PFI Announces Record Annual Results
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announcement
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21 February | 2022
Page 1
PFI ANNOUNCES RECORD ANNUAL RESULTS
The PFI management team will present the results via live webcast from 10am NZT on 21 February
2022. To view and listen to the webcast, please visit https://edge.media-server.com/mmc/p/gtffp2aq.
Anyone wishing to participate in the webcast (for example, to ask a question) must pre-register for the
conference call at https://apac.directeventreg.com/registration/event/6363677. Upon registering,
participants will be provided with participant dial-in numbers, a passcode and a unique registrant ID. In
the 10 minutes prior to the call start time, you will need to use the conference access information
provided in the email received at the point of registering, in addition to opening the webcast (using the
details above).
Highlights
▪ Record annual results: fair value gains on properties of $392.5 million contributing to a record profit
after tax of $452.8 million, Funds From Operations (FFO)
1
earnings up 14.4% from the prior year to
11.07 cents per share, Adjusted Funds From Operations (AFFO) earnings up 15.7% from the prior
year to 9.29 cents per share, cash dividends of 7.90 cents per share, up 2.6% on 2020 dividends
▪ Strong balance sheet: net tangible assets up 37.3% to 303.4 cents per share, gearing of 27.7%,
all bank facilities refinanced during the year and increased by $125 million, over $120 million of
available liquidity
▪ Refreshed strategy progressed: refreshed strategy announced and progressed with $368 million
of capital transactions
▪ Significant brownfield opportunities: $224 million or 10% of the portfolio held in brownfield
opportunities, providing a growing pipeline of medium-term development opportunities
▪ Fully occupied industrial property portfolio of scale: fully occupied industrial property portfolio
with a value in excess of $2.15 billion, weighted towards the buoyant Auckland industrial market
▪ Further growth in dividends: strategy progression, a fully occupied industrial property portfolio of
scale and buoyant industrial property market conditions result in targeted 2022 dividend range of
8.05 to 8.10 cents per share, a further increase of up to 2.5% on 2021 dividends
Property for Industry Limited (PFI, the Company) today announced record annual results for the year
ended 31 December 2021.
“We are pleased to announce record annual results following one of our busiest years yet. The PFI team
made excellent progress against the Company’s refreshed strategy.” says PFI Chief Executive Officer,
Simon Woodhams.
Record annual results
PFI generated a record profit after tax for the year of $452.8 million (89.97 cents per share), up from
$113.5 million (22.71 cents per share) in the prior year. A $392.5 million fair value gain on investment
properties, as compared to a $72.5 million fair value gain in the prior year, was a large contributor to
these record annual results.
Net rental income of $94.3 million was up $10.1 million or 12.0% on the prior year, with acquisition
activity contributing $7.3 million to this increase.
This increase in net rental income has contributed to an increase in FFO earnings to 11.07 cents per
share, up 1.40 cents per share or 14.4% on the prior year. AFFO earnings of 9.29 cents per share were
--------
1
Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) are non-GAAP financial information and are
common property investor metrics, which have been calculated in accordance with the guidelines issued by the Property Council
of Australia. Please refer to Appendix 1 for more detail as to how these measures were calculated.
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21 February | 2022
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up 1.26 cents per share or 15.7% when compared to the prior year, with a reduced level of non-
recoverable property costs also contributing to that increase.
That being the case, the PFI Board today resolved to pay a fourth quarter final cash dividend of 2.4500
cents per share. The dividend will have imputation credits of 0.2501 cents per share attached and a
supplementary dividend of 0.1135 cents per share will be paid to non-resident shareholders. The record
date for the dividend is 28 February 2022, and the payment date is 9 March 2022. The dividend
reinvestment scheme will not operate for this dividend.
The fourth quarter dividend will take cash dividends for the year to 7.90 cents per share, up 2.6% on
2020 dividends, resulting in an FFO dividend pay-out ratio of 71% (2020: 80%) and an AFFO dividend
pay-out ratio of 85% (2020: 96%, refer Appendix 3). The dividend pay-out ratio, based on PFI’s revised
dividend policy, is 92% of AFFO on rolling three-year historic average basis.
Strong balance sheet
Net tangible assets (NTA) per share increased by 82.5 cents per share or 37.3% from 220.9 cents per
share as at the end of 2020 to 303.4 cents per share as at the end of the year, breaking the $3 per share
mark for the first time in the Company’s history. The $392.5 million increase in the fair value of investment
properties contributed 77.7 cents per share to this increase.
All the Company’s bank facilities were refinanced during the year, and a further $125 million of facilities
was added. The weighted average term to expiry of PFI’s bonds and bank facilities is 3.9 years and the
Company has over $120 million of available liquidity as at the end of the year. Year-end gearing
2
is just
27.7% and the interest cover ratio
3
for the year was 4.4 times.
“Additional facilities, backed up by our significant portfolio revaluation, and coupled with the proceeds
from the recent Carlaw Park settlement, provided us with significant capital. We’ve drawn on these
resources to secure quality industrial properties such as those in Wiri and Hastings,” says Chief Finance
and Operating Officer, Craig Peirce. “At the same time, we’ve been able to push out our weighted
average term to expiry to 3.9 years for our bonds and bank facilities, which has given us additional
certainty as we grow.”
Refreshed strategy progressed
At the Company’s annual meeting in May, Simon Woodhams outlined a refreshed strategy for PFI, with
four areas of focus: core generic assets, brownfield opportunities, specialised assets and assets held
for sale. With the refreshed strategy in place, it was a busy year for transactions, with close to $253
million in acquisitions and value-add opportunities, and the divestment of Carlaw Park in December,
capping off a year of $368 million in capital transactions.
First, the purchase of a “core generic” asset located at 670-680 Rosebank Road in Avondale, Auckland
for $39.0 million was completed in January 2021.
Then in May, PFI acquired a prime industrial property located at 44 Noel Burnside Road in Wiri, Auckland
for $91.7 million. The property was leased for an initial two-year period, and because of the shorter
lease, and the potential for an expiry in two years, the PFI team viewed the purchase as a “brownfields
opportunity”. In October, a new 10-year lease was secured with Cottonsoft, accordingly this property has
now moved into the “core generic assets” classification.
Later on in the year in November, the Company acquired a 9.56-hectare site in the Hawkes Bay from
--------
2
That is, total borrowings as a percentage of the most recent independent valuation of the property portfolio. Covenant: 50%.
3
That is, the ratio of interest expense and bank fees to operating earnings excluding interest expense and bank fees. Covenant:
2 times.
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T&G Global (T&G) in a 15-year sale-and-lease-back for $79.5 million. This “specialised asset”
accommodates in excess of 36,000 square metres of T&G’s post-harvest operations, including a
packhouse, two cool stores, warehousing and 3.7 hectares of storage yard.
Two other smaller purchases at Honan Place and Rosebank Road in Avondale were completed towards
the end of the year. These properties connect to other PFI properties in the area, providing opportunities
to unlock future value across expanded sites in the medium term.
Significant brownfield opportunities
An increasing focus for the PFI team will be the redevelopment of existing holdings. The Company has
around $224 million or 10% of the portfolio held in such opportunities, providing a growing pipeline of
medium-term redevelopment projects.
Following the completion of a 3,400 square metre industrial property on surplus land at 47a Dalgety
Drive, in Wiri, the PFI team are focusing on the Company’s Bowden Road site in Mount Wellington. This
3.9-hectare site in one of Auckland’s prime industrial locations, with excellent transport links and dual
road frontages, can accommodate large-scale or multiple tenant designs of ~20,000 square metres. A
March 2023 lease expiry provides PFI access to this significant redevelopment opportunity, which could
involve an investment of ~$50 million.
Other brownfield opportunities within the portfolio will allow the Company to unlock parcels of land in key
industrial precincts, providing the opportunity to deploy balance sheet capacity into earnings accretive
projects. As these projects complete and long-term leases are secured, the properties will be moved into
“core generic” classification.
Fully occupied industrial property portfolio of scale
Portfolio snapshot as at 31 December 2021 31 December 2020
Book value $2,168.9m $1,631.5m
Number of properties 97 94
Number of tenants 136 148
Contract rent $95.6m $89.8m
Occupancy 100.0% 99.4%
Weighted average lease term 5.40 years 5.28 years
Auckland property 81.8% 84.6%
Industrial property 98.2% 91.7%
Further to the valuation announcement in December, PFI recorded an annual increase in the value of
its property portfolio from independent valuations of $392.5 million or 22.2% to $2,168.9 million. Around
90% of the valuation outcome was due to movements in yields or cap rates. As a result of portfolio and
valuation activity, PFI’s passing yield firmed from 5.53% to 4.41%. An independent market rental
assessment of the entire portfolio was completed as part of the valuation process, this assessment
estimates that PFI’s portfolio is around 3% under-rented.
Around 150,000 square metres of PFI’s portfolio was leased during the year to 29 new and existing
tenants for an average increase in term of 6.7 years. 10 new leases and 19 renewals were secured, and
across these leasing transactions average leasing costs of half a month per year of term was negotiated.
A positive re-leasing spread of around 12% on annual passing rents was achieved on stabilised
renewals. Rent reviews were completed on 114 leases during the year, resulting in an average annual
uplift of 3.5% on ~$66.5 million of contract rent. Combined, over 84% of contract rent was reviewed,
varied, or leased during 2021.
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At the end of the year the Company’s portfolio was fully occupied, and just 6.4% of contract rent is due
to expire during 2022. In addition, almost 70% of the Company’s portfolio is subject to a rent review
during 2022, including CPI-based rent reviews on 11.2% of the portfolio.
The leasing market for industrial property remains very strong, with vacancy still at historically low levels.
CBRE reports
4
that total Auckland industrial vacancy is just 0.5%, down from 1.0% as at the end of June
2021. Furthermore, they predict
5
industrial rental growth over the next five years to average 3.9% per
annum for prime properties and 3.7% per annum for secondary properties, in line with their June 2021
forecasts.
Further growth in dividends
Strategy progression, a fully occupied industrial property portfolio of scale and buoyant industrial
property market conditions mean that the PFI Board expects to declare 2022 cash dividends of between
8.05 and 8.10 cents per share, a further increase of up to 2.5% on 2021 dividends.
PFI’s dividend policy to distribute between 90% to 100% of AFFO on a rolling three-year historic average
basis, and cash dividends of 8.05 to 8.10 cents per share are anticipated to result in a dividend pay-out
at the bottom of this dividend policy range.
This guidance is subject to there being no material adverse changes in conditions or unforeseen events,
including no material tenant failures or further material COVID-19 restrictions, other than those in place
as at the date of this announcement.
Closing
“The Company’s continued focus on industrial property has coincided with ongoing investor interest and
tenant demand that has enabled us to grow significantly,” observes PFI Chairman, Anthony Beverley.
“We are pleased to have capitalised on these market conditions while keeping gearing low. Our
refreshed strategy and the changes in our dividend policy will give us that extra degree of flexibility to
enhance and expand our portfolio in order to continue growing cash returns for investors.”
ENDS
ABOUT PFI & CONTACT
PFI is an NZX listed property vehicle specialising in industrial property. PFI’s nationwide portfolio of 97 properties is leased to
136 tenants.
For further information please contact:
SIMON WOODHAMS
Chief Executive Officer
----
Phone: +64 21 749 770
Email: woodhams@pfi.co.nz
CRAIG PEIRCE
Chief Finance and Operating Officer
----
Phone: +64 21 248 6301
Email: peirce@pfi.co.nz
----
Property for Industry Limited
Shed 24, Prince’s Wharf, 147 Quay Street, Auckland 1010
PO Box 1147, Shortland Street, Auckland 1140
www.propertyforindustry.co.nz
--------
4
CBRE “Auckland Industrial Space Market Trends”, February 2022
5
CBRE “Auckland Property Market Outlook”, December 2021
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21 February | 2022
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Attachments
NZX Form – Results Announcement
NZX Form – Distribution Notice
Annual Results Presentation
Annual Report
Appendices
Appendix 1 – FFO and AFFO Calculations
Funds / Adjusted Funds From Operations For the year
ended
For the year
ended
(unaudited, $000, unless noted)
31 December
2021
31 December
2020
Profit and total comprehensive income after income
tax attributable to the shareholders of the Company
452,810 113,452
Adjusted for:
Fair value loss / (gain) on investment properties (392,519) (72,546)
Material damage insurance income (900) (5,073)
Loss / (gain) on disposal of investment properties (2,636) 14
Fair value loss / (gain) on derivative financial instruments (12,271) (643)
Amortisation of tenant incentives 3,243 2,841
Straight lining of fixed rental increases (1,417) (1,882)
Deferred taxation 9,412 12,175
Other 1 2
Funds From Operations (FFO) 55,723 48,340
FFO per share (cents) 11.07 9.67
Maintenance capex (3,946) (2,977)
Incentives and leasing fees given for the period (5,065) (4,225)
Other (incl. reversal of accounting entries for COVID-19 abatement
and deferral deals)
33 (1,010)
Adjusted Funds From Operations (AFFO) 46,745 40,128
AFFO per share (cents) 9.29 8.03
Appendix 2 – FFO and AFFO Dividend Pay-out Ratios
2021 2020
Full year dividends per share (cents) 7.90 7.70
FFO dividend pay-out ratio (%) 71% 80%
AFFO dividend pay-out ratio (%) 85% 96%
Appendix 3 – Rolling three-year AFFO Dividend Pay-out Ratios
2021 2020 2019 2018 2017
Rolling three-year AFFO dividend pay-
out ratio (%)
92% 98% 99% 102% 101%
---
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 Property for Industry Limited (PFI)
Reporting Period 12 months to 31 December 2021
Previous Reporting Period 12 months to 31 December 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$517,151 +194%
Total Revenue $517,151 +194%
Net profit/(loss) from
continuing operations
$452,810 +299%
Total net profit/(loss) $452,810 +299%
Final Dividend
Amount per Quoted Equity
Security
$0.02450000
Imputed amount per Quoted
Equity Security
$0.00250119
Record Date 28 February 2022
Dividend Payment Date 9 March 2022
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$3.034 $2.209
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
This dividend is fully credited with imputation credits to the
extent permitted by the imputation credit rules and to the extent
that the directors of PFI determine were available.
This announcement is extracted from PFI’s audited financial
statements as at and for the twelve months ended 31 December
2021. A copy of these audited financial statements is attached to
this announcement.
Authority for this announcement
Name of person
authorised
to make this announcement
Craig Peirce
Contact person for this
announcement
Craig Peirce
Contact phone number +64 9 303 9651
Contact email address peirce@pfi.co.nz
Date of release through MAP
21 February 2022
Audited financial statements accompany this announcement.
---
Distribution Notice
Updated as at 18 December 2019
Section 1: Issuer information
Name of issuer Property for Industry Limited
Financial product name/description Property for Industry Limited Shares
NZX ticker code PFI
ISIN (If unknown, check on NZX
website)
NZPFIE0001S5
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 28 February 2022
Ex-Date (one business day before the
Record Date)
25 February 2022
Payment date (and allotment date for
DRP)
9 March 2022
Total monies associated with the
distribution
$12,384,595
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.02700119
Gross taxable amount $0.00893282
Total cash distribution $0.02450000
Excluded amount (applicable to listed
PIEs)
$0.01806837
Supplementary distribution amount $0.00113499
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed X
Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
28%
Imputation tax credits per financial
product
$0.00250119
Resident Withholding Tax per
financial product
N/A
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
Date strike price to be announced (if
not available at this time)
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
DRP strike price per financial product
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Craig Peirce
Contact person for this
announcement
Craig Peirce
Contact phone number +64 21 248 6301
Contact email address peirce@pfi.co.nz
Date of release through MAP
21 February 2022
---
Highlights
Annual
Results
Briefing
2021
RECORD ANNUAL RESULT:
Fairvaluegainsonpropertiesof$392.5millioncontributingtoarecord
profitaftertaxof$452.8million,FundsFromOperations(FFO)earnings
up14.4%fromtheprioryearto11.07centspershare,AdjustedFunds
FromOperations(AFFO)earningsup15.7%fromtheprioryearto9.29
centspershare,cashdividendsof7.90centspershare,up2.6%on2020
dividends
REFRESHED STRATEGY PROGRESSED
Refreshed strategy announced and progressed with $368 million of
capital transactions
SIGNIFICANT BROWNFIELD OPPORTUNITIES
$224 million or 10% of the portfolio held in brownfield opportunities,
providing a growing pipeline of medium-term development
opportunities
FULLY OCCUPIED INDUSTRIAL PORTFOLIO OF SCALE
Fully occupied industrial property portfolio with a value in excess of
$2.15 billion, weighted towards the buoyant Auckland industrial
market
FURTHER GROWTH IN DIVIDENDS
Strategy progression, a fully occupied industrial property portfolio of
scale and buoyant industrial property market conditions result in
targeted 2022 dividend range of 8.05 to 8.10 cents per share, a
further increase of up to 2.5% on 2021 dividends
4
25 LANGLEY ROAD, WIRI
STRONG BALANCE SHEET:
Net tangible assets up 37.3% to 303.4 cents per share, gearing of
27.7%, all bank facilities refinanced during the year and increased by
$125 million, over $120 million of available liquidity
DECEMBER 2021DECEMBER 2020
BOOK VALUE
$2,168.9m$1,631.5m
NUMBER OF PROPERTIES
9794
NUMBER OF TENANTS
136148
CONTRACT RENT
$95.6m$89.8m
OCCUPANCY
100.0%99.4%
WEIGHTED AVERAGE LEASE TERM
5.40 years5.28 years
AUCKLAND PROPERTY
81.8%84.6%
INDUSTRIAL PROPERTY
98.2%91.7%
Portfolio
Snapshot
▪PFI's portfolio is diversified across 97 properties
and 136 tenants, with 100.0% occupancy and a
weighted average lease term of 5.40 years,
weighted towards Auckland industrial property
6
1
2
4
4
77
4
1
1
3
Annual
Results
Briefing
2021
Annual
Results
Briefing
2021
Valuations
7
Annual
Results
Briefing
2021
Leasing
8
0.0%
6.4%
13.9%
19.3%
8.9%
4.9%
10.4%
7.3%
2.9%
3.4%
22.6%
0%
5%
10%
15%
20%
25%
Vacant202220232024202520262027202820292030Onwards
Total ExpiriesBrownfield Opportunities
2022 Lease
Expiries
Annual
Results
Briefing
2021
▪Portfolio is 100.0% occupied and 6.4% of contract rent is due to expire
in 2022 (graph below), largest single expiry 28.7% of that (1.8% of
contract rent, graph on right)
−48 Seaview Road has been sold with settlement due to take place
in March 2022 and is excluded from any expiries analysis
▪Excluding brownfield opportunities, FY23 and FY24 expiries are 10.5%
and 11.3%, respectively (bottom graph)
▪Vacancy still at historically low levels: CBRE reports
1
Auckland Prime
industrial vacancy at 0.5%, Secondary industrial vacancy at 0.7%
1
CBRE “Auckland Industrial Space Market Trends”, February 2022
9
No event24.9%
Fixed53.4%
CPI11.2%
Expiry6.4%
Market4.1%
Rent
Reviews
▪114 rent reviews delivered an average annual uplift of ~3.5% on
~$66.5 million of contract rent
−10 market rent reviews delivered an annualised increase of
2.3% over an average review period of 5.0 years on $4.9
million of contract rent
▪Over 84% of contract rent was reviewed, varied or leased during
2021
▪CBRE predict
1
industrial rental growth over the next five years to
average 3.9% per annum for prime properties and 3.7% per
annum for secondary properties, both unchanged from June
2021
▪Independent market rental assessment estimates portfolio is
~3% under-rented (~$2.5 million)
▪PFI estimates Auckland industrial portfolio is ~4.3% under-rented
▪Around 75% of PFI’s portfolio is subject to some form of lease
event during 2022
1
CBRE “Auckland Property Market Outlook”, December 2021
10
Annual
Results
Briefing
2021
94.3
+7.3
+2.7
+2.3
-1.0
-0.7
-0.5
-0.0
84.2
$76m
$78m
$80m
$82m
$84m
$86m
$88m
$90m
$92m
$94m
$96m
$98m
2020 net rental
income
AcquisitionsNew leases &
renewals
Rent reviews &
adjustments
DisposalsVacancyOtherDevelopments2021 net rental
income
Net Rental
Income
▪Net rental income of $94.3
million up $10.1 million or 12.0%
on the prior year ($84.2 million)
▪Increases due to acquisition
activity totalling +$7.3 million
and positive leasing activity
totalling +$5.0 million
▪Decreases predominantly due to
disposals -$1.0 million and
vacancy -$0.7 million
12
Annual
Results
Briefing
2021
+2.23
+0.16
-0.06
-0.40
-0.37
-0.19
-0.11
8.03
9.29
6.0
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
2020 AFFORebase for
shares issued
Net rental
income
Non-recoverable
property costs
Administrative
expenses /
Other
Interest expense
and bank fees
Maintenance
capex
Current taxation2021 AFFO
Adjusted
Funds From
Operations
(cents per share)
▪Profit after tax of $452.8 million
▪AFFO earnings of 9.29 cents
per share, 1.26 cents per share
or 15.7% ahead of the prior
year
▪Net rental income (including
AFFO adjustments) up $11.2
million or 2.23 cents per share
on the prior year
▪Admin expenses increased
due to impact of new hires and
IT project but remained
constant as a % of average
property values
▪Maintenance capex up $1.0
million on the prior year to 21
basis points
13
Annual
Results
Briefing
2021
60%
70%
80%
90%
100%
110%
120%
6.50
7.00
7.50
8.00
8.50
9.00
9.50
FY17FY18FY19FY20FY21
AFFO (cps)DPS (cps)Pay-out % (3-year - rhs)Pay-out % (1-year - rhs)
Earnings,
Dividends,
Guidance
▪2021 cash dividends total 7.90 cents per share
(cps), up 0.20 cps of 2.6% from 2020, dividend
reinvestment scheme in place for Q1-Q3 2021
dividends, 2% discount
▪2022 dividend guidance of 8.05 to 8.10 cents
per share, a lift of 0.15 to 0.20 cents per share
or up to 2.5% on 2021 dividends
▪Dividend policy to distribute between 90% to
100% of AFFO on a rolling three-year historic
average basis, cash dividends of 8.05 to 8.10
cents per share anticipated to result in a
dividend pay-out at the bottom of this dividend
policy range
▪Guidance subject to no material adverse
changes in conditions or unforeseen events,
including no material tenant failures or further
material COVID-19 restrictions, other than
those in place as at the date of this
presentation
EARNINGS2021 CPS2020 CPSCHANGE
FUNDS FROM OPERATIONS
11.079.67+1.40 CPS or +14.4%
ADJUSTED FUNDS FROM OPERATIONS
9.298.03+1.26 CPS or +15.7%
14
Annual
Results
Briefing
2021
1
1
PFI first began disclosing AFFO in 2016, therefore part of the rolling 3-year pay-out ratio for FY17 uses Distributable Profit.
2,168.9
+392.5
+226.3
+20.3
+5.0
-106.7
1,631.5
$1,500m
$1,600m
$1,700m
$1,800m
$1,900m
$2,000m
$2,100m
$2,200m
$2,300m
$2,400m
December 2020
investment
properties & AHFS
Fair value gainAdditionsCapitalised
expenditure &
interest
Movement in lease
incentives, fees
and fixed rental
income
DisposalsDecember 2021
investment
properties & AHFS
Investment
Properties
▪Portfolio value of $2.169 billion,
including 48 Seaview Road (due
to settle March 2022), which is
classified as held for sale
(AHFS)
▪Increase from annual
independent valuations of
$392.5 million or 22.2%
▪6 properties acquired in 2021
for a combined total of $226.3
million
▪Significant capex at 59 and 47A
Dalgety Drive (redevelopment
and development) and 124
HewlettsRoad (new breezeway
canopy)
▪Disposals include Carlaw Park
(settled December 2021, book
value of $102.4) and 127
Waterloo Road (settled April
2021, book value of $4.3
million)
15
Annual
Results
Briefing
2021
220.9
303.4
+77.7
+2.4
+2.4
+1.6
+0.2
-1.8
200
220
240
260
280
300
320
December 2020
NTA
Rebase for shares
issued
Fair value gain on
investment
properties
Fair value gain on
derivative financial
instruments
Share issuesRetained earningsMaterial damage
insurance income
December 2021
NTA
Net Tangible
Assets
(cents per share)
▪Net tangible assets (NTA) per
share increased by 82.5 cents
per share or 37.3%
▪Change in NTA per share driven
by the increase in the fair value
of investment properties (+77.7
cps), a decrease in the net fair
value liability for derivative
financial instruments (+2.4 cps),
share issues (+2.4 cps), retained
earnings (+1.6 cps) and material
damage insurance income (+0.2
cps)
16
Annual
Results
Briefing
2021
Funding,
Covenants,
Interest
Rates
▪$100 million CBA liquidity facility increased
to $125 million and extended in April 2021
▪$300 million syndicated facilities refinanced
in July 2021, with an additional $100 million
facility secured from BNZ
▪Low gearing and high levels of liquidity
provide PFI with sufficient balance sheet
capacity to continue to execute on our
strategy
▪Considering options, including a third senior
secured bond issue, to further extend and
diversify borrowings
DECEMBER 2021DECEMBER 2020
FUNDING
BANK FACILITIES DRAWN
$401.2m$289.9m
BANK FACILITIES LIMIT
$525.0m$400.0m
BANK FACILITIES HEADROOM
$123.8m$110.1m
FIXED RATE BONDS
$200.0m$200.0m
FUNDING TERM (AVERAGE)
3.9 years2.8 years
BANKS
ANZ, BNZ, CBA, W estpacANZ, BNZ, CBA, Westpac
COVENANTS
LOAN-TO-VALUE RATIO (COVENANT: <50%)
27.7%30.0%
INTEREST COVER RATIO (COVENANT: >2.0X)
4.4 times4.1 times
INTEREST RATES
WEIGHTEDAVERAGE COST OF DEBT
3.81%3.75%
INTERESTRATE HEDGING (EXCL. FORWARD STARTING)
$400m/ 2.58% / 3.7 years$295m/ 3.07% / 3.1 years
FORWARD STARTING INTEREST RATE
$120m / 2.69% / 4.1 years$110m / 3.09% / 3.7 years
18
Annual
Results
Briefing
2021
1.5%
1.9%
2.3%
2.7%
3.1%
$0m
$50m
$100m
$150m
$200m
$250m
$300m
$350m
$400m
$450m
Dec-21Jun-22Dec-22Jun-23Dec-23Jun-24Dec-24Jun-25Dec-25Jun-26Dec-26Jun-27Dec-27
100.0100.0100.0
150.0
150.0
125.0
0
50
100
150
200
250
300
FY21FY22FY23FY24FY25FY26FY27FY28
BNZ facilityBondsSyndicated facilitiesCBA facility
Debt Facility
Maturity
Profile,
Hedging
▪Average term to expiry of bank
facilities and bonds (top graph)
of ~3.9 years, $123.8 million of
unutilised bank facility capacity
▪Fixed rate payer hedging profile
(bottom graph) provides for an
average of ~66% of debt to be
hedged at an average fixed rate
of ~2.53% during 2022, offering
protection from rising interest
rates
19
Annual
Results
Briefing
2021
Interim
Results
Briefing
2019
Annual
Results
Briefing
2021
Environmental,
Social and
Governance
(ESG)
▪Replaced HVAC systems containing ozone-
depleting gases at 12 properties.
▪Reduced Scope 1 greenhouse emissions by
34% compared to 2020.
▪Investigated physical climate change risks
associated with individual properties to
support TCFD disclosures.
▪Provided our team, tenants and community
with support during COVID-19.
▪Focused on ongoing health and safety
continuous improvement.
▪Began working toward Green Star certification
for future developments.
▪Created a sustainable refurbishment
framework.
2021 SUSTAINABILITY HIGHLIGHTS
Strategic themes: Taking care of our team –Looking after our tenants –Responsible property ownership –Delivering for investors
For our second annual TCFD disclosures, please see pages
33 –39 of our annual report.
21
▪Recycling or reuse of construction and
demolition waste
▪Replacement of ozone-depleting R22 air-
conditioning units
▪Landscaping that employs sustainable design,
planting and maintenance practices
▪New energy efficient LED lighting throughout
the building
▪Use of sustainable building materials
▪Reuse of existing building materials
Sustainable
Refurbishment
Case Study
Annual
Results
Briefing
2021
3-5 NIALL BURGESS ROAD, MT WELLINGTON (PRIOR TO WORKS)
22
Market
Update
▪E-commerce penetration accelerated by COVID-19
pandemic, with online spend set to experience
further growth (top graph)
▪Online sales in New Zealand expected to grow from
the current 11% to 17% (or $9.3Bn) by 2025
1
−Based on this growth in online sales alone, it is
estimated an additional 230,000 sqm of
warehouse space will be needed by 2025
▪PFI’s portfolio set to benefit from this thematic,
through strong forecast rental growth and continued
low levels of vacancy
▪CBRE “Auckland Property Market Outlook”,
December 2021:
−Further rental growth forecast, reflecting
favourable supply/demand conditions
−Slight improvements in yield and vacancy
outlooks on June 2021
CBREAUCKLAND MARKET OUTLOOK
1
DECEMBER 2021
5-YEAR
FORECAST:
DECEMBER 2021
5-YEAR
FORECAST:
JUNE 2021
PRIME INDUSTRIAL –VACANCY0.5%1.0%▼1.1%
–RENTS$155+3.9%◄►+3.9%
–YIELDS4.11%4.06%▼4.15%
SECONDARY INDUSTRIAL –VACANCY0.7%1.3%▼1.6%
–RENTS$123+3.7%◄►+3.7%
–YIELDS5.19%5.01%▼5.09%
24
Annual
Results
Briefing
2021
1
CBRE “Auckland Property Market Outlook”, “Auckland Rent & Yield Update” December 2021 and “Auckland Industrial Space Market Trends” February 2022,
2
NZ Post eCommerce Spotlight
250
350
450
550
650
750
850
950
JanFebMarAprMayJunJulAugSepOctNovDec
$m
NZ Post Total Online Spend
2
201920202021
Purpose
Vision and
Strategy
Annual
Results
Briefing
2021
26
Looking
Forward
Annual
Results
Briefing
2021
27
28
Our Portfolio
(Target & Current)
Annual
Results
Briefing
2021
Core
Generic
Holdings
Annual
Results
Briefing
2021
29
44 NOEL BURNSIDE ROAD, WIRI
▪Purchased for $91.7 million in May 2021
▪Large, modern 17,500 sqm warehouse with
2,200 sqm of canopies and 12,250 sqm of yard
▪Secured a 10-year lease to Cottonsoftfrom
1 October 2021, with a commencement rental
of $3.32 million and 2.5% fixed annual
increases, with a market rent review at the
mid-term
▪December 2021 valuation of $94.5 million
Specialised
Assets
Annual
Results
Briefing
2021
30
▪Purchased for $79.5 million in November 2021
▪15-year triple-net leaseback to NZX-listed
tenant T&G Global
▪The 9.56 hectare site accommodates in excess
of 36,000 square metres of T&G’s post-harvest
operations and 3.7 hectares of storage yard
▪Commencement rental of $3.5 million reflects
an initial yield of 4.4%
22 WHAKATU ROAD, WHAKATU
Strategic
Acquisitions
Annual
Results
Briefing
2021
▪Purchased in November 2021 for $3.1 million
▪1,436 sqm site
▪Provides PFI with the opportunity to create an
access road to the Company’s 14,740 sqm
neighbouring property at 15 JomacPlace, along
with additional car parking
▪Purchased in December 2021 for $5.2 million
▪The ~3,100 sqm site is surrounded by an
existing PFI estate, 528-558 Rosebank Road
▪~1,100 sqm of warehousing, office and
amenities leased for six years on a passing rent
of $182,000 per annum
▪Potential for integration with PFI’s neighbouring
properties in the future
▪5,000 sqm site at 318 Neilson Street, Penrose,
acquired for $6.825 million, with settlement
expected to take place in March 2022
▪Adjacent to existing PFI properties 304, 306,
312 and 314 Neilson Street, which have a
combined value of $72.5 million
▪Once settled, PFI will have a combined ~5
hectare estate zoned Heavy Industrial in one of
Auckland’s key industrial precincts valued at
almost $80 million
31
Brownfield
Opportunities
Annual
Results
Briefing
2021
32
30-32 BOWDEN ROAD, MTWELLINGTON
▪Large 3.9ha site in one of Auckland’s prime
industrial locations
▪Good links to Southern Motorway, dual access
from both Bowden Road and GabadorPlace
▪Versatile site that can accommodate large-
scale or multiple tenant designs
▪March 2023 lease expiry to provide PFI with a
significant redevelopment opportunity, which
could involve an investment of ~$50 million
Brownfield
Opportunities
Annual
Results
Briefing
2021
▪$224 million or 10% of the portfolio held in
brownfield opportunities, providing a growing
pipeline of medium-term development
opportunities
▪47A Dalgety Drive development due to be
completed in Feb-22. 5-year lease to Shaw NZ
commencing 1-Apr-22
▪Remaining brownfield opportunities set to
unlock parcels of land in key industrial
precincts, providing PFI with the opportunity to
deploy balance sheet capacity on accretive
projects
▪As projects complete and long-term leases are
secured, the properties will be moved into ‘core
generic’ classification
PROPERTY
DECEMBER
2021 VALUE
($M)
LETTABLE
AREA(SQM)
SITE
COVERAGE
% OF
CONTRACT
RENT
LEASE
EXPIRY
47A DALGETY DRIVE$12.5
3,400
57%0.6%LEASED
30-32 BOWDEN ROAD$32.5
17,047
44%2.0%31-Mar-23
92-98 HARRIS ROAD$23.8
7,194
27%1.5%3-Nov-23
170 SWANSON ROAD$33.5
5,183
12%1.2%31-Jan-24
78 SPRINGS ROAD$102.5
41,536
40%6.8%8-Oct-24
304 NEILSON STREET$19.5
4,538
22%0.8%30-Jun-26
TOTAL$224.3
78,899
12.7%
33
Assets
Held For
Sale
Annual
Results
Briefing
2021
▪Carlaw Park divestment settled December
2021
▪48 Seaview Road due to settle February 2022
▪Shed 22 seismic strengthening works nearing
completion, to be divested following the
completion of works
▪After planned divestments:
−Pro forma LVR of 26.9%;
−Portfolio will be 98.8% industrial;
−82.7% of portfolio will be located in
Auckland
34
DECEMBER
2021
48SEAVIEW
DIVESTMENT
SHED 22
DIVESTMENT
PRO FORMA
INVESTMENT PROPERTIES &
AHFS
$2,168.9m-$10.0m▼-$13.7m▼$2,143.5m
TOTAL DRAWN BORROWINGS$601.2m-$10.0m▼-$13.7m▼$577.6m
CONTRACT RENT$95.6m-$0.4m▼-$0.9m▼$94.3m
LOAN-TO-VALUE RATIO 27.7%-0.3%▼-0.5%▼26.9%
AUCKLAND PROPERTY81.8%+0.4%▲+0.5%▲82.7%
INDUSTRIAL PROPERTY98.2%NC◄►+0.6%▲98.8%
Review &
Questions
Questions?
36
CLOSING:
▪“The Company’s continued focus on
industrial property has coincided with
ongoing investor interest and tenant
demand that has enabled us to grow
significantly. We are pleased to have
capitalised on these market conditions while
keeping gearing low. Our refreshed strategy
and the changes in our dividend policy will
give us that extra degree of flexibility to
enhance and expand our portfolio in order
to continue growing cash returns for
investors.”
HIGHLIGHTS:
▪Record annual result
▪Strong balance sheet
▪Strategy refreshed and progressed
▪Significant brownfield opportunities
▪Fully occupied industrial property
portfolio of scale
▪Further growth in dividends
Annual
Results
Briefing
2021
Disclaimer
The information included in this presentation is provided as at 21 February 2022 and should be read in conjunction with the NZX results
announcement, NZX Form –Results Announcement, NZX Form –Distribution Notice, and annual report issued on that same day.
Property for Industry Limited (PFI) does not guarantee the repayment of capital or the performance referred to in this presentation.
Past performance is not a reliable indicator of future performance.
The presentation includes a number of forward looking statements. Forward looking statements, by their nature, involve inherent risks
and uncertainties. Many of those risks and uncertainties are matters which are beyond PFI’s control and could cause actual results to
differ from those predicted. Variations could either be materially positive or materially negative.
While every care has been taken in the preparation of this presentation, PFI makes no representation or warranty as to the accuracy or
completeness of any statement in it including, without limitation, any forecasts.
This presentation has been prepared for the purpose of providing general information, without taking account of any particular
investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the
appropriateness of the information in this presentation, and seek professional advice, having regard to the investor’s objectives,
financial situation and needs.
This presentation is solely for the use of the party to whom it is provided.
37
Annual
Results
Briefing
2021
---
Annual
Report
31
December
THE
HANDPICKED
ISSUE
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE
THE EVOLVING
SUSTAINABILITY LANDSCAPE
GROUND
RULES
2021
REVIEW
EVOLVING OUR STRATEGY
LOOKING
AHEAD
CRYSTAL CLEAR ABOUT
OUR FOCUS
PROPERTY FOR INDUSTRY LIMITED
20
21
04
PAGE
10
PAGE
22
PAGE
b
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
Wider opportunities.
Strict criteria.
As a professional landlord
to the industrial sector, we
accommodate the needs of a full
range of companies across diverse
industries. As COVID-19 continued
to challenge some parts of the
economy, our role as a property
partner became even more
important for those looking to
keep supplies flowing, both locally
and globally. Seizing opportunities
paid off for us.
Nevertheless, stability
remains a core discipline for PFI
and a hallmark of how we do
business. We crossed a critical
boundary this year – breaking the
$2 billion milestone for the first
time. Increased scale has brought
with it new relationships and
exciting opportunities to pick
and choose our investments, but
always within strict boundaries.
YOUR
INDUSTRIAL
PROPERTY
EXPERTS
1
www.propertyforindustry.co.nz
_ 47A Dalgety Drive, Wiri
2
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
CONTENTS
EVOLVING OUR STRATEGY
SECTION
1
2021 review
04
READ MORE ON PAGE
SCOPE TO EXPAND
SECTION
2
Business overview
06
READ MORE ON PAGE
CRYSTAL CLEAR
ABOUT OUR FOCUS
SECTION
3
Looking ahead
10
READ MORE ON PAGE
THE
HANDPICKED
ISSUE
3
SUSAN PETERSON
Independent Director
DAVID THOMSON
Independent Director
DEAN BRACEWELL
Independent Director
SIMON WOODHAMS
Chief Executive Officer
CRAIG PEIRCE
Chief Finance and
Operating Officer
GREG REIDY
Non-Executive Director
ANTHONY BEVERLEY
Board Chair and
Independent Director
Profiles of our team members can be found
on our website at pfi.co.nz/people
RECOGNISING THE POTENTIAL
SECTION
4
Acquisitions
16
READ MORE ON PAGE
OPPORTUNITIES BEAR FRUIT
SECTION
6
Specialised assets
20
READ MORE ON PAGE
ON A ROLL
SECTION
5
Value add
18
READ MORE ON PAGE
THE EVOLVING SUSTAINABILITY
LANDSCAPE
SECTION
7
Environmental, Social and Governance
22
READ MORE ON PAGE
HEALTHY RETURNS ON INITIATIVE
SECTION
8
Financial statements, notes and other disclosures
41
READ MORE ON PAGE
LEADING
4
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
2021 REVIEW
IN ONE OF our busiest years so far, the
Company made excellent progress
against a backdrop that contrasted
favourable market conditions with
the ongoing restrictions of working
from home.
The whole team has done
amazingly well to grow the business
and assist our tenants in these trying
circumstances. Important acquisitions,
large and small, strengthened different
aspects of our portfolio. We also
benefited from a significant growth in
valuations, and we concluded the sale
of Carlaw Park towards the end of the
year, which provided a reduction in
borrowings as well as nearly a year’s
extra income from that property.
In March 2021, a refreshed
strategy was agreed for the next three
to five years, with a focus on growing
returns to shareholders, continuous
portfolio improvement and first-class
management. “Discussions focused
on staying true to our commitment
to industrial property, making the
most of current market conditions
and taking a more intentional and
proactive approach to opportunities
where appropriate,” says Chief
Executive Officer Simon Woodhams.
“We agreed growing earnings and
dividends remained of primary
importance, but in order to do so,
we will need to continue to grow
the portfolio.”
A change in the dividend policy
itself saw the emphasis shift to a
three-yearly framework, in line with the strategic
horizon. The policy is intended to allow the
Company to steadily increase dividends whilst at
the same time engaging in activities with
potentially less immediate earnings accretion.
Dividends increased again this year to 7.90 cents
per share, an increase of 2.6%, representing a
dividend pay-out ratio of around 85% of Adjusted
Funds from Operations (AFFO) for the year, and
92% of AFFO on a rolling three-year basis. We are
forecasting a dividend of 8.05 to 8.10 cents per
share in 2022, a further increase of up to 2.5%.
Performance across the business was healthy.
Funds from Operations (FFO) increased by 14.4% to
11.07 cents per share, while AFFO increased by 15.7%
to 9.29 cents per share. Big gains in revaluations
across our portfolio resulted in an increase of
value of $392.5 million, meaning our portfolio is
now valued at $2.17 billion, a new highpoint.
Total shareholder returns for the year were
4.4%, but Net Tangible Assets (NTA) rose
significantly to 303 cents per share.
It was a busy year for transactions, with close
to $253 million in acquisitions and value-add
opportunities and the divestment of Carlaw Park
in December, capping off a year of $368 million in
capital transactions. Among our notable
acquisitions: 670–680 Rosebank Road in Avondale;
44 Noel Burnside Road in Wiri; and 22 Whakatu
Road in Hastings. Two other smaller purchases – 32
Honan Place and 520 Rosebank Road – connected
to PFI properties in the area and thus added to our
collective presence. More details for some of these
transactions follow on pages 16 and 17.
“In keeping with our strategy, we have pursued
acquisitions that build out our ability to deliver
sustainable dividends, including looking further
afield where it makes sense to do so. Take, for
example, the property we acquired in Hastings.
It’s a specialised asset that comes with strong
rental commitment, a blue-chip tenant in a
resilient sector and the higher yield available
in the regions,” says Simon Woodhams.
We serve a tenant base of 136 different
businesses. Occupancy and Weighted Average
Lease Term (WALT) have both increased. In fact,
we close the year with all our space occupied. We
leased 149,227 sqm of space this year for an average
term of 6.7 years and total rent of $14.5 million.
We also completed 114 rent reviews on
$66.5 million of contract rent, resulting in an average
annual uplift of 3.5%. Despite lockdown pressures, the
strength of our tenant base meant that there was a
low level of deferrals and abatement through the year.
Gearing remains comfortably below 30% at
27.7%, giving us both the ability to capitalise on
opportunities and a robust buffer should we need it.
01.
We refinanced all our bank facilities
during the year, including refinancing
the short-term Commonwealth Bank
of Australia facility to a $125 million
seven-year facility, refinancing our
$300 million syndicate and
establishing a $100 million shorter-
term facility with the Bank of
New Zealand. We also secured the
interest rates on our larger purchases
to help lock in the financial outcomes
from those properties while interest
rates were low.
“These additional facilities, backed
up by our significant portfolio
revaluation and coupled with the
proceeds from the Carlaw settlement,
provided us with significant
acquisition capital. We’ve drawn on
these resources to secure quality
industrial properties such as those in
Wiri and Hastings,” says Chief Finance
and Operating Officer Craig Peirce. “At
the same time, we’ve been able to push
out our weighted average term of
expiry to 3.9 years for our bonds and
bank facilities which has given us
additional certainty as we grow.”
We continue to press forward
with our Environmental, Social and
Governance (ESG) framework. We
have released our second Task Force
on Climate-Related Financial
Disclosures (TCFD) report in this
Annual Report, undertaken a climate
risk analysis to identify which
properties are most vulnerable to the
physical risks of climate change,
continued to phase out R22
refrigerant gas from our portfolio, and
begun planning our first Green Star
development at Bowden Road. See
pages 22 to 39 for further details.
“The Company’s continued focus
on industrial property has coincided
with ongoing investor interest and
tenant demand that has enabled us to
grow significantly,” observes PFI
Chair, Anthony Beverley. “We are
pleased to have capitalised on these
market conditions while keeping
gearing low. Our refreshed strategy
and the changes in our dividend policy
will give us that extra degree of
flexibility to enhance and expand our
portfolio in order to continue growing
cash returns for investors.”
n
2021 REVIEW
EVOL
-
VING
OUR
STRATEGY
5
For more information on our annual results, please visit:
https://www.propertyforindustry.co.nz/investor-centre/results-centre/
$
125 M
REFINANCING
of additional bank facilities
successfully secured
$
149,227
SQM LEASED
LEASING ACTIVITY
REVALUATION
2.169
$
BILLION
PORTFOLIO
$
392.5 M
$
ADJUSTED FUNDS
FROM OPERATIONS
9.29 CPS
UP 14.4%
FUNDS
FROM OPERATIONS
11.07 CPS
CONTRACT
RENT UP
95.6m
$89.8M
$95.6M
20202021
89.8m
cents per share.
7. 9 0
DIVIDEND
7.452017
7.552018
7.602019
7.70
7.90
2020
2021
303.4
NET TANGIBLE ASSETS
CENTS PER SHARE UP
37.3% ON LAST YEAR
163.22017
177.72018
205.52019
220.9
303.4
2020
2021
UP 15.7%
$
$
6
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
BUSINESS OVERVIEW
BUSINESS OVERVIEW
02.
10 THINGS YOU
SHOULD KNOW
ABOUT PFI
%
97
PROPERTIES
2020 : 94
136
TENANTS
2020 : 148
99.0
AVERAGE OCCUPANCY OVER THE LAST 10 YEARS
2020 : 98.5%
5.40
WEIGHTED AVERAGE LEASE TERM
2020 : 5.28
YEARS
$
22.4
AVERAGE PROPERTY VALUE
2020 : $17.5 MILLION
MILLION
We judge our
performance and the
ongoing effectiveness
of our strategy against
these 10 metrics.
7
%
2 7. 7
GEARING
2020 : 30.0%
29
NUMBER OF PROPERTIES OCCUPIED BY TOP
10 TENANTS
2020 : 30
11.32
AVERAGE ANNUALISED TOTAL RETURN SINCE
INCEPTION
2020 : 11.59%
2.98
SHARE PRICE
2020 : $2.93
$
21
NUMBER OF STAFF AND DIRECTORS
2020 : 19
%
8
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
BUSINESS OVERVIEW
520 ROSEBANK
ROAD
Avondale. Acquired in
December 2021 for
$5.2 million. Leased to
Kenderdine Electrical
for a term of six years.
DIVESTMENTS
VALUE-ADD OPPORTUNITIES
ACQUISITIONS
DEALS
THIS
YEAR
314 NEILSON
STREET
Penrose/Onehunga.
$5.8 million
development of a new
industrial facility
following a fire,
completed in February
2021. Leased to IAG
for 10 years starting
May 2021.
59 DALGETY DRIVE
Wiri. $8.4 million
refurbishment of
an industrial facility,
leased to Store Rite
Logistics for 12 years
starting June 2021.
670 – 680
ROSEBANK ROAD
Avondale. Acquired
in January 2021 for
$39.0 million. Fully
occupied by NZ
Comfort Group and
Dunlop Flooring.
25 LANGLEY ROAD
Wiri. Additional paint
shop acquired in
February 2021 for
$7.5 million.
22 WHAKATU ROAD
Hastings. Acquired in
November 2021 for
$79.55 million. Leased
to T&G Global for
15 years.
This year we completed $368 million of capital transactions, comprising
$116 million of divestments, $27 million of value-add opportunities and
$226 million of acquisitions.
127 WATERLOO
ROAD
Christchurch. Settled
in April for a gross sales
price of $4.3 million.
Classified as a non-
current asset held
for sale as at
December 2020.
CARLAW PARK
Parnell. Settled in
December 2021 for a
gross sales price of
$108.0 million (value
$102.4 million as at
December 2020).
Classified as a non-
current asset held
for sale as at
December 2020.
KEY
9
124 HEWLETTS
ROAD
Mount Maunganui.
$3.5 million
construction of
breezeway canopies
for various tenants,
leading to increased
rents and lease terms.
48 SEAVIEW ROAD
Wellington.
Unconditionally sold
in December 2021 for
a gross sales price of
$10.0 million (value
$8.9 million as at June
2021). Settlement of
the divestment is
scheduled to take
place in March 2022.
47A DALGETY DRIVE
Wiri. $9.0 million
development of a new
industrial facility on
surplus land, leased
to Shaw for five years
from April 2022.
44 NOEL BURNSIDE
ROAD
Wiri. Acquired in May
2021 for $91.7 million.
Leased to ABC Tissue
Products for an initial
two-year period, then
re-leased for 10 years
to Cottonsoft.
32 HONAN PLACE
Avondale. Acquired
in November 2021
for $3.1 million with
a short-term lease
in place.
10
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
LOOkING AHEAD
LOOkING AHEAD
03.
CRYS TA L
CLEAR
ABOUT
OUR
11
FOCUS
12
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
LOOkING AHEAD
ALL THE INDICATIONS are that the
impacts of the COVID-19 pandemic
will continue to be an influence,
meaning many of the macro factors
that have driven up values and
returns in the sector are likely
to remain in play. Supply chain
shortages and delays mean
businesses will want to have more
of their inventory onshore, quality
logistics space will be sought after,
e-commerce demand will remain
strong even as retail reopens and,
although inflation is now back on the
table, the returns that investors can
get from the industrial property
sector will remain competitive.
These factors help explain why
industrial is still seen as a safe haven.
They also rationalise why brands
are committing to longer leases for
their industrial and logistics assets.
“Our refreshed strategy takes
account of these drivers and builds on
our previous momentum,” says Chief
Executive Officer Simon Woodhams. “Within our
strategy, there are small but significant changes to
notice. Our core assets underpin our portfolio and
will continue to do so, but specialist assets and
those where we can purchase property and add
value are important opportunities to build new
relationships, improve the portfolio and drive
returns. These investments can have slightly longer
timeframes in terms of realising their potential,
which is why we have adjusted our dividend policy
to a three-year window.”
A STRONG MARKET HERE IS A
REFLECTION OF GLOBAL TRENDS
A REVIEW OF industrial property by commercial
real estate services firm CBRE confirms that many
of the upward pressures for the industrial sector are
global. CBRE’s review found that reliable inventory
levels are now a priority for businesses everywhere
alongside concerns over labour shortages and
disruptions to supply chains.
Consumer expectations for timely delivery
remain high, fuelling a diversification in the scale
of distribution facilities. Investor interest is also
expected to grow. CBRE’s study found that
industrial real estate fundamentals were largely
unscathed by the pandemic-led global recession,
and this resilience has continued. Globally,
e-commerce growth, inventory control, economic
recovery and supply chain diversification will
continue to drive industrial fundamentals, with
low vacancy rates, strong demand and rental
growth forecast.
Within the Asia-Pacific region, there is
evidence of strong leasing activity on the back
of solid economic growth and a recovery in global
trade. There is also a rise in demand for specialised
facilities. CBRE’s view is that strong leasing
demand will underpin further rental-rate increases
but that there will be intense competition for
properties in emerging locations.
Industrial property
has been buoyant for
a while now. While
property trends come
and go, the PFI team
remains confident
there is still growth
potential within
the sector.
_ 22
Whakatu Road,
Hastings
13
Growing our dividends
isn’t simply a case of
rinse and repeat.”
SIMON WOODHAMS
Chief Executive Officer
“Our record results this year
should be seen in context,” says
Simon Woodhams. “We have
acquired a lot of property, partly
because the transactions happened
to fall that way and because our low
gearing and renewed bank facilities
enabled us to take advantage of the
opportunities. We also benefited
from the settlement of Carlaw Park.
“Growing our dividends isn’t
simply a case of rinse and repeat.
The industrial property sector is
still the most resilient and attractive
property type in our view, but
initiative remains key to sustained
success alongside discipline.”
PORTFOLIO MAXIMISATION WILL
HELP BOLSTER RETURNS
PFI’S TEAM HAS drawn a distinction
between portfolio growth and
dividend growth. “Growth of the
portfolio is only pursued in order
to continue to secure stable,
consistently rising returns for our
investors,” explains Chief Finance
and Operating Officer Craig Peirce.
“We’re not here to land grab.
Everything we acquire and the
assets we choose to divest reports to
building a purer industrial portfolio
that collectively works effectively for
our investors.”
One of the tensions that the
team has sought to resolve through
the new dividend policy is that, in an
increasingly competitive industrial
property sector, earnings could be
changeable, slipping in one year and
100
CURRENT
OCCUPANCY
%
95.6
CONTRACT
RENT
$
MILLION
4.41
PORTFOLIO
YIELD
%
PFI’s experiences this year align with many
of these findings. E-commerce has continued to
grow - even accelerate – and companies are looking
to cater to these changes in consumer demand. A
shift away from “just in time” to “always here” is not
only changing how warehouses operate but also
keeping occupation levels very high and new
demand strong.
INITIATIVE IS STILL THE KEY TO SUCCESS
“NEW ZEALAND COMPANIES are fast learners,”
says Simon Woodhams. “In the last 12–18 months,
companies have made time to adapt their business
models. They are still worried about availability
of labour, but many are in good health. They have
shored up their cash reserves and invested in
business models. And of course, if they are based in
Auckland but they trade nationally, they have been
able to do business with the rest of the country,
which has been much less affected by lockdowns.”
In light of all this, why then did the PFI team
choose to refresh the strategy?
14
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
LOOkING AHEAD
rising in another. The policy seeks to balance
returns with what’s best for the business long term
with year-on-year dividend growth by targeting
dividends at 90 – 100% AFFO on a rolling three-
year basis, coupled with annual dividend increases.
“The industrial sector is no longer just for
passive investors looking for passive income.
Incorporating a longer-term view will help us to
drive up total shareholder returns,” says Craig
Peirce. “Annual earnings as measured by AFFO
may move around, but our aims are for increasing
dividends and earnings that move up over a
timeframe beyond any single year.”
In terms of maximising the portfolio, there are
four aspects. The first is to connect parcels of land,
where it makes sense to do so, to turn individual
holdings into estates. The second is to look through
the current environment to cater for the medium
to longer-term needs for logistics in demand areas.
The third is to identify core and specialist asset
opportunities in regional New Zealand, where
the leases, terms and clients can be attractive.
The final aspect is to leverage the Company’s
balance sheet capacity to acquire accretive
properties that make sense.
SCALE BRINGS NEW OPPORTUNITIES
“WE ARE VERY pleased to have finalised new
funding arrangements this year. Industrial land
supply is quickly being absorbed by high levels
of demand for more space and new warehousing,”
says Simon Woodhams. “Only a
certain number of players can operate
with scale to accommodate that
demand. With our $2 billion plus
portfolio, PFI has the ability to meet
the market.”
THE INFLUENCE OF ESG
WHILE THE FOCUS on long-term value
creation continues to influence the
opportunities that PFI pursues and
tenant choice is as careful as ever,
ESG is playing an increasingly vital
role in our decision making. “It’s
another lens for everything we do,”
says Simon Woodhams, “to the point
where we also now evaluate tenants
in terms of their carbon footprint,
their environmental track record and
their dependence on fossil fuels.
“Our key climate commitments
include $2 million to reduce
emissions from our HVAC systems,
pursuing Net Zero Scope 1, Scope 2
and selected Scope 3 emissions and
transparency for our stakeholders on
our climate impacts.”
LOOKING FORWARD TO
WHAT’S AHEAD
A LOT OF hard work has gone in to
making this year such a success.
It’s an exciting time – prospering in
an asset class that is now very much
recognised – with a great portfolio,
a strong and experienced team, full
occupancy, increasing rents and long,
secure tenancies. The refreshed
strategy and new dividend policy
give new clarity around priorities
and enable the Company to continue
pursuing exciting opportunities
to meet both investor and
occupier demands.
n
Incorporating a
longer-term view
will help us to drive
up total shareholder
returns.”
CRAIG PEIRCE
Chief Finance and
Operating Officer
_ 44
Noel Burnside Road,
Wiri
15
73–84%
CORE GENERIC
HOLDINGS
10–15%
BROWNFIELD
OPPORTUNITIES
1–2%
ASSETS HELD
FOR SALE
5–10%
SPECIALISED
ASSETS
AUCKLAND
STRATEGYVISIONPURPOSE
We generate income for investors
as professional landlords to the
industrial economy, generating
prosperity for New Zealand.
We will be one of New Zealand’s foremost
Listed Property Vehicles.
Our measures will be performance,
quality, scale and reputation.
We will build on what we have and we’re
true to who we are. But we will be more
intentional; more proactive.
GROWING
RETURNS
TO SHAREHOLDERS
CONTINUOUS
PORTFOLIO
IMPROVEMENT
FIRST CLASS
MANAGEMENT
CURRENT : 79%
CURRENT : 10%
WE ARE TARGETING A FOUR-
PART PORTFOLIO COMPRISING
THE FOLLOWING:
CURRENT : 10%
CURRENT : 1%
CURRENT : 82%
75–85%
OUT OF AUCKLAND
CURRENT : 18%
15 –25%
16
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
ACqUISITIONS
ACqUISITIONS
04.
RECOGNISING
THE
_ 32
Honan Place,
Avondale
TWO OF THE smaller acquisitions this year have enabled
PFI to achieve important “marriage value” gains. Both deals
underline the importance of managing the portfolio holistically
to unlock value.
The property at 32 Honan Place, Avondale, comprises two
small buildings: a medium-stud warehouse and an office and
amenity block. Its significance, however, lies in the fact that
it adjoins PFI’s much larger property at 15 Jomac Place
to the north.
15 Jomac Place works operationally for the current tenant
but has very limited yard relative to the size of the warehouse.
In effect, the yard is too small to allow heavy vehicles to
manoeuvre easily. Acquiring the Honan Place site means that,
POTENTIAL
OUR ROLE
Purchased “as is” with
an intention to
integrate the property
in time with 15 Jomac
Place.
OUR ROLE
Purchased off-market
via a sale and
leaseback transaction
with the current tenant
Kenderdine Electrical.
1,436 sqm site adjoining
15 Jomac Place.
Net lettable area: Two
connecting buildings, a
537 sqm clear-span
medium-stud warehouse
building and a two-level
office and amenity block
of ~208 sqm.
3,069 sqm site situated
down a shared driveway
off Rosebank Road.
Net lettable area: 792
sqm warehouse, 193
sqm of office along with
associated canopy, yard
and parking areas.
HONAN PLACE,
AVONDALE
—
ROSEBANK ROAD,
AVONDALE
—
32
520
PURCHASE PRICE
$3.1 million
PURCHASE PRICE
$5.2 million
CASE STUDIES
LocationLocation
AVONDALEAVONDALE
WATERVIEWWATERVIEW
20
11
19
LocationLocation
ROSEBANKROSEBANK
TRAHERNE TRAHERNE
ISLANDISLAND
16
16
17
We have acquired
properties that
provide ongoing
income, with
opportunities to
unlock future
added value.”
SIMON WOODHAMS
Chief Executive
Officer
in time, the Company can resolve
those constraints by demolishing the
older buildings at 32 Honan Place,
creating an access road and adding
further car parks.
520 Rosebank Road, also in
Avondale, is located directly
adjacent to the ETEL site at 528–550
Rosebank Road. The two properties
share, via easements, a main
egress point onto Rosebank Road
and a secondary egress point
to Saunders Place.
The Company acquired the
property through an off-market sale
and leaseback transaction with
Kenderdine Electrical, which on
settlement, entered into a six-year
lease term. The property itself
comprises a 792 sqm warehouse,
193 sqm of office along with
associated canopy, yard and parking
areas. Acquiring this property offers
future development opportunities
over the combined site in the medium
to long term.
Merging the two properties at
520 and 528–550 Rosebank Road
again enables PFI to form an enlarged
single estate holding, with greater
future potential.
“Both these acquisitions align
with our strategy to invest in
well-located industrial property and,
through doing that, to create highly
generic and scalable industrial
estates in the sought-after industrial
_ 520
Rosebank Road,
Avondale
_ 32
Honan Place,
Avondale
precinct of Avondale. In both cases,
we have acquired properties that
provide ongoing income, with
opportunities to unlock future
added value,” says Chief Executive
Officer Simon Woodhams.
n
18
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
VALUE ADD
VALUE ADD
05.
_ 44
Noel Burnside Road,
Wiri
44 NOEL BURNSIDE Road is on the corner of
Noel Burnside Road and Cavendish Drive in Wiri.
The 3.64 hectare site boasts good transport links
north and south via State Highway 20, which is
less than 200 metres away. There is a single large
warehouse on the site of around 17,500 sqm along
with a small office, canopies and heavy-duty
yard areas.
PFI acquired the property in May 2021 via
a sale and leaseback transaction with ABC Tissue
on an initial two-year term. The strategy was to
allow the lease to run its course and then secure
a longer-term lease at some point in the future.
However, just a few months later, ABC Tissue
decided to wind up its New Zealand operations
and to sell its assets to Cottonsoft. As part of the
agreement, Cottonsoft signed a new 10-year lease
for the site.
Originally, PFI envisaged that the expiry of the
ABC Tissue lease and securing a new lease would be
staggered with potential larger lease expiries within
the Company’s portfolio in around three years’ time.
Instead, through the deal with Cottonsoft, the
Company was able to secure a new tenant years
ahead of schedule, with a lower level of downtime.
The 10 year term also added around half a year to
the Company’s weighted average lease term.
ON A
ROLL
OUR ROLE
Originally purchased
and let to ABC Tissue.
Subsequently leased to
Cottonsoft for 10 years
after ABC Tissue
decided to exit its
New Zealand operations.
36,257 sqm site close
to the Southern
Motorway.
Net lettable area:
20,517 sqm.
NOEL BURNSIDE
ROAD, WIRI
—
44
PURCHASE PRICE
$91.7 million
CASE STUDIES
20
30
17
20
LocationLocation
PUHINUI PUHINUI
CREEKCREEK
19
44 Noel Burnside Road [has]
become a core asset with a large,
international tenant prepared
to commit to a much longer
timeframe.”
CRAIG PEIRCE
Chief Finance and Operating Officer
_ 44
Noel Burnside Road,
Wiri
“44 Noel Burnside Road is a quality
property, but it came with the risk of a
short initial lease,” says Chief Finance
and Operating Officer Craig Peirce.
“However, subsequent developments
saw it become a core asset with a large,
international tenant prepared to
commit to a much longer timeframe.”
n
20
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
SPECIALISED ASSETS
SPECIALISED ASSETS
06.
OPPORTUNITIES
BEAR
FRUIT
OUR ROLE
We purchased the site
from ENZIL and then
leased it back to them on
a 15-year triple-net lease
term.
9.56 hectare site
close to State
Highways 51 and 2.
Net lettable area:
36,580 sqm of
building area plus
yard areas.
WHAKATU ROAD
HASTINGS
—
22
PURCHASE PRICE
$79.5 million
CASE STUDIES
_ 22
Whakatu Road,
Hastings
LocationLocation
KARAMU KARAMU
STREAMSTREAM
NGARURORO NGARURORO
RIVERRIVER
PAKOWHAI PAKOWHAI
REGIONAL REGIONAL
PARKPARK
51
51
2
51
21
Acquiring this key
site in Hawke’s
Bay gives us a
strong presence
in New Zealand’s
high-value
primary sector.”
SIMON WOODHAMS
Chief Executive
Officer
PFI’S PURCHASE OF the Whakatu West site at
22 Whakatu Road, Hastings, has been a win/win
for New Zealand’s biggest pipfruit producer and
the Company.
ENZIL, a wholly owned subsidiary of T&G
Global Limited, was looking to divest its Hawke’s
Bay fresh produce processing facility to support
its growth strategy while continuing to operate
onsite operations via a 15-year triple-net leaseback
arrangement with rights of renewal for a further
20 years. For ENZIL, entering into this agreement
allowed them to unlock funds to reinvest back into
the core business, continue building out key global
markets and invest in innovative technology and
physical assets.
The site itself is substantial, occupying
around 9.56 hectares in one of New Zealand’s
major produce-growing regions, close to State
Highways 51 and 2. It’s home to more than 36,000
sqm of post-harvest operations in Hawke’s Bay,
including a packhouse, two coolstores, warehousing
and 3.7 hectares of storage yard. The four buildings
could be returned to generic warehousing if need
be, while the yard areas are currently used for crate
storage and offer potential future redevelopment
opportunities.
For PFI, the site offers a range of advantages
that align directly with the Company’s strategy.
Firstly, the PFI team recognised that the property
would deliver a competitive return that was
comfortably above PFI’s current weighted
average cost of funds.
Secondly, the site aligned with the portfolio
target of 5–10% specialised assets. Prior to
this purchase, PFI’s portfolio comprised 6%
specialised assets. The acquisition of the
property lifted this to 10%.
Finally, the purchase fell within the portfolio
target of 15–25% assets located outside of
Auckland. Before PFI bought Whakatu West,
the portfolio was weighted 14% to out of Auckland.
The acquisition of the property saw that proportion
to 18%, again within the range targeted by the
strategic direction.
“Acquiring this key site in Hawke’s Bay gives us
a strong presence in New Zealand’s high-value
primary sector,” explains Chief Executive Officer,
Simon Woodhams, “as well as securing us a
specialised asset occupied long term by a tenant
operating an essential service. The arrangement
gives ENZIL certainty around site and growth
funds and secures us a property that is strongly
accretive and directly increases our weighted
average lease term by around half a year.”
n
22
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
2021 has been another challenging year for our community, our people and our business.
The ongoing challenges of the COVID-19 pandemic, and the increasing awareness of the scale
of transformation required for communities to operate more sustainably, can invite a
temptation to adopt a reactive position – to wait for certainty and clarity before plotting a course.
“At PFI, we recognise this is not the right approach for us,” says PFI Chief Executive Officer
Simon Woodhams. “Instead, we have taken a proactive position by embedding sustainability
in our culture so that we are pre-empting risks, acting on opportunities and taking responsibility
for our impacts. This means being astute to changes and trends in the ever-evolving
sustainability landscape and responding strategically.”
The drive to reduce emissions
During 2021, we observed the New Zealand Government’s publication of its first draft emissions reduction
plan, which sets out sector-based policies and strategies to reduce greenhouse gas emissions. Most relevant
for PFI is the Government’s ambition to reduce both the operational and embodied carbon emissions of
buildings, which MBIE will lead through its Building for Climate Change programme. Operational emissions
stem from the everyday use of a building, while embodied emissions largely relate to materials and products
that form the building itself. PFI seeks to address both operational and embodied emissions. During 2021, PFI
began work to replace its heating, ventilation and air-conditioning (HVAC) systems that use R22 refrigerant
gas (which depletes the ozone layer and has a high global warming potential) in order to reduce operational
emissions. This is complemented by a focus on embodied emissions through creation of a new framework for
completing building refurbishments in a more sustainable way and preparations to seek Green Star
certification for major new developments.
“Tackling operational and embodied emissions is complex and challenging,” says Luke Glen, Senior
Property Manager at PFI. “We may not see an immediate drop in our emissions, but over the long run, doing
this well will significantly reduce our environmental impact and directly support the ability of our tenants to
reduce theirs. It’s worth the investment.”
With sustainability being front of mind for many tenants, PFI has an opportunity to work with tenants to
add value in a sustainable way. Notably, sustainable practices played a key role in PFI securing a lease
renewal to Electrolux at 3-5 Niall Burgess Road during 2021.
T H E
E V O LV I N G
SUSTAINABILITY
LANDSCAPE
Tackling
operational
and embodied
emissions is
complex and
challenging.”
LUKE GLEN
Senior Property
Manager
0 7.
ESG
23
When Electrolux’s lease at 3-5 Niall Burgess Road was due for renewal, sustainability was front of mind for
them when considering their future requirements. PFI was able to offer a proposal to retain Electrolux as a
tenant, by completing a refurbishment that enhances the operational efficiency of the existing building, while
ensuring that we carefully manage the impacts of the refurbishment works. This includes:
NIALL
BURGESS
ROAD
—
3-5
CASE STUDY
ELECTROLUX
AT
Landscaping that
employs sustainable
design, planting and
maintenance practices
Importantly, rejuvenating this existing building has a significantly lower environmental impact compared
to developing a new building, as the majority of the steel and concrete is already in place. Refurbishing
allows us to modernise the property, enhance functionality and create a more sustainable space for our
tenants to enjoy for many years to come.
New energy-
efficient
LED lighting
throughout the
building
Water-efficient
fittings
Use of
sustainable
building
materials
Low-VOC
materials and
finishes
Recycling or reuse
of construction and
demolition waste
Replacement of
ozone-depleting R22
air-conditioning units
This refurbishment
is an important
step in Electrolux’s
journey to reduce
80% of our carbon
emissions from
operations by
2025.”
DAVID MAIR
Head of Logistics
ANZ, Electrolux Home
Products Pty Ltd
24
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
The impetus to respond to climate change
As anticipated, publicly listed companies in New Zealand will soon be required to report their approach
to climate-related risks under the Financial Sector (Climate-related Disclosures and Other Matters)
Amendment Bill. The External Reporting Board (XRB) will provide reporting standards that align with the
disclosures recommended by the Taskforce on Climate-related Financial Disclosures (TCFD). Before this
legislation was introduced, PFI had already begun work to analyse, respond to, and report its climate-related
risks and opportunities. Our second report in line with the TCFD recommendations can be found on
pages 33 – 39. These disclosures enable our lenders, investors and other stakeholders to understand how
the potential effects of climate change could impact our business, and how we are addressing those risks.
“For PFI, TCFD isn’t just a compliance exercise,” says Sarah Beale, Head of Sustainability and Operations
at PFI. “It’s an opportunity for us to understand the impacts of climate change on our business and ensure
that we are setting ourselves up to continue to build on PFI’s strong legacy of performance. We know that
changes are coming so we are preparing for that, while also continuing to stay true to the things that make
PFI such a strong and stable company.”
The growth of sustainable investment
ESG-aligned investing has markedly increased. From a global perspective, the assets managed by the
3,826 signatories to the Principles for Responsible Investment (PRI) rose by 17% from US$103 trillion
to US$121 trillion in the 12 months to 31 March 2021.
1
The PRI is a United Nations-backed network of
international investors working to implement rigorous ESG-based principles into their investment decisions.
Domestically, the market for responsible investment rose to $142 billion of assets under management in
2020 – a jump of 28% on 2019 levels.
2
A natural consequence of the growing demand for responsible
investment opportunities is the need for high quality ESG information. At PFI, we report on sustainability
in accordance with the disclosures required under the GRI Standards – the most widely used sustainability
reporting standards globally. We have also standardised our carbon emissions disclosures through the
Carbon Disclosure Project and align our reporting of climate-related risks with the recommendations
of the TCFD. According to Craig Peirce, Chief Finance and Operating Officer at PFI, the consistency and
comparability of non-financial information over time is essential for investors considering ESG performance.
Peirce notes that PFI’s work to date on disclosures ensures that the Company is well positioned to
support this.
Within this landscape, we also cannot ignore the growing social pressures that seek to hold decision
makers to account, both at the political level and for private enterprise. We recognise our obligation to
address our impacts and prepare PFI for current and future sustainability challenges. Through robust
strategic decision making, collaboration and preparation, we are confident that PFI will effectively navigate
the evolving sustainability landscape and continue delivering for our investors and other stakeholders.
n
1. PRI, 2021. Annual Report 2021, Enhance our global footprint. Retrieved from https://www.unpri.org/annual-report-2021/
how-we-work/building-our-effectiveness/enhance-our-global-footprint, Nov 2021.
2. Responsible Investment Association Australasia, 2021. Responsible Investment Benchmark Report 2021, New Zealand. Retrieved from
https://responsibleinvestment.org/resources/benchmark-report/, Nov 2021.
25
OVERVIEW
In 2019, we ventured out to create an approach to sustainability that aligns with PFI’s purpose: to generate
income for investors and long-term prosperity for New Zealand. Notably, this included measuring our
greenhouse gas (GHG) emissions for the first time and setting a baseline year from which to evaluate
progress. 2020 saw us enhance our health and safety systems, expand the scope of our GHG emissions
measurement, formally assess our exposure to climate-related risks and opportunities, and support our
most vulnerable tenants affected by the COVID-19 pandemic. We also committed $2 million to phase out
especially harmful refrigerant gases from our heating, ventilation and air-conditioning (HVAC) systems.
Our primary focus in 2021 has been to:
§
begin replacing the environmentally harmful refrigerant gases with a more modern gas that has
a much lower impact on the environment;
§
take positive steps to address our indirect carbon emissions associated with our supply chain;
§
support our tenants, our team and our communities with the ongoing challenges of the COVID-19
pandemic; and
§
further build our capability to evaluate and respond to climate-related risks.
In terms of our impact on people and planet, we remain clear that meeting our ambitions will require
long-term commitment, long-term thinking and no shortage of hard work. We are confident that our
approach will enable PFI to mitigate risks and capitalise on opportunities for long-term value creation. 2021
marks a positive series of steps towards a sustainable horizon.
The purpose of this report is to transparently communicate
the positive and negative impacts we have on people and planet,
to explain how we are addressing such impacts, and to provide insight
into our sustainability-related risks and opportunities.
STEPS
TOWARDS A
SUSTAINABLE
HORIZON
STRATEGIC
THEMES
Taking care of our
team
—
Looking after our
tenants
—
Responsible
property ownership
—
Delivering for our
investors
—
26
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
TEAM WELLBEING
SUPPORT
To support wellbeing during the COVID-19
lockdown, we set our team up with home
office equipment, provided mental health
support, and provided an additional day
of annual leave.
AUCKLAND
CITY MISSION
We donated $5,000 to the Auckland City
Mission for food parcels to support
vulnerable communities during the 2021
COVID-19 lockdown. We also decided to gift
over 300 boxes of cookies to the Mission
that we would normally send out as
Christmas gifts due to unprecedented
demand from people in need at Christmas.
STAFF
SURVEY
PFI has a growing team. We sought to
understand our strengths and development
areas using a staff survey to ensure we can
continue to attract and retain a talented
team. We achieved a 100% participation rate
and staff engagement score of 83%.
KEYSTONE NEW ZEALAND
PROPERTY EDUCATION TRUST
PFI provided $10,000 in sponsorship
funding during 2021 as part of our continued
support for the Keystone New Zealand
Property Education Trust. The Trust
provides opportunities to students with
financial need or adverse circumstances
to pursue tertiary studies in the
property sector.
TAKING CARE OF OUR TEAM
We know that taking care of our team and wider community is an essential part of our
sustainability approach, and by doing so, we are able to ensure that we attract and retain a talented
and effective workforce.
Team health, safety and wellbeing
The risks to health, safety and wellbeing for our head office team include those associated with the
office environment (such as psychological stress and ergonomics) and those associated with site visits.
Risk management initiatives for our head office team include:
§
staff induction and ongoing training;
§
provision of ergonomically designed workstations;
§
a staff wellbeing programme that includes funding for periodic health checks and access
to a clinical psychologist;
§
team engagement with the communities in which we operate;
§
safety protocols for site visits; and
§
governance and incident management through our Office Health & Safety Committee.
27
LOOKING AFTER OUR TENANTS
COVID-19 support
The COVID-19 pandemic has continued to present
an array of challenges for businesses during 2021.
This year, as in 2020, we sought to balance support
for our tenants with our obligations to our other
stakeholders. As the economic impacts of COVID-19
are not felt in equal measure across all businesses
and industries, we provided rent abatement and
deferrals to our tenants that experienced the
most hardship.
Health, safety and wellbeing framework
PFI has implemented a formal health, safety and
wellbeing framework that provides a practical and
enduring system to ensure that our approach to
health, safety and wellbeing goes beyond adherence
to the Health and Safety at Work Act 2015. The
framework sets out our objectives, policies, risk
management controls and responsibilities across
our team. The framework is reviewed annually,
approved by our Chief Executive Officer and
overseen by our Health & Safety Committees.
20212020
Abatements$0.7m$0.9m
Rent deferrals $0.2m$0.6m
% of annual rental income0.9%1.8%
H&S INCIDENTS20212020
Incidents that did not
result in injury
811
Injuries84
Total recorded incidents1615
Property risk management
The development, maintenance and ongoing management of our properties present a range of risks to
our tenants and visitors to those properties, such as those arising from electrical hazards, roof access,
contaminants and fire risks. Risk management initiatives for our properties include:
§
prequalification requirements and induction for contractors;
§
periodic and independent property risk assessments;
§
asbestos management protocols;
§
requirements for safety plans and site inspections for development projects; and
§
governance and incident management through our Property Health & Safety Committee.
Hazard management
Hazards are identified through physical inspections, qualitative assessments, and analysis of accidents and
near misses. Identification exercises are required following major changes, and hazards must be evaluated
and recorded in a hazard register. Competency for hazard management and incident response is ensured
through induction and routine training. Procedures for hazard management, such as corrective action,
hierarchies of control and reporting, are monitored for improvement by our Health & Safety Committees and
align with WorkSafe New Zealand standards.
At the end of 2020, our hazard register identified 125 high-risk landlord hazards that predominantly
concerned electrical hazards and hazards from working at heights. High-risk hazards may cause extensive
injuries or long-term serious illness and have a moderate to high chance of occurring. Collaboration with our
facilities management partners in 2021 ensured that 90% of these hazards are now eliminated or, where not
practicably possible, controlled, with work continuing on the remaining 10% which require tailored solutions,
and new hazards identified through the year.
The health and safety incidents in the table below
reflect incidents that were reported to us across our
operations during 2021:
28
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
SCOPECATEGORYFY19 (tCO
2
e)FY20 (tCO
2
e)FY21 (tCO
2
e)
SCOPE 1
Direct EmissionsFugitive emissions (refrigerants)94.5116.876.8
Vehicle fuelCovered under
Category 6
Covered under
Category 6
0.2
SCOPE 2
Indirect EmissionsElectricity consumption (location based)15.55.414.2
Scope 1 and 2Total Scope 1 and Scope 2 Emissions110.0122.291.2
SCOPE 3
Other Indirect EmissionsCategory 1: Purchased goods and services
(1)
Not measured in 2019111.3117.4
Category 2: Capital goods
(1)
Not measured in 20192,564.72,615.0
Category 3: Energy and fuelNot measured in 20190.51.2
Category 5: Waste generated in operations0.70.50.2
Category 6: Business travel19.89.412.7
Category 7: Employee commutingNot measured in 201915.113.6
Total Scope 3 Emissions20.52,701.52,760.1
TOTAL Scope 1, 2 and 3 Emissions130.52,823.7
(2)
2,851.3
Overall, our emissions profile has not materially changed on 2020 levels.
(1) The emissions per $ spend was calculated using an environmentally-extended input output (EEIO) model. An EEIO model estimates emissions based on category spend
using data from allocating national GHG emissions to final products based on economic flows between sectors. The EEIO model is accepted by the GHG Protocol and is
considered comprehensive but varies in its granularity. Our approach to emissions assessments may evolve over time as we mature.
(2) This year, we have restated our carbon footprint for FY20 due to an overstatement of Scope 3 emissions found when preparing this report. Category 1 emissions were
originally reported as 215.2 tCO
2
e; they are restated here as 111.3 tCO
2
e. Category 2 emissions were originally reported as 3,565 tCO
2
e. They are restated here as
2,564.7 tCO
2
e. Total emissions reported in 2020 have therefore been restated as 2,823.7 tCO
2
e. The restatement stems from a calculation error that was identified
while completing the FY21 carbon footprint calculations.
OUR VALUE CHAIN
EMISSIONS
UPSTREAM EMISSIONS
SCOPE 3
CORPORATE EMISSIONS
SCOPE 1 AND 2
DOWNSTREAM EMISSIONS
SCOPE 3
Goods and services
Capital expenditure
Electricity transmission and
distribution losses
Employee commuting
Fugitive emissions from
HVAC systems
Electricity consumption
Operational waste
Business travel
2,851.3
tonnes of C0
2
e
% TOTAL FOOTPRINT
EMISSIONS SOURCE
96.3%
2,747.2 TONNES
3.2%
91.2 TONNES
0.5%
12.9 TONNES
Offset
SCOPE 2:
Electricity consumption
SCOPE 1:
Refrigerants
29
The environmental impacts of developing and maintaining PFI’s buildings largely derive from the materials
used in construction and maintenance, and the refrigerants used in HVAC systems managed by PFI. Our
stakeholders expect PFI to deliver strong environmental compliance and performance.
Sustainability Policy
PFI’s Sustainability Policy embeds sustainable thinking into our decision making through delegated roles and
responsibilities covering everyone in our business. The policy includes triggers for engagement, such as
when engaging with contractors or entering into lease agreements.
Tackling fugitive emissions
Fugitive emissions from our HVAC systems remain the most significant emissions source from our direct
operations. These emissions are released when the refrigerant gases used in our HVAC systems (including
R22) leak directly into the atmosphere. Our use of R22 gas, a standard industry refrigerant, not only
contributes to climate change but also damages the ozone layer. While the amount of R22 gas released into
the atmosphere is small, its global warming potential is almost 2,000 times the potency of carbon dioxide,
meaning refrigerants are our biggest opportunity to make meaningful reductions on our direct footprint.
We are committed to removing ozone-depleting R22 refrigerants from our portfolio that are within
our operational control and replacing them with gases with a lower global warming potential. In 2020,
we committed $2 million to phase out the use of R22 gas from our portfolio over three years. During 2021,
we invested $688,000 on HVAC upgrades, fully removing systems that use R22 gas from 12 properties.
This contributed to a reduction in our Scope 1 emissions during 2021. Our Scope 1 emissions decreased by
34% on 2020 levels, although we note that some of this change will be attributable to usual year-on-year
fluctuations. This programme will run until the end of 2023, after which we commit to continuing to phase
out R22 associated with new acquisitions.
Tackling indirect emissions through sustainable design
Scope 3 emissions from goods and services expenditure and capital expenditure continue to represent our
most material sources of indirect emissions. These emissions, in particular those that arise from our
suppliers’ construction-related activities, are considered a consequence of our operations. Avoiding and
reducing indirect emissions in our supply chain is a complex and ongoing challenge. Reducing these
emissions will require industry-wide collaboration and development of new technologies over time. That
being said, one of the most impactful things we can do to reduce emissions is to extend the life of existing
buildings because that greatly reduces the need to produce high-emitting materials like steel and cement –
see our case study on page 23.
This year, we developed a sustainable refurbishment framework that prioritises low-impact materials
and resource-efficient design features. The framework recognises that each refurbishment is unique and
ensures we have a range of sustainable design options to consider for each refurbishment. We are seeing
increased interest from existing and prospective tenants on sustainability. The intention of this framework is
to prepare for, and capitalise on, such opportunities as they arise to incrementally reduce negative impacts
across our portfolio.
RESPONSIBLE PROPERTY OWNERSHIP
Solar
Reuse of existing
building materials
LED lightingReducing volatile
organic compounds
Efficient water
flow fittings
Replacing HVAC
systems that use
R22 gas
Rainwater
harvesting
A SUSTAINABLE REFURBISHMENT MIGHT INCLUDE:
Sustainable
landscaping
30
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
This year, we have begun engaging with our suppliers and contractors to create a pathway for seeking
Green Star certification for future developments. The Green Star system evaluates a building across a
range of categories, such as materials, emissions, and innovation, and has started to inform our future
development and refurbishment decisions. For example, we have registered a development at 30-32 Bowden
Road for Green Star certification, which will commence in 2023. Green Star ratings are administered by
the New Zealand Green Building Council (NZGBC), a network of property and building businesses aiming
to normalise market-based green practices. PFI is a member of the NZGBC.
Offsetting our residual impacts
Our primary ambition is to reduce our emissions through effective reduction initiatives before we look
at offsetting. However, we are aware that despite our efforts to reduce our footprint, our operations will
inevitably continue to affect the environment.
We therefore remain committed to measuring and offsetting our Scope 1, 2 and selected Scope 3
emissions through high-quality offsets and ensuring transparency for our stakeholders on our
climate impacts.
We have offset our 2021 Scope 1, 2 and selected Scope 3 emissions
1
with certified carbon credits.
These credits are sourced from projects that reafforest, grow and protect forests in Aotearoa and the
Pacific Islands and help to deliver climate resilience, waterways protection, erosion control, biodiversity
conservation and community economic development
2
. These carbon credits have enabled us to achieve
Net Zero Carbon Business Operations certification with Ekos for the 2021 financial year.
Solar opportunities
This year, we investigated solar panel installation at selected PFI properties. While solar is a less-developed
area of our ESG strategy, electricity price signals, emerging regulation and tenant demand suggest solar
panel installation is a meaningful commercial opportunity aligned with our ESG strategy. We hope to pilot
a solar panel project in 2022 and, going forward, we will ensure that the structural design of new
developments allows for solar installation.
Addressing seismic risk
We have a programme of work in place to assess (and where appropriate, improve) the seismic ratings of
each property in our portfolio to reduce the likelihood of damage and harm as a result of earthquakes. This is
a substantial programme spanning several years that addresses all earthquake-prone buildings and lifts
them to B or A grade status. Seismic risk is also carefully considered when acquiring new properties as part
of our due diligence process. When undertaking seismic upgrade work, we generally aim to lift the seismic
rating of the property to A grade. During 2021, we completed several seismic upgrades and improved the
ratings of six of our buildings to A grade.
1. Including waste, business travel, energy and fuel, and employee commuting; excluding goods and services and capital expenditure.
2. Carbon credits are retired on either the NZETS registry for New Zealand projects and the Markit registry for the pacific project.
31
Our ESG strategy
Since the adoption of our ESG strategy in
2019, we have made promising headway
across our strategic themes, especially in
terms of climate-related impacts and health
and safety. However, we acknowledge the
job is far from complete.
To date, our ESG strategy has helped to
construct a useful platform, positioning PFI to
adapt to change and build resilience. Since that
strategy was created, there has been growing
sustainability momentum in the external
environment and sustainability has become
a more embedded part of what we do at PFI.
In 2022, we anticipate a refresh of our current
ESG strategy, with an intention to simplify the
framework, tighten our focus, reflect the
interaction with our business strategy and
understand how our stakeholders’ expectations
have changed over the last three turbulent
years. The role that PFI will play in the collective
movement of the global community to net zero
by 2050 is a key sustainability consideration for
PFI, and will form part of our thinking for this
refresh. This may include the development of
more comprehensive measurement and
feedback systems, as well as an assessment of
the technological levers accessible to support
PFI’s ambitions.. For the purposes of evaluating
our impact on people and planet in 2021, PFI’s
current materiality matrix remains relevant:
DELIVERING FOR OUR INVESTORS
PFI ESG STRATEGY
PURPOSE
PFI generates income for investors as professional landlords
to the industrial economy, generating prosperity for New Zealand
VISION
PFI will be one of New Zealand’s foremost
listed property vehicles.
Our measures will be performance, quality,
scale and reputation.
ESG PRIORITIES
Leadership
—
Strategy
—
Transparency
—
Diversity
and Inclusion
—
Wellbeing Community
—
Environment
—
Climate
STRATEGIC PILLARS
Health, safety and wellbeing
—
Resource efficiency
—
Long-term thinking
STRATEGIC THEMES
Taking care of our team
—
Looking after our
tenants
—
Responsible property ownership
—
Delivering for our investors
Material topics
Our material topics were established
through an independently run
materiality and stakeholder
engagement process in 2019, which
comprised of workshops and
interviews. Key stakeholders for PFI,
including shareholders, staff, tenants,
partner suppliers, industry groups and
regulators, investors, and financiers
were consulted to ascertain the topics
that might have a significant impact
(economically, socially, or
environmentally), or a substantive
influence, on PFI stakeholders’
decisions and assessments.
PFI MATERIALITY MATRIX
Health, safety
and wellbeing
Environmental compliance
and performance
Transparency, reporting and
responding to stakeholder concerns
Sustainability strategy,
policy and process
Energy management
and GHG emissions
Industry leadership
Diversity
Community involvement
SIGNIFICANCE OF IMPACTS
ST
AKEHOLDER IMPORT
ANCE
HIGH
HIGHMEDIUM
32
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
Improving our climate resilience
Both the physical and transition risks posed to people and planet by climate change are staggering. In 2020,
we began to understand the exposure of PFI to climate-related risks and opportunities through our first
TCFD-aligned assessment. To augment our second round of TCFD in 2021, we engaged S&P Global to help
sharpen our understanding of the physical climate-related risks associated with individual properties. S&P
Global’s analysis indicated that, overall, PFI is exposed to low to moderate physical climate-related risks.
Four properties have been assessed as having a heightened exposure to a particular climate-related hazard.
This knowledge puts PFI in a good position to consider these hazards as part of asset management decisions
such as future capital expenditure. The outcome of this assessment is pleasing because it validates
conclusions drawn from 2020 that PFI’s strategy remains robust to the impacts of climate change, provided
we remain responsive to climate risks as they evolve.
A detailed account of how PFI manages physical and transitions risks can be found in our TCFD
disclosures on pages 33 – 39.
Enhancing sustainability due diligence for new acquisitions
PFI has always taken a thorough approach to due diligence for new acquisitions, considering things like
seismic risk and tenant covenant and activity. Our work to understand PFI’s climate-related risks and
opportunities has further enhanced our approach and influenced PFI’s decision making on new acquisitions.
Climate change is now an additional lens for us to consider for the occupation and future upgrade
requirements of a potential acquisition. The exposure of a property itself to climate-related physical
hazards is also a significant consideration that has influenced PFI’s decisions regarding acquisition activity
during 2021.
Maintaining our transparency
The Carbon Disclosure Project (CDP) is a globally recognised disclosure system that provides investors
and other stakeholders with relevant information on climate impacts. Our second annual response to the
CDP questionnaire achieved B-. This was an improvement on our 2020 submission, which scored a C.
This indicates an improvement in how we measure, understand, and manage our greenhouse gas emissions
over time.
33
PFI recognises that we need to proactively manage the risks and opportunities
that arise from climate change, just as we manage all other risks and opportunities facing our
business. We are pleased with the progress that we have made during 2021 to further strengthen
our understanding of, and response to, our climate-related risks and opportunities. In particular,
PFI has undertaken an exercise to understand the resilience of individual assets in PFI’s portfolio
to climate change in different climate change transition pathways. We were pleased to find that
PFI’s portfolio overall has a low to moderate physical risk exposure. We have also taken steps
during the year to strengthen how we integrate climate considerations into our due diligence
processes for the acquisition of new properties.
This report provides information about the actions that we are taking to identify and manage climate-
related risks and opportunities. The following disclosures have been prepared in accordance with the
recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which provides a
framework for climate-related financial disclosures across four core elements: governance, strategy,
risk management and metrics and targets. This is PFI’s second report in line with the TCFD recommended
disclosures. We note that PFI will be required to provide mandatory disclosures in line with the TCFD
recommendations from 2023. These voluntary disclosures position us well to comply with that mandate
once it is in place.
Climate change is an evolving crisis with high levels of uncertainty. This report sets out PFI’s current
understanding of, and response to, climate-related issues. However, we acknowledge that this will evolve
over time. We are committed to continue progressing our response to climate change over time and to
report our progress to our stakeholders each year.
GOVERNANCE
Describe the Board’s oversight of climate-related risks and opportunities.
PFI’s Board has responsibility for our strategic direction along with oversight of our operations and risk
management. PFI’s Board receives quarterly reporting from Management on sustainability and risk
management, which includes PFI’s response to climate-related risks and opportunities. This reporting
includes progress against agreed climate-related initiatives within PFI’s ESG programme (which are set with
oversight from the Board). The Board also receives information on climate-related issues from Management
as part of PFI’s due diligence process for new acquisitions.
The PFI Board’s Audit and Risk Committee assists the Board in discharging its responsibilities with
respect to risk management. Management’s assessment of PFI’s climate-related risks and opportunities
are presented to the Board’s Audit and Risk Committee annually.
CLIMATE-RELATED
DISCLOSURES
(
TCFD REPORT
)
34
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
Describe management’s role in assessing and managing climate-related risks and opportunities.
Under PFI’s Risk Management Framework, the Chief Executive Officer and Chief Finance and Operating
Officer are responsible for management of climate risk, along with all other risks. These roles are also
responsible for the execution of PFI’s strategy, including any climate-related opportunities. PFI has a
dedicated Head of Sustainability and Operations who leads the assessment of climate-related risks and
opportunities, and coordinates our response as part of PFI’s wider ESG programme.
A monthly ESG management meeting was established in 2020 that monitors sustainability market
trends and regulatory change and makes decisions on PFI’s responses to climate-related issues. This
meeting is attended by the Chief Executive Officer and Chief Finance and Operating Officer. During 2020
and 2021, the Chief Executive Officer and Chief Finance and Operating Officer oversaw PFI’s climate-related
risk and opportunity assessments through this forum.
STRATEGY
Describe the climate-related risks and opportunities the organisation has identified over the short,
medium, and long term.
PFI’s climate-related risk and opportunity assessments are undertaken with reference to PFI’s Risk
Management Framework and the time horizons below:
HORIZONPERIODDESCRIPTION
Short term1-5 yearsWithin our weighted average lease term
Medium term6-20 yearsThe period within which most buildings will
require major capital works
Long termGreater than 20 yearsThe life of a building
PFI has identified 18 possible risks and opportunities across all of the TCFD categories. Most of the risks
are expected to materialise in the medium to long term. However, as our real estate assets are long term
investments, we are taking steps now to ensure that our organisation is resilient to these future challenges.
A summary of the top five risks that PFI has identified is provided below, along with a summary of how
PFI is responding to them, and the related opportunities:
RISKS
EXPECTED TIME
HORIZONRISK RESPONSE
RELATED
OPPORTUNITIES
Transition – Policy
(regulatory) risk:
The introduction of new
regulations, for
example on building
materials and design,
disclosure and
governance, land use,
and electricity or water
use, could lead to
increased compliance
risk, and a potential
reduction in
profitability.
Short term
Medium term
Long term
PFI is closely monitoring
climate-related regulatory
change and is working with
industry bodies to provide
feedback on proposed
regulations where
appropriate.
We are also working to
ensure that we are ready to
respond to incoming
legislative changes when
they arise.
Our Board receives
quarterly reporting on how
we are responding to
upcoming regulatory
change.
During 2021, PFI
has begun to
explore
opportunities to
create value by
working with
tenants on
renewable energy
and water efficiency
initiatives.
35
RISKS
EXPECTED TIME
HORIZONRISK RESPONSE
RELATED
OPPORTUNITIES
Transition – Market
(property) risk:
With increasing scrutiny
of organisations’ impact
on the climate, we may
experience increased
tenant or purchaser
demand for sustainable
buildings. In the long
term, this could result
in difficulty re-letting
buildings, devaluation
of properties, or
increased expenditure
to bring properties up
to higher sustainability
standards.
Short term
Medium term
Long term
Green buildings have not
traditionally been a focus
for industrial properties.
However, as outlined on
pages 29 – 30, PFI has:
§
joined the New Zealand
Green Building Council
to build on our
sustainable building
capability;
§
registered our next
major development at
30-32 Bowden Road
for Green Star
certification; and
§
created a sustainable
refurbishment
framework.
While this is a
longer-term risk,
shifting tenant
demand has
presented us with
near-term
opportunities to:
§
work with our
tenants to help
them meet their
climate or
environmental
commitments;
and
§
create value by
developing Green
Star certified
buildings.
We will continue
to progress these
initiatives during
2022.
Transition -
Reputation and
Market (capital) risk:
Failure to meet
stakeholder
expectations regarding
ESG performance could
in turn lead to difficulty
in obtaining capital
from:
§
shareholders due to
increasing
preference to invest
in demonstrably
sustainable
companies; or
§
funders due to
increased scrutiny
over climate risks
and their
management.
Short term
Medium term
Long term
PFI sees successful
execution of its ESG
programme as being critical
to managing this risk. PFI’s
climate-related risk and
opportunity assessments
have been considered in the
design of PFI’s ESG
programme. This includes:
§
reducing our greenhouse
gas emissions;
§
improving the
sustainable design of
our buildings; and
§
investigating the
resilience of individual
assets in our portfolio to
physical risk, which was
completed during 2021.
Transparency is also
important, so our
progress will continue
to be disclosed through
PFI’s annual report, and
through CDP.
Strong ESG
performance
could present an
opportunity for
PFI to increase our
capital availability
(for example,
through green
financing) and
promote our
reputation.
36
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
RISKS
EXPECTED TIME
HORIZONRISK RESPONSE
RELATED
OPPORTUNITIES
Physical – Acute
(damage) risk:
We may experience
damage or loss of
access to PFI properties
from climate-related
events, such as storms
or flooding.
Short term
Medium term
Long term
In response to this risk,
PFI has completed an
exercise with the
assistance of S&P Global
to investigate which of
PFI’s properties may be
most vulnerable to
physical impacts from
climate change. This has
helped us to better
understand what actions
we can take to mitigate
these risks through our
asset and portfolio
planning activities. We plan
to repeat this exercise
periodically as climate
science and the global
response evolve.
PFI completes physical
climate risk assessments
as part of our due diligence
checks for all new property
purchases.
To ensure that we are well
placed to respond to a
major climate event, we
continue to retain a strong
balance sheet.
We also closely manage
our insurance programme
which provides cover in the
event of damage from
weather events.
The work that we
have done to
understand and
plan for the
physical impacts of
climate change is
not only a risk
mitigation
approach. It gives
us the opportunity
to deliver longer-
term efficiencies
by enabling us to
appropriately plan
and deliver changes
at the most
effective times.
We also have an
opportunity to
embed resilience
to climate impacts
(rain, wind, heat)
into the design of
new buildings.
Physical – Acute
(insurance) risk:
Due to increasing
climate-related claims,
insurance for climate
events may become
more difficult to obtain
or increasingly
expensive.
Short term
Medium term
Long term
As PFI relies on
insurance to remediate
damage to its properties,
changes in insurer
preferences will be
carefully monitored.
PFI reviews its insurance
strategy annually and is
working to increase its
sophistication in insurance
management to ensure
that we are best placed
to address this risk should
it arise.
Due to PFI’s size,
PFI is in a position
to be able to put in
place tailored
insurance
structures.
37
Describe the impact of climate-related risks and opportunities on the organisation’s businesses,
strategy, and financial planning.
Our understanding of PFI’s climate-related issues has influenced the following aspects of our business,
strategy and financial planning:
§
PFI has undertaken additional analysis of climate-related exposures for individual assets within our
portfolio. This has in turn fed into our asset planning and portfolio management decisions.
§
PFI has enhanced its due diligence processes to consider climate change-related risks. This includes
the physical risks that a property may be exposed to. Depending on the materiality and nature of the
tenant, we may also seek to understand the impact of climate change on its business.
§
PFI has committed circa $2 million to reducing the greenhouse gas emissions from PFI’s refrigerants
between 2021 and 2023.
§
PFI has sought to address its indirect emissions from its property maintenance and construction
activities by investigating options for Green Star developments and sustainable refurbishments.
Describe the resilience of the organisation’s strategy, taking into consideration different
climate-related scenarios, including a 2°C or lower scenario.
PFI has undertaken both qualitative and quantitative assessments of the impact of different
climate-related scenarios on PFI’s strategy, including a 2°C or lower scenario. The analysis has considered
three Representative Concentration Pathways (RCPs): RCP 2.6 (low climate change scenario),
RCP 4.5 (moderate scenario) and RCP 8.5 (high scenario).
We have determined that PFI’s high level strategy of investing in quality industrial property remains
robust in either a warming scenario of lower than 2°C, or a more extreme warming scenario. PFI has
a diversified portfolio, with a good spread of geographical locations and tenants in various industries.
This reduces the impact of a single event, and the concentration risk from exposure to a particularly
impacted industry.
We have also engaged S&P Global to help us review the vulnerability of PFI’s properties to a range
of climate-related hazards across different time horizons and climate-related scenarios. S&P Global
determined that PFI’s portfolio has a low to moderate risk overall. Four properties were assessed as having
a heightened exposure to a particular climate-related hazard. This knowledge puts PFI in a good position to
consider these hazards as part of asset management decisions such as future capital expenditure.
Critically, climate-related physical risks are one of a number of strategic factors that PFI considers when
considering acquisitions and divestments. The exercise that PFI undertook during 2021 to understand the
resilience of individual assets in our portfolio to climate change has given us a greater understanding of the
types of climate hazards that are most relevant for PFI, and how these risks can be managed.
We maintain a strong balance sheet that, as demonstrated through the COVID-19 pandemic, helps us to
remain resilient in difficult times. However, it is critical that we remain responsive to climate risks as they
evolve. How we do this is outlined in the Risk Management section below.
RISK MANAGEMENT
Describe the organisation’s processes for identifying and assessing climate-related risks.
Identification and assessment of PFI’s climate-related risks is led by PFI’s Head of Sustainability and
Operations, with contribution from senior management. This assessment is completed annually.
Key risks are assessed and prioritised against a risk matrix of consequence and likelihood in line
with PFI’s Risk Management Framework. The time horizons considered are set out in the strategy section of
this report. The assessment considers PFI’s direct operations, as well as upstream and downstream impacts.
In 2021, this assessment was also informed by the analysis completed by S&P Global on the physical
climate risk exposure of each PFI property. We intend to periodically refresh the analysis of physical climate
risks for individual PFI properties, but this will not be required on an annual basis.
38
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ESG
In line with TCFD guidance, PFI considers both the risks associated with the transition to a lower
carbon economy (such as changes in regulation) and the risks associated with the physical impacts of
climate change (such as damage to buildings).
Describe the organisation’s processes for managing climate-related risks.
As described in the Governance section, PFI has a monthly ESG management meeting attended by the
Chief Executive Officer and Chief Finance and Operating Officer. This management meeting oversees
PFI’s climate-related risk and opportunity assessments. The Chief Executive Officer and Chief Finance
and Operating Officer are responsible for making decisions on whether to mitigate, transfer, accept, or
control climate-related risks.
This structure gives us flexibility to review and adapt our response to climate-related issues over
time as the external environment evolves.
PFI’s most material risks have been identified based on the likely consequences of those risks
materialising, and are set out in the Strategy section above. Actions being taken to respond to PFI’s most
material climate-related risks include:
§
incorporating climate change considerations into our due diligence process for new acquisitions;
§
growing our capabilities in sustainable building design for refurbishments and new developments;
§
disclosure to stakeholders on our ESG progress;
§
annual reviews of our insurance strategy;
§
periodically assessing the vulnerability of individual PFI properties to climate impacts; and
§
maintaining a strong balance sheet.
Many of these activities form part of PFI’s ESG framework, which is overseen by the monthly ESG
meetings. Quarterly reporting on sustainability and risk management is provided to the Board.
Describe how processes for identifying, assessing, and managing climate-related risks are integrated
into the organisation’s overall risk management.
PFI’s climate-related risks are incorporated into PFI’s company-wide risk register to provide a single view
of risk for PFI. In most cases, climate risks are an extension of our existing risks (for example, physical
damage to buildings or strategic risk). Our controls for those risks (such as acquisition due diligence and
our insurance programme monitoring) have been enhanced to include consideration of climate change
impacts. We have also introduced a new control whereby we will periodically review the PFI portfolio’s
physical climate risk.
Assessment and management of climate risk is managed in the same way as our other risks, with
oversight by senior management and the Board.
39
METRICS AND TARGETS
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in
line with its strategy and risk management process.
PFI uses the following metrics to assess climate-related risks and opportunities in line with its strategy
and risk management process:
METRICPURPOSE2021 RESULT2020 RESULT
Scope 1 emissionsTo measure PFI’s impact on
the climate.
77.0 tCO
2
e116.8 tCO
2
e
Scope 2 emissionsTo measure PFI’s impact on
the climate.
14.2 tCO
2
e5.4 tCO
2
e
Scope 3 emissionsTo measure PFI’s indirect
impact on the climate.
2,760.1 tCO
2
e2,701.5 tCO
2
e
CDP scoreTo understand how our
climate performance
compares to other
corporations globally.
B-C
Capital investment deployed
towards removal of R22 gas
To measure progress on our
commitment to phasing out
R22 within PFI’s operational
control.
$688k$0
2050 composite physical risk
score (based on a moderate
climate change scenario)*
To measure the physical
climate risk associated with
PFI’s property portfolio.
33 (Low to
Moderate risk)
Not available
*This score was provided by S&P Global following analysis of PFI’s portfolio. We note that we do not
intend to update this score annually.
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the
related risks.
Please refer to the table above for details of PFI’s 2021 GHG emissions. We recognise the importance of
reducing greenhouse gas emissions and understand that there are reputational and market risks if we do
not take meaningful steps to decrease them. During 2021, PFI has:
§
commenced work to replace all HVAC systems in our portfolio and within our operational control that
use R22 refrigerant gas by the end of 2023; and
§
taken positive steps to address our indirect carbon emissions associated with our supply chain, as
outlined in our sustainability report on pages 29 – 30.
Describe the targets used by the organisation to manage climate-related risks and opportunities
and performance against targets.
PFI is targeting replacement of all HVAC systems currently in our portfolio and within our operational
control that use R22 refrigerant gas by 2023. We are also targeting an improvement in our CDP score
from C (in 2020) to B by 2023.
40
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
HEALTHY
RETURNS
ON
INITIATIVE
Property
for
Industry
Limited
Group
Financial
Statements
31 December
2021
41
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
The accompanying notes form part of these financial statements.
ALL VALUES IN $000SNOTE20212020
INCOME
Rental and management fee income2.3 108,653 97,392
Interest income 2 3
Fair value gain on investment properties and non-current assets classified as held for sale2.1, 2.2 392,519 72,546
Gain on disposal of investment properties and non-current assets classified as held for sale 2,636 –
Fair value gain on derivative financial instruments3.2 12,271 643
Business interruption insurance income2.6 170 227
Material damage insurance income2.6 900 5,242
Total income 517,151 176,053
EXPENSES
Property costs2.4 (16,753) (16,262)
Interest expense and bank fees (20,106) (18,233)
Administrative expenses5.1 (7,465) (5,851)
Loss on disposal of investment properties and non-current assets classified as held for sale – (14)
Total expenses (44,324) (40,360)
Profit before taxation 472,827 135,693
Income tax expense5.2 (20,017) (22,241)
Profit and total comprehensive income after income tax attributable
to the shareholders of the Company4.1 452,810 113,452
Basic earnings per share (cents)4.1 89.97 22.71
Diluted earnings per share (cents)4.1 89.96 22.70
FINANCIALS 2021
42
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
The accompanying notes form part of these financial statements.
NOTE
Cents
per Share
(cents)
No. of
Shares
(#)
Ordinary
Shares
($000s)
Share-Based
Payments
Reserve
($000s)
Retained
Earnings
($000s)
Total
Equity
($000s)
Balance as at 1 January 2020–498,723,330562,429270491,3381,054,037
Total comprehensive income–––– 113,452 113,452
Dividends and reinvestment
Q4 2019 final dividend – 4/3/2020 2.15 – – – (10,724) (10,724)
Q1 2020 interim dividend – 26/5/2020 1.80 – – – (8,978) (8,978)
Q1 2020 dividend reinvestment 1,086,032 2,555 – – 2,555
Q2 2020 interim dividend – 22/9/2020 1.80 – – – (8,998) (8,998)
Q2 2020 dividend reinvestment 740,165 1,990 – – 1,990
Q3 2020 interim dividend – 18/11/2020 1.85 – – – (9,261) (9,261)
Q3 2020 dividend reinvestment 708,009 2,040 – – 2,040
Long-term incentive plan5.945,352155 345 – 500
Balance as at 31 December 2020–501,302,888569,169615566,8291,136,613
Total comprehensive income–––– 452,810 452,810
Dividends and reinvestment
Q4 2020 final dividend – 10/3/2021 2.25 – – – (11,281) (11,281)
Q4 2020 dividend reinvestment 1,105,073 3,087 – – 3,087
Q1 2021 interim dividend – 24/5/2021 1.80 – – – (9,044) (9,044)
Q1 2021 dividend reinvestment 986,161 2,737 – – 2,737
Q2 2021 interim dividend – 7/9/2021 1.80 – – – (9,064) (9,064)
Q2 2021 dividend reinvestment 976,285 2,895 – – 2,895
Q3 2021 interim dividend – 23/11/2021 1.85 – – – (9,334) (9,334)
Q3 2021 dividend reinvestment 1,038,576 2,930 – – 2,930
Long-term incentive plan5.984,685177136–313
Balance as at 31 December 2021– 505,493,668 580,995 751 980,916 1,562,662
43
ALL VALUES IN $000SNOTE20212020
CURRENT ASSETS
Cash at bank 1,103 1,414
Accounts receivable, prepayments and other assets5.3 5,842 5,397
Total current assets 6,945 6,811
NON-CURRENT ASSETS
Investment properties2.1 2,158,940 1,524,785
Property, plant and equipment 412 561
Derivative financial instruments3.2 11,623 19,415
Goodwill5.5 29,086 29,086
Total non-current assets 2,200,061 1,573,847
Non-current assets classified as held for sale2.2 10,000 106,701
Total assets 2,217,006 1,687,359
CURRENT LIABILITIES
Derivative financial instruments3.2 710 340
Accounts payable, accruals and other liabilities5.4 12,344 9,152
Taxation payable 3,557 3,252
Total current liabilities 16,611 12,744
NON-CURRENT LIABILITIES
Borrowings3.1 598,653 487,649
Derivative financial instruments3.2 4,608 25,041
Deferred tax liabilities5.2 34,419 25,160
Lease liabilities5.10 53 152
Total non-current liabilities 637,733 538,002
Total liabilities 654,344 550,746
Net assets4.2 1,562,662 1,136,613
EQUITY
Share capital 580,995 569,169
Share-based payments reserve5.9 751 615
Retained earnings 980,916 566,829
Total equity 1,562,662 1,136,613
These Group financial statements are signed on behalf of Property for Industry Limited and were authorised for issue on 21 February 2022.
Anthony Beverley Susan Peterson
Chairman Chair, Audit and Risk Committee
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2021
The accompanying notes form part of these financial statements.
FINANCIALS 2021
44
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
ALL VALUES IN $000SNOTE20212020
CASH FLOWS FROM OPERATING ACTIVITIES
Property and management fee income received 105,440 97,502
Business interruption insurance income2.6 191 206
Net goods and services tax paid (157) (304)
Interest received 2 3
Interest and other finance costs paid (19,812) (17,971)
Payments to suppliers and employees (19,239) (24,591)
Income tax paid (10,300) (19,681)
Net cash flows from operating activities 56,125 35,164
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment properties and non-current assets classified as held for sale 108,762 6,909
Acquisition of investment properties2.1 (226,279) (65,148)
Acquisition of property, plant and equipment (23) (29)
Expenditure on investment properties (23,766) (24,524)
Capitalisation of interest on development properties2.1 (204) (199)
Material damage insurance income2.6 900 5,242
Net cash flows from investing activities (140,610) (77,749)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from / (repayment of) syndicated bank facility 86,360 (25,699)
Net proceeds from bilateral CBA bank facility 25,000 100,000
Principal elements of finance lease payments (113) (111)
Dividends paid to shareholders net of reinvestments (27,073) (31,376)
Net cash flows from financing activities 84,174 42,814
Net (decrease) / increase in cash and cash equivalents (311) 229
Cash and cash equivalents at beginning of year 1,414 1,185
Cash and cash equivalents at end of period 1,103 1,414
Cash and cash equivalents at end of year comprises:
ALL VALUES IN $000S20212020
Cash at bank 1,103 1,414
Cash and cash equivalents at end of year 1,103 1,414
45
CONSOLIDATED STATEMENT OF CASH FLOWS
(
continued
)
FOR THE YEAR ENDED 31 DECEMBER 2021
RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES
ALL VALUES IN $000SNOTE20212020
Profit for the year after income tax 452,810 113,452
Non-cash items:
Fair value gain on investment properties2.1, 2.2 (392,519) (72,546)
(Gain) / loss on disposal of investment properties and
non-current assets classified as held for sale (2,636) 14
Fair value gain on derivative financial instruments (12,271) (643)
Increase in deferred taxation 5.2 9,412 12,175
Depreciation5.1 181 173
(Release of Provision) / Provision for doubtful debts (450) 378
Lease liability interest expense5.10 19 24
Employee benefits expense – share-based payments 335 300
Movements in working capital items:
Increase in accounts receivable, prepayments and other assets (351) (3,070)
Increase / (decrease) in accounts payable, accruals and other liabilities 2,190 (236)
Increase / (decrease) in taxation payable 305 (9,615)
Other: material damage insurance income (classified as cash flows from investing activities)2.6 (900) (5,242)
Net cash flows from operating activities 56,125 35,164
The accompanying notes form part of these financial statements.
FINANCIALS 2021
46
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
1. GENERAL INFORMATION48
1.1 Reporting entity48
1.2 Basis of preparation48
1.3 Group companies48
1.4 Basis of consolidation48
1.5 Critical judgements, estimates and assumptions48
1.6 Accounting policies49
1.7 Significant events and transactions50
2. PROPERTY51
2.1 Investment properties51
2.2 Non-current assets classified as held for sale62
2.3 Rental and management fee income62
2.4 Property costs63
2.5 Net rental income63
2.6 Insurance income63
3. FUNDING64
3.1 Borrowings64
3.2 Derivative financial instruments65
4. INVESTOR RETURNS AND INVESTMENT METRICS66
4.1 Earnings per share66
4.2 Net tangible assets per share66
5. OTHER67
5.1 Administrative expenses67
5.2 Taxation67
5.3 Accounts receivable, prepayments and other assets70
5.4 Accounts payable, accruals and other liabilities70
5.5 Goodwill70
5.6 Financial instruments71
5.7 Financial risk management71
5.8 Related party transactions73
5.9 Share-based payments74
5.10 Leases76
5.11 Operating segments77
5.12 Capital commitments77
5.13 Subsequent events77
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
NOTES 2021
1. GENERAL INFORMATION
IN THIS SECTION
This section sets out the basis upon which the Group’s financial statements are prepared. Specific accounting policies are described in
the note to which they relate.
1.1. Reporting entity
These audited consolidated financial statements (the financial statements) are for Property for Industry Limited (the Company) and
its subsidiary P.F.I. Property No. 1 Limited (PFI No. 1) (together, the Group). The Company is a limited liability company incorporated in
New Zealand and is registered under the New Zealand Companies Act 1993. The Company is a FMC reporting entity under Part 7 of the
Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013 and these financial statements have been prepared in
accordance with the requirements of the NZX Listing Rules. The Company is listed on the NZX Main Board (NZX: PFI).
The Group’s principal activity is property investment and management in New Zealand.
1.2. Basis of preparation
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP).
They comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial
Reporting Standards as appropriate to for-profit entities. The financial statements also comply with International Financial Reporting
Standards (IFRS).
The financial statements have been prepared on the historical cost basis except where otherwise identified. All financial information is
presented in New Zealand dollars and has been rounded to the nearest thousand.
1.3. Group companies
As at 31 December 2021 and 31 December 2020, PFI No. 1 is the only controlled entity and is wholly owned.
1.4. Basis of consolidation
The consolidated financial statements comprise the Company and the entity it controls. All intercompany transactions are eliminated
on consolidation.
1.5. Critical judgements, estimates and assumptions
In applying the Group’s accounting policies, the Board and Management regularly evaluate judgements, estimates and assumptions that
may have an impact on the Group. The significant judgements, estimates and assumptions made in the preparation of these financial
statements are as follows:
2.1. Investment properties Page 51
3.2. Derivative financial instruments Page 65
5.2. Taxation Page 67
5.5. Goodwill Page 70
5.9. Share-based payments Page 74
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
48
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
1.6. Accounting policies
Aside from accounting for the implementation costs of the Software-as-a-Service (SaaS) arrangement mentioned below, no changes to
accounting policies have been made during the year, and policies have been consistently applied to all years presented.
Significant accounting policies have been included throughout the notes to the financial statements.
Other relevant policies are provided as follows:
Accounting for SaaS arrangements
Following developments in how to account for Software-as-a-Service (SaaS) arrangements during the year, the implementation costs of
$712,000 relating to a new property management and accounting software have been expensed through ‘Administrative expenses’ in the
Consolidated Statement of Comprehensive Income in their entirety in the current period. As at 31 December 2020, the implementation
costs incurred up to that date were held in ‘Accounts receivable, prepayments and other assets’ on the Consolidated Statement of Financial
Position in anticipation of being capitalised to ‘Property, plant and equipment’ on completion of the project.
Share capital
All shares on issue are fully paid, carry equal voting rights, share equally in dividends and any surplus on wind up and have no par value.
All shares are recognised at the fair value of the consideration received by the Company. Incremental costs directly attributable to the issue
of new shares are shown in equity as a deduction from the proceeds.
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values. The Board and Management have
overall responsibility for overseeing all significant fair value measurements and transfers between levels of the fair value hierarchy.
The Group’s policy is to recognise transfers into and out of fair value levels as of the date of transfer or change in circumstances that
caused the transfer.
The carrying values of all balance sheet financial assets and liabilities approximate their estimated fair values, apart from the fixed rate
bonds (refer Note 3.1 (ii) for further details).
The Board and Management review significant unobservable inputs and valuation adjustments. If third party information is used to measure
fair values, then the Board and Management assess the evidence obtained from the third parties to support the conclusion that such
valuations meet the requirements of NZ IFRS, including the level of the fair value hierarchy in which such valuations should be classified.
Goods and services tax
These financial statements have been prepared on a goods and services tax (GST) exclusive basis except for the accounts receivable
balance, accounts payable balance and other items where GST incurred is not recoverable. These balances are stated inclusive of GST.
1. GENERAL INFORMATION (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
49
NOTES 2021
1.7. Significant events and transactions
The financial position and performance of the Group was affected by the following events and transactions that occurred during the
reporting period:
Investment property acquisitions and disposals
On 29 January 2021, the Group settled the acquisition of the properties located at 670-680 Rosebank Road, Avondale, for a net purchase
price of $39.00 million.
On 10 February 2021, the Group announced the divestment of Carlaw Gateway Building and Carlaw Park Office Complex, Parnell for a
contracted gross sales price of $110.00 million. Settlement of this divestment, for gross sales proceeds of $108 million, took place on
30 November 2021.
On 30 April 2021, the Group settled the disposal of a non-current asset classified as held for sale located at 127 Waterloo Road,
Christchurch for a gross sales price of $4.41 million.
On 6 May 2021, the Group announced an agreement to purchase the property located at 44 Noel Burnside Road, Wiri, for a net purchase
price of $91.68 million. Settlement of this acquisition took place on 27 May 2021.
On 19 October 2021, the Group announced an agreement to purchase the property located at 32 Honan Place, Avondale, for a net purchase
price of $3.10 million. Settlement of this acquisition took place on 10 November 2021.
On 1 November 2021, the Group announced an agreement to purchase the property located at 22 Whakatu Road, Hastings, for a net
purchase price of $79.55 million. Settlement of this acquisition took place on 15 November 2021.
On 1 December 2021, the Group settled the acquisition of the property located at 520 Rosebank Road, Avondale, for a net purchase price
of $5.20 million.
On 3 December 2021, the Group announced the purchase of the property located at 318 Neilson Street, Penrose, for a net purchase price
of $6.83 million. Settlement of the acquisition is expected in March 2022.
On 9 December 2021, the Group announced the divestment of the property located at 48 Seaview Road, Wellington for a contracted gross
sales price of $10.00 million. This property is classified as a non-current asset classified as held for sale in these financial statements.
Settlement of the divestment is expected to take place on 22 February 2022.
Bank facilities
On 16 April 2021, the Group extended the expiry date of its bilateral bank facility provided by Commonwealth Bank of Australia (CBA) out to
16 April 2028 and increased it to $125 million. A bilateral bank facility is a facility agreement between a single lender (a bank) and a single
borrower (a corporate customer).
On 2 July 2021, the Group extended the expiry dates of its $300 million syndicated bank facility by approximately two years and eight
months, from 4 November 2022 and 2023, to 2 July 2025 and 2026. The syndicated bank facility is provided by ANZ Bank New Zealand
Limited (ANZ), Bank of New Zealand (BNZ), CBA and Westpac New Zealand Limited (Westpac), each providing $75 million. In addition,
BNZ has provided the Group with a further $100 million facility with an expiry date of 2 July 2023.
The COVID-19 pandemic
During the year ended 31 December 2021, New Zealand has been subject to various restriction periods associated with the COVID-19
pandemic, with Auckland being subject to greater restrictions than the balance of the country.
A proportion of the Group’s tenants were impacted by disruptions and uncertainty and the Group has worked with its tenant base,
particularly the most vulnerable businesses, to offer appropriate support. This support has largely come in the form of rent deferrals and
rent abatement, with $36,000 in rent deferrals (2020: $595,000) and $331,000 (2020: $684,000) in rent abatement recorded during the
reporting period.
In response to the economic impacts of the COVID-19 pandemic on certain business sectors, the Government has enacted new lease
legislation. The COVID-19 Response (Management Measures) Legislation Act 2021 (Act), an amendment to the Property Law Act 2007,
received Royal Assent on 2 November 2021 and is now in force. This Act requires all commercial landlords to abate “a fair proportion” of
rent and outgoings for any customer adversely impacted by these restrictions, while building access is limited. This legislation has not had
a material impact on financial performance in the reporting period.
Neither the Company nor its subsidiary have taken any Government wages or salary subsidies available to companies as a result of the
COVID-19 pandemic.
1. GENERAL INFORMATION (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
50
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
2. PROPERTY
IN THIS SECTION
This section shows the real estate assets used to generate the Group’s trading performance which are considered to be the most
relevant to the operations of the Group.
2.1. Investment properties
ALL VALUES IN $000S20212020
Opening balance 1,524,785 1,469,285
Capital movements:
Additions 226,279 65,148
Disposals––
Transfer to non-current assets classified as held for sale (8,715) (106,701)
Capital expenditure 20,114 18,976
Capitalised interest
a
204 199
Movement in lease incentives, fees and fixed rental income 4,731 5,332
242,613 (17,046)
Unrealised fair value gain 391,542 72,546
As at 31 December 2,158,940 1,524,785
a The effective interest rate applied to capitalised interest was 3.75% (2020: 4.20%).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
51
NOTES 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
Avondale:
15 Copsey PlaceCanterbury 100%100%
4.6%5.3% 948 934 7,907 CBRE 17,500 9 3,091 20,600
32 Honan PlaceFenglin Logistics 100%n/a3.3%n/a 103 n/a 795 JLL – 3,134 (34) 3,100
15 Jomac PlaceSouthern Spars 100%100%6.6%6.8% 1,759 1,709 9,378 JLL 25,000 1 1,599 26,600
61-69 Patiki RoadBidvest 100%100%4.4%5.3% 1,279 1,263 9,776 CBRE 23,750 100 5,200 29,050
320 Rosebank RoadDoyle Sails 100%100%3.8%5.0% 782 763 6,625 JLL 15,250 65 5,085 20,400
520 Rosebank RoadKenderdine Electrical 100%n/a3.5%n/a 182 n/a 1,995 Savills – 5,232 (7) 5,225
528-558 Rosebank RoadETEL 100%100%4.5%4.5% 3,066 2,973 26,902 Savills 65,750 760 990 67,500
670-680 Rosebank RoadNew Zealand Comfort 100%n/a4.3%n/a 1,764 n/a 17,295 CBRE – 39,083 2,267 41,350
686 Rosebank RoadNew Zealand Comfort 100%100%4.6%5.6% 2,766 2,729 21,565 CBRE 49,050 (52) 11,302 60,300
100%100%4.6%5.3% 12,649 10,371 102,238 196,300 48,332 29,493 274,125
East Tamaki:
17 Allens RoadTSB Living 100%100%
4.2%5.4% 1,160 1,124 11,490 JLL 20,650 (100) 6,950 27,500
43 Cryers RoadAstron Plastics 100%100%4.4%5.2% 833 811 6,068 CBRE 15,650 262 2,938 18,850
6-8 Greenmount DriveBridon 100%100%3.9%5.3% 721 704 6,590 Colliers 13,400 844 4,256 18,500
92-98 Harris RoadGrainCorp 100%100%5.8%7.2% 1,388 1,354 10,687 Savills 18,750 60 4,940 23,750
36 Neales RoadMainfreight 100%100%4.0%5.1% 1,545 1,507 12,563 JLL 29,400 97 9,253 38,750
1 Ron Driver PlaceGlen Dimplex 100%100%4.3%5.1% 527 527 5,393 CBRE 10,350 (106) 1,906 12,150
78 Springs RoadFisher & Paykel Appliances 100%100%6.3%6.6% 6,478 6,289 41,530 JLL 95,000 65 7,435 102,500
10c Stonedon DriveChemical Freight Services 100%100%4.8%5.5% 978 857 8,711 CBRE 15,700 146 4,404 20,250
11 Turin PlaceThermakraft Industries 100%100%3.9%4.9% 1,023 978 9,981 Colliers 19,800 17 6,283 26,100
12 Zelanian DriveCentral Joinery 100%100%4.0%5.3% 701 701 6,098 Colliers 13,250 15 4,335 17,600
23 Zelanian DriveExclusive Tyre Distributors100%100%4.3%5.4% 478 469 3,811 CBRE 8,700 323 2,027 11,050
100%100%5.0%5.9% 15,832 15,321 122,922 260,650 1,623 54,727 317,000
Manukau:
212 Cavendish DriveMainfreight 100%100%
4.0%5.0% 2,115 2,030 25,896 JLL 40,500 32 12,468 53,000
232 Cavendish Drive
a
Fletcher Building Products 100%100%3.4%4.5% 1,232 1,132 16,832 JLL 25,400 89 11,011 36,500
47 Dalgety DrivePeter Hay Kitchens 100%100%4.6%5.3% 952 941 10,155 Colliers 17,700 (2,215) 5,015 20,500
47a Dalgety Drive, ManukauShaw 100%n/a4.2%n/a 530 n/a 4,550 Colliers – 7,486 5,014 12,500
59 Dalgety DriveStore Rite Logistics 100%100%4.1%5.3% 1,237 1,220 11,844 Colliers 22,900 4,799 2,301 30,000
12 Hautu DriveKiwi Steel 100%100%3.9%4.9% 746 726 6,492 CBRE 14,750 33 4,567 19,350
25 Langley RoadGrayson Engineering 100%100%4.0%5.0% 2,136 1,648 21,248 CBRE 33,150 7,649 12,701 53,500
1 Mayo RoadTransdiesel 100%100%4.3%5.1% 659 559 6,361 CBRE 10,950 7 4,193 15,150
61 McLaughlins RoadMOVe Logistics 100%100%3.9%4.8% 1,257 1,202 13,347 Savills 25,000 132 7,368 32,500
9 Narek PlaceZ Energy 100%100%4.3%5.0% 616 558 3,577 CBRE 11,100 2 3,098 14,200
9 Nesdale AvenueBrambles 100%100%3.8%4.9% 838 814 14,163 JLL 16,500 74 5,676 22,250
44 Noel Burnside RoadCottonsoft100%n/a3.5%n/a 3,320 n/a 32,807 Bayleys – 93,593 907 94,500
100%100%3.9%5.0% 15,638 10,830 167,272 217,950 111,681 74,319 403,950
a Excludes development land shown separately below.
2. PROPERTY(continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
52
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
Avondale:
15 Copsey PlaceCanterbury 100%100%
4.6%5.3% 948 934 7,907 CBRE 17,500 9 3,091 20,600
32 Honan PlaceFenglin Logistics 100%n/a3.3%n/a 103 n/a 795 JLL – 3,134 (34) 3,100
15 Jomac PlaceSouthern Spars 100%100%6.6%6.8% 1,759 1,709 9,378 JLL 25,000 1 1,599 26,600
61-69 Patiki RoadBidvest 100%100%4.4%5.3% 1,279 1,263 9,776 CBRE 23,750 100 5,200 29,050
320 Rosebank RoadDoyle Sails 100%100%3.8%5.0% 782 763 6,625 JLL 15,250 65 5,085 20,400
520 Rosebank RoadKenderdine Electrical 100%n/a3.5%n/a 182 n/a 1,995 Savills – 5,232 (7) 5,225
528-558 Rosebank RoadETEL 100%100%4.5%4.5% 3,066 2,973 26,902 Savills 65,750 760 990 67,500
670-680 Rosebank RoadNew Zealand Comfort 100%n/a4.3%n/a 1,764 n/a 17,295 CBRE – 39,083 2,267 41,350
686 Rosebank RoadNew Zealand Comfort 100%100%4.6%5.6% 2,766 2,729 21,565 CBRE 49,050 (52) 11,302 60,300
100%100%4.6%5.3% 12,649 10,371 102,238 196,300 48,332 29,493 274,125
East Tamaki:
17 Allens RoadTSB Living 100%100%
4.2%5.4% 1,160 1,124 11,490 JLL 20,650 (100) 6,950 27,500
43 Cryers RoadAstron Plastics 100%100%4.4%5.2% 833 811 6,068 CBRE 15,650 262 2,938 18,850
6-8 Greenmount DriveBridon 100%100%3.9%5.3% 721 704 6,590 Colliers 13,400 844 4,256 18,500
92-98 Harris RoadGrainCorp 100%100%5.8%7.2% 1,388 1,354 10,687 Savills 18,750 60 4,940 23,750
36 Neales RoadMainfreight 100%100%4.0%5.1% 1,545 1,507 12,563 JLL 29,400 97 9,253 38,750
1 Ron Driver PlaceGlen Dimplex 100%100%4.3%5.1% 527 527 5,393 CBRE 10,350 (106) 1,906 12,150
78 Springs RoadFisher & Paykel Appliances 100%100%6.3%6.6% 6,478 6,289 41,530 JLL 95,000 65 7,435 102,500
10c Stonedon DriveChemical Freight Services 100%100%4.8%5.5% 978 857 8,711 CBRE 15,700 146 4,404 20,250
11 Turin PlaceThermakraft Industries 100%100%3.9%4.9% 1,023 978 9,981 Colliers 19,800 17 6,283 26,100
12 Zelanian DriveCentral Joinery 100%100%4.0%5.3% 701 701 6,098 Colliers 13,250 15 4,335 17,600
23 Zelanian DriveExclusive Tyre Distributors100%100%4.3%5.4% 478 469 3,811 CBRE 8,700 323 2,027 11,050
100%100%5.0%5.9% 15,832 15,321 122,922 260,650 1,623 54,727 317,000
Manukau:
212 Cavendish DriveMainfreight 100%100%
4.0%5.0% 2,115 2,030 25,896 JLL 40,500 32 12,468 53,000
232 Cavendish Drive
a
Fletcher Building Products 100%100%3.4%4.5% 1,232 1,132 16,832 JLL 25,400 89 11,011 36,500
47 Dalgety DrivePeter Hay Kitchens 100%100%4.6%5.3% 952 941 10,155 Colliers 17,700 (2,215) 5,015 20,500
47a Dalgety Drive, ManukauShaw 100%n/a4.2%n/a 530 n/a 4,550 Colliers – 7,486 5,014 12,500
59 Dalgety DriveStore Rite Logistics 100%100%4.1%5.3% 1,237 1,220 11,844 Colliers 22,900 4,799 2,301 30,000
12 Hautu DriveKiwi Steel 100%100%3.9%4.9% 746 726 6,492 CBRE 14,750 33 4,567 19,350
25 Langley RoadGrayson Engineering 100%100%4.0%5.0% 2,136 1,648 21,248 CBRE 33,150 7,649 12,701 53,500
1 Mayo RoadTransdiesel 100%100%4.3%5.1% 659 559 6,361 CBRE 10,950 7 4,193 15,150
61 McLaughlins RoadMOVe Logistics 100%100%3.9%4.8% 1,257 1,202 13,347 Savills 25,000 132 7,368 32,500
9 Narek PlaceZ Energy 100%100%4.3%5.0% 616 558 3,577 CBRE 11,100 2 3,098 14,200
9 Nesdale AvenueBrambles 100%100%3.8%4.9% 838 814 14,163 JLL 16,500 74 5,676 22,250
44 Noel Burnside RoadCottonsoft100%n/a3.5%n/a 3,320 n/a 32,807 Bayleys – 93,593 907 94,500
100%100%3.9%5.0% 15,638 10,830 167,272 217,950 111,681 74,319 403,950
a Excludes development land shown separately below.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
53
NOTES 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
Mt Wellington:
30-32 Bowden RoadAltus 100%100%
5.7%6.1% 1,867 1,761 19,639 Savills 29,000 (67) 3,567 32,500
50 Carbine RoadFletcher Building Products 100%100%3.4%4.3% 190 190 2,592 Savills 4,375 (4) 1,229 5,600
54 Carbine Road & 6a Donnor PlaceHancocks 100%100%4.8%5.6% 2,107 2,062 17,015 Savills 36,500 4 6,996 43,500
76 Carbine RoadAtlas Gentech 100%100%4.2%5.1% 514 514 5,080 CBRE 10,000 (6) 2,306 12,300
7 Carmont PlaceCMI 100%100%4.2%4.6% 665 625 6,086 CBRE 13,550 590 1,810 15,950
6 Donnor PlaceCoca-Cola 100%100%4.7%5.4% 1,546 1,501 16,686 Savills 28,000 (46) 5,046 33,000
4-6 Mt Richmond DriveIron Mountain 100%100%3.4%4.1% 918 835 7,946 JLL 20,500 (5) 6,755 27,250
509 Mt Wellington HighwayFletcher Building Products 100%100%4.1%5.4% 1,056 1,046 8,744 Colliers 19,400 169 6,031 25,600
511 Mt Wellington HighwayStryker 100%100%3.7%5.1% 498 485 3,054 Colliers 9,500 109 3,991 13,600
515 Mt Wellington HighwayKiwi Management Services 100%0%3.2%5.5% 252 311 2,324 Savills 5,700 249 2,051 8,000
523 Mt Wellington HighwayBGH Group 100%100%3.6%4.7% 263 263 1,677 Colliers 5,600 (82) 1,882 7,400
1 Niall Burgess RoadBremca Industries 100%100%3.6%4.6% 259 253 1,742 Colliers 5,450 (16) 1,766 7,200
2-6 Niall Burgess RoadMcAlpine Hussmann 100%100%5.0%6.0% 1,071 1,060 6,874 CBRE 17,800 (48) 3,798 21,550
3-5 Niall Burgess RoadElectrolux 100%100%3.7%5.3% 1,115 1,115 9,373 Colliers 21,000 25 9,175 30,200
7-9 Niall Burgess RoadDHL Supply Chain 100%100%3.9%5.1% 2,493 2,416 23,565 Colliers 47,400 133 16,467 64,000
10 Niall Burgess RoadOutside Broadcasting 100%100%4.2%4.8% 275 264 1,725 JLL 5,500 2 1,048 6,550
5 Vestey DrivePPG Industries 100%100%3.9%4.9% 236 236 1,269 Colliers 4,800 42 1,258 6,100
7 Vestey DriveTrue North 100%100%4.0%5.2% 663 663 4,598 JLL 12,750 25 3,975 16,750
9 Vestey DriveMultispares 100%100%3.5%4.6% 208 220 1,600 Colliers 4,750 31 1,219 6,000
11 Vestey DriveN & Z 100%100%4.2%4.7% 515 464 3,470 Colliers 9,800 (14) 2,614 12,400
15a Vestey DriveNZ Management Academies 100%100%4.6%6.0% 594 591 3,261 Colliers 9,800 504 2,496 12,800
36 Vestey DriveHose Supplies 100%100%3.6%4.6% 177 172 1,120 CBRE 3,700 (1) 1,201 4,900
100%98%4.2%5.2% 17,482 17,047 149,440 324,875 1,594 86,681 413,150
North Shore:
2-4 Argus Place Pharmapac 100%100%
4.0%4.8% 463 451 3,560 Colliers 9,400 4 2,196 11,600
47 Arrenway Drive Device Technologies 100%100%4.1%5.1% 257 251 1,245 Colliers 4,900 (1) 1,301 6,200
51 Arrenway Drive Pacific Hygiene 100%100%4.2%5.0% 410 398 2,680 CBRE 8,000 6 1,644 9,650
15 Omega Street Wesfarmers 100%100%4.1%5.0% 513 513 3,498 Colliers 10,350 16 2,034 12,400
322 Rosedale Road BSGi 100%95%4.1%5.5% 1,169 1,144 7,936 Colliers 20,700 281 7,519 28,500
41 William Pickering Drive Innopak Global100%100%4.2%5.1% 491 479 3,027 JLL 9,400 15 2,335 11,750
100%98%4.1%5.2% 3,303 3,236 21,946 62,750 321 17,029 80,100
2. PROPERTY(continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
54
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
Mt Wellington:
30-32 Bowden RoadAltus 100%100%
5.7%6.1% 1,867 1,761 19,639 Savills 29,000 (67) 3,567 32,500
50 Carbine RoadFletcher Building Products 100%100%3.4%4.3% 190 190 2,592 Savills 4,375 (4) 1,229 5,600
54 Carbine Road & 6a Donnor PlaceHancocks 100%100%4.8%5.6% 2,107 2,062 17,015 Savills 36,500 4 6,996 43,500
76 Carbine RoadAtlas Gentech 100%100%4.2%5.1% 514 514 5,080 CBRE 10,000 (6) 2,306 12,300
7 Carmont PlaceCMI 100%100%4.2%4.6% 665 625 6,086 CBRE 13,550 590 1,810 15,950
6 Donnor PlaceCoca-Cola 100%100%4.7%5.4% 1,546 1,501 16,686 Savills 28,000 (46) 5,046 33,000
4-6 Mt Richmond DriveIron Mountain 100%100%3.4%4.1% 918 835 7,946 JLL 20,500 (5) 6,755 27,250
509 Mt Wellington HighwayFletcher Building Products 100%100%4.1%5.4% 1,056 1,046 8,744 Colliers 19,400 169 6,031 25,600
511 Mt Wellington HighwayStryker 100%100%3.7%5.1% 498 485 3,054 Colliers 9,500 109 3,991 13,600
515 Mt Wellington HighwayKiwi Management Services 100%0%3.2%5.5% 252 311 2,324 Savills 5,700 249 2,051 8,000
523 Mt Wellington HighwayBGH Group 100%100%3.6%4.7% 263 263 1,677 Colliers 5,600 (82) 1,882 7,400
1 Niall Burgess RoadBremca Industries 100%100%3.6%4.6% 259 253 1,742 Colliers 5,450 (16) 1,766 7,200
2-6 Niall Burgess RoadMcAlpine Hussmann 100%100%5.0%6.0% 1,071 1,060 6,874 CBRE 17,800 (48) 3,798 21,550
3-5 Niall Burgess RoadElectrolux 100%100%3.7%5.3% 1,115 1,115 9,373 Colliers 21,000 25 9,175 30,200
7-9 Niall Burgess RoadDHL Supply Chain 100%100%3.9%5.1% 2,493 2,416 23,565 Colliers 47,400 133 16,467 64,000
10 Niall Burgess RoadOutside Broadcasting 100%100%4.2%4.8% 275 264 1,725 JLL 5,500 2 1,048 6,550
5 Vestey DrivePPG Industries 100%100%3.9%4.9% 236 236 1,269 Colliers 4,800 42 1,258 6,100
7 Vestey DriveTrue North 100%100%4.0%5.2% 663 663 4,598 JLL 12,750 25 3,975 16,750
9 Vestey DriveMultispares 100%100%3.5%4.6% 208 220 1,600 Colliers 4,750 31 1,219 6,000
11 Vestey DriveN & Z 100%100%4.2%4.7% 515 464 3,470 Colliers 9,800 (14) 2,614 12,400
15a Vestey DriveNZ Management Academies 100%100%4.6%6.0% 594 591 3,261 Colliers 9,800 504 2,496 12,800
36 Vestey DriveHose Supplies 100%100%3.6%4.6% 177 172 1,120 CBRE 3,700 (1) 1,201 4,900
100%98%4.2%5.2% 17,482 17,047 149,440 324,875 1,594 86,681 413,150
North Shore:
2-4 Argus Place Pharmapac 100%100%
4.0%4.8% 463 451 3,560 Colliers 9,400 4 2,196 11,600
47 Arrenway Drive Device Technologies 100%100%4.1%5.1% 257 251 1,245 Colliers 4,900 (1) 1,301 6,200
51 Arrenway Drive Pacific Hygiene 100%100%4.2%5.0% 410 398 2,680 CBRE 8,000 6 1,644 9,650
15 Omega Street Wesfarmers 100%100%4.1%5.0% 513 513 3,498 Colliers 10,350 16 2,034 12,400
322 Rosedale Road BSGi 100%95%4.1%5.5% 1,169 1,144 7,936 Colliers 20,700 281 7,519 28,500
41 William Pickering Drive Innopak Global100%100%4.2%5.1% 491 479 3,027 JLL 9,400 15 2,335 11,750
100%98%4.1%5.2% 3,303 3,236 21,946 62,750 321 17,029 80,100
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
55
NOTES 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
Penrose:
4 Autumn PlaceRyco Hydraulics 100%100%
4.0%4.5% 165 161 1,210 Savills 3,600 (3) 503 4,100
6 Autumn PlaceMOTAT 100%100%3.6%4.6% 188 178 1,718 Savills 3,900 4 1,296 5,200
10 Autumn PlaceMOTAT 100%100%3.7%4.8% 707 693 7,646 Savills 14,400 (4) 4,504 18,900
122 Captain Springs RoadNew Zealand Crane Group 100%100%4.4%4.8% 577 521 7,431 CBRE 10,900 (14) 2,164 13,050
8 Hugo Johnston DriveArgyle Schoolwear 100%100%5.4%6.3% 740 738 4,359 CBRE 11,700 78 1,822 13,600
12 Hugo Johnston DriveW H Worrall 100%100%4.4%5.4% 384 382 2,639 CBRE 7,100 (8) 1,708 8,800
16 Hugo Johnston DriveNewflor Industries 100%100%4.4%5.0% 414 404 2,619 CBRE 8,100 32 1,293 9,425
80 Hugo Johnston DriveBoxkraft 100%100%3.9%5.2% 505 493 3,872 Savills 9,525 42 3,283 12,850
102 Mays Road2 Cheap Cars 100%100%4.3%5.5% 659 538 7,588 Savills 9,800 35 5,465 15,300
304 Neilson StreetFletcher Building Products 100%100%4.0%5.6% 773 755 13,438 JLL 13,500 (37) 6,037 19,500
306 Neilson StreetTrade Depot 100%100%4.6%5.4% 944 919 6,301 JLL 17,000 78 3,422 20,500
312 Neilson StreetTransport Trailer Services 100%100%4.2%5.4% 421 407 3,862 JLL 7,550 71 2,379 10,000
314 Neilson StreetIAG 100%100%3.7%4.6% 835 817 6,635 JLL 17,750 700 4,050 22,500
12 Southpark PlaceQCD 100%100%3.4%4.6% 531 520 5,477 Colliers 11,200 119 4,481 15,800
100%100%4.1%5.2% 7,843 7,526 74,795 146,025 1,093 42,407 189,525
Other Auckland:
Carlaw Park Gateway Building, ParnellQuestn/a100%
–7.5%–2,245––––––
Carlaw Park Office Complex, ParnellJacobsn/a96%–6.5%–4,677––––––
58 Richard Pearse Drive, MangereEBOS 100%100%3.5%4.6% 1,255 1,215 12,708 JLL 26,700 1 9,549 36,250
51-61 Spartan Road, TakaniniMaxiTRANS 100%100%3.7%4.8% 971 945 13,519 JLL 19,800 118 6,582 26,500
170 Swanson Road, SwansonTransportation Auckland 100%100%3.4%4.9% 1,148 1,068 37,601 Savills 21,900 4 11,596 33,500
100%98%3.5%5.9% 3,374 10,150 63,828 68,400 123 27,727 96,250
2. PROPERTY(continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
56
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
Penrose:
4 Autumn PlaceRyco Hydraulics 100%100%
4.0%4.5% 165 161 1,210 Savills 3,600 (3) 503 4,100
6 Autumn PlaceMOTAT 100%100%3.6%4.6% 188 178 1,718 Savills 3,900 4 1,296 5,200
10 Autumn PlaceMOTAT 100%100%3.7%4.8% 707 693 7,646 Savills 14,400 (4) 4,504 18,900
122 Captain Springs RoadNew Zealand Crane Group 100%100%4.4%4.8% 577 521 7,431 CBRE 10,900 (14) 2,164 13,050
8 Hugo Johnston DriveArgyle Schoolwear 100%100%5.4%6.3% 740 738 4,359 CBRE 11,700 78 1,822 13,600
12 Hugo Johnston DriveW H Worrall 100%100%4.4%5.4% 384 382 2,639 CBRE 7,100 (8) 1,708 8,800
16 Hugo Johnston DriveNewflor Industries 100%100%4.4%5.0% 414 404 2,619 CBRE 8,100 32 1,293 9,425
80 Hugo Johnston DriveBoxkraft 100%100%3.9%5.2% 505 493 3,872 Savills 9,525 42 3,283 12,850
102 Mays Road2 Cheap Cars 100%100%4.3%5.5% 659 538 7,588 Savills 9,800 35 5,465 15,300
304 Neilson StreetFletcher Building Products 100%100%4.0%5.6% 773 755 13,438 JLL 13,500 (37) 6,037 19,500
306 Neilson StreetTrade Depot 100%100%4.6%5.4% 944 919 6,301 JLL 17,000 78 3,422 20,500
312 Neilson StreetTransport Trailer Services 100%100%4.2%5.4% 421 407 3,862 JLL 7,550 71 2,379 10,000
314 Neilson StreetIAG 100%100%3.7%4.6% 835 817 6,635 JLL 17,750 700 4,050 22,500
12 Southpark PlaceQCD 100%100%3.4%4.6% 531 520 5,477 Colliers 11,200 119 4,481 15,800
100%100%4.1%5.2% 7,843 7,526 74,795 146,025 1,093 42,407 189,525
Other Auckland:
Carlaw Park Gateway Building, ParnellQuestn/a100%
–7.5%–2,245––––––
Carlaw Park Office Complex, ParnellJacobsn/a96%–6.5%–4,677––––––
58 Richard Pearse Drive, MangereEBOS 100%100%3.5%4.6% 1,255 1,215 12,708 JLL 26,700 1 9,549 36,250
51-61 Spartan Road, TakaniniMaxiTRANS 100%100%3.7%4.8% 971 945 13,519 JLL 19,800 118 6,582 26,500
170 Swanson Road, SwansonTransportation Auckland 100%100%3.4%4.9% 1,148 1,068 37,601 Savills 21,900 4 11,596 33,500
100%98%3.5%5.9% 3,374 10,150 63,828 68,400 123 27,727 96,250
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
57
NOTES 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
North Island (outside Auckland):
39 Edmundson Street, Napier MOVe Logistics 100%100%
5.3%6.6% 247 230 8,540 Savills 3,500 135 1,005 4,640
20 Constance Street, New Plymouth Aviagen 100%100%13.5%13.4% 415 409 1,366 Savills 3,060 – 15 3,075
330 Devon Street East, New Plymouth MOVe Logistics 100%100%5.2%7.0% 122 117 482 Savills 1,675 13 637 2,325
124 Hewletts Road, Mt Maunganui RMD Bulk Storage 100%100%4.1%5.2% 3,418 2,986 36,940 JLL 57,000 3,242 23,258 83,500
124a Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%3.7%4.9% 1,107 1,059 10,497 JLL 21,400 54 8,296 29,750
124b Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%3.9%5.0% 935 921 8,867 JLL 18,300 – 5,800 24,100
3 Hocking Street, Mt Maunganui BR & SL Porter 100%100%4.2%5.9% 165 165 1,250 JLL 2,800 34 1,116 3,950
143 Hutt Park Road, Wellington EBOS 100%100%5.0%5.6% 1,256 1,256 11,372 CBRE 22,450 24 2,626 25,100
8 McCormack Place, Wellington Fletcher Building Products 100%100%5.5%5.7% 786 733 6,686 JLL 12,800 (41) 1,441 14,200
28 Paraite Road, New Plymouth MOVe Logistics 100%100%7.7%7.6% 1,306 1,249 15,636 Savills 16,500 145 255 16,900
48 Seaview Road, Wellington Bridgestone 100%100%3.9%6.8% 386 537 8,996 CBRE 7,925 (8,803) 878 –
Shed 22, 23 Cable Street, Wellington
b
Shed 22 Hospo 100%100%6.7%7.1% 917 894 2,809 JLL 12,550 2,378 (1,278) 13,650
2 Smart Road, New Plymouth New Zealand Post 100%100%6.2%7.4% 334 334 2,359 Savills 4,500 – 900 5,400
558 Te Rapa Road, Hamilton DEC Manufacturing 100%100%4.3%6.8% 480 480 5,026 Colliers 7,100 100 3,900 11,100
22 Whakatu Road, Hastings Enzafruit New Zealand 100%n/a4.4%n/a 3,500 n/a 52,718 Bayleys – 79,670 (120) 79,550
100%100%4.7%5.9% 15,374 11,370 173,544 191,560 76,951 48,729 317,240
South Island:
15 Artillery Place, Nelson MOVe Logistics 100%100%
5.8%6.8% 590 565 18,052 Savills 6,900 1,459 1,891 10,250
8a & 8b Canada Crescent, Christchurch Polarcold Stores 100%100%6.1%7.4% 1,206 1,206 9,500 Savills 8,300 8,323 3,127 19,750
41 & 55 Foremans Road, Christchurch MOVe Logistics 100%100%5.1%6.3% 802 767 14,710 Savills 16,250 (3,919) 3,419 15,750
44 Mandeville Street, Christchurch Fletcher Building Products 100%100%7.5%9.0% 959 1,060 11,134 JLL 12,250 (165) 715 12,800
11 Sheffield Street, Blenheim MOVe Logistics 100%100%6.5%7.4% 536 512 10,823 Savills 11,825 (4,801) 1,276 8,300
127 Waterloo Road, ChristchurchDHL Supply Chainn/a100%–8.2%– 352––––––
100%100%6.1%7.5% 4,093 4,462 64,219 55,525 897 10,428 66,850
Investment properties - subtotal100%99%4.4%5.5% 95,588 90,313 940,204 1,524,035 242,615 391,540 2,158,190
Development land:
232 Cavendish Drive, Manukau
JLL 750 – – 750
Development land - subtotal 750 – – 750
Investment properties - total 1,524,785 242,615 391,540 2,158,940
b Included in the 2021 balance is a right-of-use asset of $4.13 million (2020: $4.0 million) primarily in relation to a ground lease,
representing the value of the land, with an associated immaterial lease liability.
2. PROPERTY(continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
58
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
ALL VALUES IN $000S UNLESS NOTEDKey tenantOccupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2021202120202021202020212020202120212020202120212021
North Island (outside Auckland):
39 Edmundson Street, Napier MOVe Logistics 100%100%
5.3%6.6% 247 230 8,540 Savills 3,500 135 1,005 4,640
20 Constance Street, New Plymouth Aviagen 100%100%13.5%13.4% 415 409 1,366 Savills 3,060 – 15 3,075
330 Devon Street East, New Plymouth MOVe Logistics 100%100%5.2%7.0% 122 117 482 Savills 1,675 13 637 2,325
124 Hewletts Road, Mt Maunganui RMD Bulk Storage 100%100%4.1%5.2% 3,418 2,986 36,940 JLL 57,000 3,242 23,258 83,500
124a Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%3.7%4.9% 1,107 1,059 10,497 JLL 21,400 54 8,296 29,750
124b Hewletts Road, Mt Maunganui Ballance Agri-Nutrients 100%100%3.9%5.0% 935 921 8,867 JLL 18,300 – 5,800 24,100
3 Hocking Street, Mt Maunganui BR & SL Porter 100%100%4.2%5.9% 165 165 1,250 JLL 2,800 34 1,116 3,950
143 Hutt Park Road, Wellington EBOS 100%100%5.0%5.6% 1,256 1,256 11,372 CBRE 22,450 24 2,626 25,100
8 McCormack Place, Wellington Fletcher Building Products 100%100%5.5%5.7% 786 733 6,686 JLL 12,800 (41) 1,441 14,200
28 Paraite Road, New Plymouth MOVe Logistics 100%100%7.7%7.6% 1,306 1,249 15,636 Savills 16,500 145 255 16,900
48 Seaview Road, Wellington Bridgestone 100%100%3.9%6.8% 386 537 8,996 CBRE 7,925 (8,803) 878 –
Shed 22, 23 Cable Street, Wellington
b
Shed 22 Hospo 100%100%6.7%7.1% 917 894 2,809 JLL 12,550 2,378 (1,278) 13,650
2 Smart Road, New Plymouth New Zealand Post 100%100%6.2%7.4% 334 334 2,359 Savills 4,500 – 900 5,400
558 Te Rapa Road, Hamilton DEC Manufacturing 100%100%4.3%6.8% 480 480 5,026 Colliers 7,100 100 3,900 11,100
22 Whakatu Road, Hastings Enzafruit New Zealand 100%n/a4.4%n/a 3,500 n/a 52,718 Bayleys – 79,670 (120) 79,550
100%100%4.7%5.9% 15,374 11,370 173,544 191,560 76,951 48,729 317,240
South Island:
15 Artillery Place, Nelson MOVe Logistics 100%100%
5.8%6.8% 590 565 18,052 Savills 6,900 1,459 1,891 10,250
8a & 8b Canada Crescent, Christchurch Polarcold Stores 100%100%6.1%7.4% 1,206 1,206 9,500 Savills 8,300 8,323 3,127 19,750
41 & 55 Foremans Road, Christchurch MOVe Logistics 100%100%5.1%6.3% 802 767 14,710 Savills 16,250 (3,919) 3,419 15,750
44 Mandeville Street, Christchurch Fletcher Building Products 100%100%7.5%9.0% 959 1,060 11,134 JLL 12,250 (165) 715 12,800
11 Sheffield Street, Blenheim MOVe Logistics 100%100%6.5%7.4% 536 512 10,823 Savills 11,825 (4,801) 1,276 8,300
127 Waterloo Road, ChristchurchDHL Supply Chainn/a100%–8.2%– 352––––––
100%100%6.1%7.5% 4,093 4,462 64,219 55,525 897 10,428 66,850
Investment properties - subtotal100%99%4.4%5.5% 95,588 90,313 940,204 1,524,035 242,615 391,540 2,158,190
Development land:
232 Cavendish Drive, Manukau
JLL 750 – – 750
Development land - subtotal 750 – – 750
Investment properties - total 1,524,785 242,615 391,540 2,158,940
b Included in the 2021 balance is a right-of-use asset of $4.13 million (2020: $4.0 million) primarily in relation to a ground lease,
representing the value of the land, with an associated immaterial lease liability.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
59
NOTES 2021
2. PROPERTY(continued)
2.1. Investment properties (continued)
Recognition and Measurement
Investment properties are held to earn rental income and for long-term capital appreciation. After initial recognition on the settlement
date at cost, including directly attributable acquisition costs, investment properties are measured at fair value, on the basis of valuations
made by independent valuers on at least an annual basis. Gains or losses arising from changes in the fair value of investment properties
are included in the Consolidated Statement of Comprehensive Income in the year in which they arise.
Subsequent expenditure is charged to the asset’s carrying amount only when it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably.
The fair value of investment property reflects the Directors’ assessment of the highest and best use of each property and amongst other
things, rental income from current leases and assumptions about rental income from future leases in light of the current market
conditions. The fair value also reflects the cash outflows that could be expected in respect of the property.
No depreciation or amortisation is provided for on investment properties. However, for tax purposes, depreciation is claimed on building
fit-out and building structure. Deferred tax is recognised to the extent that tax depreciation recovery gain or loss on disposal is calculated
on the fit-out and building structure components separately. See section 5.2 for more details.
Investment properties under construction are carried at cost until it is possible to reliably determine their fair value, from which point they
are carried at fair value less costs to complete.
Gains or losses on the disposal of investment properties are recognised in the Consolidated Statement of Comprehensive Income in the
period in which the investment properties are derecognised when they have been disposed.
Borrowing costs are capitalised if they are directly attributable to the acquisition or construction of a qualifying property. Capitalisation of
borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred.
Capitalisation of borrowing costs will continue until the asset is substantially ready for its intended use. The rate at which borrowing costs are
capitalised is determined by reference to the weighted average borrowing costs of the Group and the average level of borrowings by the Group.
Key estimates and assumptions: Investment properties and the impact of the COVID-19 pandemic
The fair value of investment properties are determined from valuations prepared by independent valuers.
All investment properties were valued as at 31 December 2021 (with the exception of 32 Honan Place, Avondale which was independently
valued as at 22 October 2021 by Jones Lang LaSalle (JLL), 520 Rosebank Road, Avondale which was independently valued as at 26
October 2021 by Savills and 22 Whakatu Road, Hastings which was independently valued as at 28 October 2021 by Bayleys Valuation
Limited (Bayleys), as part of the acquisitions. These valuations remain the best estimate of fair value as at 31 December 2021) and 2020
by Bayleys, CB Richard Ellis (CBRE), Colliers International (Colliers), JLL or Savills. Bayleys, CBRE, Colliers, JLL and Savills are
independent valuers and members of the New Zealand Institute of Valuers.
PFI’s investment property valuation policy notes that: PFI will not use the same independent valuer for a property for more than three
consecutive year end valuations, however in 2021 the Group made an exemption to this policy for seven properties. This exemption was
made for two reasons: first, in order for certain properties adjacent to each other, for example, the Company’s Neilson Street properties,
to be valued by the same valuer, and second, to allocate the Company’s portfolio more evenly across the valuers.
As part of the valuation process, the Group’s management verifies all major inputs to the independent valuation reports, assesses
movements in individual property values and holds discussions with the independent valuers.
The fair value was determined using Level 3 valuation techniques via a combination of the following approaches:
• Direct Capitalisation: The subject property rental is divided by a market derived capitalisation rate to assess the market value of
the asset. Further adjustments are then made to the market value to reflect under or over renting, additional revenue and required
capital expenditure.
• Discounted Cash Flow: Discounted cash flow projections for the subject property are based on estimates of future cash flows, supported
by the terms of any existing lease and by external evidence such as market rents for similar properties in the same location and condition,
and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.
Below are the significant inputs used in the valuations, together with the impact on the fair value of a change in the inputs:
RANGE OF SIGNIFICANT
UNOBSERVABLE INPUTSMEASUREMENT SENSITIVITY
20212020Increase in inputDecrease in input
Market capitalisation rate (%)
1
3.48 – 7.50 4.50 – 8.00 Decrease Increase
Market rental ($ per sqm)
2
28 – 286 28 – 407 Increase Decrease
Discount rate (%)
3
5.50 – 9.00 5.50 – 9.50 Decrease Increase
Rental growth rate (%)
4
1.62 – 2.99 1.66 – 2.42 Increase Decrease
Terminal capitalisation rate (%)
5
3.62 – 7.75 4.75 – 8.25 Decrease Increase
1. The capitalisation rate applied to the market rental to assess a property’s value, determined through analysis of similar transactions taking into account location, weighted
average lease term, tenant covenant, size and quality of the property.
2. The valuers assessment of the net market income which a property is expected to achieve under a new arm’s length leasing transaction. Includes both leased and vacant areas.
3. The rate applied to future cash flows reflecting transactional evidence from similar properties.
4. The rate applied to the market rental over the future cash flow projection.
5. The rate used to assess the terminal value of the property.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
60
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
The estimated sensitivity of the fair value of investment property to changes in the market capitalisation rate (under the Direct
Capitalisation valuation approach) and discount rate (under the Discounted Cash Flows valuation approach) is set out in the table below:
ALL VALUES IN $000S
Fair valueMarket capitalisation rate Discount rate
2021+ 0.25%- 0.25%+ 0.25%- 0.25%
Valuation 2,158,940
Change (115,000) 129,000 (85,000) 92,000
Change (%)(5%)6%(4%)4%
ALL VALUES IN $000S
Fair valueMarket capitalisation rateDiscount rate
2020 + 0.25%- 0.25%+ 0.25%- 0.25%
Valuation 1,524,785
Change (67,000) 73,000 (53,000) 56,000
Change (%)(5%)6%(4%)4%
Generally, a change in the assumption made for the adopted market capitalisation rate is accompanied by a directionally similar change
in the adopted terminal capitalisation rate. The adopted market capitalisation rate forms part of the direct capitalisation approach and the
adopted terminal capitalisation rate forms part of the discounted cash flow approach. Both valuation methodologies are considered when
determining an investment property’s fair value.
When calculating the direct capitalisation approach, the market rental has a strong interrelationship with the adopted market
capitalisation rate given the methodology involves assessing the total market rental income receivable from the property and capitalising
this in perpetuity to derive a capital value. In theory, an increase in the market rent and an increase in the adopted market capitalisation
rate could potentially offset the impact to the fair value. The same can be said for a decrease in the market rent and a decrease in the
adopted market capitalisation rate. A directionally opposite change in the market rent and the adopted market capitalisation rate could
potentially magnify the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and adopted terminal capitalisation rate have a strong
interrelationship in deriving a fair value given the discount rate will determine the rate at which the terminal value is discounted to the
present value. In theory, an increase in the adopted discount rate and a decrease in the adopted terminal capitalisation rate could
potentially offset the impact to the fair value. The same can be said for a decrease in the discount rate and an increase in the adopted
terminal capitalisation rate. A directionally similar change in the adopted discount rate and the adopted terminal capitalisation rate could
potentially magnify the impact to the fair value.
The impact of the COVID-19 pandemic
As at 31 December 2020, the valuers highlighted that there was heightened uncertainty due to the COVID-19 pandemic, however they
also noted that the uncertainty due to the COVID-19 pandemic was lower in the industrial property sector than other property sectors.
As at 31 December 2021, the valuers have noted that, at this point, there is no evidence of a shift in market sentiment to suggest any
material change in commercial property values resulting from the changes in Government-directed Alert Levels and Traffic Light
Settings in and around this date.
2. PROPERTY(continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
61
NOTES 2021
2. PROPERTY(continued)
2.2. Non-current assets classified as held for sale
Key estimates and assumptions: Non-current assets classified as held for sale
Non-current assets classified as held for sale comprises investment properties actively marketed for sale. The carrying value of the
property is the contracted sale price or the most recent valuation if the investment property is not contracted for sale.
ALL VALUES IN $000S20212020
127 Waterloo Road, Christchurch– 4,301
Carlaw Park Office Complex – 72,300
Carlaw Park Gateway Building – 30,100
48 Seaview Road, Wellington
1
10,000 –
Total non-current assets classified as held for sale10,000 106,701
1. A revaluation gain of $977,000 was recorded when revaluing 48 Seaview Road based on the actual contracted sales price of $10,000,000 (2020: a revaluation loss of
$40,000 recorded on transferring 127 Waterloo Road to non-current assets classified as held for sale).
On 18 February 2019, the Group announced its strategy of replacing its non-industrial assets with quality industrial properties in sought-
after areas, either via acquisitions or by value-add strategies within the existing portfolio. As at 31 December 2021, however, the non-
industrial property within investment properties - Shed 22, 23 Cable Street - cannot be classified as a non-current asset classified as held
for sale as it does not meet the defined requirements. These requirements are that the asset is available for immediate sale in its present
condition, the appropriate level of management are committed to a plan to sell the asset, an active programme to locate a buyer has been
initiated, the asset must be actively marketed for sale at a reasonable price, and the sale should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
2.3. Rental and management fee income
ALL VALUES IN $000S20212020
Gross rental receipts 92,271 80,029
Service charge income recovered from tenants 13,647 12,587
Fixed rental income adjustments 1,417 1,862
Capitalised lease incentive adjustments 240 970
Impact of rental income deferred and abated due to the COVID-19 pandemic 366 1,279
Management fee income 712 645
Total rental and management fee income 108,653 97,392
Recognition and Measurement
Rental income from investment properties is recognised in the Consolidated Statement of Comprehensive Income on a straight line basis
over the term of the lease. Fixed rental income adjustments are accounted for to achieve straight-line income recognition. Lease
incentives are capitalised to investment properties in the Consolidated Statement of Financial Position and amortised on a straight line
basis in the Consolidated Statement of Comprehensive Income over the length of the lease to which they relate, as a reduction to rental
income.
Rental abatements are usually offered by a landlord as an incentive for tenants to sign longer lease terms. However in this period rental
abatements have also been offered to assist tenants struggling due to the impact of the COVID-19 pandemic. Rental abatements are
accounted for as a lease modification under NZ IFRS 16 ‘Leases’ and the expense is spread over the remaining life of the lease, effectively
accounted for as a lease incentive.
Management fee income is recognised in the Consolidated Statement of Comprehensive Income in the period in which the services are
rendered.
Income generated from service charges recovered from tenants are included in the gross rental income with the service charge expenses
to tenants shown in Property costs. Such revenue is recognised in the accounting period the underlying expenses are incurred in
accordance with the contractual terms.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
62
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
2. PROPERTY (continued)
2.3. Rental and management fee income (continued)
Future minimum rentals receivable under non-cancellable operating leases are as follows:
ALL VALUES IN $000S20212020
Within one year 84,987 80,605
After one year but not more than five years 223,829 222,486
More than five years 138,830 117,881
Total 447,646 420,972
2.4. Property costs
ALL VALUES IN $000S20212020
Service charge expenses (13,898) (12,587)
Bad and doubtful debts recovery / (expense)
2
155 (378)
Other non-recoverable property costs (3,010) (3,297)
Total property costs (16,753) (16,262)
2. Included in the 2021 balance is $(90,000) (2020: $90,000) specifically relating to COVID-19 rent deferrals provided and NIL (2020: $288,000) relating to tenants adversely
affected by the COVID-19 pandemic.
Other non-recoverable costs represents property maintenance not recoverable from tenants, property valuation fees and property leasing costs.
2.5. Net rental income
ALL VALUES IN $000S20212020
Gross rental receipts 92,271 80,029
Service charge income recovered from tenants
3
13,647 12,587
Fixed rental income adjustments 1,417 1,882
Capitalised lease incentive adjustments 240 970
Impact of rental income deferred and abated due to the COVID-19 pandemic 366 1,279
less: Service charge expenses
3
(13,898) (12,587)
Net rental income 94,043 84,160
3. In 2021, following the migration onto a new property management and accounting software during the period, the Group adopted a revised process for accounting for service
charge income recovered from tenants and service charge expenses, and as a result these balances no longer net off to zero.
2.6. Insurance income
On 21 April 2019, 314 Neilson Street, Penrose sustained fire damage. The fire has resulted in a business interruption (loss of rents) claim and a
material damage claim. The insurance income relating to business interruption and to material damage is presented in the Consolidated
Statement of Comprehensive Income. All insurance proceeds have now been received as at 31 December 2021.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
63
NOTES 2021
IN THIS SECTION
This section outlines how the Group manages its capital structure, financing costs and exposure to interest rate risk.
3.1. Borrowings
(i) Net borrowings
ALL VALUES IN $000S20212020
Bilateral CBA bank facility drawn down - non-current 125,000 100,000
Syndicated bank facility drawn down - non-current 276,237 189,877
Fixed rate bonds - non-current 200,000 200,000
Unamortised borrowings establishment costs (2,584) (2,228)
Net borrowings 598,653 487,649
Weighted average interest rate for drawn debt (inclusive of current interest rate swaps,
margins and line fees)3.81%3.75%
Weighted average term to maturity (years) 3.87 2.82
Recognition and Measurement
All borrowings are initially measured at fair value, plus directly attributable transaction costs, and subsequently measured at amortised
cost using the effective interest rate method. Under this method, directly attributable fees and costs are capitalised and spread over the
expected life of the facility. All other interest costs and bank fees are expensed in the period they are incurred.
(ii) Composition of borrowings
ALL VALUES IN $000S
As at 31 December 2021Issue DateMaturity DateInterest Rate
Facility drawn /
amount
Undrawn
facilityFair Value
Syndicated Bank Facility C–2-Jul-23Floating 100,000 100,000
PFI01028-Nov-1728-Nov-244.59% 100,000 – 103,803
Syndicated Bank Facility A–2-Jul-25Floating 150,000 – 150,000
PFI0201-Oct-181-Oct-254.25% 100,000 – 103,159
Syndicated Bank Facility B–2-Jul-26Floating 26,237 123,763 26,237
Bilateral CBA Bank Facility–16-Apr-28Floating 125,000 – 125,000
Total borrowings 601,237 123,763 608,199
ALL VALUES IN $000S
AS AT 31 DECEMBER 2020
Issue DateMaturity DateInterest Rate
Facility drawn /
amount
Undrawn
facilityFair Value
Bilateral CBA Bank Facility–19-Mar-22Floating 100,000 – 100,000
Syndicated Bank Facility A–4-Nov-22Floating 150,000 – 150,000
Syndicated Bank Facility B–4-Nov-23Floating 39,877 110,123 39,877
PFI01028-Nov-1728-Nov-244.59% 100,000 – 111,015
PFI0201-Oct-181-Oct-254.25% 100,000 – 110,486
Total borrowings 489,877 110,123 511,378
The Group has long-term revolving facilities (A and B) with a banking syndicate comprising ANZ Bank New Zealand Limited (ANZ), Bank of
New Zealand (BNZ), Commonwealth Bank of Australia (CBA) and Westpac New Zealand Limited (Westpac) (each providing $75,000,000),
for $300,000,000. In addition, during the year BNZ provided the Group with a further $100 million facility (C). Finally, the long-term bilateral
facility with CBA was increased to $125,000,000 during the period. The carrying values of the bank facilities approximate the fair value of
the facilities because the loans have floating rates of interest that reset every 30-90 days.
3. FUNDING
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
64
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
The fair value of the fixed rate bonds is based on their listed market prices at balance date and is classified as Level 1 in the fair value
hierarchy (2020: Level 1). Interest on the PFI010 Bonds is payable quarterly in February, May, August and November in equal instalments,
while interest on the PFI020 Bonds is payable quarterly in January, April, July and October; also in equal instalments. Both bonds are listed
on the NZDX.
(iii) Security
The bank facilities and fixed rate bonds are secured by way of a security trust deed and registered mortgage security which is required to be
provided over Group properties with current valuations of at least $1,450,000,000 (31 December 2020: $1,200,000,000). In addition to this,
the bank facility agreements and the fixed rate bond terms also contain a negative pledge. The Company and PFI No. 1 are guarantors to the
facility and fixed rate bonds. As at 31 December 2021, investment properties totalling $2,168,615,000 (31 December 2020: $1,617,936,000)
were mortgaged as security for the Group’s borrowings.
3.2. Derivative financial instruments
(i) Fair values
ALL VALUES IN $000S20212020
Non-current assets 11,623 19,415
Current liabilities (710) (340)
Non-current liabilities (4,608) (25,041)
Total 6,305 (5,966)
(ii) Notional values, maturities and interest rates
20212020
Notional value of interest rate swaps – fixed rate payer – start dates commenced ($000S) 400,000 295,000
Notional value of interest rate swaps – fixed rate receiver
1
– start dates commenced ($000S) 200,000 200,000
Notional value of interest rate swaps – fixed rate payer – forward starting ($000S) 120,000 110,000
Total ($000S) 720,000 605,000
Percentage of borrowings fixed (%)67%60%
Fixed rate payer swaps:
Average period to expiry – start dates commenced (years) 3.66 3.06
Average period to expiry – forward starting (years from commencement) 4.09 3.73
Average (years) 3.76 3.24
Fixed rate payer swaps:
Average interest rate
2
– start dates commenced (%)2.58%3.07%
Average interest rate
2
– forward starting (% during effective period)2.69%3.09%
Average (%)2.61%3.07%
1. The Group has $200 million fixed rate receiver swaps for the duration of the two $100 million fixed rate bonds, the effect of the fixed rate receiver swaps is to convert
the two $100 million fixed rate bonds to floating interest rates.
2. Excluding margin and fees.
(iii) Movement in fair value of derivative financial instruments
ALL VALUES IN $000S20212020
Interest rate swaps 12,271 643
Total movement in fair value of derivative financial instruments 12,271 643
3. FUNDING (continued)
3.1. Borrowings (continued)
(ii) Composition of borrowings (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
65
NOTES 2021
Recognition and Measurement
The Group is exposed to changes in interest rates and uses derivative financial instruments, principally interest rate swaps, to mitigate this
risk. The Group does not apply hedge accounting. Derivative financial instruments are entered into to economically hedge the risk exposure.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and
are subsequently re-measured to fair value at each reporting date. Transaction costs are expensed on initial recognition and recognised in
the Consolidated Statement of Comprehensive Income. The fair value of derivative financial instruments is based on valuations prepared
by independent treasury advisers and is the estimated amount that the Group would receive or pay to terminate the derivative contract at
reporting date, taking into account current interest rates and creditworthiness of the derivative contract counterparties.
Key estimates and assumptions: Derivative financial instruments
The fair value of derivative financial instruments are determined from valuations prepared by independent treasury advisers using Level 2
valuation techniques (2020: Level 2). These are based on the present value of estimated future cash flows accounting for the terms and
maturity of each contract and the current market interest rates at reporting date. Fair values also reflect the current creditworthiness of
the derivative counterparty. These values are verified against valuations prepared by the respective counterparties. The valuations were
based on market rates at 31 December 2021 of between 0.97% for the 90 day BKBM (31 December 2020: 0.27%) and 2.65% for the 10
year swap rate (31 December 2020: 0.99%). There were no changes to these valuation techniques during the reporting period.
4. INVESTOR RETURNS AND INVESTMENT METRICS
IN THIS SECTION
This section summarises the earnings per share and net tangible assets per share which are common investment metrics.
4.1. Earnings per share
(i) Basic earnings per share
20212020
Total comprehensive income for the year attributable to the shareholders of the Company ($000s) 452,810 113,452
Weighted average number of ordinary shares (shares) 503,301,662 499,649,574
Basic earnings per share (cents) 89.97 22.71
(ii) Diluted earnings per share
The calculation of diluted earnings per share has been based on the profit attributable to ordinary shareholders and weighted-average number of
ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Weighted average number of shares for the
purpose of diluted earnings per share has been adjusted for 44,503 (2020: 38,957) rights issued under the Group’s LTI Plan as at 31 December
2021. This adjustment has been calculated using the treasury share method. Refer to note 5.9 “Share-based payments” for further details.
20212020
Total comprehensive income for the year attributable to the shareholders of the Company ($000s) 452,810 113,452
Weighted average number of shares for purpose of diluted earnings per share (shares) 503,346,165 499,688,531
Diluted earnings per share (cents) 89.96 22.70
4.2. Net tangible assets per share
20212020
Net assets ($000s) 1,562,662 1,136,613
Less: Goodwill ($000s) (note 5.5) (29,086) (29,086)
Net tangible assets ($000s) 1,533,576 1,107,527
Closing shares on issue (shares) 505,493,668 501,302,888
Net tangible assets per share (cents) 303 221
3. FUNDING (continued)
3.2. Derivative financial instruments (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
66
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
5. OTHER
IN THIS SECTION
This section includes additional information that is considered less significant in understanding of the financial performance and position
of the Group, but is disclosed to comply with New Zealand Equivalents to International Financial Reporting Standards.
5.1. Administrative expenses
ALL VALUES IN $000SNOTE20212020
Auditors remuneration
1
Audit and review of financial statements (200) (156)
Benchmarking of executive remuneration(1) –
Employee benefits (4,065) (3,511)
Directors’ fees5.8 (547) (548)
Office expenses (730) (671)
IT – licence fees and support (8) (11)
IT – implementation costs (712) –
Depreciation (181) (173)
Other expenses (1,021) (781)
Total administrative expenses (7,465) (5,851)
1. In December 2021, PwC were engaged to provide benchmarking of remuneration services for a fee of $8,000. This engagement was delivered in the FY2022 financial year.
5.2. Taxation
(i) Reconciliation of accounting profit before income tax to income tax expense
ALL VALUES IN $000S20212020
Profit before income tax 472,827 135,693
Prima facie income tax calculated at 28% (132,392) (37,994)
Adjusted for:
Non-tax deductible revenue and expenses228 1,229
Fair value gain on investment properties 109,905 20,313
Gain / (loss) on disposal of investment properties 738 (4)
Depreciation
2
4,917 4,439
Disposal of depreciable assets 645 –
Deductible capital expenditure 1,106 889
Lease incentives, fees and fixed rental income 185 879
Derivative financial instruments 3,436 180
Impairment gains / (allowance)126 (106)
Current tax prior period adjustment 157 9
Other (344) 100
Current taxation expense (10,605) (10,066)
Depreciation (5,715) (11,019)
Lease incentives, fees and fixed rental income (185) (879)
Derivative financial instruments (3,436) (180)
Impairment (allowance) / gains(126) 106
Other 50 (203)
Deferred taxation expense (9,412) (12,175)
Total taxation reported in Consolidated Statement of Comprehensive Income (20,017) (22,241)
2. As part of the assistance package offered by the Government on 25 March 2020 due to the impact of the COVID-19 pandemic, depreciation allowances were
re-introduced for commercial building structure effective from 1 April 2020, backdated to 1 January 2020, and this has been reflected in the table above.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
67
NOTES 2021
5. OTHER (continued)
5.2. Taxation (continued)
(ii) Deferred tax
20192020202020212021
ALL VALUES IN $000SAs at
Recognised
in profit As at
Recognised
in profit As at
Deferred tax assets
Impairment allowance (20) (106) (126) 126 –
Other (63) 3 (60) (203) (263)
Gross deferred tax assets (83) (103) (186) (77) (263)
Deferred tax liabilities
Investment properties 15,119 11,898 27,017 5,900 32,917
Derivative financial instruments (1,851) 180 (1,671) 3,436 1,765
Gross deferred tax liabilities 13,268 12,078 25,346 9,336 34,682
Share-based payment reserve – 200 – 153 –
Net deferred tax liability 13,185 12,175 25,160 9,412 34,419
(iii) Imputation credit account
The amounts below represent the balance of the imputation credit account as at the end of the reporting period, adjusted for imputation
credits that will arise from the payment of taxation payable represented in the Consolidated Statement of Financial Position.
ALL VALUES IN $000S20212020
Opening balance2,577 3,997
Taxation paid / payable 10,343 9,971
Imputation credits attached to dividends paid(11,656) (11,391)
Closing balance available to shareholders for use in subsequent periods1,264 2,577
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
68
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
5. OTHER (continued)
5.2. Taxation (continued)
(iii) Imputation credit account (continued)
Recognition and Measurement
The Company and Group are a listed Portfolio Investment Entity (PIE) for the purposes of the Income Tax Act 2007. Tax is accounted for
on a consolidated Group basis and the Group is required to pay tax to the Inland Revenue as required by the Income Tax Act 2007. Income
tax expense comprises current and deferred tax and is recognised in the Consolidated Statement of Comprehensive Income for the year.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is recognised on all temporary differences, including:
• The tax liability arising from accumulated depreciation claimed on investment properties, where applicable;
• The tax asset arising from the allowance for impairment;
• The tax liability arising from certain prepayments and other assets; and
• The tax asset / liability arising from the unrealised gains / losses on the revaluation of interest rate swaps.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the reporting date. Deferred tax is not recognised for:
• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
• Temporary differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the
foreseeable future; and
• Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable entity, or on different entities, but they intend to settle
current tax assets and liabilities on a net basis.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary
differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Additional income tax arising from distribution of dividends is recognised at the same time as the liability to pay the dividend is
recognised.
Key estimates and assumptions: Deferred tax
Given changes to purchase price allocations rules, which applied to agreements for the disposal and acquisition of property entered into
on or after 1 April 2021, and following the reintroduction of depreciation allowances for commercial building structures, the Group
completed a review of its deferred tax methodology in the prior year. As a result of that review, deferred tax was provided on the
accumulated depreciation claimed on both the structure and fit-out components of investment properties (in 2019 deferred tax was
provided on the accumulated depreciation claimed only on the structure component). In 2020, this resulted in an increase in the deferred
tax liability of $9.6 million. Investment properties are valued each year by independent valuers (as outlined in note 2.1). These values
include an allocation of the valuation between the land and building components. The calculation of deferred tax on depreciation
recovered places reliance on the land and building split in the valuation provided by the valuers. The building value is then split between
fit-out and structure based on the proportion of the tax book values of each.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
69
NOTES 2021
5. OTHER (continued)
5.3. Accounts receivable, prepayments and other assets
ALL VALUES IN $000S20212020
Accounts receivable 1,834 2,311
Provision for doubtful debts – (450)
Prepayments and other assets 3,325 1,536
Deposit paid for the acquisition of 670-680 Rosebank Road – 2,000
Deposit paid for the acquisition of 318 Neilson Street683 –
Total accounts receivable, prepayments and other assets 5,842 5,397
Recognition and Measurement
Accounts receivable are recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.
Receivables are assessed on an ongoing basis for impairment. The group applies the simplified approach to providing for expected credit
losses prescribed by NZ IFRS 9 ‘Financial Instruments’, which permits the use of lifetime expected loss provision for all trade receivables.
5.4. Accounts payable, accruals and other liabilities
ALL VALUES IN $000S20212020
Accounts payable 1,570 1,008
Accrued interest expense and bank fees 2,827 2,196
Accruals and other liabilities in respect of investment properties 2,242 1,247
Accruals and other liabilities 5,705 4,701
Total accounts payable, accruals and other liabilities 12,344 9,152
Recognition and Measurement
Expenses are recognised on an accruals basis and, if not paid at the end of the reporting period, are reflected as a payable in the
Consolidated Statement of Financial Position
5.5. Goodwill
ALL VALUES IN $000S20212020
Goodwill 29,086 29,086
Recognition and Measurement
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the fair value of the
identifiable net assets acquired.
Goodwill is measured at cost less accumulated impairment losses. It is tested annually for impairment or more frequently if events or
changes in circumstances indicate potential impairment. An impairment loss is recognised if the carrying amount exceeds the estimated
recoverable amount. Impairment losses are recognised in the Consolidated Statement of Comprehensive Income.
Goodwill is allocated to the Group’s cash generating units (CGU) identified according to the lowest level at which the goodwill is monitored.
To assess whether goodwill is impaired, the carrying amount of the CGU is compared to the recoverable amount, determined based on
the greater of its value in use and its fair value less costs of disposal.
Key estimates and assumptions: Goodwill
All goodwill relates to the Property for Industry Limited CGU.
The fair value of the Property for Industry Limited CGU for goodwill impairment testing is determined using Level 3 valuation techniques
(2020: Level 3). Fair value less costs of disposal is measured by calculating the fair value of the Property for Industry Limited CGU using
a 1 day volume-weighted average share price at the reporting date, applying a control premium (15.8%, as determined by a third party in
July 2020, which is considered to remain sufficiently consistent as at 31 December 2021, 2020: 15.8%) and deducting costs of disposal.
As at 31 December 2021 the estimated fair value less costs of disposal of the Property for Industry Limited CGU exceeded the carrying
value (2020: nil impairment).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
70
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
5. OTHER (continued)
5.6. Financial instruments
The following financial assets and liabilities, that potentially subject the Group to financial risk, have been recognised in the
financial statements:
ALL VALUES IN $000S20212020
Financial Assets
Financial assets at amortised cost:
Cash at bank 1,103 1,414
Accounts receivable and other assets 1,834 1,861
Total - Financial assets at amortised cost 2,937 3,275
Financial assets at fair value through profit or loss:
Derivative financial instruments 11,623 19,415
Total - Financial assets at fair value through profit or loss 11,623 19,415
Total Financial Assets 14,560 22,690
Financial Liabilities
Financial liabilities at amortised cost:
Accounts payable, accruals and other liabilities 12,072 8,986
Lease liabilities 53 245
Borrowings 598,653 487,649
Total - Financial liabilities at amortised cost 610,778 496,880
Financial liabilities at fair value through profit or loss:
Derivative financial instruments 5,318 25,381
Total - Financial liabilities at fair value through profit or loss 5,318 25,381
Total Financial Liabilities 616,096 522,261
5.7. Financial risk management
The Group’s activities expose it to a variety of financial risks, including interest rate risk, credit risk and liquidity risk. The Group’s overall financial
risk management strategy focuses on minimising the potential negative economic impact of unpredictable events on its financial performance.
(a) Interest rate risk
The Group’s exposure to the risk of changes in interest rates relates primarily to the Group’s borrowings with a floating interest rate.
The Group has an interest rate hedging policy which has been reviewed by an external firm with expertise in this area. The policy calls for
a band of the Group’s borrowings to be at fixed interest rates, with a greater proportion of the near term to be fixed and a lesser percentage
of the far dated to be fixed.
The Group uses derivative financial instruments, principally fixed rate payer interest rate swaps, to exchange its floating short-term
interest rate exposure for fixed long-term interest rate exposure in accordance with its policy bands. As the Group holds derivative financial
instruments, there is a risk that their fair value will fluctuate because of underlying changes in market interest rates. This is accepted as a
by-product of the Group’s interest rate hedging policy, however this risk is partially mitigated by the Group’s holding of fixed rate receiver
interest rate swaps. The fair value of derivative financial instruments is disclosed in the Consolidated Statement of Financial Position (refer
to note 3.2).
The following sensitivity analysis shows the effect on profit before tax and equity if interest rates at balance date had been 50 basis points
(0.50%) higher or lower with all other variables held constant.
20212020
ALL VALUES IN $000S
Gain/(loss) on
increase of
0.50%
Gain/(loss) on
decrease of
0.50%
Gain/(loss) on
increase of
0.50%
Gain/(loss) on
decrease of
0.50%
Impact on profit before tax 3,374 (3,670) 420 (1,139)
Impact on equity 2,429 (2,642) 302 (820)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
71
NOTES 2021
5. OTHER (continued)
5.7. Financial risk management (continued)
(b) Credit risk
Credit risk represents the risk that the counterparty to a financial instrument will fail to discharge its obligations and the Group will suffer
financial loss as a result. Financial instruments which potentially subject the Group to credit risk consist of cash and cash equivalents,
accounts receivable and other assets and interest rate swap agreements.
With respect to the credit risk arising from cash and cash equivalents, there is limited credit risk as cash is deposited with ANZ Bank
New Zealand Limited, a registered bank in New Zealand with a credit rating of AA– (Standard & Poor’s). The Group considers both historical
analysis and forward-looking information in determining any expected credit loss, and infers from this strong credit rating that no loss
allowance is deemed necessary.
With respect to the credit risk arising from accounts receivable, the Group only enters into lease arrangements over its investment
properties with parties whom the Group assesses to be creditworthy. It is the Group’s policy to subject all potential tenants to credit
verification procedures and monitor accounts receivable balances. As the Group has a wide spread of tenants over many industry sectors,
it is not exposed to any significant concentration of credit risk. Credit risk does not arise on property sale proceeds to be settled as title will
not transfer until settlement.
With respect to the credit risk arising from interest rate swap agreements, there is limited credit risk as all counterparties are registered
banks in New Zealand. The credit ratings of these banks are all AA– (Standard & Poor’s).
The carrying amount of financial assets as per note 5.6 approximates the Groups maximum exposure to credit risk. For certain receivables
the Group holds bank guarantees, parent company guarantees or personal guarantees.
(c) Liquidity risk
Liquidity risk is the risk that the Group will experience difficulty in either realising assets or otherwise raising sufficient funds to meet its
obligations arising from its financial liabilities.
The Group manages its liquidity risk by ensuring that it has committed funding facilities at a minimum of 105% of the projected peak debt
level over the next twelve months (excluding business acquisitions).
The maturities of the Group’s borrowings based on the remaining period is 3.9 years (2020: 2.8 years), with all borrowings due later than
one year (2020: later than one year). Further details of the Group’s borrowings, including the maturities of the Group’s borrowings, are
disclosed in note 3.1.
The table below analyses the contractual undiscounted cash flows of the Group’s financial liabilities (principal and interest) by the relevant
maturity groupings based on the remaining period as at 31 December 2021 and 31 December 2020.
ALL VALUES IN $000S
Carrying
amount
Contractual cash flows
Total 0 - 1 year1 - 2 years 2 - 5 years > 5 years
Financial liabilities
Accounts payable, accruals and other liabilities 12,072 12,072 – – – 12,072
Lease liabilities 53 101 53 – – 154
Derivative financial instruments
1
(6,305) 1,521 (1,149) (5,488) (1,635) (6,751)
Borrowings 598,653 15,161 113,810 393,941 128,855 651,767
Total as at 31 December 2021 604,473 28,855 112,714 388,453 127,220 657,242
Accounts payable, accruals and other liabilities 8,986 8,986 – – – 8,986
Lease liabilities 245 93 100 52 – 245
Derivative financial instruments
1
5,966 2,987 2,512 966 636 7,101
Borrowings 487,649 9,593 257,907 250,084 – 517,584
Total as at 31 December 2020 502,846 21,659 260,519 251,102 636 533,916
1. The carrying amount of derivative financial instruments shown is the net position of both derivative financial instrument assets and derivative financial instrument
liabilities.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
72
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
5. OTHER (continued)
5.7. Financial risk management (continued)
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern whilst maximising the
return to shareholders through maintaining an optimal balance of debt and equity to optimise the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The Group’s capital structure includes borrowings and shareholders’ equity. The Group monitors capital on the basis of the loan to value
ratio and borrowing covenant compliance. The loan to value ratio is calculated as borrowings divided by investment properties. The Group’s
strategy is to maintain a loan to value ratio of no more than 40%. The covenants on all borrowings require a loan to value ratio of no more
than 50%, and this was complied with during the year.
The Group operates a Dividend Reinvestment Scheme (DRS) which allows eligible shareholders to reinvest dividends in shares. The Board,
at its sole discretion, may suspend the DRS at any time and/or apply a discount to which shares are issued under the DRS.
5.8. Related party transactions
(i) Key management personnel
ALL VALUES IN $000S20212020
Directors’ fees – annual fees 547 548
Leadership Team remuneration
1
2,452 2,032
Key management personnel 2,999 2,580
1. In 2021, there were changes to the composition of the Leadership Team, with the appointment of a Head of Sustainability and Operations. If the composition of the
Leadership Team in 2021 was the same in 2020, Leadership Team remuneration would have totalled $2,168,000.
(ii) Other related party transactions
The Group also has related party relationships with the following parties:
Related partyAbbreviationNature of relationship(s)
Commonwealth Bank of AustraliaCBASusan Peterson, a member of the Board of Directors, was also a Director of ASB
Bank Limited (ASB), a 100% subsidiary of CBA, however she resigned from this
position effective 30 June 2020.
The Board of DirectorsDirectorsThe Board of Directors
The following transactions with related parties took place:
ALL VALUES IN $000SRelated party20212020
Interest expense and bank fees incurred
2
CBA N/A (1,082)
Interest income received
2
CBA N/A 482
2. All prior year transactions and positions held with CBA are as at 30 June 2020 as that was the date that CBA ceased to be a related party of the Group.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
73
NOTES 2021
5. OTHER (continued)
5.8. Related party transactions (continued)
(ii) Other related party transactions (continued)
The following positions were held with related parties:
ALL VALUES IN $000S UNLESS STATED OTHERWISERelated party31 Dec 202130 Jun 2020
Amounts owing
1
CBA N/A (274)
Amounts owed
1
CBA N/A 116
Bank facility provided
1
CBA N/A 125,000
Bank facility drawn
1
CBA N/A 93,070
Notional value of interest rate swaps:
Current fixed rate payer swaps
1
CBA N/A 60,000
Forward starting fixed rate payer swaps
1
CBA N/A 50,000
Current fixed rate receiver swaps
1
CBA N/A 50,000
1. All prior year transactions and positions held with CBA are as at 30 June 2020 as that was the date that CBA ceased to be a related party of the Group.
NUMBERRelated party31 Dec 202131 Dec 2020
Shares held beneficially in the companyDirectors 194,367 193,868
Shares held non-beneficially in the companyDirectors – –
No related party debts have been written off or forgiven during the year (2020: NIL).
5.9. Share-based payments
Long-term incentive plan (Equity settled)
The long-term incentive plan (LTI Plan) was introduced for selected senior executives in the Group on 2 December 2019 (“2019 Grant”).
Under this plan, Performance Share Rights (PSRs) were issued to these senior executives which give them the right to receive ordinary
shares in the Group after a 1-3 year period, subject to achieving the performance hurdles outlined below. These are at-risk payments
designed to align the reward of these senior executives with the enhancement of shareholder value over a multi-year period. On 17 February
2020, a second grant of PSRs (“2020 Grant”) and on 22 February 2021 a third grant of PSRs (“2021 Grant”) were issued to these senior
executives under equivalent conditions to the 2019 Grant.
The key terms and conditions related to the PSRs under the LTI Plan are as follows:
• The PSRs are granted for nil consideration and have a nil exercise price.
• The participant must remain an employee of the Group as at the relevant vesting date for each tranche of PSRs.
• Each grant under the LTI Plan has three tranches with two separate performance hurdles applying to each tranche. The three tranches
enable a third of the PSRs to vest after one year, two years and three years from the service commencement dates of 1 January 2019,
1 January 2020 and 1 January 2021. For each tranche:
• 50% of the PSRs are subject to a performance hurdle of the Company’s rolling three year Funds From Operations (FFO) growth
equalling or exceeding the three year CPI growth to September immediately prior to the vesting date (“Part A”); and
• 50% of the PSRs are subject to a performance hurdle of the Company’s Total Shareholder Returns (TSR) outperforming the TSR of a
property peer group (comprising other listed property issuers) over the period from the commencement date to the vesting date for
the relevant tranche (“Part B”).
• At vesting, subject to meeting performance hurdles, each PSR is converted to one ordinary share. The LTI Plan is a dividend protected
LTI Plan and the senior executives will receive additional shares representing the value of dividends paid over the vesting period. The
senior executives are liable for tax on the shares received at this point.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
74
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
5. OTHER (continued)
5.9. Share-based payments (continued)
The following table reconciles the opening PSR balance as at 1 January 2021 to the closing PSR balance as at 31 December 2021.
GRANT YEAR
2020 Opening
(PSRs)
2020 Granted
(PSRs)
2020 Vested
(PSRs)
2020 Closing /
2021 Opening
(PSRs)
2021 Granted
(PSRs)
2021 Vested
(PSRs)
2021 Closing
(PSRs)
2021 – – – 155,174 (51,725) 103,449
2020 – 165,279 (55,093) 110,186 – (55,093) 55,093
2019 130,682 – (65,341) 65,341 – (65,341) –
Total 130,682 165,279 (120,434) 175,527 155,174 (172,159) 158,542
The PSRs outstanding at 31 December 2021 had a weighted – average contractual life of 1.33 years (31 December 2020: 1.31 years).
The LTI Plan has resulted in a share-based payment reserve totalling $751,000 as at 31 December 2021 (2020: $615,000)
Fair value measurement of LTI Plan
The fair value of the PSRs have been measured using a Monte Carlo simulation model. Service and non-market performance conditions
were not taken into account in measuring fair value. The TSR performance metric is a market condition and has been factored into the fair
value of the PSRs at grant date. However, the FFO performance metric is a non-market condition and is not factored into the fair value of
the PSRs.
The inputs used in the measurement of the fair values at grant date were as follows.
Performance Share Rights
2021 Grant2020 Grant2019 Grant
Part APart BPart APart BPart APart B
Weighted average fair value at grant date$2.88$1.49$2.49$1.18$2.35$2.04
Share price at grant date$2.88$2.88$2.49$2.49$2.35$2.35
Expected volatility (weighted-average)21.9%21.9%10.3%10.3%10.0%10.0%
Expected life (weighted-average)22 months22 months22 months22 months13 months13 months
Risk-free interest rate0.3%0.30%1.22%1.22%1.00%1.00%
The expected volatility and correlation measures are based on the standard deviation and correlation of weekly returns of the property peer
group, over a three year period. .
The risk-free rate was based on government bond yields over a period of 1, 2 and 5 years.
Recognition and Measurement
The PSRs are measured at fair value at grant date and expensed over the period during which the participant becomes unconditionally
entitled to the shares, based on an estimate of shares that will eventually vest. The corresponding entry of the expense is equity. The fair
value of the PSRs which are vested - and the corresponding shares which are issued - are transferred from the share-based payment
reserve to share capital on issue of the shares.
Key estimates and assumptions: Long-term incentive plan
It has been assumed that the selected senior executives will remain employed with the Company on each of the vesting dates and that
the non-market performance conditions will be met.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
75
NOTES 2021
5. OTHER (continued)
5.10. Leases
(i) Amounts recognised in the Consolidated Statement of Financial Position
The Consolidated Statement of Financial Position shows the following amounts relating to leases:
ALL VALUES IN $000S20212020
Right-of-use assets
1
Properties 140 229
Total right-of-use assets 140 229
1. Included in the line item ‘Property, plant and equipment’ in the Consolidated Statement of Financial Position.
Additions to the right-of-use assets during the 2021 financial year were $3,000 (2020: $6,000).
ALL VALUES IN $000S20212020
Lease liabilities
Current
2
101 93
Non-current
3
53 152
Total lease liabilities 154 245
2. Included in the line item ‘Accounts payable, accruals and other liabilities’ in the Consolidated Statement of Financial Position.
3. Included in the line item ‘Lease liabilities’ in the Consolidated Statement of Financial Position.
(ii) Amounts recognised in the Consolidated Statement of Comprehensive Income
The Consolidated Statement of Comprehensive Income shows the following amounts relating to leases:
ALL VALUES IN $000S20212020
Depreciation charge of right-of-use assets
4
Properties (97) (91)
Total depreciation charge of right-of-use assets (97) (91)
4. Included in the line item ‘Administrative expenses’ in the Consolidated Statement of Comprehensive Income.
ALL VALUES IN $000S20212020
Interest cost
5
(19) (24)
5. Included in the line item ‘Interest expense and bank fees’ in the Consolidated Statement of Comprehensive Income.
The total cash outflow for leases in 2021 was $112,000 (2020: $111,000).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
76
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
5. OTHER (continued)
5.11. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker has been identified as the Board of Directors. The Group is internally reported as a single operating segment
to the chief operating decision-maker.
5.12. Capital commitments
As at 31 December 2021, the Group had capital commitments totalling $4,875,000 (31 December 2020: $58,754,000) as follows:
ALL VALUES IN $000S20212020
AddressProject
314 Neilson StreetDesign and build – 334
47 Dalgety DriveDesign and build – 6,311
59 Dalgety DriveRefurbishment – 1,993
25 Langley RoadAcquisition of warehouse on completion of construction – 7,532
124 Hewletts RoadRefurbishment – 3,318
670-680 Rosebank RoadAcquisition (net of deposit paid) – 37,000
Shed 22, 23 Cable StreetSeismic works 413 2,266
47A Dalgety DriveDesign and build 1,558 –
3-5 Niall Burgess RoadRefurbishment 2,904 –
Total capital commitments 4,875 58,754
In addition, during the period the Group entered into an agreement to lease new office premises for an annual rent of $330,000 plus GST for
a period of eight years from commencement date. Commencement date is expected to be in Q3, 2022.
5.13. Subsequent events
On 23 January 2022, all regions in New Zealand moved to Government-directed ‘Red’ Traffic Light setting in response to several cases of
community transmission of the Omicron variant of COVID-19. This setting remains at the date of signing the financial statements and these
events are not expected to have a significant impact on the business.
On 21 February 2022, the Board of Directors of the Company approved the payment of a net dividend of 2.250000 cents per share to be paid
on 9 March 2022. The gross dividend (2.700119 cents per share) carries imputation credits of 0.136620 cents per share. The payment of
this dividend will not have any tax consequences for the Group and no liability has been recognised in the Consolidated Statement of
Financial Position as at 31 December 2021 in respect of this dividend.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2021
77
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. These matters were 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 these matters.
Description of the key audit matterHow our audit addressed the key audit matter
Valuation of investment properties
As disclosed in note 2.1 of the financial statements,
the Group’s investment properties were valued at
$2,159 million as at 31 December 2021.
The valuation of the Group’s property portfolio is
inherently subjective and is given specific audit
focus and attention due to the existence of
significant estimation uncertainty. A small
percentage difference in a single or multiple input
assumption could result in material misstatement
of the valuation.
Given the subjectivity involved in determining valuations for individual
properties, including alternative assumptions and valuation methods, there
is a range of values that could be considered reasonable. We have
considered the adequacy of disclosures made in note 2.1 to the consolidated
financial statements, Investment properties, which sets out the key
judgements and estimates. This note describes the impact of the COVID-19
pandemic on the valuation of investment properties.
Independent auditor’s review report
To the shareholders of Property for Industry Limited
Our opinion
In our opinion, the accompanying financial statements of Property for Industry Limited (the Company), including its subsidiary
(the Group), present fairly, in all material respects, the financial position of the Group as at 31 December 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 Group›s financial statements comprise:
• the consolidated statement of financial position as at 31 December 2021;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the 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 Group 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 Group in the areas of benchmarking of remuneration and the provision of an executive
remuneration benchmarking report. The provision of these other services has not impaired our independence as auditor of the Group.
78
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
AUDITORS 2021
Key audit matters–continued
Description of the key audit matterHow our audit addressed the key audit matter
The valuations were carried out by independent
third-party valuers who performed their work in
accordance with the International Valuation
Standards and the Australia and New Zealand
Property Institute Valuation and Property
Standards. The valuers are rotated across the
portfolio on a three-yearly cycle, with the exception
of certain properties as disclosed in note 2.1.
The Group has adopted the assessed values
determined by the valuers.
In determining a property’s valuation, two
approaches are generally used to determine the
fair value of an investment property: the income
capitalisation approach and the discounted cash
flow approach, to arrive at a range of valuation
outcomes from which the valuers derive a point
estimate.
The valuers take into account property specific
information such as the contracted tenancy
agreements and rental income earned by the
asset. They apply assumptions in relation to
capitalisation rates, discount rates and market rent
and the anticipated growth, based on market data
and transactions where available.
Management verifies all major inputs to the
valuations, assesses property valuation
movements since prior year, holds discussions
with the independent valuers to assess the
reasonableness of the valuations, and
communicates the results of the process with
the Directors.
In assessing the valuation of the investment properties, we performed the
following procedures:
External valuations
We held discussions with management to understand:
• movements in the Group’s investment property portfolio,
• changes in the condition of each property, and
• the controls in place over the valuation process.
For all properties, the carrying value was agreed to the external valuation
reports and we held discussions with the valuers. Applying a risk-based
approach, we read and evaluated the valuations of specific properties.
The valuers confirmed that the valuation approach for each property was in
accordance with accounting and valuation standards, and suitable for use in
determining the carrying value of Investment Properties at 31 December 2021.
We assessed the valuers’ qualifications, expertise and their objectivity and we
found no evidence to suggest that the objectivity of any valuer was
compromised in their performance of the valuations.
We also considered whether or not there was bias in determining individual
valuations and found no evidence of bias.
We carried out procedures, on a sample basis, to test whether the property-
specific information supplied to the valuers by the Group reflected the
underlying property records held by the Group. For the items tested, the
information was consistent.
Assumptions
Our work over the assumptions used in the valuations focused on those
properties where the assumptions used and/or year-on-year fair value movement
was most significant. We engaged our own in-house valuation specialist to
assess the methodologies and critique and challenge, against market evidence
and current market conditions, the key assumptions used by the valuers.
We concluded that the assumptions used in the valuations were supportable in
light of available and comparable market evidence.
From the procedures performed, we have no matters to report.
Our audit approach
Overview
Materiality
Audit scope
Key audit
matters
Overall group materiality: $3,400,000, which represents approximately 5% of profit before tax excluding
valuation movements relating to investment properties and interest rate derivatives.
We chose this benchmark because, in our view, it is the benchmark against which the performance of the
Group is most commonly measured by users.
Following our assessment of the risk of material misstatement, a full scope audit was performed over the
consolidated Group balances.
As reported above, we have one key audit matter, being:
• Valuation of investment properties
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.
79
INDEPENDENT AUDITOR’S REPORT (continued)
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 Group
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.
How we tailored our group audit scope
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 Group, the accounting processes and controls, and the industry in which the
Group operates.
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 Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the 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-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those
matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit
work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Indumin Senaratne (Indy Sena).
For and on behalf of:
Chartered Accountants Auckland
21 February 2022
80
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
AUDITORS 2021
INDEPENDENT AUDITOR’S REPORT (continued)
YEAR ENDED 31 DECEMBER 20212020201920182017
ALL VALUES IN $M UNLESS OTHERWISE NOTED
FINANCIAL PERFORMANCE
Income517.1176.1229.3158.3128.1
Expenses(44.3)(40.4)(38.9)(36.0)(78.5)
Profit before taxation472.8135.7190.4122.349.6
Total taxation (expense) / benefit(20.0)(22.2)(14.1)(12.2)2.1
Total comprehensive income after tax452.8113.5176.3110.151.7
Weighted average number of ordinary shares (‘000 shares)503,302499,650498,723498,723459,600
IFRS basic earnings per share (cents per share)89.9722.7135.3522.0811.25
DISTRIBUTIONS
Total comprehensive income after tax452.8113.5176.3110.151.7
Distribution adjustments(406.1)(73.4)(137.5)(72.9)(17.3)
Adjusted Funds From Operations (AFFO)46.740.138.837.234.4
Weighted average number of ordinary shares (‘000 shares)503,302499,650498,723498,723459,600
AFFO per share (cents per share)9.298.037.797.467.49
Gross dividends paid relating to the year reported (cents per share)9.999.7310.209.337.45
Net dividends paid relating to the year reported (cents per share)7.907.707.607.557.45
AFFO pay-out ratio (%)85.1%95.9%97.6%101.2%99.5%
FINANCIAL POSITION
Investment properties2,158.91,524.81,469.31,318.71,210.8
Goodwill29.129.129.129.129.1
Other assets29.0133.524.311.22.2
Total assets2,217.01,687.41,522.71,358.91,242.1
Borrowings598.7487.6412.9398.2370.6
Other liabilities55.663.255.845.528.6
Total liabilities654.3550.8468.7443.8399.2
Total equity1,562.71,136.61,054.0915.1842.9
Closing shares on issue (‘000 shares)505,494501,303498,723498,723498,723
Net tangible (excluding goodwill) assets (cents per share)303.4220.9205.5177.7163.2
Gearing (%)27.7%30.0%28.2%30.3%30.8%
PROPERTY PORTFOLIO METRICS
Number of properties (#)9794949492
Number of tenants (#)136148144148148
Contract rent95.689.884.982.079.6
Occupancy (%)100.0%99.4%99.0%99.3%99.9%
Net lettable area including yard (sqm) 940,204 838,403 809,183 780,092 756,455
Weighted average lease term (years)5.405.285.385.395.33
Portfolio capitalisation rate (%)4.4%5.5%5.7%6.1%6.4%
PERFORMANCE
81
FIVE-YEAR PERFORMANCE SUMMARY
82
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2021
83
Property
for
Industry
Limited
Group
Annual
Report
31 December
2021
OTHER
DISCLOSU
-
RES
OTHER DISCLOSURES
84
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
COMPANY STRUCTURE AND
STATUTORY INFORMATION
Property for Industry Limited (the Company, PFI) is a publicly listed company established in 1994. The Board currently has five
Directors, four of whom are independent.
More information on the PFI Board and Management Team is available on the PFI website at https://www.propertyforindustry.co.nz/
about-pfi/our-people-investors/.
PRINCIPAL ACTIVITY
PFI is a listed industrial property investment company. PFI and its subsidiary P.F.I. Property No. 1 Limited (together, the Group)
invest solely in New Zealand. There has not been any change in the nature of the Company’s or Group’s business in the year ended
31 December 2021, nor in the classes of business in which the Company has an interest.
GOVERNANCE
The Board of PFI is committed to the highest standards of business behaviour and accountability. The Board regularly reviews and
assesses the Group’s governance structures and processes to ensure they are consistent with best practice standards.
As part of the Board’s ongoing monitoring and review of the Group’s governance framework, the Board has developed a Corporate
Governance Manual (the manual) that forms the Group’s corporate governance framework. It incorporates the NZX Listing Rules
relating to corporate governance and the recommendations of the NZX Corporate Governance Code (the NZX Code) and was last
updated in September 2020. The Board plans to review the manual following the update to the NZX Code in 2022.
A copy of the manual is available on the PFI website at https://www.propertyforindustry.co.nz/about-pfi/governance/ and includes:
1. Code of Ethics;
2. Board Charter;
3. Audit and Risk Committee Charter;
4. Nomination and Remuneration Committee Charter;
5. Remuneration Policy;
6. Financial Product Trading Policy;
7. Continuous Disclosure Policy; and
8. Diversity Policy.
COMPLIANCE WITH NZX REQUIREMENTS
PFI considers that it complies with the NZX Code.
NZX CODE: KEY PRINCIPLES
This section sets out PFI’s corporate governance policies, practices and processes by reference to the NZX Code’s eight key
principles and supporting recommendations.
85
Principle One: Code of Ethical Behaviour
Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for these
standards being followed throughout the organisation.
Code of Ethics
The Board has developed a Code of Ethics that forms part of
the manual. The Code of Ethics provides a framework for PFI’s
Directors and employees by which they are expected to conduct
their duties by facilitating behaviour that is consistent with PFI’s
business standards.
PFI monitors compliance with the Code of Ethics through its
management processes as well as through the whistleblowing
procedures set out in the Code of Ethics itself. All Directors and
employees are informed of the content of the Code of Ethics
prior to commencing such roles, and will be informed of any
future change to the Code of Ethics.
Financial Product Trading Policy
PFI is committed to transparency and fairness in financial product dealing. The rules for dealing in PFI’s listed securities are
contained in its Financial Product Trading Policy. The policy’s main purpose is to ensure no Director, employee or contractor uses
their position or knowledge of PFI or its business to engage in financial product dealing for personal benefit, or to provide a benefit
to any third party.
The Financial Product Trading Policy applies to Directors, employees and contractors of PFI and its subsidiary, and trusts and
companies controlled by those persons (Restricted Persons).
The key points of the policy are:
§
A prohibition on “insider trading”, meaning persons who hold
non-publicly available price-sensitive information must not
pass on that information, nor acquire or dispose of PFI’s
listed securities at any time;
§
Restricted Persons must obtain consent to trade PFI listed
securities at any time; and
§
No trading is permitted by Restricted Persons during
“blackout periods” from the balance date and the half-year
balance date until the day following the release of the
relevant results to NZX.
Principle Two: Board Composition & Performance
To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and perspectives.
Board Charter
The Board has developed a charter that sets out its authority, duties and responsibilities. The Board, through a set of formal policies
and procedures:
§
Establishes a clear framework for oversight and
management of PFI’s operations and for defining the
respective roles and responsibilities of the Board;
§
Structures itself to be effective in discharging its
responsibilities and duties;
§
Sets standards of behaviour expected of the Company’s
Management Team and representatives;
§
Safeguards the integrity of the Company’s financial
reporting;
§
Ensures timely and balanced disclosure;
§
Respects and facilitates the rights of shareholders;
§
Recognises and manages risk;
§
Encourages Board and Management Team effectiveness;
§
Ensures remuneration of Directors, employees and
contractors is fair and responsible; and
§
Recognises the legitimate interests of all stakeholders.
The Board has an obligation to protect and enhance the value of the assets of PFI for the benefit of shareholders. It achieves this
through approval of appropriate corporate strategies, with particular attention to capital structure, acquisition and divestment
proposals, capital expenditure and the review of the performance of the Management Team on a regular basis.
The Board delegates implementation of the adopted corporate strategies to the Management Team.
OTHER DISCLOSURES
86
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
Board Composition
The Company’s constitution requires the Company to comply with the minimum board composition requirements under the NZX
Listing Rules (being at least three directors). As at 31 December 2021, there were five Directors: four of whom are independent.
The NZX Listing Rules require at least two Independent Directors, and it is the Company’s policy that there should always be a
majority of Independent Directors.
The Directors of the Company who held the office during the 12 months to 31 December 2021, their status, date of appointment and
meeting attendances follows:
DIRECTOR STATUS
DATE OF
APPOINTMENT
LAST
RE-ELECTED
DATE
CEASED
TO BE A
DIRECTOR
MEETINGS
ATTENDED
(ELEVEN MEETINGS
HELD)
Anthony BeverleyIndependent Director
Board Chair
2 July 20013 June 2020N/A11
David ThomsonIndependent Director12 February 201819 May 2021N/A11
Dean BracewellIndependent Director
Nomination and Remuneration
Committee Chair
29 November 20193 June 2020N/A11
Gregory ReidyNon-Executive Director20 January 201219 May 2021N/A11
Susan PetersonIndependent Director
Audit and Risk Committee Chair
24 May 20168 May 2019N/A11
All current Directors are also Directors of the Company’s subsidiary, P.F.I. Property No. 1 Limited.
The Board reviews its performance as a whole as well as the performance of individual members and each committee.
Director Skills and Experience
A profile of each Director outlining their experience and length of service can be found on the PFI website. The Board strives to
ensure that PFI has the right mix of skills and experience for PFI to achieve its strategic goals. The skills and experience
represented on the Board are summarised in the diagram below:
Property
Financial
Governance
Executive Leadership
Health and Safety
Sustainability
Digital and Technology
Directors are encouraged to undertake continuing education to develop and maintain their skills and knowledge.
Director Independence
Director independence is determined in accordance with the requirements of the NZX Listing Rules. The Board has determined that,
as at 31 December 2021, the following Directors of the Company were independent: Anthony Beverley, David Thomson, Dean
Bracewell and Susan Peterson. This assessment is based on the fact that these Directors all share the following characteristics:
§
They are all Non-Executive Directors.
§
They are not currently, or within the last three years have not been, employed in an executive role by the Company, or any of its
subsidiaries, and / or there has been a period of at least three years between ceasing such employment and serving on the Board.
Key:
Strong skills or experience
Some skills or experience
87
§
They are not currently holding, or within the last 12 months they have not held, a senior role in a provider of material
professional services to the Company or any of its subsidiaries.
§
They do not currently have, or within the last three years they have not had, a material business relationship (e.g. as a supplier or
customer) with the Company or any of its subsidiaries.
§
They are not a substantial product holder of the Company, or a senior manager of, or a person otherwise associated with, a
substantial product holder of the Company.
§
They do not currently have, or within the last three years they have not had a material contractual relationship with the
Company or any of its subsidiaries, other than as a director.
§
They do not currently have close family ties with anyone in the categories listed above.
§
No director has been a Director with the Company for a length of time that may compromise independence.
The Board acknowledges Anthony Beverley’s length of tenure on the Board and notes that any change in Board composition needs
to be balanced with ensuring that necessary skills are retained on the Board.
The Board has concluded that Anthony Beverley’s length of tenure on the Board did not, and does not, influence the capacity for
Anthony Beverley to bring an independent view to decisions in relation to the Company, act in the best interests of the Company,
and represent the interests of the Company’s financial product holders generally, having regard to the factors described in the NZX
Code that may impact Director independence.
The Board noted Gregory Reidy is not considered to be independent by virtue of his role as Managing Director within the last three
years.
Details of Directors’ relevant interests in the Company’s financial products as at 31 December 2021 can be found in the section
entitled Principle Four: Reporting and Disclosure.
Under the Board Charter (described in further detail above), any Chief Executive Officer of PFI is not eligible to be appointed as the
Chair of the Board.
Director Appointments
In compliance with Listing Rule 2.7.1, each Director must not hold office without re-election past the third annual meeting following
the Director’s appointment or three years, whichever is longer. Any Director appointed by the Board must not hold office (without
re-election) past the next annual meeting following the Director’s appointment.
Where a Board vacancy arises or the Board otherwise determines a need to appoint a new Director, it is the responsibility of the
Nomination and Remuneration Committee to identify and nominate external candidates to fill Board vacancies as and when they
arise (see Principle Three below for further information). PFI enters into a formal written agreement with all new Directors, which
establishes the terms of their appointment.
Diversity and Inclusion
The breakdown of the gender composition of PFI’s Directors and Officers as at the end of the previous two financial years is as follows:
FINANCIAL YEAR
MALE FEMALE
DIRECTORSOFFICERSDIRECTORSOFFICERS
Year ending 31 December 20204310
Year ending 31 December 20214310
The Board believes that a diverse and inclusive work environment is critical to the sustainability of PFI. At PFI, diversity means
recognising and valuing the many ways that we are different. It includes differences that relate to gender, age, culture, ethnicity,
disability, religion, and sexual orientation, as well as differences in background, skills, perspective and experiences.
The Board has adopted a Diversity Policy to support an inclusive work environment where everyone is treated equitably and fairly
and is supported to be successful in their roles. The Board monitors PFI’s performance against the Diversity Policy through regular
employee engagement surveys to ensure that our overall work culture remains inclusive. The Board also sets Diversity and
Inclusion targets annually, which are monitored quarterly.
The Board is committed to taking steps that will see the diversity in the composition of both the Board and leadership team move
progressively over time. It is important to note that PFI is a small team comprising 16 permanent and dedicated team members and
that seven of these team members are female (2020: seven out of 14).
OTHER DISCLOSURES
88
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
Principle Three: Board Committees
The Board should use committees where this will enhance its effectiveness in key areas, while still retaining Board
responsibility.
Audit and Risk Committee
The Board has established an Audit and Risk Committee in accordance with the NZX Code. The Board has approved a written
charter that outlines the committee’s authority, duties, responsibilities, relationship with the Board and a policy on audit
independence. The committee develops and monitors procedures to ensure the Board is properly and regularly informed and
updated on corporate financial matters. The Board is required to regularly review the performance of the Audit and Risk Committee.
The Audit and Risk Committee’s functions include:
§
Recommending the appointment and removal of external auditors (see Principle Seven: Auditors for further detail);
§
Reviewing PFI’s financial reporting documents with the view to ensuring PFI maintains accurate financial and accounting
records; and
§
Reviewing earnings releases and financial reports.
In addition to the committee’s audit and financial reporting related functions, it is also responsible for providing a view on PFI’s
business and financial risk management process, including the adequacy of the overall control environment, independence from
management and controls in selected areas representing significant risk.
The Audit and Risk Committee generally meets four times a year, and at least twice a year (or more frequently if required) with the
Group’s auditor to review the outcome of the interim review (30 June) and annual audit (31 December). Employees only attend
Audit and Risk Committee meetings at the invitation of the committee.
The Audit and Risk Committee must have a minimum of three Directors as members, and the majority must be Independent
Directors. No executive may be a member of the Audit and Risk Committee. The Chair of the Board is not eligible to be chair of
the Audit and Risk Committee.
At 31 December 2021, the members of the Audit and Risk Committee were Susan Peterson (Chair of the Audit and Risk Committee),
Anthony Beverley and David Thomson. All were members of the committee at all times during 2021 and attended the four meetings
of the committee held during 2021.
Nomination and Remuneration Committee
The Board has also established a Nomination and Remuneration Committee in accordance with the NZX Code. The committee’s
role includes identifying and recommending individuals for nomination to be members of the Board and its committees and
regularly reviewing the remuneration policy. For further information on remuneration, see Principle Five: Remuneration. The Board
has approved a written charter to assist the committee to fulfil this purpose, which outlines the committee’s authority, duties,
responsibilities and relationship with the Board. The Board is required to regularly review the performance of the Nomination and
Remuneration Committee and undertakes a review annually of its objectives and activities.
When nominating candidates, the committee takes into account a range of factors as well as perceived needs of the Board at the
time. Some of these factors include qualifications, experience, requirements of the NZX Listing Rules and the ability to exercise an
independent perspective and informed judgement on matters that come before the Board. While the committee has the authority to
obtain legal or other independent professional advice, it may only nominate a person to be a Director of PFI with approval of the
Board.
The Nomination and Remuneration Committee must have at least two members, all of whom must be Independent Directors.
At 31 December 2021, the members of the Nomination and Remuneration Committee were Dean Bracewell (Chair of the
Nomination and Remuneration Committee), Anthony Beverley and Susan Peterson. All were members of the committee at all times
during 2021 and attended the six meetings of the committee held during 2021.
Other Committees
The Board does not consider that any additional Board committees need to be established as standing Board committees at
this stage.
89
Principle Four: Reporting & Disclosure
The Board should demand integrity in non-financial reporting, and in the timeliness and balance of corporate disclosures.
Continuous Disclosure Policy
PFI is committed to its obligation to inform shareholders and market participants of all material information that might affect
the price of its listed securities in accordance with the NZX Listing Rules and the Financial Markets Conduct Act 2013. Accordingly,
the Board has adopted a Continuous Disclosure Policy which applies to PFI, its subsidiary (the Group) and their respective Directors,
and all relevant employees of PFI. The Board has also appointed the Chief Finance and Operating Officer to act as the Group
Disclosure Officer. The Group Disclosure Officer is responsible for ensuring policy compliance and for investigating any alleged
breaches.
Corporate Governance Documents
PFI’s Board and committee charters, annual and interim reports, company announcements, the policies recommended in the
NZX Code and other investor-related material are available on PFI’s website.
Financial / Non-Financial Disclosure
PFI is committed to appropriate financial and non-financial reporting. Oversight of the Company’s financial reporting is applied
through the Audit and Risk Committee.
PFI is also committed to non-financial reporting and disclosure. You can find out more information on PFI’s approach to the
disclosure of environmental, social and governance matters on pages 22 – 39. You can find out more information about PFI’s
approach to risk management in the section entitled Principle Six: Risk Management.
Directors’ Relevant Interests
Details of Directors’ dealings in the Company’s financial products in the year ended 31 December 2021 are as follows:
DIRECTOR
NO. OF SHARES
(ACQUIRED)
CONSIDERATION
PER SHARE DATE
Susan Peterson146$2.793710 March 2021
Susan Peterson119$2.775524 May 2021
Susan Peterson112$2.96527 September 2021
Susan Peterson122$2.821523 November 2021
All of the above dealings were as a result of participation in PFI’s Dividend Reinvestment Scheme.
Details of Directors’ relevant interests in the Company’s financial products as at 31 December 2021 are as follows:
DIRECTOR NATURE OF RELEVANT INTEREST NUMBER OF SHARES
Susan PetersonBeneficial holder18,659
Gregory ReidyBeneficial holder155,708
Dean BracewellBeneficial holder20,000
No Director had a relevant interest in the Company’s bonds.
OTHER DISCLOSURES
90
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
Principle Five: Remuneration
The remuneration of Directors and executives should be transparent, fair and reasonable.
Director Remuneration
As noted under Principle Three, the Board, in setting the Directors’ remuneration, is to be guided by the Remuneration Policy that
forms part of the manual. The table below sets out the remuneration that was approved by shareholders at the 2021 PFI annual
meeting:
ROLE
$ PLUS GST
(IF ANY)
Board Chair170,000
Independent Director / Non-Executive Director 90,000
Audit and Risk Committee Chair15,000
Audit and Risk Committee Member7,500
Nomination and Remuneration Committee Chair10,000
Nomination and Remuneration Committee Member5,000
Hourly rates for abnormal and particularly time intensive projects or transactions outside the scope of typical
Board work
350 per hour
Other than as noted in this report, neither the Company nor its subsidiary have provided any other benefits to a Director for services
as a Director or in any other capacity.
Neither the Company nor its subsidiary have made loans to a Director.
Neither the Company nor its subsidiary have guaranteed any debts incurred by a Director.
The table below sets out the total remuneration received by the Company’s Directors during the year to 31 December 2021 and the
prior year comparative:
DIRECTOR ROLE
FEES PAID
2021
$000
FEES PAID
2020
$000
Anthony BeverleyBoard Chair7977
Independent Director87 83
Audit and Risk Committee Member––
Nomination and Remuneration Committee Member––
David ThomsonIndependent Director8783
Audit and Risk Committee Member5–
Dean Bracewell
1
Nomination and Remuneration Committee Chair107
Independent Director8783
Gregory Reidy Non-Executive Director 8783
Humphry Rolleston
2
Independent Director–35
Susan PetersonAudit and Risk Committee Chair1515
Independent Director87 83
Nomination and Remuneration Committee Member3–
Total 547548
1. Dean Bracewell was the Nomination and Remuneration Committee Chair from 1 March 2020.
2. Humphry Rolleston ceased to be a Director on 3 June 2020.
91
Employee Remuneration Strategy
The Board supports a remuneration strategy that is aligned to our investors’ interests and encourages the achievement of our
strategic objectives. The remuneration of the Chief Executive Officer and other employees is designed to attract and retain the most
talented and effective individuals. Packages include a base salary, together with a short-term and (in some cases) a long-term
incentive (LTI) component.
Chief Executive Officer Remuneration
The Chief Executive Officer’s remuneration is comprised of a base salary and benefits, a short-term incentive (STI) and participation
in PFI’s LTI plan.
The CEO’s STI is paid on achievement of annual targets that are aligned to the delivery of PFI’s key operational objectives, including
strategic execution targets, portfolio metrics, earnings, capital and liquidity measures, and leadership metrics. STI payments are
endorsed by the Nomination and Remuneration Committee and approved by the Board, based on achievement of the objectives and
targets.
Further details on the LTI plan can be found below.
Simon Woodhams’ remuneration as Chief Executive Officer over the past two reporting periods is set out below:
YEAR ENDING
SALARY
$
BENEFITS
3
$
SUBTOTAL
$
PAY FOR PERFORMANCE
TOTAL
REMUNERATION
$
STI
$
LTI
4
$
SUBTOTAL
$
31 December 2020$500,000$30,824$530,824$225,000$52,376$277,376$808,200
31 December 2021$550,000$40,199$590,199$250,000$68,107$318,107$908,306
Simon Woodhams’ participation in PFI’s LTI plan is as follows:
YEAR ENDING
SHARE RIGHTS
GRANTED
(SHARES)
SHARE RIGHTS
VESTED DURING
THE YEAR
5
(SHARES)
SHARE RIGHTS
LAPSED DURING
THE YEAR
(SHARES)
SHARE RIGHTS
OUTSTANDING AT
THE END OF THE
YEAR (SHARES)
31 December 202073,22452,817–77,225
31 December 202167,24275,231–69,236
Long Term Incentive Plan
LTIs are at-risk payments designed to align the reward of certain executives with the enhancement of shareholder value over a
multi-year period.
The current LTI plan commenced in the year ended 31 December 2019, and is a dividend protected share rights plan. Under the
plan, invited executives are granted a number of share rights determined by dividing the face value of the grant by the value of one
PFI share at the date of the grant. At vesting, subject to meeting performance hurdles, each share right is converted to one ordinary
share. The executive may also receive additional shares representing the value of dividends paid over the vesting period. The
executive is liable for tax on the shares received at this point.
Each grant under the LTI plan has three tranches with two separate performance hurdles applying to each tranche. The three
tranches enable a third of the share rights to vest after one year, two years and three years from the commencement date. For each
tranche:
§
50% of the share rights are subject to a performance hurdle of the Company’s rolling three year Funds From Operations growth
equalling or exceeding the three year CPI growth to the September immediately prior to the vesting date; and
§
50% of the share rights are subject to a performance hurdle of the Company’s Total Shareholder Returns (TSR) outperforming
the TSR of a property peer group (comprising other listed property issuers) over the period from the commencement date to the
vesting date for the relevant tranche.
3. Benefits include KiwiSaver and insurance.
4. The LTI is based on the fair value of the vested awards recognised in the financial statements.
5. The share rights vested does not include shares vesting as a result of dividend protection.
OTHER DISCLOSURES
92
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
Grants are intended to continue to be made annually with performance measured over a three year period.
The total share rights granted, vested, and lapsed during 2021 and 2020, and the share rights outstanding at the end of
31 December 2021 and 31 December 2020 are as follows:
YEAR ENDING
SHARE RIGHTS
GRANTED
(SHARES)
SHARE RIGHTS
VESTED DURING
THE YEAR
(SHARES)
6
SHARE RIGHTS
LAPSED DURING
THE YEAR
(SHARES)
SHARE RIGHTS
OUTSTANDING AT
THE END OF THE
YEAR (SHARES)
31 December 2020165,279120,434–175,527
31 December 2021155,174172,159–158,542
Employee Remuneration
During the years ended 31 December 2021 and 31 December 2020, the number of employees who received remuneration with a
combined total value exceeding $100,000
7
is set out below:
REMUNERATION RANGE
NUMBER OF EMPLOYEES
20212020
$900,001 – $910,0001–
$800,001 – $810,000–1
$750,001 – $760,0001–
$680,001 – $690,000–1
$370,001 – $380,0001–
$330,001 – $340,000–1
$210,001 – $220,0001–
$190,001 – $200,00011
$170,001 – $180,0001–
$160,001 – $170,0001–
$150,001 – $160,0001–
$130,001 – $140,00013
$110,001 – $120,00012
$100,001 – $110,0003–
6. The share rights vested does not include shares vesting as a result of dividend protection.
7. Includes LTI vested during the year based on the fair value of the vested awards recognised in the financial statements.
93
Principle Six: Risk Management
Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The Board
should regularly verify that the issuer has appropriate processes that identify and manage potential and material risks.
Risk Governance
The Board has established a Risk Management Framework to ensure that risks are managed within PFI’s Board-approved risk
appetite. The Risk Management Framework was last reviewed and approved by PFI’s Board in November 2021. The Risk
Management Framework establishes the following framework for risk governance:
ROLERESPONSIBILITY
BoardThe Board sets the risk appetite, risk tolerances and desired risk culture. It oversees the
assessment, management and reporting of key business risks.
Audit and Risk Committee
(A&RC)
The A&RC supports the Board by providing a specific focus on risk and compliance matters.
The A&RC is also responsible for PFI’s external audit arrangements.
Senior Leadership Team The Senior Leadership Team is responsible for ensuring compliance with the Risk Management
Framework and promoting good risk practices within their teams.
StaffAll staff at PFI have responsibility for identifying and managing risk. Business parameters
are set through policies, procedures, systems, processes and controls.
AssuranceThe Board seeks regular assurance on compliance with the Risk Management Framework,
on the promotion of good risk practices and that the business is operating within PFI’s Board-
approved risk appetite.
OTHER DISCLOSURES
94
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
Key Risks
PFI has a robust risk assessment process. Risk assessments are carried out by the Management Team at least annually in
accordance with PFI’s Risk Management Framework. A risk assessment includes identification of material risks, assessment of the
consequences and likelihood of the risk and development of controls to achieve a level of residual risk that is within PFI’s Board-
approved risk appetite.
The risks associated with the COVID-19 pandemic continued to be identified, recorded and closely monitored throughout 2021.
Management regularly reviewed these risks and adapted their response to the latest developments.
The table below outlines some of PFI’s key business risks following the latest refresh of its risk register, how these risks are
managed, and a commentary on these risks for 2021.
RISK DESCRIPTIONHOW PFI MANAGES THE RISK2021 COMMENTARY
Economic and market risk:
The risk of adverse changes in the
New Zealand economic environment,
political environment or the broader
investment market, impacting
property values and income.
We monitor both wider economic
conditions and the industrial property
market through research and
relationships with market participants.
Quarterly reporting on market
conditions is provided to the Board.
PFI has continued to carefully monitor the
impacts of the COVID-19 pandemic, supply
chain constraints, and other market
challenges during 2021. PFI has responded
early to address changing market conditions
and has achieved strong results during FY21.
Strategic risk:
The risk of failing to appropriately
set, execute or adapt PFI’s strategy
(for example, failing to ensure
portfolio optimisation or adapt to
changing market preferences).
PFI’s strategy is set by the Board. The
Management Team provides quarterly
reporting on strategy implementation to
the Board.
PFI refreshed its strategy during 2021 as
outlined on pages 10 – 15. Good progress has
been made during 2021 on the
implementation of PFI’s strategy. In
particular, PFI has:
§
acquired quality industrial properties in
Avondale, Wiri and Hastings; and
§
divested the non-core property at Carlaw
Park, Parnell.
Health, safety and wellbeing risk:
The risk of failing to manage health,
safety and wellbeing hazards at a
PFI property.
PFI’s formalised health, safety and
wellbeing framework sets out a system
of controls to ensure that health, safety
and wellbeing risks are actively
managed through a variety of risk
mitigants such as monitoring visits. This
is managed through PFI’s health and
safety committees with quarterly
reporting to the Board.
Continuous improvement of PFI’s health,
safety and wellbeing management has been
a key focus during 2021. PFI continues to
experience a low level of incidents. Further
information on health, safety and wellbeing
can be found in the Sustainability section of
this Annual Report.
Financial performance risk:
The risk of financial performance not
being managed to expectations.
PFI has a wide suite of controls for this
risk, including a delegations policy,
analytical reviews, forecasting,
budgeting, and proactive management.
PFI continues to carefully manage its
financial performance risk. Despite the
ongoing direct and indirect impacts of the
COVID-19 pandemic, PFI has achieved
record financial results during FY21.
Technology and cybersecurity risk:
The risk of PFI’s systems or data
becoming compromised, for example
due to a cyberattack or an outage.
PFI’s systems are managed by
competent third parties and protected
by a range of cybersecurity controls.
During 2021, PFI has continued to work with
suppliers to ensure that robust
cybersecurity controls are in place for its
systems.
PFI also completes annual climate change risk assessments. The risks identified through this assessment are embedded in a
range of risks on PFI’s risk register, including economic and market risk, emerging regulation risk and physical damage risk.
Further information on PFI’s climate-related risks can be found in the Climate-Related Disclosures section of this Annual Report
(pages 33 – 39).
95
Principle Seven: Auditors
The Board should ensure the quality and independence of the external audit process.
The Board is responsible for establishing the Company’s audit framework and ensuring that communication is maintained with
external auditors or accountants. The Audit and Risk Committee (see Principle Three) assists the Board in discharging these
responsibilities. Annexed to the Audit and Risk Committee Charter is a separate Policy on Audit Independence, which covers the
provision of services by external auditors.
Under the policy, it is the Audit and Risk Committee’s role to approve the appointment of PFI’s external auditors and assess PFI’s
internal controls and systems that support external financial reporting.
PFI’s external auditors are subject to a rotation system, which requires the external auditor or lead audit partner to change every
five years. There is also a mandatory stand down period before those partners can next be engaged by PFI. Neither will a former
Independent Contractor or employee of PFI be engaged in an external audit role within two years of ceasing to be employed by PFI.
The external auditor attends PFI’s Annual Meeting each year to answer any questions relating to the audit.
The Audit and Risk Committee must pre-approve all audit services, as well as all non-audit services provided by the auditor. The
Policy on Audit Independence sets out a number of principles to guide the committee in assessing whether the services could be
perceived as conflicting with the independent role of the auditor. To illustrate, approval will not be granted to produce financial
statements (such that they might be perceived as auditing their own work), implement financial systems, or perform any function of
management. This ensures that there is a clear separation between internal and external audit roles. The Audit and Risk Committee
monitors, and may limit, the amount of non-audit related work being undertaken by the firm holding office as auditor, if that work
may, in its opinion, impair the independence of the external auditor.
PFI does not have an internal audit function. The process it employs for evaluating and continually improving the effectiveness of its
risk management and internal processes can be found in the section entitled Principle Six: Risk Management.
Principle Eight: Shareholder Rights & Relations
The Board should respect the rights of shareholders and foster constructive relationships with shareholders that encourage
them to engage with the issuer.
PFI encourages an open dialogue with its shareholders and stakeholders. The manual, annual report, financial information, and all
NZX announcements are available on the Company’s website. PFI shareholders are encouraged to receive shareholder
communications electronically.
In respect of voting rights, PFI shareholders have one vote per share they hold in PFI, and will have the right to vote on major
decisions that may change the nature of PFI in accordance with the NZX Listing Rules.
In order for shareholders to fully participate in meetings, the Board endeavours to post the annual shareholders’ notice of meeting
on PFI’s website as soon as possible and at least 20 working days prior to the meeting. In 2021, a hybrid annual meeting was held
(providing for both virtual and in-person attendance), allowing wider participation by shareholders.
OTHER MATTERS
Directors’ Interests Register
During the year, the Board authorised the renewal of the Directors’ and Officers’ insurance cover as at 30 June 2021 for a period of
12 months and has certified, in terms of section 162 of the Companies Act 1993, that this cover is fair to the Company.
As permitted by the Company’s constitution and the Companies Act 1993, the Company has also executed a deed indemnifying its
Directors against potential liabilities and costs they may incur for acts or omissions in their capacity as Directors of the Company
and its subsidiary.
Please refer to the Directors’ Relevant Interests section above for information regarding the acquisition and disposal of relevant
interests in the Company’s financial products by its Directors.
No Director has sought authorisation to use Company information.
OTHER DISCLOSURES
96
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
Section 140(1) of the Companies Act 1993 requires a director of a company to disclose certain interests. Under subsection (2) a
director can make disclosure by giving a general notice in writing to the company of a position held by a director in another named
company or entity. The following are details of Directors’ general disclosures entered in the Interests Register for the Company
during the 12 months ending 31 December 2021. Any entry added by notices given by the Directors during the year ended 31
December 2021 is denoted with *. Any entry removed by notices given by the Directors during the year ended 31 December 2021 is
denoted with ~.
DIRECTOR POSITION COMPANY
Anthony BeverleyDirector; Chair of Audit and Risk Committee ~;
Chair of Board *
Arvida Group Limited
Dean BracewellDirectorTainui Group Holdings Limited
Executive Board MemberHalberg Foundation
DirectorAra Street Investments Limited
DirectorAir New Zealand Limited
DirectorPort of Tauranga Limited *
Gregory ReidyDirectorMcDougall Reidy & Co Limited ~
DirectorMRC LP Limited ~
DirectorResidentiae Group Limited ~
DirectorThirty Enfield Limited ~
DirectorDMD (GP) Limited (as General Partner of
DMD Limited Partnership) ~
DirectorMRC2 Limited
DirectorRWP LP Limited ~
DirectorResidentiae (Edwin Street) GP Limited (as
General Partner of Residentiae (Edwin
Street) Limited Partnership)
DirectorH&R MRC Limited
DirectorResident Properties Limited
DirectorArea Management Limited
TrusteeGrammar Rugby Incorporated
DirectorReidy & Co Limited
DirectorMSR GP Limited (as General Partner of
MSR Limited Partnership)
Susan PetersonDirector; Chair of Nomination and Remuneration
Committee ~; Chair of Board *
Vista Group International Limited
Director; Chair of Remuneration CommitteeXero Limited
Director; Chair of Nominations and Governance
Committee; Chair of People and Remuneration Committee
Trustpower Limited ~
Director; Co-Chair of BoardOrganic Initiative Limited ~
Board MemberGlobal Women
MemberNZX Markets Disciplinary Tribunal ~
DirectorArvida Group Limited
Director; Chair of Remuneration CommitteeCraigs Investment Partners Limited *
97
Other than noted in this report, there were no other interests register entries recorded for the Company or its subsidiary for the year
ended 31 December 2021.
Donations
The Company made the following donations during 2021:
§
$5,000 to the Auckland City Mission to help with emergency food parcels for families and individuals in need during the
COVID-19 lockdown.
§
$5,000 to Motor Neurone Disease New Zealand to fund research and provide support for sufferers of motor neurone disease in
New Zealand.
The Company is a sponsor of the Keystone New Zealand Property Education Trust and paid the Trust $10,000 by way of
sponsorship during the year.
The subsidiary did not make any donations during the year.
Substantial Product Holders as at 31 December 2021
As at 31 December 2021, the total number of ordinary shares on issue was 505,493,668. The Company has only ordinary shares on
issue.
The persons who, for the purposes of section 293 of the Financial Markets Conduct Act 2013, were substantial product holders as
at 31 December 2021 are:
SECURITY HOLDER
NO. OF SHARES WHEN
NOTICE WAS FILED
% WHEN NOTICE
WAS FILED
ANZ New Zealand Investments Limited, ANZ Bank New Zealand Limited
and ANZ Custodial Services New Zealand Limited
41,932,2198.328%
Accident Compensation Corporation (ACC)32,238,5166.403%
Details of Dividends Paid
The following dividends have been paid by the Company in the past two financial years:
DIVIDENDS DATE PAID
CENTS PER
SHARE
TOTAL
PAID
2021
$000
TOTAL
PAID
2020
$000
Q4 2019 final dividend4 March 20202.1510,723
Q1 2020 interim dividend26 May 20201.808,978
Q2 2020 interim dividend22 September 20201.808,997
Q3 2020 interim dividend18 November 20201.859,261
Q4 2020 final dividend10 March 20212.2511,279
Q1 2021 interim dividend24 May 20211.809,045
Q2 2021 interim dividend7 September 20211.809,063
Q3 2021 interim dividend23 November 20211.859,332
Total dividends per statement of changes in equity 38,719 37,959
NZX Waivers
The Company did not rely on any NZX waivers during 2021.
OTHER DISCLOSURES
98
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
SHAREHOLDER STATISTICS
GEOGRAPHICAL SPREAD AS AT 31 JANUARY 2022
ORDINARY SHARES HOLDING
%
HOLDING
Auckland & Northern Region 192,572,031 38.11%
Hamilton & Surrounding
Districts
107,579,228 21.28%
Wellington & Central Districts 137,148,884 27.13%
Dunedin & Southland 36,419,472 7.20%
Nelson, Marlborough &
Christchurch
13,761,135 2.72%
Overseas 18,012,918 3.56%
Total 505,493,668 100.00%
SHAREHOLDER SPREAD AS AT 31 JANUARY 2022
ORDINARY SHARES
NUMBER
OF
HOLDERS HOLDING
%
HOLDING
Up to 4,999 1,324 3,274,948 0.64%
5,000 - 9,999 1,117 7,937,010 1.57%
10,000 - 49,999 2,247 47,683,992 9.43%
50,000 - 99,999 346 23,245,853 4.60%
100,000 - 499,999 266 51,890,189 10.27%
500,000 and above 91 371,461,676 73.49%
5,391 505,493,668 100.00%
20 LARGEST REGISTERED SHAREHOLDERS AS AT 31 JANUARY 2022
HOLDER HOLDING
%
HOLDING
Custodial Services Limited 58,477,569 11.57%
Accident Compensation Corporation - NZCSD 33,685,470 6.66%
ANZ Wholesale Trans-Tasman Property Securities Fund - NZCSD 25,752,347 5.09%
FNZ Custodians Limited 25,128,082 4.97%
Forsyth Barr Custodians Limited 22,987,549 4.55%
BNP Paribas Nominees (NZ) Limited - NZCSD 16,240,206 3.21%
Citibank Nominees (New Zealand) Limited - NZCSD 15,618,883 3.09%
New Zealand Depository Nominee Limited 14,895,794 2.95%
HSBC Nominees (New Zealand) Limited - NZCSD 12,374,680 2.45%
ANZ Wholesale Property Securities - NZCSD 8,534,445 1.69%
Tea Custodians Limited, Client Property Trust Account - NZCSD 8,073,922 1.60%
MFL Mutual Fund Limited - NZCSD 7,351,171 1.45%
Messrs. Wildermoth, Wilson and Young and Ms Wildermoth 7,331,480 1.45%
Investment Custodial Services Limited 6,947,725 1.37%
JBWere (NZ) Nominees Limted 5,780,061 1.14%
Mr. Mckee and Ms. Mckee 5,566,373 1.10%
PT (Booster Investments) Nominees Limited 4,927,634 0.97%
Masfen Securities Limited 4,767,744 0.94%
Heatherfield Investments Limited 4,199,149 0.83%
Simplicity Nominees Limited - NZCSD 3,513,483 0.70%
Shares held by top 20 shareholders 292,153,767 57.80%
Balance of shares 213,339,901 42.20%
Total of issued shares 505,493,668 100.00%
99
BONDHOLDER SPREAD: PFI010 AS AT 31 JANUARY 2022
BONDS
NUMBER
OF
HOLDERS HOLDING
%
HOLDING
5,000 - 9,999 65 347,000 0.35%
10,000 - 49,999 410 7,825,000 7.83%
50,000 - 99,999 45 2,655,000 2.66%
100,000 - 499,999 38 5,719,000 5.72%
500,000 - 999,999––0.00%
1,000,000 and above 13 83,454,000 83.44%
Total 571 100,000,000 100.00%
BONDHOLDER SPREAD: PFI020 AS AT 31 JANUARY 2022
BONDS
NUMBER
OF
HOLDERS HOLDING
%
HOLDING
5,000 - 9,999 40 229,000 0.23%
10,000 - 49,999 204 4,169,000 4.17%
50,000 - 99,999 29 1,601,000 1.60%
100,000 - 499,999 27 3,876,000 3.88%
500,000 - 999,999 6 4,167,000 4.17%
1,000,000 and above 8 85,958,000 85.95%
Total 314 100,000,000 100.00%
BONDHOLDER STATISTICS
20 LARGEST REGISTERED BONDHOLDERS AS AT 31 JANUARY 2022
HOLDER
PFI 010
HOLDING
PFI010 %
HOLDING
PFI 020
HOLDING
PFI020 %
HOLDING
Custodial Services Limited 22,477,000 22.48% 32,402,000 32.40%
Forsyth Barr Custodians Limited 21,690,000 21.69% 17,934,000 17.93%
FNZ Custodians Limited 10,173,000 10.17% 11,435,000 11.44%
Citibank Nominees (New Zealand) Limited - NZCSD – 0.00% 10,037,000 10.04%
National Nominees Limited - NZCSD 8,557,000 8.56% – 0.00%
Generate Kiwisaver Public Trust Nominees Limited - NZCSD 1,589,000 1.59% 5,813,000 5.81%
NZPT Custodians (Grosvenor) Limited - NZCSD 4,300,000 4.30% 780,000 0.78%
HSBC Nominees (New Zealand) Limited - NZCSD 4,075,000 4.08% 3,900,000 3.90%
Tea Custodians Limited Client Property Trust Account - NZCSD 3,392,000 3.39% 3,260,000 3.26%
Investment Custodial Services Limited 1,950,000 1.95% 729,000 0.73%
Hobson Wealth Custodian Limited 1,895,000 1.90% 1,177,000 1.18%
Forsyth Barr Custodians Limited 1,202,000 1.20% 891,000 0.89%
FNZ Custodians Limited 1,115,000 1.12% 667,000 0.67%
JBWere (NZ) Nominees Limited 1,039,000 1.04% – 0.00%
JML Capital Limited – 0.00% 600,000 0.60%
Sterling Holdings Limited – 0.00% 500,000 0.50%
Investment Custodial Services Limited 350,000 0.35% – 0.00%
FNZ Custodians Limited 340,000 0.34% 153,000 0.15%
Forsyth Barr Custodians Limited 322,000 0.32% 290,000 0.29%
Kiwigold.co.nz Limited – 0.00% 300,000 0.30%
Forsyth Barr Custodians Limited 295,000 0.30% – 0.00%
Hobson Wealth Custodian Limited 283,000 0.28% – 0.00%
Custodial Services Limited 280,000 0.28% 198,000 0.20%
Dunedin Diocesan Trust Board – 0.00% 250,000 0.25%
Hobson Wealth Custodian Limited 233,000 0.23% – 0.00%
Custodial Services Limited – 0.00% 223,000 0.22%
Bonds held by top 20 Bondholders 85,557,000 85.56% 91,539,000 91.54%
Total Remaining Holders Balance 14,443,000 14.44% 8,461,000 8.46%
Total of issued Bonds 100,000,000 100.00% 100,000,000 100.00%
OTHER DISCLOSURES
100
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
GRI INDEX
GENERAL DISCLOSURES
DISCLOSURE TITLEGRILOCATION OR REFERENCE
Organisational Profile
Name of the organisation102 - 1Property for Industry Limited
Activities, brands, products and services102 - 2https://www.propertyforindustry.co.nz/about-pfi/
Location of headquarters102 - 3 https://www.propertyforindustry.co.nz/contact-us/
Location of operations102 - 4https://www.propertyforindustry.co.nz/investor-centre/
portfolio-summary/
Ownership and legal form102 - 5https://www.propertyforindustry.co.nz/about-pfi/
Markets served102 - 6https://www.propertyforindustry.co.nz/investor-centre/
portfolio-summary/
Scale of the organisation102 - 7i. https://www.propertyforindustry.co.nz/about-pfi/our-people/
ii. PFI is a single operation
iii. Statement of comprehensive income, page 42
iv. Statement of financial position, page 44
v. https://www.propertyforindustry.co.nz/investor-centre/
portfolio-summary/
Information on employees and other workers102 - 8As of 31 December 2021, we have a team of 16 permanent staff
(nine male and seven female) based in Auckland, and two
contractors. This information is acquired during the recruitment
process and maintained in personnel records.
PFI also relies on third-party providers for a number of its
activities, most notably facilities management and development
activities.
There are no seasonal variances in these numbers.
Supply chain102 - 9PFI’s supply chain primarily comprises local facilities managers
and construction partners.
Significant changes to the organisation and
its supply chain
102 - 10None
Precautionary Principle or approach102 - 11PFI applies the Precautionary Principle when conducting day to
day activities, acquiring and selling properties, and completing
refurbishments and property development.
External initiatives 102 - 12N/A
Membership of associations102 - 13Property Council of New Zealand, New Zealand Green Building
Council
Strategy
Statement from senior decision-maker102 - 14The Evolving Sustainability Landscape, page 22
Ethics and Integrity
Values, principles, standards, and norms of
behaviour
102 - 16https://www.propertyforindustry.co.nz/about-pfi/governance/
101
DISCLOSURE TITLEGRILOCATION OR REFERENCE
Governance
Governance structure102 - 18https://www.propertyforindustry.co.nz/about-pfi/governance/
Stakeholder Engagement
List of stakeholder groups102 - 40Delivering for our Investors, page 31
Collective bargaining agreements102 - 41None
Identifying and selecting stakeholders102 - 42Stakeholders are identified as people or organisations that have
a key interest in PFI, or who could be materially affected by its
activities.
Approach to stakeholder engagement 102 - 43Delivering for our Investors, page 31
Key topics and concerns raised102 - 44Delivering for our Investors, page 31. PFI’s response to key
topics and concerns is provided throughout its sustainability
reporting, pages 22 – 39
Reporting Practices
Entities included in the consolidated financial
statements
102 - 45Page 48
Defining report content and topic boundaries102 - 46Delivering for our Investors, page 31
List of material topics102 - 47Delivering for our Investors, page 31
Restatements of information102 - 48PFI has restated its carbon footprint for FY20 due to an
overstatement pertaining to Scope 3, Category 1 and Category
2 emissions. Total emissions in FY20 were originally reported
as 3,927.9 tCO
2
e; they have been restated as 2,823.7 tCO
2
e.
Changes in reporting102 - 49None
Reporting period102 - 501 January 2021 – 31 December 2021
Date of most recent report102 - 51February 2021 (2020 Annual Report)
Reporting cycle102 - 52Annual
Contact point for questions regarding the
report
102 - 53info@pfi.co.nz
Claims of reporting in accordance with the
GRI standards
102 - 54This report has been prepared in accordance with the GRI
Standards: Core option.
GRI content index102 - 55Pages 100 – 102 of this report.
External assurance 102 - 56Our sustainability-related reporting has not been externally
assured for 2021. We did, however, receive an external review of
our carbon footprint from Ekos.
OTHER DISCLOSURES
102
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT 2021
TOPIC SPECIFIC DISCLOSURES
DISCLOSURE TITLEGRILOCATION OR REFERENCE
Emissions
Topic boundaries103 - 1Our Value Chain Emissions, page 28; Responsible Property
Ownership, pages 29 – 30
Management approach103 - 2Our Value Chain Emissions, page 28; Responsible Property
Ownership, pages 29 – 30
Evaluation of management approach103 - 3 Responsible Property Ownership, pages 29 – 30; Delivering for
Our Investors, pages 31– 32
GHG emissions Scope 1305 - 1Our Value Chain Emissions, page 28
GHG emissions Scope 2305 - 2Our Value Chain Emissions, page 28
GHG emissions Scope 3305 - 3Our Value Chain Emissions, page 28
Occupational health and safety
Topic boundaries103 - 1Taking Care of Our Team, page 26; Looking After Our Tenants,
page 27
Management approach103 - 2Taking Care of Our Team, page 26; Looking After Our Tenants,
page 27
Evaluation of management approach103 - 3 Taking Care of Our Team, page 26; Looking After Our Tenants,
page 27
Hazard identification, risk assessment, and
incident investigation
403 - 2Taking Care of Our Team, page 26; Looking After Our Tenants,
page 27
Work-related injuries403 - 9H&S incidents, page 27
Diversity and equal opportunity
Topic boundaries103 - 1PFI Diversity Policy, https://www.propertyforindustry.co.nz/
about-pfi/governance/
Management approach103 - 2PFI Diversity Policy, https://www.propertyforindustry.co.nz/
about-pfi/governance/
Evaluation of management approach103 - 3 PFI Diversity Policy, https://www.propertyforindustry.co.nz/
about-pfi/governance/
Diversity of governance bodies and
employees
405 - 1Diversity and Inclusion, page 87; GRI Index 102-8 Information on
employees and other workers, page 100
Sustainable design
Topic boundaries103 - 1Responsible Property Ownership, pages 29 – 30
Management approach103 - 2Responsible Property Ownership, pages 29 – 30
Evaluation of management approach103 - 3 Responsible Property Ownership, pages 29 – 30
Economic performance
Topic boundaries103 - 1Page 1; Our ESG Strategy, page 31
Management approach103 - 2Crystal clear about our focus, pages 10 – 15
Evaluation of management approach103 - 3Crystal clear about our focus, pages 10 – 15
Financial implications and other risks and
opportunities due to climate change
201 - 2Climate-Related Disclosures, pages 33 – 39
GRI INDEX
103
2022
FEBRUARY
§
2021 Full-year announcement
§
2021 Annual report released
MARCH
§
2021 Final dividend payment
MAY
§
2022 First-quarter announcement
§
Annual meeting
§
2022 First-quarter dividend payment
AUGUST
§
2022 Half-year announcement
§
2022 Interim financial statements
released
SEPTEMBER
§
2022 Half-year dividend payment
NOVEMBER
§
2022 Third-quarter announcement
§
2022 Third-quarter dividend payment
2023
FEBRUARY
§
2022 Full-year announcement
§
2022 Annual report released
MARCH
§
2022 Final dividend payment
ISSUER OF SHARES AND BONDS
Property for Industry Limited
Shed 24, Prince’s Wharf
147 Quay Street
PO Box 1147
Auckland 1140
Tel: +64 9 303 9450
propertyforindustry.co.nz
info@propertyforindustry.co.nz
DIRECTORS
Anthony Beverley (Chair)
David Thomson
Dean Bracewell
Gregory Reidy
Susan Peterson
CHIEF EXECUTIVE OFFICER
Simon Woodhams
Tel: +64 9 303 9652
woodhams@propertyforindustry.co.nz
CHIEF FINANCE AND OPERATING
OFFICER
Craig Peirce
Tel: +64 9 303 9651
peirce@propertyforindustry.co.nz
AUDITOR
PricewaterhouseCoopers
Level 27, PwC Tower
15 Customs Street West
Private Bag 92162
Auckland 1142
Tel: +64 9 355 8000
CORPORATE LEGAL ADVISOR
Chapman Tripp
Level 34, PwC Tower
15 Customs Street West
PO Box 2206
Auckland 1140
Tel: +64 9 357 9000
VALUATION PANEL
Bayleys Valuation Limited
CBRE Limited
Colliers International New Zealand
Limited
Jones Lang LaSalle Limited
Savills (NZ) Limited
BANKERS
ANZ Bank New Zealand Limited
Bank of New Zealand
Commonwealth Bank of Australia
Westpac New Zealand Limited
SECURITY TRUSTEE
New Zealand Permanent Trustees
Limited
SAP Tower, Level 16,
151, Queen Street, Auckland 1010
PO Box 1598
Auckland 1140
Tel: 0800 371 471
BOND SUPERVISOR
Public Trust
SAP Tower, Level 16,
151, Queen Street, Auckland 1010
PO Box 1598
Auckland 1140
Tel: +64 9 985 5300
REGISTRAR
Computershare Investor
Services
159 Hurstmere Road
Private Bag 92119
Auckland 1142
Tel: +64 9 488 8777
investorcentre.com/nz
This Annual Report, including the Corporate Governance statement, is dated
21 February 2022 and signed on behalf of the Board by:
Anthony Beverley Susan Peterson
Chair Chair, Audit and Risk Committee
DIRECTORYCALENDAR
insight
creative.co.nz
PFI193
www.propertyforindustry.co.nz
YOUR
INDUSTRIAL
PROPERTY
EXPERTS
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