL, as
a shareholder of Investore, is not eligible to vote on the
appointment of the independent Directors.
Under Investore’s Constitution, if SIML has exercised
its Director appointment rights, the Chair must be
‘Independent of the Manager’ and the Board must include
at least two Directors (where there are four Directors on
the Board) or at least three Directors (where there are
five Directors on the Board) who are ‘Independent of the
Manager’. Where there are four Directors on the Board,
the Chair has a casting vote on Board resolutions in the
case of an equality of votes.
‘Independent of the Manager’ means, in respect of a
Director, that:
• The Director is not an ‘Associated Person’
(as defined in the Listing Rules) of SIML, any person
who holds or controls more than 25% of the ordinary
shares of SIML, or any related company of a person
who holds or controls more than 25% of the ordinary
shares of SIML;
• The Director was not appointed by SIML under its
appointment rights in the Constitution;
• The Director is not an executive officer of SIML and
has no ‘Disqualifying Relationship’ (as defined in the
Listing Rules) with SIML; or
• Pursuant to any NZX Regulation ruling or other
written consent of NZX, the Director is to be treated
as being independent of SIML.
The Directors of Investore who held the office of Director
during the 12 months to 31 March 2021, their status and
date of appointment, expertise, and experience, is set out
on pages 10 and 11, with their attendance at meetings
set out on page 77.
The Board has reviewed the status of each of the
Directors and confirms that, as at the date of release
of this Annual Report, Directors Mike Allen, Gráinne
Troute and Adrian Walker are independent Directors, on
the basis that none of these directors have any current
or prior relationship with Investore or any substantial
product holder of Investore (other than his or her role
as a director of Investore), and none of these directors
has been a director of Investore for a length of time that
may compromise independence. Accordingly, as at the
date of this Annual Report, Investore’s Board comprises
a majority of independent directors, consistent with the
recommendation in the NZX Code.
The Chair of the Board, Mike Allen, is an independent
Director and is independent of the Manager. In addition,
the Chair of the Board and the Chief Executive Officer of
the Manager are separate.
The company secretary of Investore is an employee of
SIML, as Investore has no employees. The company
secretary has direct access to the Chair of the Board and
Chair of the Audit and Risk Committee, to raise matters
as appropriate.
Appointment of Directors
Potential candidates for appointment as an independent
Director are nominated by the Board or shareholders and
are voted on by the shareholders of Investore. The Board
may appoint Directors to fill a casual vacancy, but where a
Director is appointed to fill a casual vacancy, that Director
is required to retire and stand for election at the first
Annual Shareholder Meeting after their appointment.
To be eligible for selection, candidates must demonstrate
the appropriate qualities and experience for the role
of Director and will be selected on a range of factors,
including property industry knowledge, business acumen,
financial markets and governance experience. Other
relevant factors may include background, qualifications,
and professional expertise, and these will be considered
against the Board’s assessment of its needs at the time
and having regard to the strategy of Investore.
Before appointing a new director, the Board undertakes
appropriate pre-appointment checks, including
background checks on education, employment
experience, criminal history, and bankruptcy.
As reported in the Annual Report for FY20, Director
Adrian Walker was appointed as a Director on 3 April
2020. He was subsequently elected as a Director by
Investore shareholders at the Annual Shareholder
Meeting on 9 September 2020. No other directors were
appointed during FY21.
All new non-executive Directors are appointed by way of a
formal letter of appointment setting out the key terms and
conditions of their appointment, including expected time
commitment, remuneration entitlements and indemnity
and insurance arrangements. New Directors are provided
with an induction pack containing key governance
information, policies, and relevant information necessary
to prepare new Directors for their role. New Directors also
meet each of the key members of SIML management as
part of an induction programme, designed to provide new
Directors with an overview of Investore, its strategy and
operations, and the market in which it operates.
Directors’ Skills and Experience
The Board regularly reviews its skills and experience
against the Board’s perceived skill requirements
given Investore’s business and its current strategic
requirements.
The Board is conscious to ensure that it collectively has
an appropriate mix of skills, knowledge, experience, and
diversity to enable the Board to meet its responsibilities
and to bring different perspectives to Board discussions.
A balance is sought between Directors with experience
and knowledge of the property sector, the history and
operations of Investore and the Manager, and new
Directors who bring new thinking, perspectives, skills
and experience.
Set out in Diagram 3 is a summary of the identified mix of
skills and experience among Directors that the Board has
identified. This skills matrix takes account of the nature
of the Company’s business interests and its strategic
principles. Individual Director profiles are also set out on
the Investore website and on pages 10 and 11 of this
Annual Report. The current mix of skills and experience
is considered appropriate for the responsibilities and
requirements of governing Investore.
Diagram 3 – Board Skills Matrix
Risk
management
Setting
corporate
strategy
Financial
reporting
Non-Independent
Independent
Female
Male
Legal
80%
60%
40%
20%
100%
4 5 years
T
e
n
u
r
e
G
e
n
d
e
r
D
i
v
e
r
s
i
t
y
S
k
i
l
l
s
a
n
d
C
o
m
p
e
t
e
n
c
i
e
s
0 3 years
Legal
Retail
Property
Capital markets
2
1
4
4
4
4
5
5
Governance
and leadership
C
o
m
p
o
s
i
t
i
o
n
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72
Professional Development
The Board conducts continuing professional
development for Directors, which includes briefings
from senior SIML managers and industry experts. This is
intended to enable Directors to maintain the knowledge
and skill set required for the office of a Director of
Investore, particularly focused on knowledge specific
to the property industry, macroeconomic factors, and
new regulatory and governance practices, all of which
may impact on Investore’s business and operations.
All Directors undertake appropriate training to remain
current on how to best perform their duties as Directors.
Board Review
Directors carry out an annual performance review
and during FY21 the Board engaged an independent
external review of its performance and its engagement
with SIML management. The Board’s objective with this
external review was to enhance Board effectiveness by
strengthening governance and leadership, and ensuring
these are aligned with achieving the organisation’s
purpose in a sustainable way.
The review consisted of separate interviews with
each Director as well as with key members of SIML
management. The report provided an overview of the
Board’s effectiveness and confirmed that the Investore
Board is characterised by a healthy, collaborative, open
dynamic. The report made some suggestions for further
refinement of the Board’s operations. The Board met
with the assessor to discuss the suggestions and agree
how best to address each suggestion. As a result, the
Board has modified its meeting process and will reassess
the effectiveness of this new approach after a period
of time.
Diversity
The Investore Board understands that different
perspectives contribute to a more successful business
and recognises the value in diversity of thinking and
skills. Investore is committed to promoting diversity on
its Board by attracting, developing, and retaining high
calibre Directors from a diverse pool of individuals and
skill sets. The Board also monitors diversity and inclusion
practices of the manager, SIML.
The Board has adopted a Diversity Policy, which applies
to the Board, given that Investore has no employees.
Investore’s Diversity Policy is available on its website.
Investore aligns its Diversity Policy with SIML’s Diversity
Policy. For more information on the Manager’s diversity
strategy, refer to the FY21 Annual Report of Stride (when
available) at www.strideproperty.co.nz
Investore has conducted a review of its Diversity Policy and
the performance of Investore against its annual objectives
for the year in review, and notes its progress towards
achieving its objectives in Table 1. In addition, Investore has
promoted diversity during FY21 through its participation in
the Future Directors’ programme, with the appointment of
Emma McDonald as a Future Director, and the work of the
Board in mentoring and supporting Emma.
The Investore Board notes that SIML has undertaken a
number of initiatives during FY21 intended to improve
its diversity practices, including becoming a Diversity
Works member and completing the Diversity and
Inclusion Stocktake and revising and improving its
flexible work policy.
Gender composition of the Board of Investore
As at
31 March 2021
As at
31 March 2020
Male4 (80%)3 (75%)
Female1 (20%)1 (25%)
Principle 3: Board Committees
“The board should use committees
where this will enhance its
effectiveness in key areas, while still
retaining board responsibility.”
Committees play an important role in Investore’s
governance framework, allowing a subset of the
Board to focus on a particular area of importance,
while still ensuring the Board as a whole is
responsible for decision-making for the Company.
The Board has one standing committee in operation,
the Audit and Risk Committee, to assist in the
exercise of its functions and duties. The Board
may also establish non-standing committees, as
required, to deal with specific matters. During
FY21 the Board established two temporary Due
Diligence Committees, one to oversee planning and
preparation for the equity capital raising undertaken
during April and May 2020, and the second to
oversee planning and preparation for the listed
bond issue undertaken during August 2020. The
purpose of the Due Diligence Committees was to
ensure that the Company met its legal obligations in
relation to the equity and debt raises. In both cases,
all members of the Board were members of the Due
Diligence Committee, along with representatives of
the Manager and advisers.
The NZX Code recommends that a Remuneration
Committee and a Nominations Committee be
established to recommend remuneration packages
for Directors and senior employees and to
recommend director appointments to the Board.
As Investore has no employees and a relatively
small Board, the function of Director remuneration
and appointment is undertaken by the full Board,
with both Director remuneration and independent
Director appointments ultimately requiring
shareholder approval.
Audit and Risk Committee
The Audit and Risk Committee operates under a
written Charter which is reviewed annually by the
Committee to ensure that it remains appropriate
and current. This Charter is available in the
Governance section of the Investore website. The
Charter requires that the Audit and Risk Committee
be comprised solely of non-executive Directors,
and have at least three members, with the majority of
members being independent Directors. At least two
Directors on the Committee must be independent of
SIML. The Chair of the Audit and Risk Committee is to
be an independent Director and may not be the Chair
of the Board. All Audit and Risk Committee members
are expected to have an appropriate degree of financial
acumen for the position of Audit and Risk Committee
member and at least one member must have accounting
or related financial management expertise.
The Audit and Risk Committee currently comprises
three Directors, of whom two, Gráinne Troute and
Mike Allen, are independent Directors. The third
member of the Committee, John Harvey, is a SIML-
appointed Director with considerable financial and
audit experience, having been a partner at PwC for
23 years. The Chair of the Committee, Gráinne Troute,
is an independent Director and is not the Chair of
the Board.
Directors who are not committee members have a
standing invitation to, and regularly attend, the Audit
and Risk Committee meetings. Meetings of the Audit
and Risk Committee are held at least twice a year,
having regard to Investore’s reporting and audit cycle.
Additional meetings may be held at the discretion of the
Chair, or if requested by any Audit and Risk Committee
member or the external auditor. The NZX Code
recommends that employees (which in this case, would
be senior management of SIML) should only attend
Audit and Risk Committee meetings at the invitation of
the Committee. The Chief Executive Officer and senior
management of SIML, and the external auditor, have a
standing invitation to attend Audit and Risk Committee
meetings. The Audit and Risk Committee are free to,
and do, meet separately with the external auditor,
without senior management of SIML present, to discuss
audit matters. The Audit and Risk Committee provides
assistance to Directors in fulfilling their responsibility
to investors in relation to the reporting practices of
Investore, and the quality, integrity, and transparency of
the financial reports of Investore.
Table 1 - Diversity Objectives and Progress FY21
ObjectiveProgress as at 31 March 2021
Recruitment
Ensure recruitment procedures provide for a wide range of potential
Director candidates to be considered at Board level
When conducting a search for a new Director, Investore considers
diversity as one of the factors for consideration and encourages
applications from a diverse range of Director candidates and utilises a
variety of channels.
Reporting
SIML will report periodically to the Board on diversity related matters
within its business, including diversity of employees
Investore has adopted a Diversity Policy to apply to the Board which
is aligned with SIML’s Diversity Policy. The Investore Board takes an
active approach to oversight of the Manager’s diversity approach. SIML
reported to the Investore Board on progress in its diversity objectives,
a summary of which can be found in the Stride Annual Report for FY21
(when available).
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The primary roles of the Audit and Risk Committee are:
Due Diligence Committees
During the year in review a temporary Board Committee
was established to oversee the equity capital raising
undertaken in April and May 2020 to provide flexibility
in funding to further pursue Investore’s growth strategy.
Given the capital raising was undertaken during the
COVID-19 lockdown period, which involved a level
of uncertainty and potential risk for Investore, it was
determined that all Directors would participate in the
Due Diligence Committee, along with members of SIML
management and representatives of Investore’s advisers.
The key function of the Due Diligence Committee was to
oversee and coordinate the due diligence process for the
equity capital raising, which comprised an institutional
placement and a retail offer.
The Due Diligence Committee was responsible for
ensuring that all material information known to Investore
was disclosed to the market and that the offer materials
did not contain any statement that was false, misleading,
or deceptive or which was unsubstantiated, and
contained all of the information required by statute and
the Listing Rules. The Committee also established a
system of continuing enquiry, review, and monitoring of
developments between the date of the offer materials
and the allotment of shares, to ensure no material
information arose which should be disclosed to the
market during this period.
A second Due Diligence Committee was formed in
July 2020 to oversee the offer of Investore’s second
tranche of listed bonds, which were listed in August
2020. All Directors participated in the Due Diligence
Committee, along with members of SIML management
and representatives of Investore’s advisers. The Due
Diligence Committee operated in a similar fashion to
the Due Diligence Committee formed earlier in the year
for the purpose of the April and May 2020 equity capital
raising and had a similar role.
Board and Committee Meetings and Attendance
The Board schedules a minimum of six meetings per
year, at which Directors receive written reports and
presentations from SIML’s Chief Executive Officer and
senior management covering a review of operations
and financial results for the period in review, matters
for Board approval, and an outline of key health, safety
and sustainability matters and, as appropriate, risk and
governance reports. The Board regularly considers
performance against strategy, sets strategic plans,
and approves initiatives to meet the Company’s
strategic principles.
Financial Reporting
• Review financial statements
and obtain the external
auditor’s views on
disclosures and content of
the financial statements to
be presented to investors
• Review with SIML and
external auditors the results
of analysis of significant
financial reporting issues
and practices, including
changes in accounting
principles
Audit
• Recommend appointment
of external auditors and
monitor services provided
by auditors to ensure
independence is maintained
• Agree scope of half year
review and annual audit,
review audit opinion
and review auditor’s
compensation and
recommend such to the
Board
• Report results of annual
audit to the Board, including
whether the financial
statements comply with
applicable laws and
regulations
Risk
• Monitor and review the risk
management framework
established by the Manager
• Review key business risks
and controls, and review
reports on effectiveness of
systems for internal control,
financial reporting and risk
management
• Review and approve key
insurance policy terms
and cover adequacy and
recommend such to the
Board
Directors also attend briefings with senior managers of
SIML on an ad hoc basis and attend investor briefings
in connection with their role as a Director of Investore.
These attendances are not included in the disclosure
in Table 2 below but comprise an important element of
Investore Director responsibilities. In addition, the Board
held a strategy day during FY21, to review and reassess,
to review and reassess the Company’s strategic priorities.
All Directors attended this strategy day.
The number of Board and Committee meetings held
during the year and details of Directors’ attendance at
those meetings are disclosed in Table 2.
BoardAudit and Risk Committee
Due Diligence Committee and
Related Board Meetings
Number of meetings in FY21
8510
Mike Allen859
Gráinne Troute859
Adrian Walker*7510
Tim Storey8510
John Harvey859
Table 2 - Board and Committee Meeting Attendance for Period 1 April 2020 to 31 March 2021
Note: Director Adrian Walker was appointed on 3 April 2020 following the Board meeting held that day.
Takeover Protocols
The Board has established takeover protocols which
set out the procedure to be followed in the event a
takeover offer for Investore is made or it is foreseeable
that an offer may be imminent. These protocols are
available on Investore’s website in the Corporate
Governance Documents section. The protocols provide
for an independent takeover committee to be formed,
comprising independent Directors of Investore, to
oversee the takeover process and ensure compliance
with Investore’s obligations under the Takeovers
Code. The protocols also govern the procedure for
communications with the bidder, with the market, and
with investors.
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Principle 4: Reporting and
Disclosure
“The board should demand integrity in
financial and non-financial reporting,
and in the timeliness and balance of
corporate disclosures.”
Market Disclosure Policy
Investore has a Market Disclosure Policy, available on
Investore’s website, to ensure the Company meets its
obligation to keep the market informed of all material
information. This policy sets out Investore’s commitments
in relation to market disclosure, to:
Ensure that shareholders, bondholders, and
the market are provided with full and timely
information about Investore’s activities
Comply with the continuous disclosure
principles contained in statute and in the
Listing Rules
Ensure that all market participants have
equal opportunities to receive externally
available information issued by Investore
The Policy requires all directors and executive officers
of SIML and Directors of Investore to inform the Chief
Executive Officer of SIML or the SIML General Manager
Corporate Services (who is also the Disclosure Officer
under the Policy) of any potentially material information or
proposal immediately after the relevant person becomes
aware of that information or proposal. A Disclosure
Committee, comprising Investore’s Chair and SIML’s Chief
Executive Officer, Chief Financial Officer and General
Manager Corporate Services, is responsible for making
decisions about what information is material information
and ensuring that appropriate disclosures are made in a
timely manner to the market.
This policy and Investore’s compliance with the policy
were reviewed by the Board during FY21.
Availability of Key Governance Documents
Investore is committed to ensuring that investors and
potential investors are informed as to Investore’s key
governance policies and charters, and accordingly, key
documents are available on Investore’s website. These
include: Board Charter, Audit and Risk Committee
Charter, annual and interim reports, announcements, key
corporate governance policies and other investor related
material (as recommended in the NZX Code).
A remuneration policy has not been prepared by Investore
as Investore has no employees. However, information
regarding Director remuneration is made available to
investors when shareholders are asked to approve any
changes to Director remuneration and is reported in the
annual reports of Investore.
Financial Reporting
Investore is committed to appropriate financial and
non-financial reporting. Investore’s Audit and Risk
Committee is responsible for overseeing Investore’s
financial reporting, including ensuring that such
reporting is balanced, clear and objective. Further
information on the Audit and Risk Committee and its
responsibilities is contained in the commentary on
Principle 3.
Non-Financial Reporting
Risks
The Audit and Risk Committee establishes processes
to identify and consider the material business risks
faced by Investore. The Board also regularly receives
risk management reports and reviews key risks to the
business of Investore and the controls implemented
to manage exposure to those risks. All identified
risks have specific mitigation strategies where
appropriate, and the Manager regularly reviews the
effectiveness of these strategies.
Environmental Sustainability, Social Responsibility
and Corporate Governance
Investore is committed to ensuring that Environmental
Sustainability, Social Responsibility and Corporate
Governance (ESG) are key considerations in the
operation and governance of its business. In practice,
Investore aligns its approach to ESG factors with that
of the Manager, SIML.
The Investore sustainability strategic plan was
refreshed during FY21, in conjunction with SIML, and
three distinct goals were established, with a series of
objectives and actions which flow from these goals.
Sustainability Strategic Plan
Objective
Contribute to a resilient
community
Develop
shared prosperity
Protect
the planet
Description
We want to ensure leading health
and safety performance and support
a connected and inclusive society
We want to foster long-term
prosperity by investing in and
managing outstanding places
that reward everyone connected
with them
We want to create efficient, climate-
resilient places that deliver long term
value and support a low
carbon future
UN
Sustainable
Development
Goals
During FY21 the Investore Board considered the key risks, at a high level, that may be faced by Investore in
relation to climate change, and, in accordance with the Taskforce on Climate-related Financial Disclosures,
categorised those risks into two categories – transition risks, being those associated with transitioning to a low-
carbon economy; and physical risks, being risks arising as a result of changes in the physical climate and acute
climate events. A description of these risks can be found on pages 23 and 24 of this Annual Report. Investore will
work with SIML during FY22 to undertake further work to refine and develop these risks to form a detailed and
comprehensive climate risk assessment for Investore.
Investore Property Limited Annual Report 2021
79
Investore Property Limited Annual Report 2021
78
Principle 5: Remuneration
“The remuneration of directors and
executives should be transparent, fair
and reasonable.”
Directors are remunerated in the form of Directors’
fees as approved by shareholders, with a higher level of
remuneration for the Chair of the Board and an additional
amount for the Chair of the Audit and Risk Committee, to
reflect the additional time and responsibilities that these
positions require. No Director of Investore is entitled to
any remuneration other than by way of Directors’ fees and
the reasonable reimbursement of travel, accommodation
and other expenses incurred in the course of performing
duties or exercising their role as a Director. Directors do
not participate in any Company share or option plan.
The Board is collectively responsible for recommending
Director remuneration packages to shareholders. As
previously advised to the market, Investore intends to
review Director remuneration every two years. Investore
remains committed to the principle that remuneration is
set and managed in a manner which is fair, transparent,
and reasonable.
Investore does not have a remuneration policy because
it has no employees, and accordingly pays no executive
remuneration.
Table 3 sets out Director remuneration for those Directors
who held office in the year to 31 March 2021. These fees
are consistent with those approved by shareholders at
the annual meeting of Investore in 2019. As noted at that
annual meeting, Investore does not operate a fee pool,
and has no pool for additional attendances.
Table 3 - Directors’ Remuneration
DirectorRemuneration
Mike Allen$85,000
Gráinne Troute$51,500
Adrian Walker$45,000
Tim Storey$45,000
John Harvey$45,000
Total*$271,500
* Total Directors’ fees exclude GST and reimbursed costs directly
associated with carrying out Director duties. No additional fees
were paid to Directors who were members of the Due
Diligence Committees.
Principle 6:
Risk Management
“Directors should have a sound
understanding of the material
risks faced by the issuer and how
to manage them. The board should
regularly verify that the issuer
has appropriate processes that
identify and manage potential and
material risks.”
Risk Management Framework
The Board recognises that identification and
management of risks to Investore’s business is
essential to the continued success of Investore.
The Board is responsible for overseeing and
approving Investore’s risk management strategy
and policies, as well as ensuring effective audit,
risk management and compliance systems are
in place.
The Audit and Risk Committee assists the
Board in fulfilling its risk assurance and audit
responsibilities and the Board then delegates
the implementation of a Board approved risk
management framework to the Manager, SIML.
Investore has established a risk management
framework, supported by a set of risk-based
policies appropriate for Investore, including a
Treasury Policy, the Manager’s Conflicts Policy,
Investment Mandate and Delegations of Authority
(which are endorsed and approved by Investore).
The principal purpose of this framework is to
integrate risk management into Investore’s
operations, and to formalise risk management as
part of Investore’s internal control and corporate
governance arrangements.
As part of the risk management framework,
the Manager maintains a comprehensive risk
register for Investore, recording the key risks to
its business, and assigning each risk a rating
based on the likelihood and impact of the risk,
both before and after application of controls. The
risk register is reviewed on a semi-annual basis
and the high and critical risks are reported to the
Board, as well as an assessment of any new risks.
The Board focused on the risks posed by COVID-19
during the year in review, while also being aware that
this was not the only issue faced by the business. As
reported in the “Sustainability” section of this Annual
Report, the Board is conscious of the risks posed by
climate change, and during FY22 will continue to develop
a comprehensive understanding of the risks posed to
Investore’s business through climate change and the
response to climate change.
Management of Health and Safety Risk
Investore’s health and safety framework reflects
its commitment to health and safety. The Board
acknowledges that effective governance of health and
safety is essential for the continued success of Investore.
Investore’s health and safety approach reflects
the externally managed nature of its business. In
appointing SIML to manage the Investore business,
Investore relies on SIML to ensure that Investore is
complying with its health and safety obligations. The
Investore Board works closely with SIML to understand
the key risks to Investore’s business from a health
and safety perspective, ensure that these risks are
eliminated or minimised, and that SIML is implementing
appropriate systems and procedures to ensure effective
management of health and safety risks when managing
Investore’s assets and business.
SIML sets key performance indicators on an annual basis
and reports regularly against those key performance
indicators to the Investore Board. In addition, the
Investore Board reviews any incidents across the
Investore sites and SIML’s remedial actions in relation
to incidents, and seeks to ensure that there is continual
learning from any incidents or near misses. During FY21
Investore continued to promote a positive health and
safety culture throughout its area of influence, including
SIML, tenants and its supply chain.
A key area of focus for both Investore and SIML is
contractor management, through ensuring that
contractors with appropriate health and safety practices
are engaged, and when engaged they are minimising
risks to staff, public and tenants in undertaking their
activities. During FY21, the key health and safety issue
facing Investore was the impact of COVID-19 on its
operations and those of its tenants. As many of the
Investore tenants are considered ‘essential
businesses’ within the Government definition on the
www.covid19.govt.nz website, the sites those tenants
operated from were required to be kept operational.
Investore, in conjunction with its tenants, identified
those contractors that were required to keep the sites
operational and safe, and identified and reviewed
those contractors’ processes and procedures for safe
operating. As the alert levels changed, Investore’s
key focus was on ensuring appropriate information
was provided to contractors and tenants regarding
operational expectations such as physical distancing,
contact tracing and sanitising, and monitoring to ensure
these expectations were being met.
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8081
Principle 7: Auditors
“The board should ensure the quality
and independence of the external
audit process.”
PwC is the auditor of Investore. The principles that govern
the relationship between Investore and its external
auditors are set out in the Audit and Risk Committee
Charter, which includes the Audit Independence
Guidelines. These Guidelines require compliance with
the Listing Rules, which requires rotation of the lead audit
partner at least every five years. Investore, in conjunction
with SIML, has determined to rotate its lead audit partner
for FY22, meaning that the FY21 audit will be the final
audit for the current lead partner.
Investore does not have a policy of rotating its audit
firm, on the basis that there is a limited pool of external
audit firms within New Zealand and Investore engages
the other major firms for non-audit services, meaning
they would be conflicted if approached to act as auditor.
As Investore has been operational for five years only,
Investore’s Audit and Risk Committee will continue to
consider its audit independence framework.
Investore’s Audit Independence Guidelines set out
a description for determining the non-audit services
that may be provided by the external auditor without
compromising the external auditor’s independence. The
Audit and Risk Committee regularly monitor non-audit
services provided by the external auditor and confirm
whether these services prejudice the maintenance of
independence of the auditor. Any non-audit services
provided by the external auditor must be approved by
the Chair of the Audit and Risk Committee. The purpose
of the audit independence framework is to ensure
that audit independence is maintained, both in fact
and appearance, so that Investore’s external financial
reporting is both reliable and credible. For FY21,
PwC, as auditor, did not provide any services other than
audit and review of financial statements and
other assurance services.
Director John Harvey was formerly a partner at PwC,
the audit firm for Investore. However, as John Harvey
retired from the PwC partnership in 2009, the Board has
determined that his prior relationship with PwC does not
prejudice the independence of the auditor.
The Audit and Risk Committee meet at least twice a
year with the external auditors, with the opportunity
to meet without any representatives of the Manager
present. The Board invites the external auditor to attend
meetings of the Audit and Risk Committee as required.
Directors are free to make direct contact with the
external auditor as necessary to obtain independent
advice and information. The external auditor also
attends shareholder meetings to answer questions from
shareholders in relation to the audit.
Investore engages SIML to manage its business, as it has
no employees. Investore therefore has no internal audit
function, and Investore is aware that SIML, as Manager,
does not operate an internal audit function due to its size.
However, the Investore Board and/or Manager engage
consultants to undertake internal reviews from time-
to-time on a project-by-project basis, and can monitor,
amongst other things, internal controls, risk management
or the integrity of financial systems. Such projects can
operate both with and independently from the Manager,
with findings reported directly to the Board.
Principle 8:
Shareholder Rights and Relations
“The board should respect the rights
of shareholders and foster constructive
relationships with shareholders that
encourage them to engage with the issuer.”
Investor Communications
The Board believes that open communication with
investors is very important to ensure effective governance
and oversight of the business of Investore. Investors
deserve to be provided with such information as may
be required to enable them to make informed decisions
about their investment in Investore.
The Board has adopted a Market Disclosure Policy
that establishes procedures aimed at ensuring Directors
are aware of and fulfil their disclosure obligations under
the Listing Rules. Significant market announcements
require the prior approval of the Board. Material
announcements are posted on Investore’s page on the
NZX website, www.nzx.com, under the ticker “IPL”, and
are also posted on Investore’s website, enabling investors
to access these announcements easily. In addition, the
Investore website has copies of all presentations and
reports (including annual and interim reports) released
by Investore, and shareholders are encouraged to
refer to the website www.investoreproperty.co.nz for
information on the Company.
While annual and interim reports are made available on
the NZX website, www.nzx.com, and are also available
on Investore’s website, www.investoreproperty.co.nz,
investors can also request hard copies by contacting
Investore’s Share Registrar (whose contact details can
be found in the Corporate Directory at the back of this
Annual Report).
The Company encourages investors to receive investor
communications by electronic means where possible.
Investore participates in the regular initiative undertaken
by its share registrar, Computershare, to encourage
investors to receive communications electronically,
as this saves money for Investore and benefits the
environment through avoiding the use of resources for
printed documents.
Shareholder Meetings
Investore’s shareholders have the right to vote on major
decisions in accordance with the Listing Rules.
The Board endeavours, where possible, to distribute
every Notice of Meeting for shareholder meetings at least
20 working days prior to any shareholder meeting. During
FY21, shareholders were given at least 20 working days’
notice of the Annual Shareholder Meeting held on
9 September 2020. This meeting was initially set to
be held in person, but due to the Auckland lockdown
restrictions imposed in August 2020, the Board
determined that the risk of the meeting not being able
to go ahead was too great and accordingly elected to
change the meeting to a virtual meeting. The Board would
prefer to hold a physical meeting where possible.
Shareholders are encouraged to attend Investore’s
Annual Shareholder Meeting and take the opportunity to
meet the Board and senior managers of the Manager. All
Directors and senior managers of the Manager attend
shareholder meetings and are available for questions.
The Chair provides time for questions from the floor,
and these are answered by the appropriate member
of the Board or Manager. Investore’s external auditor
attends the meeting and is available to take questions
on the preparation of the financial statements and the
auditor’s report. The next Annual Shareholder Meeting for
Investore is scheduled to be held on 8 July 2021.
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8283
Statutory
Disclosures
Capital Raising
Investore undertook an equity capital raise during April
and May 2020 (the Capital Raise), comprising:
• an $85 million underwritten share placement
(Placement); and
• a retail offer to eligible shareholders of up to
$15 million, with the ability to accept additional
applications of up to $5 million at Investore’s
discretion (Retail Offer).
The Capital Raise was successfully completed on
20 May 2020 and Investore elected to accept additional
applications under the Retail Offer. Accordingly, just
over 63.6 million shares were issued at $1.65 per share,
equating to $105 million of gross proceeds raised. The
net proceeds of the Capital Raise were used to repay
debt, providing funding flexibility for Investore to continue
its strategy of targeted growth.
The Retail Offer permitted each eligible shareholder
to apply for up to $50,000 of additional shares in
Investore, under Listing Rule 4.3.1(c) as modified by
the class waiver and ruling issued by NZX Regulation
dated 19 March 2020 and the waiver issued by NZX
Regulation to Investore dated 29 April 2020. The effect
of the class waiver and ruling issued by NZX Regulation
was to temporarily increase the aggregate dollar value
of shares that may be issued to each shareholder under
a Share Purchase Plan to $50,000 in any 12-month
period, for a short period of time, to assist issuers to
raise capital given the impacts of COVID-19. The waiver
issued by NZX Regulation to Investore in respect of this
Capital Raise was to permit Investore to issue shares
under the Share Purchase Plan of up to $50,000 per
registered holder, even though Investore undertook a
capital raise in November and December 2019, which
included a Share Purchase Plan component.
The Investore Board determined, having received advice
on options for the structure of the Capital Raise, to
undertake the Capital Raising by way of the Placement and
Retail Offer (rather than under a pro rata structure such as
a rights or entitlement offer) for a number of reasons:
• Due to the need to move quickly given the COVID-19
period, the Placement and Retail Offer enabled
Investore to prepare and undertake the Capital
Raise in a short period of time as Investore could
use the precedents it had developed for the capital
raise in November and December 2019 as a base.
This enabled Investore to bring the Capital Raise to
market in a short period of time;
• The Placement and Retail Offer could be, and was,
sized and structured in such a way as to enable
almost all shareholders to apply for at least their
pro rata shareholding in Investore;
• By relying on the NZX class waiver and ruling, the
Retail Offer of up to $50,000 worth of shares per
registered holder enabled approximately 98% of
Investore’s shareholders to participate in the Retail
Offer to a level which at least maintained their pre-
offer holding;
• The Retail Offer enabled smaller shareholders to
participate in the equity raising at the same price as
institutions in the Placement but with the benefit of
having a longer offer period to consider participation.
Investore Property Limited Annual Report 2021
84
Statutory Disclosures
Disclosures of Interest
The general disclosures of interest made by Directors of the Board during the period 1 April 2020 to 31 March 2021
pursuant to section 140 of the Companies Act 1993, are shown in Table 4.
Table 4 – Interests Register Entries
DirectorCompanyPosition
Mike Allen (Chair)Breakwater Consulting LimitedDirector
China Construction Bank (New Zealand) LimitedDirector
Tainui Group Holdings LimitedDirector (1)
Waikato-Tainui Fisheries LimitedDirector (1)
Taumata Plantations LimitedDirector
QuayStreet Asset Management LimitedChair (2)
Johnston’s Coachlines (NZ) LimitedDirector (1)
Go-Bus Transport LimitedDirector (1)
Go-Bus Holdings LimitedDirector (1)
Ngai Tahu Tainui Go Bus Holdings LimitedDirector (1)
Abano Healthcare Group LimitedDirector (1)
Gráinne TrouteTourism Holdings LimitedDirector
Summerset Group Holdings LimitedDirector
Tourism Industry AotearoaChair (2)
Adrian WalkerNil
Tim StoreyStride Property Limited and subsidiariesChair
Stride Investment Management LimitedChair
Industre Property Nominee Limited and related entitiesDirector (2)
Prolex LimitedDirector
Prolex Investments LimitedDirector
Prolex Management LimitedDirector
LawFinance LimitedChair
John HarveyStride Property Limited and subsidiariesDirector
Stride Investment Management LimitedDirector
Pomare Investments LimitedDirector / Shareholder
Kathmandu Holdings LimitedDirector
Heartland Bank LimitedDirector
Port of Napier LimitedDirector
(1) Entries removed by notices given by Directors during the year ended 31 March 2021.
(2) Entries added by notices given by Directors during the year ended 31 March 2021.
The following declarations of interest were made pursuant to section 140(1) of the Companies Act 1993:
Directors of Subsidiary Companies
Investore Property Limited had no subsidiaries as at
31 March 2021.
Indemnity and Insurance
As permitted by Investore’s Constitution, Investore has
entered into a deed of access, indemnity, and insurance
to indemnify its Directors for liabilities or costs they may
incur for acts or omissions in their capacity as a Director
to the extent permitted under the Companies Act 1993.
The indemnity does not cover wilful default or fraud,
criminal liability, liability for failure to act in good faith and
in the best interests of the relevant company, or liabilities
that cannot be legally indemnified.
Investore also has a Directors and Officers liability
insurance policy in place. Among other things, the
Directors and Officers liability insurance policy excludes
cover for deliberate dishonesty, insider trading, fines
and penalties (except for legally indemnifiable civil
fines or civil penalties), liability arising out of a breach of
professional duty other than as a professional director,
and liability for which the insured is legally indemnified.
Use of Company Information
No notices have been received by Investore under section
145 of the Companies Act 1993 with regard to the use
of Investore’s information received by Directors in their
capacities as Directors of Investore.
Loans to Directors
There are no loans to the Directors of Investore.
Directors’ Interests in Shares
Directors disclosed the following relevant interests in
Investore shares as at 31 March 2021:
DirectorRelevant interest held in ordinary shares
Mike Allen56,592
Gráinne Troute32,590
Tim Storey 49,759
John Harvey49,759
Directors are not required to hold shares in the Company,
but may choose to do so in order to demonstrate
alignment of interests in the performance of the Company
with shareholders.
DirectorNature of interest
Tim Storey and
John Harvey
An interest declared by Directors Tim Storey and John Harvey, who are Directors of Stride Property Limited, and
are interested in the acquisition by Stride Property Limited of shares in Investore under the equity capital raisings
conducted by Investore during FY21.
Twenty Largest Registered Shareholders as at 31 March 2021
NameNumber of SharesPercentage of Shares
Stride Property Limited 69,201,97718.80
Forsyth Barr Custodians Limited 31,293,1968.50
Accident Compensation Corporation - NZCSD 29,246,6247.94
JBWere (NZ) Nominees Limited 18,511,7625.03
HSBC Nominees (New Zealand) Limited - NZCSD16,029,4274.35
FNZ Custodians Limited 15,512,9264.21
Citibank Nominees (New Zealand) Limited – NZCSD13,126,7253.57
ANZ Wholesale Trans-Tasman Property Securities Fund - NZCSD 12,736,3163.46
BNP Paribas Nominees (NZ) Limited – NZCSD11,742,9303.19
National Nominees Limited – NZCSD10,693,5132.90
New Zealand Depository Nominee Limited 8,698,1752.36
Generate KiwiSaver Public Trust Nominees Limited – NZCSD
8,126,6932.21
ANZ Wholesale Australasian Share Fund – NZCSD7,602,5692.07
ANZ Wholesale Property Securities - NZCSD5,362,5721.46
MFL Mutual Fund Limited – NZCSD5,260,4261.43
Custodial Services Limited 5,085,9471.38
BNP Paribas Nominees (NZ) Limited – NZCSD4,920,5211.34
Hobson Wealth Custodians Limited 4,714,2231.28
Custodial Services Limited A/C 3 4,622,8691.26
Custodial Services Limited A/C 2
2,937,0330.80
285,426,42477.53
Numbers may not sum due to rounding.
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
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Twenty Largest Registered Bondholders (IPL010) as at 31 March 2021
NameUnits% Units
National Nominees Limited - NZCSD14,388,00014.39
Forsyth Barr Custodians Limited 13,691,00013.69
FNZ Custodians Limited13,156,00013.16
Hobson Wealth Custodians Limited 6,607,0006.61
HSBC Nominees (New Zealand) Limited - NZCSD 5,518,0005.52
Custodial Services Limited <A/C 4>5,239,0005.24
Custodial Services Limited <A/C 2>3,473,0003.47
Generate Kiwisaver Public Trust Nominees Limited - NZCSD 3,275,0003.28
JBWere (NZ) Nominees Limited 3,000,0003.00
Custodial Services Limited <A/C 3>2,789,0002.79
Investment Custodial Services Limited 2,410,0002.41
ANZ Fixed Interest Fund - NZCSD 1,744,0001.74
Custodial Services Limited <A/C 18>1,669,0001.67
Custodial Services Limited <A/C 1>1,627,0001.63
Mint Nominees Limited - NZCSD 1,600,0001.60
FNZ Custodians Limited 1,102,0001.10
Hobson Wealth Custodian Limited 930,0000.93
BNP Paribas Nominees (NZ) Limited - NZCSD 900,0000.90
Commonwealth Bank of Australia - NZCSD
654,0000.65
Forsyth Barr Custodians Limited 548,0000.55
84,320,00084.32
Twenty Largest Registered Bondholders (IPL020) as at 31 March 2021
NameUnits% Units
Forsyth Barr Custodians Limited 26,145,00020.92
FNZ Custodians Limited15,314,00012.25
National Nominees Limited - NZCSD 11,500,0009.20
Generate Kiwisaver Public Trust Nominees Limited - NZCSD9,396,0007.52
Hobson Wealth Custodians Limited 7,751,0006.20
Custodial Services Limited <A/C 4>5,871,0004.70
TEA Custodians Limited Client Property Trust Account - NZCSD 5,215,0004.17
HSBC Nominees (New Zealand) Limited - NZCSD 4,250,0003.40
Queen Street Nominees ACF PIE Funds - NZCSD4,000,0003.20
ANZ Fixed Interest Fund - NZCSD 3,546,0002.84
JBWere (NZ) Nominees Limited 3,210,0002.57
Citibank Nominees (New Zealand) Limited - NZCSD 2,680,0002.14
Custodial Services Limited <A/C 2>2,573,0002.06
Investment Custodial Services Limited 2,190,0001.75
Custodial Services Limited <A/C 3>1,860,0001.49
Forsyth Barr Custodians Limited 1,748,0001.40
FNZ Custodians Limited 1,110,0000.89
NZPT Custodians (Grosvenor) Limited - NZCSD 1,000,0000.80
Custodial Services Limited <A/C 18>972,0000.78
Custodial Services Limited <A/C 16>746,0000.60
111,077,00088.86
Substantial Product Holders as at 31 March 2021
*
As at 31 March 2021, the names of all persons who are substantial product holders in Investore pursuant to sub-part 5 of
part 5 of the Financial Markets Conduct Act 2013 are noted below:
Name
Date of substantial
product holder notice
Relevant interest
in the number of
ordinary shares
% of
ordinary shares held
Stride Property Limited20 May 202069,201,97718.8
ANZ New Zealand Investments16 November 202029,952,1488.1
Accident Compensation Corporation31 March 202128,746,6247.8
Salt Funds Management Limited16 December 202022,332,0906.1
Forsyth Barr Investment Management Limited13 November 202018,464,6655.0
* The number of ordinary shares listed in the table are as per the last substantial product holder notice filed on or prior to 31 March 2021.
Distribution of Ordinary Shares and Shareholdings as at 31 March 2021
Size of holding
Number of
shareholders
% of
shareholders
Number of
ordinary shares
% of
ordinary shares
1 - 99250.491,018
0.00
100 - 199140.271,843
0.00
200 - 4991262.4646,885
0.01
500 - 9992945.74212,171
0.06
1,000 - 1,99973114.271,070,639
0.29
2,000 - 4,999
1,322
25.814,277,1631.16
5,000 - 9,999
1,070
20.897,427,3762.02
10,000 - 49,999
1,297
25.3225,757,1957.00
50,000 - 99,9991382.699,253,6662.51
100,000 - 499,999701.3712,204,5763.32
500,000 - 999,99940.082,629,6620.71
1,000,000 and over310.61305,252,83982.92
Total5,122100.00368,135,033100.00
Distribution of Holders of IPL010 Listed Bonds as at 31 March 2021
Size of holding
Number of
bondholders
% of
bondholders
Issued bonds
($)
% of
issued bonds
5,000 - 9,999
37 7.40209,0000.21
10,000 - 49,99935571.006,784,0006.78
50,000 - 99,9995711.403,219,0003.22
100,000 - 499,999316.205,468,0005.47
500,000 - 999,99940.803,032,0003.03
1,000,000 and over163.2081,288,00081.29
Total500100.00100,000,000100.00
Numbers may not sum due to rounding.
Numbers may not sum due to rounding.
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
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Distribution of Holders of IPL020 Listed Bonds as at 31 March 2021
Size of holding
Number of
bondholders
% of
bondholders
Issued bonds
($)
% of
issued bonds
5,000 - 9,999
3811.80259,0000.21
10,000 - 49,999
19359.944,084,0003.27
50,000 - 99,999
3310.251,965,0001.57
100,000 - 499,999
3611.186,430,0005.14
500,000 - 999,999
41.242,903,0002.32
1,000,000 and over
185.59109,359,00087.49
Total322100.00125,000,000100.00
Donations
Investore made no donations in the year ended
31 March 2021.
Credit Rating
As at the date of this Annual Report, Investore does not
have a credit rating.
Exercise of NZX Disciplinary Powers
The NZX did not exercise any of its powers under Listing
Rule 9.9.3 in relation to Investore during FY21.
Auditor’s Fees
As noted, PwC has continued to act as auditor for
Investore and the amount payable by Investore to PwC,
for audit fees and non-audit work fees, in respect of FY21
is set out in note 7.2 to the Financial Statements.
NZX Waivers
During FY21 Investore was granted or relied on certain
waivers from the Listing Rules, which are described
below. A copy of these waivers is available at
www.nzx.com/companies/IPL
Investore has been granted a number of waivers from
the Listing Rules in relation to its structure, including
the right of SIML to appoint two directors, which are
outlined below.
Listing Rules 2.2.1 to 2.8.1
Listing Rules 2.2.1 to 2.8.1 stipulate certain requirements
in relation to the appointment, removal and rotation of
Directors. A waiver from Listing Rules 2.2.1 to 2.8.1
was granted to the extent that SIML, as the Manager of
Investore, has exercised its right to appoint two Directors
(the SIML appointed Directors). This waiver is subject to a
number of conditions, including that:
• the Chair of the Board must be independent and
have a casting vote on any Board resolutions;
• Investore is not permitted to count any votes cast
by SPL (and its Associated Persons (as defined
in the Listing Rules) (other than votes cast by a
Director in respect of shares owned or held in their
personal capacity)) on the election or removal of the
independent Directors;
• Investore will continue to be identified by a
“Non-Standard Designation” (NS Designation);
• the NS Designation be disclosed as a part of
Investore’s offer documents and annual reports; and
• this waiver is disclosed as part of Investore’s
annual reports.
This waiver was requested and granted to ensure that
SIML, while it is Manager of Investore, is able to have
influence over the strategic direction of Investore by
being able to appoint two (but not less than two) Directors
and to remove any such Director and appoint another in
their place.
Listing Rule 2.10.1
Listing Rule 2.10.1 limits the ability of Directors to vote
on matters in which they are “interested” for the purposes
of the Companies Act 1993. A waiver from Listing
Rule 2.10.1 was granted to permit the SIML appointed
Directors to vote on matters in which they are “interested”
solely due to their directorship of both Investore and
SIML. This waiver is subject to the conditions that:
• the Chair of the Board must be independent and
have a casting vote on any Board resolutions;
• any Directors appointed by SIML must be identified
in Investore’s offer documents and its annual reports;
• at any time that a new person is appointed to the
Investore Board, that each Director certifies to
NZX Regulation that any Board resolution that they
approve will, in their opinion, be in what the Director
believes to be the best interests of Investore; and
• that this waiver is disclosed as a part of Investore’s
annual reports.
This waiver was requested, and granted, to ensure that
SIML appointed Directors were not restricted from
voting on Investore Board resolutions solely due to being
Directors of SIML.
In addition, on 29 April 2020 Investore was granted
certain waivers in connection with the equity capital raise
undertaken in April and May 2020, which are outlined below:
Listing Rule 5.2.1
Rule 5.2.1 prohibits an issuer entering into a material
transaction with a related party, unless that material
transaction is approved by an ordinary resolution or is
conditional on such approval, subject to certain limited
exceptions. A waiver from Rule 5.2.1 was granted to
Investore to permit certain related parties to participate
in the Placement announced by Investore on 29 April
2020 without the requirement to obtain the approval of
shareholders. The “related parties” to which the waiver
related were those shareholders who held more than
10% of Investore’s shares, being SPL, ANZ New Zealand
Investments Limited and related bodies corporate,
and Salt Funds Management Limited. The waiver was
required to enable Investore to allocate more shares in
the Placement to these related parties than they would
be entitled to under their pro rata allocation, to provide
Investore flexibility to allocate shares in the Placement so
as to maximise the amount received for those shares.
The waiver was subject to the conditions that:
• Investore was not unduly influenced in its decision to
undertake the Placement by the related parties;
• the related parties who participate in the placement
will not be involved in, or influence, any allocation
decision in relation to the Placement;
• the related parties will derive no benefit as a result
of the related party relationship, other than solely
through participation in the placement on the same
terms and conditions as all other equity security
holders or as participants in the Placement on
commercial terms; and
• the waiver, its conditions and its implications are
disclosed in this Annual Report.
The Independent Directors of Investore were required to
certify to NZX that the above conditions were satisfied.
Limb (a) of the definition of “Share Purchase Plan”
The definition of Share Purchase Plan in the Listing Rules
provides that the consideration payable for the equity
securities issued under the Share Purchase Plan must
not exceed $15,000 per registered holder in any
12-month period. This definition was amended by way of
a class waiver and ruling issued by NZX Regulation dated
19 March 2020 to increase the limit per registered holder
to $50,000. Investore sought and was granted a waiver
from limb (a) of the definition of “Share Purchase Plan”
to the extent that the definition would prevent Investore
from accepting applications in excess of $50,000 per
registered holder in any 12-month period as a result
of the capital raising undertaken in November and
December 2019.
The waiver was granted on the conditions that:
• the consideration payable for the shares issued in the
Share Purchase Plan announced on 29 April 2020
does not exceed $50,000 per registered holder or,
in the case of shares held through a custodian, each
beneficial owner; and
• the waiver, its conditions and its implications are
disclosed in this Annual Report.
Directors’ Statement
This Annual Report is dated 18 May 2021 and is signed
for and on behalf of the Board of Directors of Investore
Property Limited by:
Mike Allen
Chair of the Board
Gráinne Troute
Chair of the Audit
and Risk Committee
Investore Property Limited Annual Report 2021Investore Property Limited Annual Report 2021
9091
GlossaryCorporate Directory
Board
Board of Directors of Investore Property Limited
Contract Rental
Contract Rental is the amount of rent payable by each tenant,
plus other amounts payable to Investore by that tenant under the
terms of the relevant lease as at the relevant date, annualised for
the 12-month period on the basis of the occupancy level for the
relevant property as at the relevant date, and assuming no default
by the tenant
Distributable Profit
Distributable profit is a non-GAAP measure and consists of profit/
(loss) before income tax, adjusted for determined non-recurring
and/or non-cash items (including non-recurring adjustments
for incentives payable to anchor tenants for lease extensions)
and current tax. Further information including the calculation of
distributable profit and the adjustments to profit before income tax,
is set out in note 3.2 to the Financial Statements
FY20
The financial year ended 31 March 2020
FY21
The financial year ended 31 March 2021
FY22
The financial year ended 31 March 2022
Investore or the Company
Investore Property Limited
Listing Rules
The main board listing rules of NZX
LV R
Loan to value ratio
NLA
Net Lettable Area
NZX
NZX Limited
NZX Code
NZX Corporate Governance Code 2020
SIML or the Manager
Stride Investment Management Limited, the Manager of Investore
under a Management Agreement dated 10 June 2016 (as may be
amended from time to time)
SPL
Stride Property Limited
WA LT
Weighted Average Lease Term
Board of Directors
Mike Allen (Chair)
Gráinne Troute
Adrian Walker (appointed 3 April 2020)
Tim Storey (SIML Appointed Director)
John Harvey (SIML Appointed Director)
Registered Office
Level 12, 34 Shortland Street, Auckland 1010
PO Box 6320, Victoria Street West
Auckland 1142, New Zealand
W investoreproperty.co.nz
Manager
Stride Investment Management Limited
Level 12, 34 Shortland Street, Auckland 1010
PO Box 6320, Victoria Street West
Auckland 1142, New Zealand
T +64 9 912 2690
Auditor
PwC
PwC Tower
15 Customs Street West, Auckland 1010
Private Bag 92162, Auckland 1142
Share Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna
Private Bag 92119, Victoria Street West
Auckland 1142
T +64 9 488 8777
F +64 9 488 8787
E enquiry@computershare.co.nz
Legal Adviser
Bell Gully
Level 21, Vero Centre
48 Shortland Street, Auckland 1010
PO Box 4199, Auckland 1140
Bankers
ANZ Bank New Zealand Limited
Bank of New Zealand
China Construction Bank, New Zealand Branch
Commonwealth Bank of Australia
Industrial and Commercial Bank of China Limited,
Auckland Branch
Westpac New Zealand Limited
Bond Supervisor
Public Trust
Private Bag 5902
Wellington 6140
Investore Property Limited Annual Report 2021
93
Investore Property Limited Annual Report 2021
92
Investore
Property Limited
Level 12, 34 Shortland Street
Auckland 1010
PO Box 6320
Victoria Street West,
Auckland 1142, New Zealand
T +64 9 912 2690
W investoreproperty.co.nz
---
Annual Results
Presentation
For the year ended 31 March 2021
18May 2021
Contents
Highlights
03
Portfolio metrics
04
Delivering on our strategy
06
Update on COVID-19
07
Portfolio
08
Financial performance
16
Capital management
20
Looking ahead
24
2
Highlights
3
1.Post-balance date Investore has announced it has entered into two agreements (1) an unconditional agreement to acquire CountdownPetone for $37.3m, due to settle on 21 May 2021; and (2) a conditional agreement to acquire 3.5ha of
development land at WaimakJunction, Kaiapoi, North Canterbury, for $10.5m. The agreement to acquire land at WaimakJunction remains conditional on receipt of resource consents and entering into a final documented agreement to lease
with Woolworths NZ to construct a Countdown supermarket on the site.
2.Distributable profit is a non-GAAP measure and consists of profit/(loss) before income tax, adjusted for determined non-recurring and/or non-cash items (including non-recurring adjustments for incentives payable to anchor tenants for lease
extensions) and current tax. Further information, including the calculation of distributable profit and the adjustments to profit before income tax, is set out in note 3.2 in the financial statements.
3.Net Tangible Assets (NTA) as at31 March 2021.
4.LVR is calculated based on independent valuations, which include seismic works and rental underwrites to be funded by SPL in relation to the three properties acquired from SPL and settled in April 2020.
Investore Property Limited | FY21 Annual Results Presentation
FinancialhighlightsCapital managementKey highlights
$2.08
NTA
3
per share,
up $0.35 or 20.2% from 31 March 2020
26.8%
Loan to Value Ratio
4
as at31 March 2021
Profit after income tax
$161.3m
up $132.6m from FY20
Distributable profit
2
after current tax
$29.1m
up $8.0m on FY20
$105m
Equity capitalraised
during April and May 2020
$125m
7-year listed bond
at 2.40% interest rate
$37.3m
acquisition of Countdown
Petone
1
announced
$10.5m
acquisition of Waimak
Junction
1
land announced
$0.9m
gross rent relief for COVID-19,
average negotiated lease extension
of 7 months
4
5.23%
Average portfolio
capitalisationrate
$1.038bn
Portfolio value
1
,
net valuation gain of 15.5% over
12 months from 31 March 2020
2
99.1%
Portfolio occupancy
(by area)
9.8 years
WALT
Portfolio
metrics
1.As at31 March 2021. Portfolio value includes 35 MacLagganStreet, Dunedin, which is classified as property held for sale, and excludes (1) the seismic
works and rental underwrites (total $7.1m) to be completed by SPL in relation to the three properties acquired from SPL and settled on 30 April 2020; and (2)
lease liabilities.
2.Compared to Investore’sproperty portfolio as at31 March 2020, and including the three properties acquired from SPL as if those properties had been
acquired as at that date, based on independent valuations of those three properties obtained in preparation for the acquisition in April 2020.
Investore Property Limited | FY21 Annual Results Presentation
Our strategy
Maximisingdistributions and total shareholder returns over the medium to long term by investing in
quality, large format retail properties throughout New Zealand
Active Portfolio
Management
Focus on owning well-located
properties with long lease terms
and high occupancy, with
nationally recognised quality
tenant brands, and maintaining
strong and enduring tenant
relationships that support the
portfolio
Proactive Capital
Management
Proactive capital management
to maintain a healthy and
flexible balance sheet for
growth, while preserving
sustainable returns to investors
Targeted Growth
Considered acquisitions and
developments which deliver
growth, while continuing to
enhance geographical and/or
tenant portfolio diversification
Optimisation of the
Portfolio
Development of existing
properties to meet the needs of
tenants and the surrounding
catchment, which may include
acquiring sites adjacent to
existing properties, to provide
development options for the
future
5
Investore Property Limited | FY21 Annual Results Presentation
Delivering on our strategy
Targeted
Growth
•Portfolio valuation
1
of $1.038bn, representing a $139.3m or 15.5% net revaluation gain
2
since 31 March 2020
•Post-balance date Investore has entered into an unconditional agreement to acquire a Countdown-anchored
property at Petone, Wellington, for $37.3m, with settlement expected 21 May 2021
•Post-balance date, Investore has entered into a conditional agreement to acquire a 3.5 ha parcel of land at
Waimak Junction, Kaiapoi, North Canterbury, for $10.5m. Investore has reached agreement in principle with
Woolworths NZ to construct a new Countdown supermarket on part of the land. The total commitment, including
the cost of the land and the Stage 1 development, is expected to be $31m
Active
portfolio
management
•Weighted average lease term (WALT) 9.8years
•99.1% occupancy by area
•59 lease extensions and renewals completed, including COVID-19 related deals, with a weighted average lease
extension of 16 months
•72% of leases by Contract Rental
3
expiring in 2030 or beyond
Continued
portfolio
optimisation
•Portfolio average market capitalisation rate of 5.23%, 85 basis point compression since 31 March 2020
4
•Property acquired adjacent to existing Investore-owned Countdown Papakura in March 2020 for $1.2m, with works
now complete on expansion of Countdown carpark and improved customer access to the property
•Tesla EV supercharger stations installed at Johnsonville Countdown, becoming operational in May 2021 and
enabling Tesla vehicles to be recharged in approximately 30 minutes
Proactive
capital
management
•$105m new equity raised in April and May 2020, with net proceeds used to repay bank debt and provide funding
flexibility for future growth, such as the post balance date acquisitions at Petone and WaimakJunction
•$125m 7-year listed bonds issued in August 2020 at a fixed 2.4% interest rate
•$80m new bank facilities secured and $101m of bank facilities extended to June 2024
•Loan to Value Ratio (LVR) 26.8%
5
, compared to 31.3% as at31 March 2020
1.See footnote 1 on page 4.
2.See footnote 2 on page 4.
3.Contract Rental is the amount of rent payable by each tenant, plus other amounts payable to Investoreby that tenant under the terms of the relevant lease, annualised for the 12-month period on the basis ofthe occupancy level of the
relevant property as at31 March 2021, and assuming no default by the tenant.
4.Compared to Investore’sproperty portfolio as at31 March 2020, and including the three properties acquired from SPL as if those properties had been acquired as at that date,based on independent valuations of those three properties
obtained in preparation for the acquisition in April 2020.
5.See footnote 4 on page 3
6
Investore Property Limited | FY21 Annual Results Presentation
v
Update on COVID-19
Investore’sportfolio continues to
demonstrate resilience given the high
proportion of tenants that are
essential businesses
•Investore has worked with its tenants to support them through
the impact of COVID-19 throughout the year
•Investore’s gross rent receivable for FY21 has reduced by
$0.9m as a result of COVID-19 deals
•Investore has achieved a weighted average lease extension
of seven months across all COVID-19 arrangements
•Balanced against the reduced gross rent receivable for FY21,
Investore has benefited from reintroduced building
depreciation deduction claims for property owners with
commercial properties at a level of 2% of diminishing value a
year, starting in April 2020. This has provided a reduction in
current tax of $2.2m for FY21, more than offsetting the rent
reduction related to COVID-19 deals
Countdown, Rotorua
7
Investore Property Limited | FY21 Annual Results Presentation
Portfolio
Countdown, Papakura
8
Investore Property Limited | FY21 Annual Results Presentation
Targeted growth –Countdown Petone acquisition
Countdown Petone, 45 -49 Jackson Street, Petone, Wellington
Key TenantsCountdown, Westpac, Pita Pit, St Pierre’s
Occupancy100%
NLA4,603 sqm
Land area12,190 sqm
WALT11 years
Purchase price$37.3m
Passing yield4.6%
Expected settlement21 May 2021
Investore Property Limited | FY21 Annual Results Presentation
9
Countdown, 86%
Specialty
tenants, 14%
Tenant mix by Contract Rental
Countdown
Westpac
Pita Pit
Spice Traders
St Pierre’s Sushi
The Chubby Baker
Investore is delivering on its strategy of targeted growth with the announcement post balance date of
entry into an unconditional agreement to acquire Countdown Petone for $37.3m
Targeted growth –WaimakJunction land
Development land, WaimakJunction, Kaiapoi
Stage 1 –development of Countdown
Land area1.9 ha
Stage 1 land cost$5.5m
Tenants
Countdown
McKeown fuel station
WALT
10 years on completion of
Countdown
Total Stage 1 cost$26m
Yield on cost5.2%
Stage 2
Vacant land (Stage 2)1.6 ha
Vacant land cost$5m
Investore has a conditional agreement to acquire 3.5ha of land at
WaimakJunction, Kaiapoi, North Canterbury, for $10.5m
Investore has reached agreement in principle to construct a Countdown
on part of the site, adjacent to an existing McKeown’s service station.
The total commitment, including the cost of the land and the Stage 1
development, is expected to be $31m
Once the Countdown has been developed, there will be 1.6ha of
remaining land for future development
10
Investore Property Limited | FY21 Annual Results Presentation
WaimakJunction Concept Plan
Active portfolio management
Portfolio metrics
As at
31 Mar 21
Adjusted
3
31 Mar 20
As at
31 Mar 20
Number of properties434340
Number of tenants13013078
Net lettable area (NLA) (sqm)246,272246,176208,125
Net ContractRental
4
($m)57.156.247.5
WALT(years)9.810.411.5
Market capitalisation rate (%)5.236.086.06
Occupancy rate by area99.199.799.7
Portfolio value
5
($m)1,037.9
1
895.2
6
761.4
Total site area (sqm)594,660593,456507,411
Average site coverage (%)41.441.541.0
Car parking ratio (bays per
100sqm of NLA)
4.34.33.9
Key portfolio activities
✓Portfolio value
1
increased to $1,037.9m, representing a net
valuation gain of $139.3m or 15.5%
2
✓56 rent reviews completed over 77,500 sqm, resulting in a
2.3% increase to previous rentals
✓97% of the rent reviews completed were structured reviews
–CPI or fixed
✓Increase in turnover rent, up$0.45m to $1.0m for FY21,
based on unaudited sales
✓Countdown exercised 6-year right of renewal at
Mt Wellington Shopping Centre, improving the overall
property’s WALT from 2.7 years to 5.1 years
✓6 new lettings completed during the period, achieving an
average of 5.2 years tenure
✓Investore’sportfolio comprises 59 hectares of commercial
property with an average site coverage of 41.4%, providing
future development opportunities
1.See footnote 1 on page 4.
2.See footnote 2 on page 4.
3.As at 31 March 2020, as if the acquisition of the three properties from SPL on 30 April 2020 had settled as at that date.
4.See footnote 3 on page 6.
5.Excludes lease liabilities.
6.Valuation assumes that the seismic works to be undertaken by SPL, at a value of $7.0m, have been completed.
11
Investore Property Limited | FY21 Annual Results Presentation
Everyday
needs
Countdown
New World
Pak’nSave
Animates
Unichem Pharmacy
Pet Essentials
Snap Fitness
NZ Post
Hardware
Bunnings
Mitre10 MEGA
Resene
General
Merchandise /
Retail
The Warehouse
Briscoes
Rebel Sport
Kitchen Things
Hunting and Fishing
Supercheap Auto
Lighting Direct
Freedom Furniture
Food /
Beverage
McDonald’s
Burger Fuel
Columbus Coffee
Pizza Hut
Domino’s Pizza
Pita Pit
Super Liquor
Noodle Canteen
St Pierre Sushi
12
Majority of tenants represent everyday needs
Investore’sportfolio continues to have a high proportion (around 72% by Contract Rental) of tenants
that represent ‘everyday needs’, providing regular, repeat visitation to properties, and enabling
Investoreto benefit from the market conditions created by COVID-19 during FY21
Note: Numbers may not sum due to rounding.
Everyday
Needs, 72%
Hardware,
16%
General
Merchandise /
Retail, 9%
Food /
Beverage, 3%
Investore Property Limited | FY21 Annual Results Presentation
36%
14%
22%
10%
13%
5%
82%
18%
AucklandWellingtonOther North Island
WaikatoCantebury & Central OtagoOther South Island
13
Anchor tenants continue to represent a high proportion (88%) of Investore’stotal
Contract Rental, resulting in a resilient portfolio in difficult market conditions, as demonstrated
by the strong valuation growth over FY21
1.See footnote 3 on page 6.
Geographic diversification by Contract Rental
1
North Island
South Island
Anchor tenant classification by Contract Rental
1
Anchor tenants underpin income
64%
13%
5%
3%
1%
1%
1%
Countdown
Bunnings
Foodstuffs
Mitre 10
The Warehouse Group
Briscoes Group
NZ Post
Investore Property Limited | FY21 Annual Results Presentation
0.9%
3.1%
1.3%
3.7%
4.7%
2.7%
3.9%
7.0%
1.2%
15.0%
5.4%
0.0%
18.1%
3.5%
29.6%
Long dated lease expiry profile
Lease Expiry Profile
1
by Contract Rental
2
As at 31 March 21
WALT
9.8 years
Long portfolio WALT of 9.8 years and 72% of
Contract Rental
2
expiring in 2030 or beyond
FY22
3.1% Contract Rental expiring:
•The Warehouse, 35 MacLagganStreet, Dunedin (1.5%)
•NZ Post, Bay Central Shopping Centre, Tauranga (0.8%)
•Other expiries total 0.8% across 8 tenants
FY23
1.3% Contract Rental expiring across 10 tenants with no major
expiries
FY24
3.7% Contract Rental expiring:
•Countdown, CnrAnglesea & Liverpool Streets, Hamilton
(2.4%)
•Other expiries total 1.3% across 11 tenants
1.Represents the scheduled expiry for each lease, excluding any rights of renewal that may be granted under each lease, for theentire portfolio as at 31 March 2021 as a percentage of Contract Rental.
2.See footnote 3 on page 6.
14
Investore Property Limited | FY21 Annual Results Presentation
Sustainability
15
In the past year Investore has continued to develop its sustainability practices, including developing
the key objectives of its Sustainability Strategic Plan, and commencing a climate risk assessment
Investore Property Limited | FY21 Annual Results Presentation
Sustainability Strategic Plan:
FY22 Achievements
•Commenced measuring greenhouse gas emissions through the BraveGen
software system implemented by the Manager, SIML
•Prepared initial list of climate related risks which are reported in the FY21
Annual Report. During FY22 Investore will formalise this climate risk
assessment
•Installed Tesla superchargers at Johnsonville Countdown supermarket,
operational in May 2021
ObjectiveContribute to a
resilient community
Develop shared
prosperity
Protect the planet
DescriptionWe want to ensure
leading health and
safety performance
and support a
connected and
inclusive society
We want to foster
long-term
prosperity by
investing in and
managing
outstanding places
that reward
everyone
connected with
them
We want to create
efficient, climate-
resilient places
that deliver long
term value and
support a low
carbon future
Financial performance
Mitre10 Mega Botany, Auckland
16
Investore Property Limited|FY21 Annual Results Presentation
Financial performance
31 Mar 21
$m
31 Mar 20
$m
Change
$m%
Net rental income55.848.1+7.7+16.1
Corporate expenses(9.2)(7.5)(1.8)(23.8)
Profit before net finance expense, other income and income tax46.640.6+6.0+14.7
Net finance expense(16.6)(13.9)(2.8)(19.9)
Profit before other income/(expense) and income tax29.926.7+3.2+12.0
Other income/(expense)
1
139.07.7+131.3+1705.9
Profit before income tax169.034.4+134.5+390.5
Income tax expense(7.7)(5.8)(1.9)(32.1)
Profit after income tax attributable to shareholders161.328.6+132.6+463.6
1.Other income/(expense) includes net change in fair value of investment properties.
Values in the table above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
17
Investore Property Limited|FY21 Annual Results Presentation
31 Mar 21
$m
31 Mar 20
$m
Change
$m%
Profit before income tax169.034.4+134.5+390.5
Non-recurring, and/or non-cash items, and other adjustments:
-Net change in fair value of investment properties(139.3)(7.7)(131.6)(1705.2)
-Loss on rental guarantee0.3-+0.3+100.0
-Reversal of lease liabilities movement in investment properties(0.1)-(0.0)(51.2)
-Spreading of fixed rental increases(0.2)(1.1)+0.9+83.7
-Capitalised lease incentives(0.9)(0.1)(0.9)(1786.0)
-Lease incentives amortisation0.1-+0.1+1725.0
-Borrowings establishment cost amortisation0.70.5+0.2+40.5
-Swap break expenses3.60.2+3.4+1685.4
Distributable profit before current income tax33.126.3+6.9+26.2
Current income tax(4.0)(5.2)+1.1+21.7
Distributable profit after current income tax29.121.1+8.0+38.0
Adjustments to funds from operations:
-Maintenance capital expenditure(1.3)(3.2)+1.9+59.8
Adjusted Funds From Operations (AFFO)
2
27.817.9+9.9+55.7
Weighted average number of shares (millions)361.5275.2
Basic and diluted distributable profit after current income tax per share -
weighted (cents)8.057.66
AFFO basic and diluted distributable profit after current income tax per share -
weighted (cents)7.696.49
Distributable profit
1
1.Distributable Profit –refer footnote 2 on page 3 for definition.
2.AFFO is a non-GAAP measure and is intended as a supplementary measure of operating performance. Cash spent during the period on capital expenditure as part of maintaining a building’s grade/quality, but not expensed as part of
distributable profit after current income tax, is adjusted to enable the investors to see the cash generating ability of the business.
Values in the table above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
18
Investore Property Limited|FY21 Annual Results Presentation
Financial summary
1.LVR is calculated based on independent valuations, which include seismic works and rental underwrites to be funded by SPL in relation to the three properties acquired from SPL and settled in April 2020. The independent valuations
also exclude lease liabilities.
2.Excludes the after tax fair value of interest rate derivatives.
As at
31 Mar 21
As at
31 Mar 20Change
Investment property value ($m)1,037.9761.4+276.4
Drawn debt ($m)(280.0)(238.4)(41.6)
Loan to Value Ratio (LVR)26.8%
1
31.3%+4.5
Equity ($m)765.7526.7+239.0
Shares on issue (millions)368.1304.5+63.6
Net TangibleAssets (NTA) per share$2.08$1.73+$0.35
Adjusted NTA
2
per share$2.08$1.74+$0.35
19
Investore Property Limited|FY21 Annual Results Presentation
Capital management
Bay Central Shopping Centre, Tauranga
20
Investore Property Limited | FY21 Annual Results Presentation
Proactive capital management
1.China Construction Bank, New Zealand Branch (CCB).
2.Industrial and Commercial Bank of China Limited, Auckland Branch (ICBC).
3.See footnote 4 on page 3.
4.The unexpired lease term in a property or portfolio, assuming the property or portfolio is fully leased. This is weighted by theincome applicable to each lease and a current market rental with nil term for vacant space.
Key debt transactions
•$50m new 5-year bank facility secured June 2020 with
the introduction of CCB
1
into the syndicate
•$101m of bank facilities extended to June 2024
•$125m 7-year fixed rate bonds issued August 2020 with
fixed 2.40% interest rate
•$99m bank facility cancelled following bond issue
•$30m new 3-year bank facility secured November 2020
with the introduction of ICBC
2
into the syndicate
Equity transaction
•$105m equity capital raised in April and May 2020
Debt facilities
As at
31 Mar 21
As at
31 Mar 20
Debt facilities limit
(ANZ, BNZ, CBA, CCB
1
, Westpac, ICBC
2
),
including $225m bonds
$476m$370m
Debt facilities drawn$280m$238m
Weighted average maturity of debt facilities3.8 years2.2 years
Debt covenants
LVR
(Drawn Debt / Property Values)
Covenant: ≤ 65%; internal policy max: 48%
26.8%
3
31.3%
Interest Cover Ratio
(EBIT/Interest and Financing Costs)
Covenant: ≥ 1.75x
3.1x2.7x
WALT
4
Covenant: > 6.0 years
9.7
years
11.4
years
21
Investore Property Limited | FY21 Annual Results Presentation
Improved debt profile
Total debt facilities $476m with $280m drawn, leaving $196m undrawn and available to
fund future growth (or $128m after committed acquisitions and developments)
1
Weighted average maturity of debt facilities
3.8 years as at 31 March 2021, increased from
2.2 years as at 31 March 2020
22
$70m
$30m
$101m
$50m
$100m
$125m
FY22FY23FY24FY25FY26FY27FY28
Debt maturity profile
As at 31 March 2021
Bank facilities
(Mar-21)
IPL010 bondsIPL020 bonds
Investore Property Limited | FY21 Annual Results Presentation
1.Committed acquisitions and developments comprise the acquisition of Countdown Petone ($37.3m) and the acquisition of the landatWaimakJunction (which acquisition remains conditional) and the completion of Stage 1 of
the development with an estimated total cost (including land) of $31m.
Hedging and cost of debt
Hedging Update
•100% drawn debt hedged, including fixed bonds
•Weighted average cost of debt at 4.04%, expected to fall as
interest rate swaps mature -a tailwind to earnings
•$125m 7-year fixed rate bonds issued August 2020 at a
2.40% coupon
•$30m swaps expired and $40m swaps cancelled following
the bond issuance
•No new hedging entered into given “lower for longer”
interest rate environment
Cost of debt
As at
31 Mar 21
As at
31 Mar 20
Weighted average cost of debt
(incl. current interest rate
derivatives, bonds and bank
margins, and line fees)
4.04%4.63%
Weighted average fixed
interest rate (excl. margins)
1.64%2.64%
Weighted average fixed
interest rate maturity (incl.
bonds, active and forward
starting swaps)
3.9 years2.4 years
% of drawn debt fixed100%94%
23
$280m
$230m
$200m $200m
$125m $125m $125m
1.64%
1.47%
1.34%1.34%
0.40%0.40%0.40%
0.00%
0.50%
1.00%
1.50%
2.00%
-
$50m
$100m
$150m
$200m
$250m
$300m
Mar-21Mar-22Mar-23Mar-24Mar-25Mar-26Mar-27
Fixed rate interest profile
Notional fixed rate debt (net of fixed-to-floating hedging)
Weighted average interest rate of fixed rate debt (excl. margin and line fees)
Investore Property Limited | FY21 Annual Results Presentation
Looking ahead
Countdown, Palmerston North
24
Investore Property Limited | FY21 Annual Results Presentation
•Continued focus on targeted
growth to enhance the portfolio
and maximise returns
•Ensure disciplined delivery of
development opportunity at
WaimakJunction
•Continue refurbishment projects
across the portfolio with
Countdown and other key tenants
•Cash dividend guidance for FY22
of 7.60 cents per share. The Board
will continue to review dividend
guidance as and when acquisitions
occur
FY22 cash
dividend guidance
7.60 cps
Looking ahead
Appendix A
26
Investore Property Limited | FY21 Annual Results Presentation
$1.73
$2.08
($0.02)
$0.46
($0.02)
($0.08)
As at
31-Mar-20
Capital raiseProfit before taxIncome tax
expense
Dividends paidAs at
31-Mar-21
Net Tangible Assets
Values in the tables above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
$26.7m
$29.9m
$7.7m
$1.0m
($0.2 m)
($0.9 m)
($2.6 m)
($1.4 m)
($0.4 m)
31 Mar 20Net rental
increase from
acquisitions
Net rental
increase from
existing portfolio
Lower net rental
from COVID
abatements
NZ IFRS
adjustments
Higher net finance
expense
Higher
management and
performance fees
expenses
Higher
administration
expense
31 Mar 21
Profit before other income/(expense) and income tax
Appendix B
Values in the tables above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
1. The SPL acquisition excludes the seismic works $7.0m to be completed by Stride Property Limited (SPL) on the three large format retail properties acquired from SPL on 30 April 2020, and the balance of the rental guarantee of $0.1m
from SPL.
27
Investore Property Limited | FY21 Annual Results Presentation
$761.4m
$1,037.9m
$133.6m
1
$0.8m
$0.2m
$2.5m
$139.3m
As at
31-Mar-20
SPL acquisitionLease
incentives
Spreading of fixed
rental increases
Capital
expenditure
Net change in
fair value
As at
31-Mar-21
Investment Properties (excl. lease liabilities)
$47.5m
$57.1m
$8.7m
$0.1m
($0.6 m)
$0.3m
$0.4m
$0.4m
$0.2m
As at
31-Mar-20
SPL
acquisition
DevelopmentExpiriesRent reviewsTurnoverOpex
recoverability
OtherAs at
31-Mar-21
Net Contract Rent
Thank you
28
Important Notice: The information in this presentation is an overview and does not
contain all information necessary to make an investment decision.It is intended to
constitute a summary of certain information relating to the performance of Investore
for the year ended 31 March 2021. Please refer to Investore’s Annual Report 2021 for
further information in relation to the year ended 31 March 2021. The information in
this presentation does not purport to be a complete description of Investore. In
making an investment decision, investors must rely on their own examination of
Investore, including the merits and risks involved. Investors should consult with their
own legal, tax, business and/or financial advisors in connection with any acquisition of
securities.
No representation or warranty, express or implied, is made as to the accuracy,
adequacy or reliability of any statements, estimates or opinions or other information
contained in this presentation, any of which may change without notice. To the
maximum extent permitted by law, Investore, Stride Investment Management Limited
and their respective directors, officers, employees, agents and advisers disclaim all
liability and responsibility (including without limitation any liability arising from fault or
negligence on the part of Investore, Stride Investment Management Limited and their
respective directors, officers, employees, agents and advisers) for any direct or
indirect loss or damage which may be suffered by any recipient through use of or
reliance on anything contained in, or omitted from, this presentation.
This presentation is not a product disclosure statement or other disclosure document.
Level 12, 34 Shortland Street
Auckland 1010, New Zealand
PO Box 6320, Victoria Street
West, Auckland 1142,
New Zealand
P+64 9 912 2690
Winvestoreproperty.co.nz
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019
Results for announcement to the market
Name of issuer Investore Property Limited (NS)
Reporting Period 12 months to 31 March 2021
Previous Reporting Period 12 months to 31 March 2020
Currency NZD – New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$55,813 16.10%
Total Revenue $55,813 16.10%
Net profit/(loss) from
continuing operations
$161,260 463.55%
Total net profit/(loss) $161,260 463.55%
Final Dividend
Amount per Quoted Equity
Security
$0.01900000
Imputed amount per Quoted
Equity Security
$0.00200611
Record Date 26/05/2021
Dividend Payment Date 02/06/2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.08 $1.73
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the attached Annual Report and Annual Results
Presentation for the year ended 31 March 2021.
Authority for this announcement
Name of person
authorised
to make this announcement
Louise Hill
Contact person for this
announcement
Louise Hill
Contact phone number +64 275 580033
Contact email address louise.hill@strideproperty.co.nz
Date of release through MAP
18/05/2021
Audited financial statements accompany this announcement.
---
Template
Distribution Notice
Updated as at 18 December 2019
Please note: all cash amounts in this form should be provided to 8 decimal places
Section 1: Issuer information
Name of issuer INVESTORE PROPERTY LIMITED
Financial product name/description Ordinary Shares of Investore Property Limited
NZX ticker code IPL
ISIN (If unknown, check on NZX
website)
NZIPLE0001S3
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 26/05/2021
Ex-Date (one business day before the
Record Date)
25/05/2021
Payment date (and allotment date for
DRP)
02/06/2021
Total monies associated with the
distribution
1
$6,994,566
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD – New Zealand Dollar
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.02100611
Gross taxable amount
3
$0.00716467
Total cash distribution
4
$0.01900000
Excluded amount (applicable to listed
PIEs)
$0.01384144
Supplementary distribution amount $0.00091033
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Fully imputed
If fully or partially imputed, please
state imputation rate as % applied
6
28%
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
Imputation tax credits per financial
product
$0.00200611
Resident Withholding Tax per
financial product
n/a
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
n/a
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Louise Hill
Contact person for this
announcement
Louise Hill
Contact phone number +64 275 580033
Contact email address louise.hill@strideproperty.co.nz
Date of release through MAP
18/05/2021
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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