Kiwi Property gives green light to build-to-rent

NZX RELEASE
21 September 2021
Kiwi Property gives green light to build-to-rent


Kiwi Property today announced it is moving ahead with the construction of
New Zealand’s first major build-to -rent development, marking an important milestone in
the delivery of the company’s mixed-use strategy. The 295 apartment complex will be
located at Sylvia Park in Auckland, accelerating the site’s evolution into an integrated
retail, office and residential community.

Build-to -rent accommodation is developed, owned and managed by institutional
landlords, specifically for long-term rental. Featuring a combination of studio, one, two
and three bedroom apartments, the Sylvia Park build-to -rent development will offer
residents the security of long-term tenure, coupled with quality amenities, resident
services and curated events.

Enabling works are already underway at the Lynton Road site, with construction set to
commence in late 2021 and renting to begin in early 2024. The $221 million
development will target a stabilised net yield of approximately 4.5%, and a 10 year
property internal rate of return of over 8.0%
1
. The project will be debt funded, pending
the outcome of the process to sell The Plaza and Northlands, which is currently
underway.


“This is a proud moment for Kiwi Property, as we take a decisive step forward in the
execution of our mixed-use strategy. Build-to -rent is poised to become an important
part of our portfolio, further diversifying our asset base, unlocking growth and promoting
valuation uplift,” says Kiwi Property CEO, Clive Mackenzie.

“With our large mixed-use landholdings, including Sylvia Park and LynnMall, we’re in a
unique position to deliver build-to -rent. The size of these assets and ability to overlay
multiple developments creates an area of distinct competitive advantage. We’re
excited to be moving ahead with build-to -rent today and are just getting started.”

Kiwi Property’s ability to develop build-to -rent on its own sites enables the company to
mitigate upfront costs and drive more attractive returns. In addition, by leveraging the
asset management, security and maintenance platforms already in place at its mixed-
use assets, Kiwi Property is able to unlock greater operational efficiency and economies
of scale.

“The structural case for build-to -rent is strong. More than half of Aucklanders over the
age of 15 currently rent, with this number expected to rise to 60% by 2043. This new
asset class has the potential to play an important role in helping address the growing
demand for rental accommodation and alleviate New Zealand’s housing shortfall,”
added Mackenzie.

2
Kiwi Property has a clear pathway to scale in build-to -rent. Under the Sylvia Park
masterplan, approximately 1,200 apartments could potentially be built across the site
over the medium term, transforming the location into a major residential hub. Resource
consent is also being sought for a 25-storey mixed-use building at Auckland’s LynnMall,
which will include 245 build-to -rent apartments, as well as three floors of office and
additional ground floor retail. More than 600 apartments could be accommodated at
the location in the coming years. Further details regarding the LynnMall mixed-use
development will be provided once a decision has been made to proceed with the
project.

A live webcast for analysts and institutional investors will be held at 10.30am (NZT) today
to provide further details regarding the build-to -rent announcement.

The webcast can be viewed online at:
https://edge.media-server.com/mmc/p/mzhwcv2y

Alternately, participants may pre-register to join via conference call at:
https://apac.directeventreg.com/registration/event/3177225

> Ends

Note
1. IRR assumes interest deductibility being permitted for new builds, as per “Design of
the interest limitation rule and additional bright line rules – a Government discussion
document” (June 2021).


Contact us for further information:
Clive Mackenzie
Chief Executive Officer
clive.mackenzie@kp.co.nz

Campbell Hodgetts
Communications and Investor Relations Lead
campbell.hodgetts@kp.co.nz
+64 27 563 4985
About us:
Kiwi Property (NZX: KPG) is one of the largest listed property companies on the New
Zealand Stock Exchange and is a member of the S&P/NZX 20 Index. We’ve been around
for over 25 years and proudly own and manage a significant real estate portfolio,
comprising some of New Zealand’s best mixed-use, retail and office buildings. Our
objective is to provide investors with a reliable investment in New Zealand property
through the ownership and active management of a diversified, high-quality portfolio.
S&P Global Ratings has assigned Kiwi Property an issuer credit rating of BBB (stable) and
an issue credit rating of BBB+ for each of its fixed rate senior secured bonds. Kiwi Property
is the highest rated New Zealand company within CDP (Carbon Disclosure Project) and is
a member of FTSE4 Good, a series of benchmark and tradable indices for ESG
(Environmental, Social and Governance) investors. Kiwi Property is licensed under the
Real Estate Agents Act 2008. To find out more, visit our website kp.co.nz

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Build to rent:
delivering the next
stage of Kiwi Property’s
mixed-use strategy
21 September 2021

> Build to Rent (BTR) is gaining significant attention as an
exciting new asset class in New Zealand.
> BTR accommodation is developed, owned and
managed by institutional landlords, specifically for
long-term rental.
> The model offers residents the flexibility and
convenience of renting, coupled with the security of
tenure typically associated with home ownership.
> Residents benefit from extended tenancies and
structured rental increases.
> Communities are the heartbeat of successful BTR
schemes and connection between residents is fostered
through building amenity and design.
What is build to rent?
2
Artist’s impression – Sylvia
Park BTR south east view

BTR –responding to residents’ needs
3
Access to shopping
and entertainment
Public
transport
Flexible
tenure
Professional
management
Connected
communities
Pets
allowed
Quality
amenities
Ready to
move in

Macro trends
supporting BTR
44

0
1
2
3
4
5
6
7
8
United StatesCanadaIrelandUnited
Kingdom
AustraliaNew Zealand
Price to Income Multiple
1987 or 1992 (Earliest Data)2019 Median Market
>Housing affordability was similar between most OECD nations
until the late 1980s / early 1990s.
>New Zealand housing affordability has deteriorated
significantly since then and in 2019, the median home cost
seven times the average household income.
Declining housing affordability
Source: Demographia International Housing Affordability 2021
>Median prices for residential property across New Zealand increased
by 25.5% from $677,400 in August 2020 to a record $850,000 in August
2021, putting home ownership beyond the reach of many.
>Auckland again underpinned house price growth, hitting a record
median house price of $1,200,000, up 26.4% on the year before.
House price to income ratio
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
201020112012201320142015201620172018201920202021
Auckland median house price
Source: REINZ monthly report 14 September 2021
5

0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20102011201220132014201520162017201820192020
Auckland housing demand
New Housing Needed (AKL)Code Compliance Certificates (CCC's)
Home ownership getting harder
Source: Statistics NZ and Auckland Council housing data
>Auckland’s housing supply has failed to keep pace with the city’s
rapidly growing population.
>Housing intensification is driving a sharp increase in new home
consents and code compliance certificates.
>Despite the increase in consents, demand for housing continues to
significantly outstrip supply.
>It takes the average New Zealander 14 years to save a 20%
deposit for a house in Auckland, up 6 years over the past
decade.
>With the increase in house prices throughout the country, the
number of KiwiSaver withdrawals required to fund first home
purchases has increased exponentially.
Time to save deposit - Auckland
0
5
10
15
20
25
30
35
40
45
50
55
0
2
4
6
8
10
12
14
16
20112012201320142015201620172018201920202021
Number of
KiwiSaver withdrawals
('000)
Years to save a 20% deposit
Time required to save a 20% depositNumber of KiwiSaver Withdrawals
Source: REINZ, IRD, JLL Research and Consultancy
6

0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2013201820232028203320382043
Number of Renters
Renting demographics
15-3435-4950-6970+
Renting on the rise
>Renters now account for around 50% of Auckland's
total population aged 15 and over, with this number
expected to grow to ~60% by 2043.
>Population growth and demographic trends support
demand for rental accommodation, particularly
amongst millennials.
>Housing unaffordability, lack of supply, changing
consumer perceptions and a greater acceptance of
apartment living are expected to entrench rental
accommodation as a vital component of Auckland’s
residential accommodation mix.
Source: Statistics NZ and JLL Research and Consultancy. Shaded area in graph shows forecast period.
7

Auckland residential – strong returns, low volatility
Source: MSCI, MBIE, REINZ, JLL Research and Consultancy, Macquarie Research
>Auckland residential income growth has been more stable than
other commercial property asset classes over the past decade.
>BTR creates the opportunity to deliver higher rental growth than
other property asset classes, coupled with less volatility.
Auckland residential returnsRental growth and volatility by asset class
(June 2011-June 2021)
Source: JLL Research, MBIE
8
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
10 Year15 Year
Total Return
AKL ResidentialAll Commercial PropertyNZX50Govt Bonds
>Auckland residential property returns have outpaced all commercial
real estate, the NZX50 and Government bonds over the past 15 years,
delivering a total annual return of over 11%.
>When viewed over the past decade, a similar story emerges, with
Auckland residential property returns tracking ahead of all commercial
property and bonds, but being surpassed by the NZX50.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
IndustrialOfficeResidential
Average growthVolatility

> BTR is in its infancy in New Zealand, however there is the
potential for significant growth in the asset class, based on
global precedent.
> In 2020, BTR accounted for 36% of real estate investment in
the US, 24% in Europe and 19% in Japan, totaling ~US$224b.
> In Australia, there are ~1,800 BTR apartments currently in
operation and a further ~7,400 in the pipeline.
> There were no completed BTR units in the UK in 2013. ~150,000
BTR units are currently complete, under construction or
planned for construction, accounting for ~3% of the UK’s
private rental sector.
> Based on the UK trajectory, ~18,000 BTR homes could be built
in Auckland over the next 10 years, making BTR a $12b asset
class by 2030.
BTR – poised for growth in New Zealand
9
Artist’s impression -
view from Sylvia Park
Source: CBRE, JLL Research

BTR at Kiwi Property
10

Kiwi Property is uniquely placed to deliver BTR
The strong case for BTR at Kiwi Property
Strategy
Intensify mixed-use assets
Empower customer
success
Grow with third party capital
Unlocking our mixed-use
strategy
11
1.Accelerates Sylvia Park’s evolution into a world class
mixed-use centre.
2.Kiwi Property’s large mixed-use landholdings mitigate
upfront costs and provide a foundation for scale,
creating competitive advantage.
3.Additional mixed-use diversification (through BTR
and/or other asset classes) will support site-wide
capitalisation rate compression and valuation uplift.
4.Existing asset management, security and maintenance
platforms can be leveraged to deliver operational
synergies and economies of scale.
5.First mover advantage will help Kiwi Property capture
forecast BTR growth and address Auckland’s housing
shortage.

Moving forward with BTR at Sylvia Park
>Kiwi Property will proceed with construction of its first BTR development
at Sylvia Park in late 2021 and has begun enabling works.
>The development comprises 295 residential apartments across three
separate buildings, up to twelve levels, with 119 basement car parks.
>Amenities will be concentrated in a centrally located pavilion, creating
a vibrant community hub. Facilities include co-working facilities,
gymnasium, residents’ lounge, as well as rooftop terrace.
>The site connects directly to Sylvia Park shopping centre and the
associated train and bus interchange, offering residents outstanding
convenience and accessibility.
>The project will be debt funded, pending the outcome of the process
to sell The Plaza and Northlands, which is currently underway.
Total construction cost$221m
Number of apartments 295
ConstructiontimeframeLate 2021 – Early 2024
Homestar target7 – 8 Stars
Expected net yield Approx. 4.5%
Expected property IRR > 8.0%
1
Artist’s impression -central podium
overlooking the village green
Artist’s impression –
southern boardwalk
Note 1: IRR assumes interest deductibility being permitted for new builds, as per “Design of the interest limitation rule and
additional bright line rules – a Government discussion document” (June 2021).
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Sylvia Park - more than a retail powerhouse
Key:
RetailLFROfficeIndustrialBuild to rent
13
A dash line represents projects approved for construction
Sylvia Park as at September 2021 showing
land uses and currently approved projects.

Sylvia Park BTR -external perspectives
Artist’s impression -
Lynton Rd view
Artist’s impression - western
view from Sylvia Park
Artist’s impression – south
east view from Sylvia Park
14

Sylvia Park BTR -interior perspectives
Artist’s impression –
living room
Artist’s impression –
bedroom
Artist’s impression –
kitchen
15

Sylvia Park BTR -amenities perspectives
Artist’s impression –
concierge lounge
Artist’s impression –
concierge desk
Artist’s impression –
resident’s pavilion
16

BTR at LynnMall – the next step on the journey
>Kiwi Property has sought resource consent for a mixed-use tower at LynnMall,
including 245 BTR apartments. The building will integrate ground floor retail,
three commercial office levels and 19 floors of residential apartments.
>The proposed development links to the existing LynnMall retail centre and is
within 50 meters of the New Lynn train station, and city rail link.
>Construction could begin 2022, pending consent, funding and approval.
Further details will be provided once a decision has been made.
>The BTR development will be the tallest building in west Auckland and offer
quality amenities, including a rooftop deck and leisure area, providing
unparalleled views from the Waitemata to Manukau harbours.
>Amenity spaces, concentrated activity zones and organised events will
create a vibrant community with a deep connection to place.
>7–8 Homestar rating targeted, delivering excellent sustainability performance.
Development configuration
Ground LevelRetail2,235sqm
Level 1-3
Office
Parking
4,665sqm
132 Bays
Level 4Parking97 Bays
Tower:Level 5-25BTR245 Apartments
Artist’s impression –LynnMall
mixed-use tower
17

LynnMall mixed-use tower - external perspectives
Artist’s impression -Memorial Drive
lobby entrance and retail offering
Artist’s impression -view from
New Lynn Railway station
18
Artist’s impression -north-east
view from Memorial Square

A pathway to BTR scale for Kiwi Property
Sylvia Park
>The greater Sylvia Park site contains a
total of 35.5 hectares.
>Approximately 1,200 apartments could
be developed at Sylvia Park in the
medium term.
LynnMall
>Approximately 600 apartments could
be developed at LynnMall in the
medium term.
>Further development will be
considered in line with demand.
Other BTR opportunities
>A number of Auckland sites have the potential to meet
investment and structural requirements.
>Planned transport and infrastructure improvements will provide
significant development opportunities. Local and central
government support solutions to Auckland's housing shortage.
>Kiwi Property’s large existing landholdings, and integrated asset management
platform create significant opportunities to grow BTR and drive economies of
scale, creating competitive advantage and unlocking shareholder value.
19

Thanks
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