FY22 Results
25137519
IMMEDIATE – 18 May 2022
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Annual Report
2022
2 Financial Highlights
4 Portfolio Highlights
6 Chair’s Letter
10 Board of Directors
12 Manager’s Report
14 Portfolio Overview
16 Targeted Growth
20 Strategically Located Portfolio
22 Rental Growth
24 Proactive Capital Management
28 Climate-related Disclosures
36 Financial Summary
38 Consolidated Financial Statements
71 Independent Auditor’s Report
74 Corporate Governance
92 Statutory Disclosures
100 Glossary
101 Corporate Directory
Contents
Investore has been designated as a “Non-Standard”
(NS) issuer by NZX. A copy of the waivers granted by
NZX from NZX Listing Rules 2.2.1 to 2.8.1 and 2.10.1 in
respect of Investore’s “NS” designation can be found at
www.nzx.com/companies/IPL/documents
Investore Property Limited Annual Report 20221
100%
debt hedged or fixed,
with no debt facilities
maturing until FY24
$125m
5 year listed bonds
issued February 2022
at 4.00% per annum
interest rate
29.5%
Loan to Value Ratio
2
as
at 31 March 2022, with
$120m bank debt
facility headroom,
providing capacity for
future growth
3
$34.3m
profit before other income
/ (expense) and income tax
from FY21
Up $4.3m
7.90 cents
per share cash dividend
for FY22
from FY21
Up 0.30 cents
3.77%
weighted average interest
rate as at 31 March 2022
as at 31 March 2021, due to Investore’s
proactive management of debt
Down from 4.04%
$118.2m
profit after income tax
from FY21due to a lower
revaluation movement
Down $43.1m
$29.9m
distributable profit
1
after
current income tax
from FY21
Up $0.8m
Financial
Highlights
For the 12 months ended
31 March 2022 (FY22)
1. See glossary on page 100.
2. Loan to Value Ratio (LVR) is calculated based on
independent valuations, which include seismic works to
be funded by Stride Property Limited (SPL) in relation to
2 Carr Road, Auckland, acquired from SPL and settled
in April 2020. The independent valuations also exclude
lease liabilities.
3. If this headroom was fully utilised, then Investore’s LVR
would be 35.9% (on a pro forma 31 March 2022 basis).
Investore Property Limited Annual Report 20222 Investore Property Limited Annual Report 20223 Investore Property Limited Annual Report 20222 Investore Property Limited Annual Report 20223
Portfolio
Highlights
All values are as at 31 March 2022,
unless otherwise stated
Investore’s strategy is
to invest in quality, large
format retail properties
throughout New Zealand,
and actively manage
shareholders’ capital, to
maximise distributions
and total returns over the
medium to long term.
99.7%
portfolio occupancy by area
$1.2bn
portfolio value
1
, with a
net valuation increase for
FY22 of $91m or 8.2%
$84.3m
portfolio acquisitions
2
9.1 years
Weighted Average
Lease Term (WALT)
1. Portfolio value excludes (1) seismic works ($3.0m) to be completed by SPL in relation to 2 Carr Road, Auckland, acquired from SPL and settled on 30 April 2020;
and (2) lease liabilities.
2. Comprises the acquisitions of Countdown, Petone for $37.3m, 4 Carr Road, Mt Roskill for $36.0m and an adjoining unit to Countdown, Meadowbank for $0.6m and the
acquisition of the property at Waimak Junction, Kaiapoi, for $10.5m, which acquisition remains conditional.
2.9%
increase in rentals as a
result of 76 rent reviews
completed across
100,533 sqm (40.2%
of the total portfolio)
4.81%
average property market
capitalisation rate
from 31 March 2021
Down 0.4%
4 Carr Road, Mount Roskill, Auckland
Investore Property Limited Annual Report 20224 Investore Property Limited Annual Report 20225
Chair’s
Letter
1. See glossary on page 100.
2. Committed acquisitions and developments
comprise the acquisition of the land at Waimak
Junction, Kaiapoi, (which acquisition remains
conditional), the completion of Stage 1 of the
development with an estimated cost (including
land) of $32.6 million and other capital
commitments of $22.7 million.
Dear Investors,
The Board of Directors of Investore
is pleased to present the Annual
Report for the year ended 31 March
2022 (FY22). Investore’s focus
during FY22 has been on pursuing
its strategy of targeted growth and
taking a proactive and prudent
approach to capital management.
The market for large format retail properties has
remained strong during the last year. Evidencing this
demand, Investore’s portfolio is independently valued
at $1.2 billion as at 31 March 2022, a net valuation
increase of $91.0 million or 8.2% over the 12 months
from 31 March 2021. This increase has been driven
primarily by capitalisation rate compression which
evidences the continued desirability of Investore’s large
format retail portfolio.
Financial Results
The Investore Board is pleased to report positive financial
results for the 12 months to 31 March 2022. Investore
reported strong operating performance for FY22, with
profit before other income/(expense) and income tax
of $34.3 million, up $4.3 million from FY21. This was
primarily due to increased net rental income of
$58.3 million (FY21: $55.8 million), due in part to income
from the two acquisitions completed during FY22,
partially offset by the reduction in rental income as a
result of the sale of the MacLaggan Street, Dunedin,
property in August 2021. The rent increases achieved
during FY22 of 2.9% across 76 rent reviews, reflecting
40.2% of the total portfolio space, also contributed to
higher net rental income.
Total corporate expenses were slightly higher than
FY21 (FY22: $10.0 million; FY21: $9.2 million), due
primarily to higher asset management fees, which are
calculated as a percentage of the value of Investore’s
portfolio and accordingly rise as the Investore portfolio
increases in value. Higher administration expenses
(FY22: $2.6 million; FY21: $2.2 million) also contributed
to overall higher corporate expenses.
Finance expenses were lower in FY22 ($14.0 million)
compared with FY21 ($16.6 million), due in large part
to the prior year being impacted by swap termination
expenses of $3.6 million.
The net change in the fair value of Investore’s investment
properties of $91.0 million contributed to profit after
income tax for FY22 of $118.2 million, which was
$43.1 million lower than FY21 due primarily to a lower
net change in fair value of investment properties. The
lower net change in fair value of investment properties in
FY22 compared with FY21 is substantially driven by the
impact of COVID-19 on investment property valuations
as at 31 March 2020, which resulted in a significant net
increase in fair value of investment properties of
$139.3 million for FY21.
Distributable profit
1
after income tax was $29.9 million
for FY22, up $0.8 million from FY21.
Investore’s financial results include the impact of
COVID-19 rent abatements provided by Investore to
its tenants. As at 30 September 2021, Investore had
provided for rent abatements of $1.0 million, following
the introduction by the Government of legislation
mandating all commercial landlords to provide rent
abatement to tenants impacted by COVID-19 lockdowns.
Having largely concluded all negotiations relating to
rent abatements for the FY22 lockdown periods (which
primarily impacted Auckland and Hamilton), this has
resulted in a reduction in distributable profit for FY22 of
$0.7 million.
Investore’s focus on large format retail properties
resulted in rent abatements being relatively minor
compared to overall gross rent (1.0% of gross rent
for FY22), due to the resilience of large format retail
properties and the large proportion of tenants that
provide essential services within Investore’s portfolio.
Investore also benefitted from its geographically diverse
portfolio as many stores throughout the country were
only subject to Level 3 or 4 trading restrictions for a short
period of time as 63% of tenants (by Contract Rental
1
) are
located outside of the Auckland region.
Investore expects all current tenants to remain open
and trading under all traffic light settings under the
Government’s current COVID-19 Protection Framework,
implemented in December 2021.
Growth in Portfolio
Investore has delivered on its strategy of targeted growth
during FY22, completing the acquisition of two high
quality large format retail properties for a combined
purchase price of $73.3 million. Investore will undertake
acquisitions which improve the quality and earnings
profile of its portfolio and deliver on its strategy of
maximising returns to investors over the medium to
long term.
The two acquisitions completed during FY22 (being
Countdown, Petone and 4 Carr Road, Mt Roskill)
evidence this approach – both properties have long
WA LTs
1
of 11 years and 10 years respectively as at the
date of their acquisition, and both are fully occupied.
The quality of these properties is evidenced by their
valuation increase, with the combined gross value of both
of these properties having increased by $1.0 million as at
31 March 2022.
Investore delivers growth not just from acquisitions, but
also from continuing to develop and optimise its current
portfolio in response to tenant demand. There has been
considerable activity in this regard during FY22, including
building extensions and refurbishments, and enhancing
customer experiences such as through online pick up
bays. Improving Investore’s existing portfolio in this way
drives growth in income through rentalised returns and
increased asset value, delivering value to investors.
Proactive Capital Management
The Investore Board has a strategy of proactively
managing capital, and this is particularly important in
a rising interest rate environment. In February 2022,
Investore successfully completed its third NZX listed
bond issuance, issuing $125 million of 5 year senior
secured fixed rate bonds at a 4.00% per annum interest
rate, reflecting an issue margin of 1.15% per annum.
At the time of issue this was New Zealand’s lowest
ever issue margin for a non-rated issuer, which reflects
strong ongoing bondholder support for Investore, and
confidence in the resilient characteristics of its portfolio.
The proceeds from the bond issue were used to
repay existing bank debt facilities, resulting in lower
overall interest costs and extending the weighted average
tenor of Investore’s debt to 4.0 years as at 31 March
2022. As at 31 March 2022, 100% of Investore’s debt
was hedged or subject to a fixed rate of interest, with
a weighted average interest rate of 3.77%, down from
4.04% as at 31 March 2021, primarily due to the issue
of the fixed rate bonds in February 2022. In the current
rising interest rate environment and given the material
nature of interest costs to Investore’s business, the
Investore Board is pleased to be taking a conservative
approach to its cost of debt.
Investore also has significant amounts of available debt
facility headroom, providing Investore with capacity to
continue its targeted growth strategy. After allowing
for current commitments for acquisitions, capital
refurbishments and developments, Investore has
$65 million of undrawn debt facilities available
2
.
During FY22, the Investore Board reviewed its loan
to value ratio (LVR) policy, reducing its target LVR to
between 30% and 40% on a long term basis. If Investore
utilised all available debt facility headroom, its LVR would
be 35.9%, which is near the midpoint of the revised
Board policy.
Investore Property Limited Annual Report 20226 Investore Property Limited Annual Report 20227
Governance and Sustainability
Sustainability has been a focus for the Investore Board
during FY22, as Investore seeks to ensure that its
business is operated in a sustainable manner, while
also meeting the demands of tenants, investors and
customers. Sustainability considerations have become
a key part of the Board’s decision making on all material
decisions, including acquisitions, capital upgrade works
and developments.
During FY22 the Board considered the appropriate
structure for overseeing sustainability matters for
Investore, and considered that responsibility should
remain with the whole Board. This was due to the smaller
size of the Board, as well as the integrated nature of key
business decisions and sustainability. An amended Board
Charter recording Investore’s approach and commitment
to sustainability and environmental management was
adopted by the Board, along with a sustainability policy.
Investore is currently in the process of assessing its
greenhouse gas emissions, which will assist it to set
emissions reduction targets. Investore has completed an
initial climate risk assessment with the assistance of its
Manager, and this has formed part of Investore’s climate-
related disclosures contained in this report (see page
28 and following), which are intended to align with the
framework of the Taskforce on Climate-related Financial
Disclosures.
As investors will be aware, Emma McDonald joined the
Board as a Future Director as part of the Institute of
Directors “Future Directors” programme in April 2020.
The programme is designed to encourage directorship
by giving aspiring directors the opportunity to observe a
company board and receive mentoring from experienced
directors. Having completed two years as a Future
Director, Emma will shortly be leaving the Board to
continue her leadership and governance career. Emma
has been a valued participant on the Board, providing
industry insight and fresh thinking, and we wish her all the
very best in her future governance career.
The Board intends to continue to support the Future
Directors programme and will actively look for a suitable
replacement for Emma.
Manager
Investore’s Manager, Stride Investment Management
Limited (SIML), has again ably supported Investore in
another challenging year, given the level of activity within
the business and its portfolio, together with the extra
complications as a result of the impacts of COVID-19 on
Investore’s business. The Board remains pleased with the
level of support shown by SIML and the services provided
by SIML.
For FY22, $8.7 million of management fees were
incurred to SIML. Excluding performance fees and
project management fee expenses, the management fees
incurred to SIML for FY22 equate to 0.56% of the value
of Investore’s assets under management as at 31 March
2022. FY22 fees were 3.1% higher than FY21 fees of
$8.4 million, primarily due to higher asset management
fees which are directly related to the value of Investore’s
portfolio and accordingly rise as the value of the portfolio
increases. FY22 asset management fees are 15.5%
higher than FY21, which equates to the increase in
overall portfolio value between 31 March 2021 and
31 March 2022. The higher asset management fees were
partially offset by lower performance fees incurred
during FY22.
Consistent with its policy of reviewing management
fees every two years, the Board intends to undertake a
review of the Manager and management fees in FY23
in accordance with the terms of the Management
Agreement with SIML.
Share Price
The Board is aware that the market price of Investore’s
shares is below the net tangible assets (NTA) per share
of Investore’s assets. The Board considers that the share
price does not reflect the true value of Investore’s assets
in the current environment, given:
• The Investore portfolio continues to deliver
strong net valuation increases, with increases
during FY22 driven by transactional evidence in the
market for large format retail properties, including
transactions in the latter part of the financial year.
Consistent with this, Investore sold the property at
35 MacLaggan Street, Dunedin, for an attractive
price, representing an 8.5% premium to the
property’s most recent valuation at the time of sale.
• Investore’s portfolio comprises 44 properties in
highly desirable locations, with long term value,
occupied by high quality, nationally recognised
tenants, providing security of income over the long
term. The existing Investore portfolio comprises
61 hectares of commercial property with an
average site coverage of 41%, providing ideal future
development opportunities, including to deliver on
tenants’ last mile logistics initiatives.
• In the current inflationary environment, Investore
stands to benefit through increased turnover rental,
driven by higher overall turnover for individual
supermarkets.
The Board will continue to assess additional
opportunities to further demonstrate the value of
Investore’s portfolio, with a view to ensuring the share
price more closely reflects Investore’s net tangible assets.
Outlook
Looking forward, the Board intends to continue
progressing its strategy of targeted growth as
appropriate development and acquisition opportunities
arise. The Board will maintain a focussed approach to
acquisitions, consider a property’s sustainability metrics,
and only pursue those opportunities that enhance the
existing portfolio and maximise returns to investors over
the medium to long term.
The Board will continue to ensure Investore’s capital is
prudently managed, maintaining sufficient debt facility
headroom for acquisitions and developments as well
as the continued optimisation of the existing portfolio
through refurbishments, capital works and improving
customer experience such as online pick up bays.
Investore currently expects to pay a cash dividend of
7.90 cents per share for FY23, in accordance with
Investore’s policy of paying between 90 and 100%
of distributable profit.
On behalf of the Board, we thank investors for their
continued support of Investore.
Mike Allen
Independent Director and Chair of the Board
Investore Property Limited Annual Report 20228 Investore Property Limited Annual Report 20229
Board of
Directors
Mike Allen
Chair of the Board
Independent, Non-Executive Director
Appointed 9 June 2016, last elected 2019
Mike has considerable governance experience and
is currently a director of Taumata Plantations Limited
and Chair of QuayStreet Asset Management. Prior to
his governance career, he had an executive career in
investment banking and general management experience
in New Zealand and the United Kingdom.
Gráinne Troute
Chair of the Audit and Risk Committee
Independent, Non-Executive Director
Appointed 19 April 2018, last elected 2021
Gráinne has over 30 years’ experience in listed and
unlisted organisations, in highly competitive and
customer-focussed sectors, including McDonald’s
New Zealand and SKYCITY Entertainment Group.
Gráinne is currently a director of Tourism Holdings
Limited, and Summerset Group Holdings Limited, and
is Chair of Tourism Industry Aotearoa.
Tim Storey
SIML Nominee and Non-Executive Director
Tim has more than 30 years of experience across a
range of business sectors, and has practised as a lawyer
in Australia and New Zealand. Tim was a partner in the
Bell Gully partnership, having retired in 2006, and is
Chairman of Stride Property Limited, Stride Investment
Management Limited and ASX listed LawFinance Limited.
Emma McDonald
Future Director
Emma has been appointed as a Future Director
programme participant by Investore under the Institute
of Directors’ Future Directors programme. Emma is a
director of Pragmatix Limited, a project management
business, and has considerable experience in project
management, having previously been in project
management and bid management roles with Fletcher
Construction and Shell International. Emma brings
valuable experience and insights to the Investore Board,
and participates in Investore Board meetings but does
not vote or have any role as a director.
Adrian Walker
Independent, Non-Executive Director
Appointed 3 April 2020, last elected 2020
Adrian is a very experienced commercial property
executive, with over 30 years’ experience in the property
sector, including 20 years as the General Manager
of Property at Woolworths NZ (owner of Countdown
brand supermarkets). Adrian brings to Investore a deep
knowledge of the property industry in New Zealand, as
well as the supermarket sector, a sector that makes up a
significant portion of Investore’s property portfolio. Adrian
has a strong background in property, financial planning
and strategic management.
John Harvey
SIML Nominee and Non-Executive Director
John has over 35 years’ professional experience as
a chartered accountant, including at PwC, where
he was a partner for 23 years and held a number of
management and governance roles. John retired from
PwC in 2009 to pursue a career as a professional
independent director. He is currently a director of Stride
Property Limited, Stride Investment Management
Limited, Kathmandu Holdings Limited, Heartland Bank
Limited and Port of Napier Limited.
Investore Property Limited Annual Report 202210 Investore Property Limited Annual Report 202211
Manager’s
Report
Dear Investors,
Stride Investment Management
Limited (SIML) is proud to continue
to manage the business of
Investore, in what has been another
challenging year, due to the impact
of COVID-19 lockdowns as well
as the external factors that have
influenced FY22.
individual store and generates additional turnover – and
by extension contributes to Investore’s performance –
but also benefits other tenants located in the centre, as
customers visit other stores whilst they are picking up
their groceries or hardware.
Consistent with this objective, SIML undertook a number
of store refurbishment and capital upgrade works
during FY22, driving customer visitation and adding
value to the portfolio. Examples of these works include
capital upgrade works by way of new drive-through
pick up bays and re-roofing for Countdown Invercargill,
external refurbishment of Countdown Browns Bay, and
refurbishment programmes undertaken for Bunnings
Hamilton, Bunnings Rotorua and Bunnings Palmerston
North. Major capital works and refurbishment planning
is currently underway for Countdown Highland Park,
which SIML will progress in conjunction with Countdown
during FY23.
On behalf of Investore, during FY22 SIML negotiated
76 rent reviews which resulted in a 2.9% increase to
previous rentals. Of these, nearly half (37) were CPI linked
reviews, which on average resulted in a 5.0% increase on
prior rentals.
In addition, SIML completed a number of COVID-19 rent
abatement negotiations with tenants across the portfolio
totalling $0.7 million, after the Government mandated
that commercial landlords abate a fair proportion of rent
if a tenant was unable to trade due to COVID-19
lockdown restrictions.
SIML was very pleased to have successfully managed the
issue of $125 million of 5 year senior secured fixed rate
bonds in February 2022, which, in conjunction with the
refinance of $70 million of debt facilities in September
2021, resulted in a lower overall debt cost for Investore
against a backdrop of rising interest rates.
As Manager, we continue to be very proud to support
Investore in its strategic objectives, and will continue
to progress Investore’s strategy of growth through
acquisitions that complement Investore’s portfolio while
also continuing to optimise the existing portfolio through
value add works, maximising distributions and total
returns to shareholders over the medium to long term.
Thank you for your continued support of Investore and
SIML as Manager.
Philip Littlewood
Chief Executive Officer
Stride Investment Management Limited
Fabio Pagano
Investore Fund Manager
Stride Investment Management Limited
On behalf of Investore, SIML was very pleased to have
successfully completed the acquisitions of 4 Carr Road,
Mt Roskill, Auckland, and Countdown, Petone, Wellington,
during FY22 for a total purchase price of $73.3 million.
In addition, Investore has a conditional agreement to
acquire a further property, at Waimak Junction, Kaiapoi,
for $10.5 million. SIML’s development team has been
active in preparing for the development of this property,
as well as ensuring that the cost of development is
supported by the returns that Investore can expect to
achieve from the project. The first stage of development,
being the Countdown supermarket, will be a high quality,
sustainable development, targeting a minimum 4 star
Green Star Design & As Built rating, with a long WALT
1
on
completion of construction.
SIML also continues to actively manage and optimise
Investore’s existing portfolio, by collaborating with
tenants to add value to Investore’s existing assets through
improving customer accessibility, efficiency, and visitation
experience. The increased customer visitation resulting
from improved customer amenities not only benefits that
Philip LittlewoodFabio Pagano
1. See glossary on page100.
Investore Property Limited Annual Report 202212 Investore Property Limited Annual Report 202213
Portfolio
Overview
1. See glossary on page 100.
2. Portfolio value as at 31 March 2022 excludes (1) seismic works ($3.0m) to be completed by SPL in relation to 2 Carr Road, Auckland, acquired from SPL and settled on
30 April 2020; and (2) lease liabilities.
3. Portfolio value as at 31 March 2021: (1) excludes seismic works and rental underwrites (total $7.1 million) to be completed by SPL in relation to the three properties acquired
from SPL; (2) excludes lease liabilities; (3) includes 35 MacLaggan Street, Dunedin, which was held as property intended for sale.
4. Represents the scheduled expiry for each lease, excluding any rights of renewal that may be granted under each lease, for the entire portfolio as at 31 March 2022 as a
percentage of Contract Rental.
Note: Numbers in charts may not sum due to rounding
As at
31 March 2022
As at
31 March 2021
Number of properties4443
Number of tenants143130
Net lettable area (NLA) (sqm)249,829246,272
Net Contract Rental
1
($m)60.257.1
WA LT
1
(years)9.19.8
Market capitalisation rate (%)4.815.23
Occupancy rate by area99.799.1
Portfolio value ($m)1,201.3
2
1,037.9
3
Investore’s portfolio
shows a level of
resilience in the current
environment, with
its long WALT
1
, high
concentration of tenants
that provide essential
services and focus on
tenants that tend to be
resilient in a recessionary
environment, such as
grocery and hardware
stores.
Anchor Tenant Classification by
Contract Rental
1
as at 31 March 2022
Anchor tenants represent
a high proportion (87%) of
Investore’s total Contract
Rental. These high quality,
resilient tenants provide
security of income in varying
market conditions.
Portfolio Tenant
Classification by
Contract Rental
1
as at 31 March 2022
Hardware
16%
Everyday Needs
73%
Food / Beverage
4%
General
Merchandise /
Retail
7%
NZ Post
Briscoes Group
63%
12%
4%
3%
3%
1%
Mitre 10
Foodstuffs
Bunnings
Countdown
Lease Expiry Profile
4
by Contract Rental
1
as at 31 March 2022
0.1%
Vacant
28.6%
FY35
5.9%
FY34
14.6%
FY30
4.1%
FY27
2.3%
FY23
4.7%
FY25
2.7%
FY26
6.8%
FY28
0.2%
FY32
1.2%
FY29
6.2%
FY31
4.2%
FY24
18.4%
FY33
WA LT
9.1 years
The Investore portfolio has a
weighted average lease expiry of
9.1 years as at 31 March 2022,
with over 73% of Contract Rental
expiring in FY30 and beyond.
This long weighted average
lease expiry ensures Investore
has certainty of income over the
medium to long term.
Investore Property Limited Annual Report 202214 Investore Property Limited Annual Report 202215
Targeted Growth
Acquisitions and
developments
One of Investore’s key strategic
pillars is to undertake considered
acquisitions and developments
which deliver growth, while
continuing to enhance
geographical and/or tenant
portfolio diversification, and where
appropriate, consider disposals to
maintain balance sheet capacity
and optionality. Investore also looks
to develop existing properties to
meet the needs of tenants and the
surrounding catchment, focussing
on increasing rental returns from
the portfolio.
Investore actively pursues
opportunities to grow
its portfolio, with such
growth undertaken in
a disciplined manner
so as to ensure value to
shareholders.
FY22 Portfolio Valuation Movement
Investore successfully completed the following key acquisitions during FY22:
• Countdown, Petone, Wellington, acquired in May 2021 for
$37.3 million, with a WALT of 11 years at the time of acquisition
• 4 Carr Road, Mt Roskill, Auckland, acquired in August 2021 for
$36.0 million, with a WALT of 10 years at the time of acquisition
The property acquired by Investore at 4 Carr Road is located beside an existing
Investore property at 2 Carr Road, Mt Roskill, tenanted by Bunnings. The
combination of these two properties will enable Investore to maximise site
efficiency and also provides future opportunities, being 3.85ha of prime central
Auckland commercial real estate.
Investore has also secured a conditional agreement to acquire development
land at Waimak Junction, Kaiapoi, with an acquisition price of $10.5 million.
This acquisition remains conditional on receipt of final resource consent
conditions. This property provides a strong development pipeline for Investore,
providing further growth potential, with the first stage of the development,
comprising construction of a Countdown supermarket together with
associated infrastructure, expected to commence in July 2022. The projected
yield on cost of the Stage 1 development (including the Stage 1 land cost) is
approximately 5%.
Investore will consider divestments where it considers this appropriate for
strategic portfolio reasons and to maintain balance sheet capacity. In August
2021 Investore sold the property at 35 MacLaggan Street, Dunedin, for
$10.2 million. The lease of this property was coming to an end and Investore
was able to negotiate an attractive price, representing an 8.5% premium to the
property’s most recent valuation at the date of sale.
($9.4m)
Disposals
(excluding gain on
sale and costs)
$8.1m
Capex and other
adjustments
$91.0m
Fair Value
Movement
$1,201.3m
Closing balance
as at 31 March
2022
1
$1,037.9m
Opening balance
as at 31 March
2021
3
$73.8m
Acquisitions
4
Investore’s portfolio of
44 properties is valued in excess of
$1.2 billion, a valuation increase of
8.2% in FY22.
$1.2 billion total portfolio value
1
9.1 years WALT
2
99.7% portfolio occupancy by area
4.81% average market capitalisation rate
Recent acquisitions:
Are earnings accretive
Provide secure
income for shareholders
Increase Investore’s
exposure to high quality,
resilient tenants
Are located in major
urban centres
2 & 4 Carr Road, Mt Roskill, Auckland
1. Portfolio value excludes (1) the seismic works ($3.0m) to be completed by SPL
in relation to 2 Carr Road, Auckland, acquired from SPL and settled on 30 April
2020; and (2) lease liabilities.
2. See glossary on page100.
3. Portfolio value as at 31 March 2021: (1) excludes seismic works and rental
underwrites (total $7.1 million) to be completed by SPL in relation to the three
properties acquired from SPL; (2) excludes lease liabilities; (3) includes
35 MacLaggan Street, Dunedin, which was held as property intended for sale.
4. Includes the acquisitions of Countdown, Petone for $37.3m, 4 Carr Road, Mt
Roskill for $36.0m and an adjoining unit to Countdown, Meadowbank for $0.6m,
to be used as a shopping trolley bay for Countdown.
Note: Numbers in charts may not sum due to rounding.
Investore Property Limited Annual Report 202217 Investore Property Limited Annual Report 202216
Growing and developing
the existing portfolio
Investore continually seeks opportunities to add value to its existing portfolio, including
through collaborating with key tenants to undertake capital projects that improve overall
customer experience and drive increased customer visitation to each property. Investore
receives additional income as a result of these projects, through rental return on the
investment or by way of increased turnover rent. These projects may also lead to an
increase in lease tenure, adding value to Investore’s portfolio.
Bunnings, Rotorua
Capital upgrade works were completed at Bunnings,
Rotorua in January 2022, including LED lighting
upgrades, installation of a trade office, refresh of existing
amenities and construction of canopies over external
areas such as the building materials and landscape area
and timber trade store entry. These improvement works
will deliver a 6.25% per annum return over the term of the
lease and a long term lease commitment.
Countdown, Invercargill
Investore has completed capital upgrade works at
Countdown, Invercargill, including a roof replacement
and store expansion to deliver a dedicated online
operation, as well as new drive-through customer pick
up bays. In conjunction, Countdown is completing a
comprehensive internal upgrade of the store, with the
fully refurbished store expected to be operational by the
middle of 2022.
Countdown, Highland Park
Investore has agreed with Countdown to expand
the customer amenity at Countdown, Highland Park,
Auckland. This expansion will include new parking areas,
improved customer access ways and a dedicated online
pick up area. Investore expects to receive a rental return
of 5.5% per annum on the cost of the upgrade works,
with Countdown to commit to a longer lease term on
completion of the works.
Countdown, Browns Bay
This store was refurbished through a joint project by
Investore and Countdown as tenant. Investore completed
upgrades of the interior infrastructure and exterior of
the store, including replacing the roof. In conjunction,
Countdown undertook a full interior store refurbishment,
including installing a dedicated online pick up room.
The collaboration between Investore and Countdown has
resulted in an attractive and revitalised store.
Investore Property Limited Annual Report 202218 Investore Property Limited Annual Report 202219
Strategically
Located Portfolio
In growing its portfolio, Investore has focussed on properties located in areas
which are highly populated, or which have strong population growth. This
ensures ongoing demand for its properties, given its focus on tenants which
provide “everyday needs” and therefore rely on strong customer visitation.
Since 2019, Investore has acquired properties in Auckland, Tauranga, Rotorua,
Wellington and the Christchurch region, and has sold the MacLaggan Street
property located in Dunedin South.
Ideally located for “last mile logistics”
The locations of Investore’s properties mean that they are well suited to support
last mile logistics, which is the final distance in e-commerce when delivering
to the customer. This final distance tends to be the most expensive in the
distribution model, either because it is in a densely populated, congested area for
delivery vehicles or because it is in a region that is remote and costly to access.
By having stores in these strategic locations, Investore ensures that its sites are
ideally suited for serving customers through both traditional physical channels
and fulfilling online orders, whether through pick up or delivery. We believe the
store-based fulfilment model (where online orders are met by local stores) will
remain the predominant model for online grocery fulfilment in New Zealand due
to the relatively low population densities, large travel distances and established
existing supply chains. Investore expects this to result in continued demand for its
stores, to serve customers in store and online.
Meeting online orders through strategically located stores, utilising both pick up
and home delivery, enables our tenants to meet the needs of their customers,
while also minimising costs and reducing delivery times for customers. Investore
continues to invest in ensuring its stores have the infrastructure needed to
support its tenants to meet the demand for online sales, with 57% of Investore’s
supermarket stores now having dedicated pick up services. A further 12
locations are planning to expand online pick up services during FY23.
1. See glossary on page 100.
Investore’s
properties are:
Well-located,
close to or within
residential
communities
On large sites
With relatively low
site coverage
Waikato & Bay of Plenty
(18% of Contract Rental)
7 properties
40 tenants
50,990 sqm NLA
$183m asset value
Auckland
(37% of Contract Rental
1
)
13 properties
54 tenants
79,359 sqm NLA
$451m asset value
North
Island
84%
South
Island
16%
Canterbury & Otago
(11% of Contract Rental)
7 properties
9 tenants
25,399 sqm NLA
$137m asset value
Other North Island
(13% of Contract Rental)
6 properties
11 tenants
48,121 sqm NLA
$182m asset value
Other South Island
(5% of Contract Rental)
3 properties
5 tenants
10,956 sqm NLA
$58m asset value
Wellington
(17% of Contract Rental)
8 properties
24 tenants
35,005 sqm NLA
$194m asset value
Note: Numbers in charts may not sum due to rounding
Investore Property Limited Annual Report 202221 Investore Property Limited Annual Report 202220
Rental Growth
Growth in income for
Investore comes from
three main sources:
rental growth, growth
in Countdown turnover
rental, and acquisition
and enhancement
of properties.
Investore has focussed on improving overall portfolio performance through
accretive acquisitions and maximising rental growth of its existing portfolio.
Since listing in 2016, Investore has delivered like-for-like portfolio rental
growth of 1.7% per annum from the IPO
1
to March 2022 (2.0% per annum to
March 2021). Transaction activity since listing has been growth focussed, with
a 2.7% annual rental growth rate across assets acquired since listing and held
for a complete financial year in FY22. In contrast, Investore has disposed of
properties with lower rental growth profiles, with a rental growth rate across
assets divested after listing of 0.6% per annum (IPO
1
to March 2022).
A higher inflationary environment, which New Zealand is currently experiencing,
is expected to benefit Investore through higher moving annual turnover (MAT)
growth driving incremental turnover rental, supported by continued portfolio
investment activities.
Countdown leases (which comprise 63% of portfolio net Contract Rental
2
)
contain turnover rental mechanisms under which additional “turnover rent”
is paid when MAT at a store exceeds a specified threshold. The threshold is
generally reviewed every five years. When MAT is higher than the threshold at
review dates, the base rent is increased to reflect the growth in turnover and
the turnover threshold is set at a higher level.
Based on the original turnover thresholds (i.e. excluding any resets that have
occurred since 2016), as at 31 March 2022:
• Approximately 38% of the current portfolio would earn turnover income in
2022, up from 11% in 2018
• 69% of the portfolio is higher than 80% of turnover thresholds, up from
60% in 2018. As turnover increases, a store is more likely to commence
paying turnover rent, and accordingly Investore tracks stores that are
within 80 to 100% of the turnover rent threshold
1. IPO is defined as the date from which Investore
acquired its IPO portfolio of 39 properties
(including the SCA portfolio acquired after the
date of the IPO) (IPO Portfolio). Portfolio rent
is calculated as the rolling 12 month portfolio
rent based on the IPO Portfolio and excluding
divestments since the IPO.
2. See glossary on page 100.
3. Moving annual turnover (MAT) is based on
thresholds set in July 2016. Rolling 12 month
MAT compared to historical MAT thresholds.
42.5
Mar-19
43.2
Mar-20
44.4
Mar-21
44.3
Mar-22
41.4
IPO
1
41.8
Mar-18
Sep-18Mar-19Sep-19Mar-20Mar-21Sep-21Mar-22
31%
31%
38%
39%
30%
30%
32%
41%
27%
Sep-20
35%
27%
38%
28%
47%
24%
32%40%
49%
11%
55%
13%
33%
36%
31%
Current Portfolio
Turnover Mix
(weighted by MAT
3
)
> 100%
80% - 100%
< 80%
Rolling 12 month
Portfolio Rent
(like-for-like) ($m)
Investore Property Limited Annual Report 202222 Investore Property Limited Annual Report 202223
Proactive Capital
Management
Investore’s strategy
is to proactively
manage its capital
to maintain a healthy
and flexible balance
sheet for growth, while
preserving sustainable
returns to investors.
During FY22 Investore has focussed on ensuring it is well placed to manage
the risks of a rising interest rate environment. Key transactions included:
• $125 million of 5 year senior secured fixed rate bonds issued in February
2022 at a 4.00% per annum fixed interest rate
• $70 million of debt facilities refinanced in September 2021 for an
additional 12 months to August 2023
• $20 million of new hedging entered into in FY22
Fixed Rate Interest Profile as at 31 March 2022
Debt Maturity Profile as at 31 March 2022
$250m
Mar-26
$125m
Mar-27
$280m
Mar-25
$355m
Mar-22
$355m
Mar-23
$355m
Mar-24
$125m
FY27
$125m
FY28
$50m
FY26
FY23
$75m
FY24
$100m
FY25
Notional fixed rate
debt (net of fixed-to-
floating hedging)
Weighted average
interest rate of fixed
rate debt (excluding
margin and line fees)
Bank Facilities
IPL010
IPL020
IPL030
Weighted average interest rate as at 31 March
2022, down from 4.04% as at 31 March 2021
3.77%
Debt that is hedged or subject to a fixed
interest rate
100%
IPL030 bond fixed interest rate, reflecting a
1.15% per annum issue margin, the lowest ever
issue margin for an unrated New Zealand issuer at
the time
4.00%
Weighted average maturity of debt facilities as at
31 March 2022, slightly down from 3.8 years as at
31 March 2021
3.7 years
Next debt maturingFY24
1.96%
1.76%
1.63%
0.40%
2.00%2.00%
Investore Property Limited Annual Report 2022
24 Investore Property Limited Annual Report 202225
As at
31 March 2022
As at
31 March 2021
Facility limit ($m)475476
Debt facilities drawn ($m)355280
Weighted average debt maturity (years)3.73.8
LV R
1
(%) (Covenant: ≤65%)29.526.8
Weighted average interest rate (%)3.774.04
Interest cover ratio (Covenant ≥1.75x)3.7x3.1x
WA LT
2
(years) (Covenant: > 6.0 years) 9.09.7
% of drawn debt fixed100100
Weighted average fixed rate maturity
(years)
3
4.03.9
1. See glossary on page 100.
2. The unexpired lease term in a property or
portfolio, assuming the property or portfolio
is fully leased. This is weighted by the income
applicable to each lease and a current market
rental with nil term for vacant space.
3. Includes bonds and interest rate swaps.
4. Represents the purchase price for Waimak
Junction, plus the expected cost of Stage 1
of the development. This acquisition
remains conditional.
Key Debt Metrics
Investore has a relatively low loan to value ratio of 29.5% as at 31 March
2022, with debt facility headroom of $120 million, providing Investore
with capacity to continue its growth strategy. Taking into consideration
Investore’s committed capital expenditure, including the acquisition of
the property at Waimak Junction and development of Stage 1 of that
property ($32.6 million), as well as capital projects committed across the
existing portfolio of $22.7 million, this would result in an LVR of 32.6%
(on a pro forma 31 March 2022 basis), leaving Investore with undrawn
debt facilities of $65 million.
Loan to value ratio
LVR
as at
31 March
2021
Waimak
Junction
4
Countdown
Petone
Acquisition
Capital
expenditure
and other
commitments
MacLaggan
Street
Divestment
RevaluationsLVR
as at 31
March 2022
Other
capital
commitments
Pro forma
LVR as at
31 March
2022
4 Carr
Road
Acquisition
26.8%
2.5%
2.3%
0.9%
(0.6%)
(2.4%)
29.5%
32.6%
1.8%
1.3%
Investore Property Limited Annual Report 202226 Investore Property Limited Annual Report 202227
Climate-related
Disclosures
Ensuring the future
of a sustainable
business is
important to
Investore and the
Board. The Board
is focussed on
adapting its portfolio
for a sustainable
future and meeting
the challenges of
climate change.
As with other aspects of the management of Investore’s business, Investore
works closely with its Manager, SIML, in relation to sustainability and climate
risk, and aligns its approach with that taken by Stride Property Group (Stride).
During FY22, work undertaken has included completion of the first formal
climate risk assessment, gathering greenhouse gas emissions data and
preparing to commence the Green Star performance rating process for aspects
of the Investore portfolio.
Investore is committed to completing the Global Real Estate Sustainability
Benchmarking (GRESB) assessment process, which benchmarks Investore’s
sustainability performance against a peer group in the Asia Pacific region.
Investore is committed to understanding and improving its sustainability
performance against its peers, and completing the GRESB assessment
process annually will assist in that regard.
This section of the Annual Report provides disclosures against the overall
framework of the Taskforce on Climate-related Financial Disclosures, intended
to assist investors with understanding how Investore assesses and responds to
climate risk in its business.
Governance
During FY22 the Board considered the appropriate structure for overseeing
sustainability matters for Investore and resolved that responsibility should
remain with the whole Board. This is due to the smaller size of the Board,
along with the fact that sustainability considerations impact on all areas
of the Investore business, particularly the strategic decisions that are the
responsibility of the Board.
The Board amended the Investore Board Charter to clarify that the Board’s
responsibilities include setting and monitoring Investore’s sustainability policy
and integrating environmental and social principles into the governance of
Investore. The Charter also sets out Investore’s commitment to sustainability.
The Charter can be found in the Corporate Governance Documents section of
the Investore website, www.investoreproperty.co.nz.
As described elsewhere in this report, Investore has appointed SIML to manage
the business of Investore. Accordingly, while the Investore Board has primary
responsibility for the governance of sustainability matters, Investore relies on
SIML to assist with execution of Investore’s strategic sustainability initiatives.
The SIML Board has established a Board Sustainability Committee to oversee
sustainability activities within Stride, and this Committee provides support and
advice to the Investore Board.
Day to day responsibility for implementing strategic initiatives related to climate
risk and sustainability sits with the SIML executive team. The SIML sustainability
team reports to the General Manager Corporate Services, who is a member of
the SIML executive team and reports directly to the CEO.
During the year, SIML established a climate risk working group to provide input
on the climate risk assessment. This group was provided training on climate
change and climate risks, along with climate risk terminology, to assist them in
undertaking their role.
The governance structure for climate risk is set on the following page.
Sustainability
Governance
Framework
Board of Directors
Executive Team
Sustainability Team
Climate Risk
Working Group
Investment
Management Limited
Sustainability
Committee
Management
Agreement
Reporting
Support
and advice
Board of Directors
Investore Property Limited Annual Report 202228 Investore Property Limited Annual Report 202229
Climate-related
Disclosures
Climate Risk Management
During FY22 a climate risk working group was formed by
SIML to assess the impact of climate risk on the business
of Stride and its managed entities, including Investore.
The working group considered climate risk under two
scenarios – a low carbon scenario and a business as
usual scenario.
Under the low carbon scenario, the world transitions to
a low carbon economy and temperature rise is kept to
between 0.3 and 1.7 degrees Celsius (Representative
Concentration Pathway (RCP) 2.6). In the business as
usual scenario, on the other hand, carbon emissions are
not constrained and the temperature rise is between 2.6
and 4.8 degrees Celsius (RCP 8.5) and there is a 300%
increase in hot days (>25 degrees Celsius).
In assessing the risks posed to Investore’s business
and strategy under each scenario, the working group
held a number of workshops to assess the risks and
opportunities associated with climate risk, and the
outcome was then moderated by the sustainability team
within SIML.
Given the longer-term nature of climate risk impacts,
the climate risk assessment is currently not integrated
into Investore’s overall enterprise risk management
process. However, during FY23 Investore intends to
better integrate the two risk approaches, to ensure a
comprehensive approach to risk across the organisation.
Strategy
Investore’s strategy is to invest in quality, large format
retail properties through New Zealand, and actively
manage shareholders’ capital, to maximise distributions
and total returns over the medium to long term.
The Investore Board considers climate risk as part of
the inputs to its overall strategic decision making. The
Board has considered the impact of climate change on
Investore’s business and strategy, including through
completion of a climate risk assessment, which is
described in this section of the Annual Report, and plans
to undertake further work in this area during FY23.
Climate Change Risks and Opportunities
During FY22 the first formal climate risk assessment
for Investore was undertaken. The process identified
that climate transition risks have more impact in the low
carbon scenario, where the focus on reducing carbon is
much greater in the short term, while physical risks are
more likely to occur and will be more severe under the
business as usual scenario, where climate change has
more impact on assets and people.
Transition climate risks arise from the transition to
a lower carbon economy. Transitioning to a lower
carbon economy may entail extensive policy,
legal, technology, and market changes to address
mitigation and adaptation requirements related to
climate change. Depending on the nature, speed,
and focus of these changes, transition risks may
pose varying levels of financial and reputational
risk to organisations.
Physical climate risks resulting from climate
change can be event driven or due to longer-term
shifts in climate patterns. Physical risks may have
financial implications for organisations, such as
direct damage to assets and indirect impacts
from supply chain disruption.
Managing the impacts of climate risk is necessarily
integrated with Investore’s business practices, and
particularly asset life cycles, to ensure that climate risk
decisions align with business requirements and the
longer-term nature of the property assets which form the
basis for Investore’s business strategy.
In preparing the climate risk assessment, Investore
adopted the following timeframe:
Short timeframe: To 2025
Medium timeframe: 2026-2035
Long timeframe: 2036-2050
These timeframes were chosen because they align with
Investore’s business cycles and the life of Investore’s
properties, with Investore’s business planning based on a
10 year cycle.
Outlined on the following pages is the preliminary
assessment of climate risks and opportunities that are
most likely to materially affect Investore under the low
carbon and the business as usual scenarios.
Low Carbon Scenario – Less than 2°C
Climate transition issues are more material in the low carbon scenario, where the short term focus is on reducing
carbon, driven by: growth of energy efficiency, renewables and low carbon technology; faster decarbonisation of
transport and industry; changing methods of transportation; divestment from fossil fuels; more rapidly evolving
investor mandates and financial institutional appetite for climate mitigation; increasing tenant demand for green
properties, and faster evolution of climate regulation and carbon pricing.
Transition risks and opportunities
RiskImpact
Timeframe and
preliminary risk ratingResponse / Next Steps
Market and technology
- Increasing expectation
of stakeholders and need
to remain current with
technological advances,
such as growth of
electrification of transport,
divestment from fossil fuels
and growth of renewables
and low carbon technology
• Increased demands from tenants
to upgrade buildings to be more
energy efficient, resulting in
increased capital expenditure
• Increasing expectation from
tenants and customers that electric
vehicle infrastructure is provided,
requiring additional capital
expenditure
• Potential tenant vacancies if
properties do not meet tenant
sustainability demands
• Opportunity to be an “early mover”
to greener buildings and therefore
attract higher rent
Short / medium timeframe
Moderate risk
Investore will develop properties
to a Green Star standard, in order
to ensure new properties meet
the demands of tenants
Investore is also preparing to
obtain a Green Star Performance
rating for two portfolios of
properties – (1) hardware and
(2) select supermarkets
Investore expects to set
emissions reduction targets
during FY23
Policy and legal changes
- Increasing standards
for buildings, including
embodied carbon
assessments and
operational emissions
assessments at the time of
building consents; potential
reduction in number of
available carparks (which
has been important for
Investore’s business)
• More costly to develop buildings,
due to the need to ensure buildings
meet the required standards. Will
tenants pay more for rent?
• There is currently an element of
uncertainty around requirements
for future building consents which
can create risk for new construction
which requires a long timeframe
Short / Medium timeframe
Moderate risk
Continue to monitor Building Act
and consent amendments, and
adapt as required
Increased urbanisation with
move of population to main
cities
• Opportunity for well-located
“everyday needs” assets to be more
in demand as population grows in
urban areas, supporting Investore’s
focus on well-located assets in key
urban regions
Medium timeframe
Opportunity
Continue to focus on investing
in sustainable assets in central
urban locations that are likely
to benefit from increasing
urbanisation
Investore Property Limited Annual Report 202230 Investore Property Limited Annual Report 202231
Climate-related
Disclosures
Business as Usual Scenario - 4°C Temperature Rise
Chronic and acute physical climate issues become
most material under this scenario, as short-term efforts
required to decarbonise fall short of environmental
requirements. Under this scenario, greater focus and
investment will be on adapting to higher temperatures
and associated impacts, such as higher sea levels and
more extreme weather events.
This may include more immediate investment to
strengthen asset physical resilience; exiting assets
that are in high-risk zones; careful due diligence on the
impacts of forecast sea level rise and storms on existing
assets; building properties that factor in higher resilience
to storms, floods, wind, and have back up or alternative
energy sources; deepening relationships with insurers
and energy suppliers to monitor and maintain stable
contracts and affordable access.
Investore considers the following physical risks to be the
most material under the business as usual scenario.
Risks:
Increased frequency and severity of extreme
weather events such as cyclones, storms,
floods, and fire
Increase in sea level rise including greater
sea surge events
Rising temperatures
Increased water scarcity
Physical risks
RiskImpact
Timeframe and
preliminary risk ratingResponse / Next Steps
Increase in sea level rise
including greater sea surge
events
• Asset values reduce, or useful
life of the asset is impacted,
particularly for those assets located
in coastal areas
• Properties in exposed areas are
damaged due to sea level rise and
the likelihood of larger sea surges
and inundation
• Less tenant demand for
properties at risk of sea level rise
as a result of risk to inventory and
potential closures due to sea surge
or inundation
• Increased costs of maintenance
and repair due to damage from
sea and potentially more robust
building materials required
• Increased costs of insurance and/
or inability to insure against this risk
• Potential for higher rates as
Councils seek increased funding
to implement protection measures
against sea inundation
Medium/long timeframe
Moderate risk
Sea level rise risks are considered
as part of due diligence for new
assets
The response to this risk will be
further informed by individual
property risk assessments to be
undertaken during FY23
RiskImpact
Timeframe and
preliminary risk ratingResponse / Next Steps
Rising temperatures• Increased operating costs due
to cooling are borne primarily by
tenants, however Investore will
bear increased operating costs for
properties with common areas
• Tenants may demand more
energy efficient properties due to
increased costs of cooling, or this
may impact on the amount they
can afford to pay in rent, thus
impacting capital expenditure or
income for Investore
Medium timeframe
Moderate risk
The need to future proof for rising
temperatures is considered as
part of capital upgrades across
the portfolio
The response to this risk will also
be further informed by individual
property risk assessments to be
undertaken during FY23
Increased water scarcity
from more and/or longer
drought events, less rainfall,
change in seasons (longer
summers, shorter winters)
• Increased operating costs from
greater water consumption due to
increased heat and an increase in
the price of water will primarily be
borne by Investore’s tenants
• Increased operating costs,
including higher water costs,
may impact the amount that
tenants are prepared to pay for
rent for premises, thus impacting
Investore’s business
Medium timeframe
Moderate risk
Consider the need to develop
water-efficient buildings as part
of property development
Risk impact to be further
considered by individual
property risk assessments to be
undertaken during FY23
Increased frequency and
severity of extreme weather
events such as cyclones,
storms, floods, and fire
• Increased operational costs from
repairing damage to properties
• Increased capital expenditure from
improving the resilience of assets to
extreme weather events
• Demand from tenants for properties
that are resilient to extreme
weather events may impact
demand for Investore’s properties,
if Investore does not invest to make
its properties resilient
• Insurance costs expected to rise,
and while insurance costs are
primarily borne by tenants, this
impacts overall costs of occupancy,
thus potentially impacting amount
of rent tenants can bear
Medium timeframe
High risk
Ensure new developments are
constructed to be resilient to
climate risks
Risk impact to be further
considered by individual
property risk assessments to be
undertaken during FY23
During FY23 Investore intends to:
• Further refine its risk assessment and take steps to quantify the impact of each risk and opportunity, as well as define
metrics that will assist with monitoring each risk
• Assess the impact of climate risk on individual properties which will enable development of an adaptation plan and
transition plan for Investore
Investore Property Limited Annual Report 202232 Investore Property Limited Annual Report 202233
Climate-related
Disclosures
Risk Response
The Investore Board understands that climate risk must
be considered as part of business strategy. Examples
include:
• Investore intends to seek a Green Star
Performance rating for two portfolios of Investore
properties – all hardware stores and select
standalone Countdown stores. Investore has
consulted with the tenants of these stores in relation
to its intention and has obtained their support for this
approach. As Investore’s properties tend to primarily
be single tenant properties, with little or no common
areas, Investore considers that it is essential to work
collaboratively with tenants on a climate risk response.
• Investore is targeting a minimum 4 star Green Star
Design & As Built rating for the new Countdown
supermarket to be built on the land Investore intends
to acquire at Waimak Junction. This property will
assist Investore in meeting its climate risk response
objectives. Investore works collaboratively with its
tenants in developing designs for new properties,
and will work with tenants on climate initiatives for
new or refurbished properties.
With the assistance of its manager, SIML, Investore has been collecting
greenhouse gas (GHG) emissions data to enable Investore to understand
its Scope 1 and 2 GHG emissions. Investore is also working with tenants to
obtain information relating to their emissions, which are Scope 3 emissions
for Investore.
Scope 3 emissions will be significantly greater than Scope 1 and 2 emissions
and therefore to make a material reduction in emissions Investore recognises
that it will need to work with tenants to achieve a reduction in Scope 3 tenant
emissions. Investore has commenced that process through having initial
discussions with some of its key tenants, including Countdown, Bunnings and
Mitre 10.
Investore’s Scope 2 emissions increased materially in 2021 due to the
acquisition of two properties that have common area electricity consumption,
being Mt Wellington Shopping Centre and Bay Central Shopping Centre.
The reduction in emissions for FY22 is a result of the Auckland lockdowns
during the latter part of the 2021 calendar year, when common area electricity
consumption reduced significantly. This data provides Investore with a basis
on which to better understand its emissions, which will assist with setting
emissions reduction targets during FY23.
Countdown, Petone
Metrics and Targets
Scope 1 & 2
Emissions
(tCO2-e)
0
20
40
60
80
100
120
140
160
180
200
FY22FY21FY20
Scope 1
Scope 2
(tCO2-e)
Investore Property Limited Annual Report 2022
35 Investore Property Limited Annual Report 202234
Financial
Summary
Investore is pleased to present its five
year financial summary table, enabling
investors to understand trends for key
financial metrics.
Countdown, Petone
Financial Summary
The Five Year Financial Summary table reflects the numbers in the financial statements
for each respective year.
20222021202020192018
Five Year Financial Summary($m)($m)($m)($m)($m)
Net rental income
58.3
55.848.147.444.2
Profit before net finance expense, other income/(expense) and
income tax
1
48.3
46.640.641.438.7
Net finance expense
(14.0)
(16.6)(13.9)(14.4)(11.9)
Profit before other income/(expense) and income tax
1
34.3
29.926.727.026.8
Other income/(expense)
91.5
139.07.717.126.1
Profit before income tax
125.8
169.034.444.152.9
Income tax expense
(7.6)
(7.7)(5.8)(5.5)(6.7)
Profit after income tax
118.2
161.328.638.646.2
Basic earnings per share - weighted
32.1 cents
44.60 cents10.40 cents14.78 cents17.64 cents
Distributable profit before income tax
2
34.8
33.126.326.326.0
Distributable profit after income tax
29.9
29.121.120.920.5
Basic distributable profit after income tax per share - weighted
8.11 cents
8.05 cents7.66 cents8.01 cents7.85 cents
Investment properties value
1,201.3
3
1,037.9
4
761.4761.2738.3
Drawn debt facilities and bonds
355.0
280.0238.4318.5307.4
Borrowings loan to value ratio
29.5%
5
26.8%
6
31.3%41.8%41.6%
NTA per share
$2.32
$2.08$1.73$1.70$1.64
Adjusted NTA per share
7
$2.32
$2.08$1.74$1.71$1.64
Values in the table above are calculated based on the numbers in the financial statements for each respective financial year and may not sum
accurately due to rounding.
1Profit before net finance expense, other income/(expense) and income tax and Profit before other income/(expense) and income tax are non-GAAP measures and have been presented to assist
investors in understanding the different aspects of Investore's financial performance.
2Distributable profit is a non-GAAP measure and consists of profit/(loss) before income tax, adjusted for determined non-recurring and/or non-cash items (including non-recurring adjustments for
incentives payable to anchor tenants for lease extensions) and current tax. Further information including the calculation of distributable profit and the adjustments to profit before income tax, is set
out in note 3.2 to the consolidated financial statements.
3Excludes lease liabilities and $3.0 million of seismic work to be funded by SPL in relation to 2 Carr Road, Auckland, acquired from SPL and settled on 30 April 2020.
4Excludes lease liabilities and the seismic work and rental underwrites (total $7.1 million) to be funded by SPL in relation to the three properties acquired from SPL and settled on 30 April 2020 and
includes 35 MacLaggan Street, Dunedin, which was held as property intended for sale at $9.4 million.
5Excludes lease liabilities and includes $3.0 million of seismic works to be funded by SPL in relation to 2 Carr Road, Auckland, acquired from SPL and settled on 30 April 2020.
6Excludes lease liabilities and includes the seismic works and rental underwrites (total $7.1 million) to be funded by SPL in relation to the three properties acquired from SPL and settled on
30 April 2020.
7Excludes after tax fair value of interest rate derivatives.
36Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202237 Investore Property Limited Annual Report 202236
39 Consolidated Statement of Comprehensive Income
40 Consolidated Statement of Changes in Equity
41 Consolidated Statement of Financial Position
42 Consolidated Statement of Cash Flows
44 Notes to the Financial Statements
Consolidated
Financial
Statements
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
20222021
Notes
$000$000
Gross rental income
67,923
64,514
Direct property operating expenses
(9,649)
(8,701)
Net rental income
2.1
58,274
55,813
Less corporate expenses
Asset management fee expense
4.0
(5,736)
(4,965)
Performance fee expense
4.0
(1,667)
(2,076)
Administration expenses
(2,561)
(2,183)
Total corporate expenses
(9,964)
(9,224)
Profit before net finance expense, other income/(expense) and income tax48,310
46,589
Finance income
167
4
Finance expense
(14,212)
(16,644)
Net finance expense
5.3
(14,045)
(16,640)
Profit before other income/(expense) and income tax34,265
29,949
Other income/(expense)
Net change in fair value of investment properties
2.2
91,017
139,287
Gain on disposal of investment property
1.7
576
-
Loss on rental guarantee
-
(294)
Net change in fair value of derivative financial instruments
5.2
(52)
24
Profit before income tax125,806
168,966
Income tax expense
7.3
(7,639)
(7,706)
Profit after income tax attributable to shareholders118,167
161,260
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Movement in cash flow hedges, net of tax
5.5
9
3,051
Total comprehensive income after tax attributable to shareholders
118,176
164,311
Basic and diluted earnings per share (cents)
3.1
32.10
44.60
Investore Property Limited Annual Report 202239
The attached notes form part of and are to be read in conjunction with these financial statements.
Investore Property Limited Annual Report 202238 Investore Property Limited Annual Report 202239
Consolidated Statement of Financial Position
As at 31 March 2022
20222021
Notes
$000$000
Current assets
Cash at bank
7,229
6,800
Trade and other receivables
7.4
872
451
Prepayments
629
286
Other current assets
1,562
1,172
10,292
8,709
Investment properties classified as held for sale
-
9,400
10,292
18,109
Non-current assets
Investment properties
2.2
1,219,766
1,043,872
Deposit, prepayments and other payments on investment property
2.2
8,011
7,081
Derivative financial instruments
5.2
667
1,788
1,228,444
1,052,741
Total assets
1,238,736
1,070,850
Current liabilities
Trade and other payables
7.5
5,564
5,723
Current tax liability
948
734
Lease liabilities
2.3
78
55
Derivative financial instruments
5.2
134
498
6,724
7,010
Non-current liabilities
Borrowings
5.1
351,530
277,363
Lease liabilities
2.3
18,356
15,363
Deferred tax liability
7.3
6,958
4,540
Derivative financial instruments
5.2
126
900
376,970
298,166
Total liabilities
383,694
305,176
Net assets855,042
765,674
Share capital
558,293
558,293
Retained earnings
296,383
207,024
Reserves
5.5
366
357
Equity
855,042
765,674
For and on behalf of the Board of Directors of Investore Property Limited, dated 18 May 2022:
Mike Allen
Chair of the Board
Gráinne Troute
Chair of the Audit and Risk Committee
Investore Property Limited Annual Report 202241
The attached notes form part of and are to be read in conjunction with these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2022
Notes
Cents
per
share
Number
of shares
000
Share
capital
$000
Retained
earnings
$000
Cash flow
hedge
reserve
$000
Total
$000
Balance 31 Mar 21368,135558,293207,024357765,674
Transactions with shareholders:
Q4 2021 final dividend
1.900--(6,995)-(6,995)
Q1 2022 interim dividend
1.975--(7,271)-(7,271)
Q2 2022 interim dividend
1.975(7,271)(7,271)
Q3 2022 interim dividend
1.975
(7,271)(7,271)
Total transactions with shareholders
--(28,808)-(28,808)
Other comprehensive income:
Movement in cash flow hedges, net of tax
5.5
---99
Total other comprehensive income---99
Profit after income tax
--118,167-118,167
Total comprehensive income
--118,1679118,176
Balance 31 Mar 22
368,135558,293296,383366855,042
Balance 31 Mar 20
304,499455,64173,744(2,694)526,691
Transactions with shareholders:
Q4 2020 final dividend1.900--(6,995)-(6,995)
Q1 2021 interim dividend1.900--(6,995)-(6,995)
Q2 2021 interim dividend1.900--(6,995)-(6,995)
Q3 2021 interim dividend1.900--(6,995)-(6,995)
New shares issued
63,636102,652--102,652
Total transactions with shareholders
63,636102,652(27,980)-74,672
Other comprehensive income:
Movement in cash flow hedges, net of tax
5.5
---3,0513,051
Total other comprehensive income
---3,0513,051
Profit after income tax
--161,260-161,260
Total comprehensive income
--161,2603,051164,311
Balance 31 Mar 21
368,135558,293207,024357765,674
40Investore Property Limited Annual Report 2022
The attached notes form part of and are to be read in conjunction with these financial statements.
Investore Property Limited Annual Report 202240 Investore Property Limited Annual Report 202241
Consolidated Statement of Cash Flows (continued)
For the year ended 31 March 2022
Reconciliation of profit after income tax attributable to shareholders to net cash flows from operating activities
20222021
Notes
$000$000
Profit after income tax attributable to shareholders118,167
161,260
Add/(less) non-cash items:
Movement in deferred tax
7.3
2,714
4,054
Current tax movement in cash flow reserve
-
(392)
Net change in fair value of investment properties
(91,017)
(139,287)
Gain on disposal of investment property
(576)
-
Spreading of fixed rental increases
(51)
(179)
Capitalised lease incentives
(51)
(86)
Lease incentives amortisation
36
20
Capitalised lease incentives - COVID-19 abatements
(216)
(857)
Lease incentives amortisation - COVID-19 abatements
158
126
Rental income abatement provision due to COVID-19
(24)
-
Movement in loss allowance
7.4
141
32
Borrowings establishment costs amortisation
865
683
Accrued interest movement in derivative financial instruments
5.2
(76)
(69)
Net change in fair value of derivative financial instruments
5.2
52
(24)
Loss on rental guarantee
-
294
Amortisation of swap break expenses
-
1,401
30,122
26,976
Add/(less) activities reclassified from/(to) operating activities:
Movement in working capital items relating to investing activities
214
1,006
Movement in working capital items relating to financing activities
-
1,441
Movement in borrowings/bond transaction costs classified as operating activities
(1,698)
(1,863)
28,638
27,560
Movement in working capital:
(Increase)/decrease in trade and other receivables
(421)
92
Increase in prepayments and other current assets
(733)
(178)
Increase/(decrease) in current tax liability
214
(351)
Decrease in trade and other payables
(159)
(191)
Net cash provided by operating activities
27,539
26,932
Investore Property Limited Annual Report 202243
The attached notes form part of and are to be read in conjunction with these financial statements.
Consolidated Statement of Cash Flows
For the year ended 31 March 2022
20222021
Notes
$000$000
Cash flows from operating activities
Gross rental received
67,224
64,003
Interest received
10
4
Swap break income/(expense)
5.2
157
(2,153)
Operating expenses
(17,759)
(15,235)
Performance fee expenses
(2,297)
(1,961)
Interest paid
(13,387)
(10,907)
Refinancing of bank borrowings
(116)
(448)
Bond issuance expenses
(1,582)
(1,418)
Income tax paid
(4,711)
(4,395)
Rental guarantee
-
(558)
Net cash provided by operating activities
27,539
26,932
Cash flows from investing activities
Capital expenditure on investment properties
(5,040)
(4,710)
Acquisition of investment properties
(73,115)
(135,858)
Deposit, prepayments and other payments relating to portfolio improvement initiatives
(4,993)
-
Acquisition of other assets
(278)
-
Proceeds from disposal of investment properties
10,190
-
Net cash applied to investing activities
(73,236)
(140,568)
Cash flows from financing activities
Proceeds from issuance of fixed rate bonds
1.7
125,000
125,000
Repayment of bank borrowings from bond proceeds
1.7
(125,000)
(118,650)
Drawdown of bank borrowings
85,100
137,250
Repayment of bank borrowings
(10,100)
-
Dividends paid
(28,808)
(27,980)
Lease liabilities payments
(66)
(65)
Proceeds from equity issue
-
105,000
Capital raising expenses
-
(2,348)
Repayment of bank borrowings from capital raise
-
(102,000)
Net cash provided by financing activities
46,126
116,207
Net increase in cash and cash equivalents held429
2,571
Opening cash and cash equivalents
6,800
4,229
Closing cash and cash equivalents
7,229
6,800
Cash and cash equivalents at year end comprises:
Cash at bank
7,229
6,800
Cash and cash equivalents at year end
7,229
6,800
42Investore Property Limited Annual Report 2022
The attached notes form part of and are to be read in conjunction with these financial statements.
Investore Property Limited Annual Report 202242 Investore Property Limited Annual Report 202243
1.0 General Information
This section sets out Investore’s accounting policies that relate to the consolidated financial statements (financial statements) as
a whole. Where an accounting policy is specific to a note, the policy is described within the note to which it relates.
1.1 Reporting entity
The financial statements presented are those of Investore Property Limited (the Parent) and its subsidiary Investore Property (Carr Road) Limited
(the Subsidiary) (refer notes 1.7 and 7.6) (together referred to as Investore). The Parent is domiciled in New Zealand and is registered under the
Companies Act 1993. The Parent is also an FMC reporting entity under Part 7 of the Financial Markets Conduct Act 2013.
Investore’s principal activity is property investment in New Zealand. Investore is managed by Stride Investment Management Limited (SIML).
The financial statements were approved for issue by the Board of Directors of the Parent (the Board) on 18 May 2022.
1.2 Basis of preparation
The financial statements have been prepared in accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013, the NZX
Main Board Listing Rules (NZX Listing Rules) and Generally Accepted Accounting Practice in New Zealand (GAAP). The financial statements comply
with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS), other New Zealand accounting standards and authoritative
notices that are applicable to entities that apply NZ IFRS. The financial statements also comply with International Financial Reporting Standards
(IFRS). Investore is a for-profit entity for the purposes of financial reporting.
The financial statements have been prepared under the historical cost basis except for assets and liabilities stated at fair value as disclosed.
The financial statements have been presented in New Zealand dollars and have been rounded to the nearest thousand, unless stated otherwise.
1.3 New standards, amendments and interpretations
In October 2021, the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 was passed. It amends the Financial
Markets Conduct Act 2013, the Financial Reporting Act 2013 and the Public Audit Act 2001, mandating certain entities to disclose climate-related
information. Entities are expected to publish climate-related statements for financial years beginning on or after 1 January 2023 based upon
climate standards issued by the External Reporting Board (XRB). Investore's first climate-related statement will be required for the year ending
31 March 2024.
The XRB intends to issue the following:
•Aotearoa New Zealand Climate Standard 1: Climate-related Disclosures (NZ CS 1);
•Aotearoa New Zealand Climate Standard 2: Adoption of Climate-related Disclosures (NZ CS 2); and
•Aotearoa New Zealand Climate-related Disclosures Concepts (NZ CRDC).
NZ CS 1 will be the primary disclosure standard and will be based on the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD). NZ CS 2 will be an adoption standard to enable entities to begin their climate-related disclosure journey. NZ CRDC will be
an authoritative notice containing key concepts, such as materiality. Investore continues to monitor the developments and guidance of the new
climate-related disclosure requirements, with XRB aiming to publish these new standards by 31 December 2022.
At the date of approval of the financial statements, there were no relevant standards on issue but not applied.
1.4 Fair value estimation
Investore classifies its fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making measurements.
The fair value hierarchy has the following levels:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices); and
Level 3 - inputs for the asset or liability that are not based on observable market data.
1.5 Significant accounting policies, estimates and judgements
In the application of NZ IFRS, the Board and SIML are required to make judgements, estimates and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on experience and other factors
that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ
from the estimates, judgements and assumptions made by the Board and SIML.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised and in any future periods affected.
Judgements made by the Board and SIML in the application of NZ IFRS that have significant effects on the financial statements and estimates
with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements.
In particular information about significant areas of estimation uncertainty that have the most significant effect on the amount recognised in the
financial statements is disclosed in the relevant notes as follows:
• Investment properties (note 2.2);
• Derivative financial instruments (note 5.2);
• Lease liabilities (note 2.3); and
• Deferred tax (note 7.3).
Investore Property Limited Annual Report 202245
Notes to the Financial Statements
For the year ended 31 March 2022
1.0General Information
45
1.1Reporting entity45
1.2Basis of preparation45
1.3New standards, amendments and interpretations45
1.4Fair value estimation45
1.5Significant accounting policies, estimates and judgements45
1.6COVID-19 impacts46
1.7Significant events and transactions46
1.8Non-GAAP measures46
2.0Property
47
2.1Net rental income47
2.2Investment properties48
2.3Lease liabilities54
2.4Capital expenditure commitments contracted for55
3.0Investor Returns
56
3.1Basic and diluted earnings per share (EPS)56
3.2Distributable profit56
4.0Related Party Disclosures
57
5.0Capital Structure And Funding
58
5.1Borrowings58
5.2Derivative financial instruments60
5.3Net finance expense62
5.4Share capital62
5.5Reserve62
5.6Capital risk management62
6.0Risk Management
63
6.1Financial Instruments63
6.2Financial assets at amortised cost63
6.3Financial liabilities at amortised cost63
6.4Financial risk management63
6.5Interest rate risk64
6.6Credit risk64
6.7Liquidity risk65
6.8Fair values65
7.0Other
66
7.1Operating segments66
7.2Corporate expenses66
7.3Tax67
7.4Trade and other receivables69
7.5Trade and other payables69
7.6Investment in subsidiaries70
7.7Contingent liabilities70
7.8Subsequent events70
44Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202244 Investore Property Limited Annual Report 202245
2.0 Property
This section covers property assets, being large format retail properties, which generate Investore’s trading performance.
2.1 Net rental income
Accounting Policy
Investment property is leased by Investore to tenants under operating leases with rent payable monthly. Rental income from investment
properties is recognised on a straight-line basis over the lease term. Lease incentives provided in relation to letting the investment properties
are capitalised to the respective investment properties or investment properties classified as held for sale in the consolidated statement of
financial position and amortised on a straight-line basis over the non-cancellable portion of the lease to which they relate, as a reduction of
rental income. Where a lease provides for fixed rental increases over the term of the lease, they are amortised on a straight-line basis over the
non-cancellable portion of the lease to which they relate.
Income generated from service charges recovered from tenants is included in the gross rental income with the service charge expenses to
tenants shown in the direct property operating expenses. Such revenue is recognised in the accounting period the underlying expenses are
incurred in accordance with the contractual terms.
20222021
$000$000
Gross rental income
Rental income
60,894
57,805
Service charge income recovered from tenants
6,938
5,832
Spreading of fixed rental increases
51
179
Capitalised lease incentives
51
54
Lease incentives amortisation
(21)
(9)
Capitalised lease incentives - COVID-19 abatements
216
857
Lease incentives amortisation - COVID-19 abatements
(158)
(126)
Rental income abatement provision due to COVID-19
(48)
(78)
Total gross rental income
67,923
64,514
Direct property operating expenses
Service charge expenses to tenants
(8,388)
(7,177)
Movement in loss allowance
(141)
(32)
Lease incentives amortisation
(15)
(11)
Other non-recoverable property operating expenses
(1,105)
(1,481)
Total direct property operating expenses
(9,649)
(8,701)
Net rental income
58,274
55,813
Other non-recoverable property operating expenses represent property maintenance and operating expenses not recoverable from tenants and
property leasing costs.
Investore Property Limited Annual Report 202247
1.0 General Information (continued)
1.6 COVID-19 impacts
The COVID-19 Response (Management Measures) Legislation Act 2021, which was enacted in November 2021, mandated rent abatement by
landlords and resulted in Investore incurring additional rent abatement costs. For the year ended 31 March 2022, Investore provided for rental
abatements of $0.7 million (2021: $0.9 million). Rental abatements accounted for as lease modifications amounted to $0.2 million. As a lease
modification, the reduction in rental income is capitalised and spread over the remainder of the tenant's non-cancellable lease term. The remaining
$0.5 million of rental abatements were not treated as lease modifications and the reduction in rent was recognised in the period the rent
relief occurred.
1.7 Significant events and transactions
The financial position and performance of Investore was affected by the following events and transactions that occurred during the reporting period:
Acquisition of investment properties
On 21 May 2021, Investore acquired a property at 45-49 Jackson Street, Petone, Wellington, anchored by a Countdown Supermarket for a
purchase price of $37.25 million.
On 13 August 2021, Investore acquired a company (refer note 7.6), the Subsidiary, which owns a large format retail property at 4 Carr Road,
Auckland, for $36.0 million. The property is anchored by Rebel Sport and Briscoes with two other retail tenancies. It is located immediately adjacent
to the Parent’s existing property at 2 Carr Road which is occupied by Bunnings Warehouse. The acquisition of the shares in the Subsidiary does not
constitute an acquisition of a business but rather an acquisition of an asset as substantially all of the fair value of the identifiable assets acquired
were concentrated in the investment property.
Divestment of 35 MacLaggan Street, Dunedin
On 2 August 2021, Investore divested the property at 35 MacLaggan Street, Dunedin, for $10.2 million gross before transaction costs, resulting in a
gain on disposal of $0.6 million.
Bank debt refinancing
In September 2021, Investore refinanced $70 million of bank debt facility, extending this facility for a further one year to 31 August 2023.
Issuance of fixed rate bonds (IPL030)
On 25 February 2022, Investore issued $125 million of fixed rate bonds with a five-year term expiring on 25 February 2027, paying an interest rate
of 4.00% per annum. The proceeds were used to repay $125 million of debt and Investore cancelled $126 million of its bank borrowings.
Revaluation of investment properties
Investore undertook independent valuations of the entire portfolio as at 31 March 2022, which resulted in a net change in fair value of investment
properties of $91.0 million (2021: $139.3 million) (refer note 2.2).
Change to dividend policy
In August 2021, the Board revised Investore’s dividend policy, widening the payout ratio from 95% and100% of distributable profit to between
90% and 100% of distributable profit (refer note 3.2).
1.8 Non-GAAP measures
The consolidated statement of comprehensive income includes two non-GAAP measures; Profit before net finance expense, other income/
(expense) and income tax; and Profit before other income/(expense) and income tax. These non-GAAP measures have been presented to assist
investors in understanding the different aspects of Investore’s financial performance.
Note 3.2 sets out Investore’s calculation of distributable profit and Adjusted Funds From Operations (AFFO) which are both non-GAAP measures.
Distributable profit is presented to enable investors to see an earnings measure which more closely aligns to Investore’s underlying and recurring
earnings from its operations. AFFO is intended as a supplementary measure of operating performance. Cash spent during the period on capital
expenditure as part of maintaining a building’s grade/quality, but not expensed as part of distributable profit after tax, is adjusted to reflect cash
earnings for the period.
These non-GAAP measures do not have a standard meaning prescribed by GAAP and therefore may not be comparable to information presented by
other entities.
46Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202246 Investore Property Limited Annual Report 202247
2.0 Property (continued)
2.2 Investment properties (continued)
20222021
$000$000
Opening balance1,043,872
772,547
Re-assessment of lease liabilities
3,082
4,366
Property acquisitions
73,784
133,647
Transfer to investment properties classified as held for sale
-
(9,400)
Net change in fair value
91,017
139,287
Recognition of prepayment on investment properties
3,476
-
Subsequent capital expenditure
4,411
2,449
Spreading of fixed rental increases
51
179
Capitalised lease incentives
51
86
Lease incentives amortisation
(36)
(20)
Capitalised lease incentives - COVID-19 abatements
216
857
Lease incentives amortisation - COVID-19 abatements
(158)
(126)
Closing balance
1,219,766
1,043,872
Comprising:
Investment property per independent valuations
1,204,350
1,035,535
Less prepayment on investment property relating to seismic works
(3,018)
(7,081)
1,201,332
1,028,454
Lease liabilities
18,434
15,418
Total
1,219,766
1,043,872
Deposit, prepayments and other payments relating to portfolio improvement initiatives
4,993
-
Prepayment on investment property relating to seismic works
3,018
7,081
Deposit, prepayments and other payments on investment property
8,0117,081
In the previous year, Investore purchased three large format retail properties, being 2 Carr Road, Bunnings Warehouse, Auckland, Mt Wellington
Shopping Centre, Auckland, and Bay Central Shopping Centre, Tauranga, from Stride Property Limited (SPL). Settlement of the acquisitions was
completed on 30 April 2020. Under the sale and purchase agreement, SPL is to complete seismic works of $7.0 million and provided a rental
guarantee of $0.5 million. As at 31 March 2022, all of the rental guarantee had been utilised (2021: $0.1 million of the rental guarantee had not
been utilised) and $3.5 million (2021: $nil) of the seismic works have been completed at Mt Wellington Shopping Centre and Bay Central Shopping
Centre, with $0.5 million not proceeding for Bay Central Shopping Centre due to anticipated partial redevelopment of the site. As at 31 March
2022, the valuation for 2 Carr Road was prepared on the basis that the seismic works had been completed. Consequently, $3.0 million has
been recognised as a prepayment on investment property (non-current asset), representing the remaining seismic works to be completed (2021:
$7.1 million).
In addition, there were amounts for deposit, prepayments and other payments totalling $5.0 million relating to Investore's expansion and portfolio
improvement initiatives, including a prepayment of $0.7 million in relation to a conditional agreement to acquire a 3.5 hectare parcel of land at
Waimak Junction, Kaiapoi, North Canterbury (refer note 2.4).
Investore has commenced an exercise to refresh the seismic strength assessments for investment properties located in high or medium earthquake
risk zones. This exercise is in the preliminary stages and, as at the date these financial statements have been approved by the Board for issue, no
material matters have been identified.
Valuations are performed by independent registered valuers who hold an annual practising certificate with the Valuers Registration Board and
are members of the New Zealand Institute of Valuers. All investment properties were valued by independent valuers and are dated effective as
at 31 March 2022. The investment properties were valued either by CVAS (NZ) Limited, CVAS (WLG) Limited, Jones Lang LaSalle Limited (JLL),
Savills (NZ) Limited (Savills), Bayleys Valuations Limited (Bayleys) or CBRE Limited (CBRE) as indicated. The net change in fair value of $91.0 million
(2021: $139.3 million) includes $0.07 million (2021: $0.07 million) in relation to the change in the value of the lease liabilities.
Investment property measurements are categorised as Level 3 in the fair value hierarchy. During the period, there were no transfers of investment
properties between levels of the fair value hierarchy (2021: nil transfers).
At each reporting date, SIML’s asset managers verify all major inputs to the independent valuation report and assess property valuation movements
when compared to the prior year valuation report. SIML’s executive team review the valuations performed by the independent registered valuers
for financial reporting purposes. This team reports directly to the SIML Chief Executive Officer. Discussions of valuation processes and results
are held between members of the executive team and the independent valuers, and the SIML Chief Executive Officer and Investore’s Audit and
Risk Committee, at least once every six months, in line with Investore’s reporting dates. This review includes review of specific independent
valuations and discussions with the independent valuers as considered necessary. Ultimately, Investore’s Directors are responsible for reviewing
and approving the investment property valuations.
The following tables provide a summary of the valuation of the individual investment properties, their net lettable area (NLA), market capitalisation
rate (cap rate), contract yield, occupancy and weighted average lease term (WALT) for the purpose of providing further detail of the assets which are
considered to be the most relevant to the operations of Investore. Colliers
1
refers to the valuer CVAS (NZ) Limited and Colliers
2
refers to the valuer
CVAS (WLG) Limited.
The cap rate %, contract yield %, occupancy % and WALT years for the total of investment properties in the following tables are weighted averages.
The totals may not sum due to rounding.
Investore Property Limited Annual Report 202249
2.0 Property (continued)
2.1 Net rental income (continued)
Accounting Policy
Lessors classify each of its leases as either an operating or finance lease based on the economic substance of the agreement so as to reflect
the risks and rewards incidental to ownership. Leases in which substantially all the risks and rewards of ownership are retained by the lessor
are classified as operating leases.
Properties leased out under operating leases are included in investment properties as separately disclosed in the consolidated statement of
financial position.
As a lessor, Investore has determined that it retains substantially all the risks and rewards of ownership of properties and has therefore classified all
leases as operating leases.
The future aggregate minimum rentals receivable under non-cancellable operating leases are as follows:
20222021
$000$000
Within one year
60,708
57,976
Between one and two years
59,259
57,109
Between two and three years
57,479
55,848
Between three and four years
54,463
54,009
Between four and five years
53,025
51,145
Later than five years
271,883
308,231
Future rentals receivable
556,817
584,318
2.2 Investment properties
Accounting Policy
Investment properties are held either to earn rental income or for capital appreciation or both. Investment property is initially stated at cost,
including related transaction costs, and then at fair value as determined at least every 12 months by an independent registered valuer.
The fair value of an investment property represents the estimated price for which a property could be sold for at the date of valuation in an
orderly transaction between market participants. The predominant methods for assessing the current fair value of an investment property are
the Income Capitalisation and the Discounted Cash Flow approaches. Each approach derives a value based on market inputs, including:
•recent comparable transactions where available;
•forecast future rentals, based on the actual location, type and quality of the investment property, and supported by the terms of any
existing lease, other contracts or external evidence such as current market rents for similar properties;
•vacancy assumptions based on current and expected future market conditions after expiry of any current lease; and
•appropriate discount rates derived from recent comparable market transactions reflecting the uncertainty in the amount and timing of
cash flows.
In addition, consideration is given to the maintenance and capital requirements including necessary investments to maintain functionality of the
property for its expected useful life.
Any gain or loss arising from a change in the fair value of the investment property is recognised in the consolidated statement of
comprehensive income within net change in fair value of investment properties. Subsequent expenditure is capitalised to the asset’s carrying
amount only when it is probable that future economic benefits associated with the item will flow to Investore and the cost of the item can be
measured reliably. All other repairs and maintenance costs are expensed to the consolidated statement of comprehensive income during the
period in which they are incurred.
Investment properties are de-recognised when they have been disposed of. The net gain or loss on disposal is calculated as the difference
between the carrying amount at the time of the disposal and the net proceeds on the disposal and is included in the consolidated statement of
comprehensive income in the reporting period in which the disposal occurs.
Investore leases various properties under non-cancellable operating lease agreements. At the inception of a lease contract where Investore is
the lessee, Investore assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
Right-of-use assets are measured on initial recognition as the initial lease liability, plus any initial indirect costs incurred, less any lease
incentives received. Right-of-use assets that meet the definition of investment property are presented within investment property. Investore
applies the fair value model to investment property, including right-of-use assets that meet the definition of investment property.
Investment property is adjusted for cash flows relating to lease liabilities already recognised separately on the consolidated statement of
financial position and also reflected in the investment property valuations.
48Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202248 Investore Property Limited Annual Report 202249
2.0 Property (continued)
2.2 Investment properties (continued)
NLACap rate
Contract
yieldOccupancyWALT
As at 31 Mar 21Valuerm
2
$000%%%years
Auckland
24 Anzac RoadCBRE4,38228,9004.634.51100.013.9
326 Great South RoadCBRE4,63341,2004.384.34100.013.9
35A St Johns RoadColliers
1
4,45725,2004.755.27100.013.9
507 Pakuranga RoadColliers
1
4,81223,8004.634.76100.013.9
3 Averill StreetJLL5,43518,0007.508.08100.013.4
Cnr Church & Selwyn StreetsJLL2,01113,4004.884.90100.03.9
Cnr Te Irirangi Drive & Bishop Dunn PlaceBayleys12,20541,5004.384.45100.09.7
112 Stoddard RoadSavills4,20029,7004.684.86100.06.9
226 Great South RoadSavills7,36242,0005.755.98100.08.8
20-24 Neville StreetSavills3,81629,0004.884.92100.011.0
2 Carr RoadCBRE11,69353,4004.134.58100.06.2
295 Penrose RoadCBRE9,01440,3006.006.64100.04.7
Waikato
66-76 Studholme Street, MorrinsvilleColliers
1
1,7247,4005.886.24100.03.9
Cnr Anglesea & Liverpool Streets, HamiltonSavills5,2658,70010.2510.63100.02.8
Cnr Bridge & Anglesea Streets, HamiltonSavills4,20022,3005.255.19100.012.1
Cnr Hukanui & Thomas Roads, HamiltonSavills4,50618,9005.635.70100.010.8
446 Te Rapa Road, HamiltonBayleys12,76340,0004.504.47100.08.9
Bay of Plenty
230-240 Fenton Street, RotoruaSavills5,17223,7005.004.81100.09.4
26-48 Old Taupo Road, RotoruaBayleys13,94033,9004.754.89100.08.9
65 Chapel Street, TaurangaJLL17,36052,5006.636.9199.64.4
Wellington
47 Bay RoadColliers
2
3,46016,0004.754.77100.013.9
91 Johnsonville RoadJLL6,31621,5006.134.2075.09.9
13-19 Queen Street, Upper HuttColliers
2
3,42713,0005.255.93100.013.9
14 Russell Street, Upper HuttJLL3,03710,3006.137.27100.03.9
261 High Street, Lower HuttColliers
2
5,07823,7505.005.23100.013.9
Cnr Hanson Street, John Street &
Adelaide RoadColliers
2
4,88228,5004.905.8598.710.4
3 Main RoadJLL4,20022,0005.005.30100.011.9
Other North Island
Cnr Butler & Kerikeri Roads, KerikeriSavills3,88723,3005.005.11100.011.7
53 Leach Street, New PlymouthColliers
1
8,52237,2004.754.73100.08.5
9 Gloucester Street, NapierColliers
1
4,38621,4004.754.71100.08.5
Cnr Fernlea Avenue & Roberts Line,
Palmerston NorthColliers
2
3,61116,2505.495.71100.010.6
Cnr Tremaine Avenue & Railway Road,
Palmerston NorthColliers
2
13,73031,0005.255.59100.08.9
Canterbury
87-97 Hilton Street, KaiapoiCBRE3,02514,7005.886.06100.013.9
219 Colombo Street, ChristchurchCBRE3,97622,1005.135.47100.013.9
Cnr Victoria & Browne Streets, TimaruJLL4,03212,4355.996.2885.013.2
40-50 Ivory Street, RangioraSavills3,78618,9005.635.70100.011.7
Cnr Rolleston & Masefield Drives, RollestonSavills4,25124,5005.004.92100.011.7
24 Brighton Mall, ChristchurchColliers
1
2,2076,3006.006.33100.07.4
Other South Island
Cnr Putaitai Street & Main Road, NelsonCBRE2,65915,0005.385.79100.011.7
51 Arthur Street, BlenheimCBRE3,13612,7005.886.12100.013.9
309 Cumberland Street, DunedinJLL4,12325,1005.004.97100.013.9
172 Tay Street, InvercargillJLL
5,16125,8005.635.88100.012.5
Total
239,8401,035,5355.205.4299.09.9
Investore Property Limited Annual Report 202251
2.0 Property (continued)
2.2 Investment properties (continued)
NLACap rate
Contract
yieldOccupancyWALT
As at 31 Mar 22Valuerm
2
$000%%%years
Auckland
24 Anzac RoadJLL4,382
31,600
4.004.15100.012.9
326 Great South RoadColliers
1
4,641
44,500
4.004.04100.012.9
35A,T St Johns RoadJLL4,457
27,500
4.884.7898.212.6
507 Pakuranga RoadCBRE4,812
24,700
4.634.48100.012.9
3 Averill StreetColliers
1
5,435
17,750
7.508.26100.012.2
Cnr Church & Selwyn StreetsBayleys2,011
14,000
4.684.73100.02.9
Cnr Te Irirangi Drive & Bishop Dunn PlaceBayleys12,205
46,300
4.134.25100.08.7
112 Stoddard RoadSavills4,200
31,100
4.504.64100.05.9
226 Great South RoadSavills7,362
44,000
5.505.81100.07.5
20-24 Neville StreetSavills3,816
33,000
4.254.33100.010.0
2 Carr RoadCBRE11,693
55,800
4.004.50100.05.2
4 Carr RoadSavills5,332
36,250
4.004.01100.09.4
295 Penrose RoadCBRE9,014
44,500
5.506.10100.04.1
Waikato
66-76 Studholme Street, MorrinsvilleJLL1,724
8,000
6.006.01100.02.9
Cnr Anglesea & Liverpool Streets, HamiltonSavills5,265
9,500
10.0010.03100.01.8
Cnr Bridge & Anglesea Streets, HamiltonSavills4,200
23,200
5.004.90100.011.1
Cnr Hukanui & Thomas Roads, HamiltonSavills4,506
20,100
5.255.40100.09.7
446 Te Rapa Road, HamiltonBayleys12,763
43,100
4.254.25100.07.9
Bay of Plenty
230-240 Fenton Street, RotoruaSavills5,172
25,000
4.754.56100.08.4
26-48 Old Taupo Road, RotoruaBayleys13,940
40,900
4.254.44100.010.0
65 Chapel Street, TaurangaJLL17,360
54,000
6.386.8999.73.6
Wellington
45-49 Jackson StreetSavills4,605
38,000
4.384.41100.010.0
47 Bay RoadBayleys3,460
17,250
4.254.45100.012.9
91 Johnsonville RoadColliers
2
6,316
26,000
4.925.43100.011.7
13-19 Queen Street, Upper HuttJLL3,427
15,750
4.755.95100.012.9
14 Russell Street, Upper HuttColliers
1
3,037
11,000
5.386.48100.02.9
261 High Street, Lower HuttColliers
1
5,078
30,000
4.384.32100.012.9
Cnr Hanson Street, John Street &
Adelaide RoadColliers
2
4,882
31,250
4.545.40100.010.0
3 Main RoadJLL4,200
25,000
4.634.68100.010.9
Other North Island
Cnr Butler & Kerikeri Roads, KerikeriSavills3,887
24,300
4.884.90100.010.7
53 Leach Street, New PlymouthBayleys8,567
39,300
4.504.47100.07.5
9 Gloucester Street, NapierColliers
2
4,386
22,750
4.504.43100.07.5
Cnr Fernlea Avenue & Roberts Line,
Palmerston NorthColliers
2
3,611
17,750
5.135.25100.010.0
Cnr Tremaine Avenue & Railway Road,
Palmerston NorthCBRE13,730
36,700
4.634.76100.07.9
Canterbury
87-97 Hilton Street, KaiapoiColliers
1
3,025
14,750
5.256.07100.012.9
219 Colombo Street, ChristchurchBayleys3,976
22,950
5.005.29100.012.9
Cnr Victoria & Browne Streets, TimaruColliers
1
4,032
15,500
5.254.6278.011.5
40-50 Ivory Street, RangioraSavills3,786
20,800
5.005.18100.010.7
Cnr Rolleston & Masefield Drives, RollestonSavills4,251
28,000
4.884.71100.010.7
24 Brighton Mall, ChristchurchColliers
1
2,207
6,600
5.756.03100.06.4
Other South Island
Cnr Putaitai Street & Main Road, NelsonCBRE2,659
15,600
5.005.22100.010.7
51 Arthur Street, BlenheimJLL3,136
13,100
5.755.94100.012.9
309 Cumberland Street, DunedinColliers
1
4,123
28,000
4.254.39100.012.9
172 Tay Street, InvercargillCBRE
5,161
29,200
5.255.20100.011.5
Total
249,8291,204,3504.814.9999.79.1
50Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202250 Investore Property Limited Annual Report 202251
2.0 Property (continued)
2.2 Investment properties (continued)
Predominant valuation techniques used:
•Income Capitalisation approach - is based on the current contract and market income and an appropriate market yield or return for the
particular investment property. Adjustments are then made to the value to reflect under or over renting, pending capital expenditure, and
upcoming expiries, including allowance for lessee incentives and leasing expenses.
•Discounted Cash Flow approach - adopts a ten-year investment horizon and makes appropriate allowances for rental income growth and
leasing expenses on expiries, with an estimated terminal value at the end of the investment period. The terminal yield is used to derive the
terminal value. Terminal yield rate estimates are based on comparable transaction data and also consider matters such as building age and
the market environment at the end of the investment period (10 years). The present value reflects the market based income and expenditure
projections, discounted at a rate of return referred to as a discount rate. In selecting the discount rate many factors are considered, including
the degree of apparent risk, market attitudes toward future inflation, the prospective rates of return for alternative investments and the rates of
return earned by comparable properties in the past.
In deriving a market value under each approach, all assumptions are based, where possible, on market based evidence and transactions for
properties with similar locations, construction detail and quality of lessee covenant. The adopted market value is a combination of both the Income
Capitalisation and the Discounted Cash Flow approaches. There were no changes to the valuation techniques during the year.
The key inputs used to measure fair value of investment properties, along with their sensitivity to significant increase or decrease, are stated below:
Fair value measurement sensitivity
to significant:
Significant inputDescription
Increase
in input
Decrease
in input
Valuation
method
Cap rateThe cap rate is applied to the market income to
assess an investment property’s value. It is derived
from detailed analysis of factors such as comparable
sales evidence and leasing transactions in the open
market taking into account location, tenant covenant
- lease term and conditions, WALT, size and quality of
the investment property.
DecreaseIncreaseIncome
Capitalisation
Discount rateThe discount rate is applied to future cash flows
of an investment property to provide a net present
value equivalent. The discount rate adopted takes
into account recent comparable market transactions,
prospective rates of return for alternative investments
and apparent risk.
DecreaseIncreaseDiscounted Cash
Flow
Gross market rentalThe valuer’s assessment of gross market rental
for both occupied and vacant areas of the
investment property.
IncreaseDecreaseIncome
Capitalisation and
Discounted Cash
Flow
Rental growth rateThe rental growth rate applied to the market rental in
the 10-year cash flow projection.
IncreaseDecreaseDiscounted Cash
Flow
Terminal yieldThe rate used to assess the terminal value of
the property.
DecreaseIncreaseDiscounted Cash
Flow
Generally, a change in the assumption made for the adopted cap rate is accompanied by a directionally similar change in the adopted discount rate.
It may also result in an adjustment to the terminal yield.
When calculating fair value using the Income Capitalisation approach, the gross market rent has a strong interrelationship with the adopted cap rate,
given the methodology involves assessing the total gross market income receivable from the investment property and capitalising this in perpetuity
to derive a capital value. In theory, an increase in the gross market rent and an increase (softening) in the adopted cap rate could potentially offset
the impact to the fair value. A decrease in the gross market rent and a decrease (tightening) in the adopted capitalisation rate could also potentially
offset the impact to fair value. A directionally opposite change in the gross market rent and the adopted capitalisation rate could potentially magnify
the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and adopted terminal yield have a strong interrelationship in deriving a fair value,
given the discount rate will determine the rate at which the terminal value is discounted to the present value.
An increase (softening) in the adopted discount rate and a decrease (tightening) in the adopted terminal yield could potentially offset the impact to
the fair value. A decrease (tightening) in the discount rate and an increase (softening) in the adopted terminal yield could also potentially offset the
impact to fair value. A directionally similar change in the adopted discount rate and the adopted terminal yield could potentially magnify the impact
to the fair value.
Investore Property Limited Annual Report 202253
2.0 Property (continued)
20222021
Breakdown of valuations by valuer$000$000
CBRE Limited (CBRE)
206,500
228,300
CVAS (NZ) Limited (Colliers
1
)
168,100
121,300
CVAS (WLG) Limited (Colliers
2
)
97,750
128,500
Jones Lang LaSalle Limited (JLL)
174,950
201,035
Savills (NZ) Limited (Savills)
333,250
241,000
Bayleys Valuations Limited (Bayleys)
223,800
115,400
Investment property per independent valuations
1,204,350
1,035,535
A valuation is determined based on a range of unobservable inputs. They are unobservable as they are not freely available or explicit in the market
and are developed by analysing transactional data. Key unobservable inputs are the capitalisation rate, discount rate, gross market rent, rental
growth rates and terminal yield. The following table details the key unobservable inputs and the ranges adopted:
Cap
rate
Discount
rate
Gross
market
rental
Rental
growth
rate
Terminal
yield
%%$/m
2
%%
As at 31 Mar 224.00-10.003.00-8.50148-4740.18-2.954.00-11.00
As at 31 Mar 21
4.13-10.253.50-7.75147-488(0.04)-2.724.63-10.25
The estimated sensitivity of the fair value of the total investment property portfolio to changes in the market capitalisation rate and discount rate,
assuming the capitalisation rate or discount rate moved equally on all the properties, is provided below. The metrics chosen are those where
movements are likely to have the most significant impact on fair value.
Cap rate %
Discount rate %
-0.25+0.25-0.25+0.25
As at 31 Mar 22
Change $000
68,662(59,997)34,496(29,574)
Change %
6(5)3(3)
As at 31 Mar 21
Change $00052,073(50,333)18,510(20,194)
Change %5(5)2(2)
2.2 Investment properties (continued)
52Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202252 Investore Property Limited Annual Report 202253
2.0 Property (continued)
2.4 Capital expenditure commitments contracted for
As at 31 March 2022, Investore had committed to $55.3 million (2021: $0.246 million) in total for capital expenditure works to be undertaken over
the next 12 to 18 months:
•$0.7 million for the completion of the roof replacement at the property at 295 Penrose Road, Auckland.
•Approximately $22 million towards expansion plans in collaboration with its tenants in Auckland. With regards to the property at
2 Carr Road, Bunnings Warehouse is planning to undertake an expansion of the trade zone and associated improvements along with the
planned seismic upgrades to be funded by SPL. Investore will contribute approximately $14 million towards the expansion and improvement
works with an associated improvements rental and a new 12-year lease on completion. Investore has also agreed to contribute approximately
$8 million to improve the customer amenity at the Countdown site at 507 Pakuranga Road, including new parking areas, improved customer
access ways and a dedicated online pick-up area, with an associated improvements rental.
•On 18 May 2021, Investore announced that it had entered into a conditional agreement to acquire a 3.5 hectare parcel of land at Waimak
Junction, Kaiapoi, North Canterbury, for $10.5 million. Investore has reached agreement in principle with Countdown to construct a new
supermarket on a portion of this site, leaving the balance of the land for future development. It is conditional on resource consents being
satisfied for new titles and road closures. Investore expects the total commitment, including the cost of the land and the stage 1 development
of the Waimak Junction land to be approximately $33.3 million which will be funded from available debt facilities. Investore has prepaid
$0.7 million on this project at 31 March 2022.
Investore has no other material commitments as at balance date.
Investore Property Limited Annual Report 202255
2.0 Property (continued)
2.3 Lease liabilities
Accounting Policy
Investore leases as lessee various properties under non-cancellable operating lease agreements. At the inception of a contract, Investore
assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
Lease liabilities are measured based on the present value of the fixed and variable lease payments, less any cash lease incentives receivable.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as
to produce a constant rate of interest on the remaining balance of the liability for each period.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally
the case for leases in Investore, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms,
security and conditions.
Investore is committed under eleven (2021: eleven) leases where Investore is the lessee:
•Corner of Anglesea and Liverpool Streets, Hamilton (seven);
•3 Averill Street, Auckland (one);
•70 Studholme Street, Morrinsville (one);
•51 Arthur Street, Blenheim (one); and
•Corner of Bridge and Anglesea Streets, Hamilton (one).
The leases relate to ground rent on leasehold properties and contain renewal and termination options exercisable only by Investore. In determining
the lease term, Investore considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a
termination option. Extension options are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
The lease term is reassessed if an option is actually exercised (or not exercised) or Investore becomes obliged to exercise (or not exercise) it.
The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this
assessment, and that is within the control of the lessee.
During the year, the lease liabilities and right-of-use assets have been re-assessed by $3.08 million upwards in total, primarily to reflect a rent
review for the ground lease at 3 Averill Street, Auckland.
20222021
Right-of-use asset$000$000
Opening balance15,418
11,117
Re-assessment on rent review
3,082
4,366
Depreciation
(66)
(65)
Closing balance
18,434
15,418
Lease liabilities
Opening balance15,418
11,117
Re-assessment on rent review
3,082
4,366
Cash lease payments
(1,397)
(847)
Finance lease interest
1,331
782
Closing balance
18,434
15,418
Current liabilities
78
55
Non-current liabilities
18,356
15,363
Total lease liabilities
18,434
15,418
54Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202254 Investore Property Limited Annual Report 202255
4.0 Related Party Disclosures
This section sets out the transactions that have occurred during the relevant periods between Investore and SIML, as manager
of Investore, and SPL, which owns a cornerstone shareholding in Investore. The shares in each of SIML and SPL are Stapled
Securities and together they comprise the Stride Property Group.
20222021
The following transactions with a related party took place$000$000
SIML
Asset management fee expense
(5,736)
(4,965)
Performance fee expense
(1,667)
(2,076)
Building management fee expense
(438)
(428)
Accounting fee expense
(250)
(250)
Disposal fee expense
(128)
-
Leasing fee expense
(92)
(449)
Maintenance fee expense
(40)
(40)
Project management fee expense
(157)
(96)
Sustainability fee expense
(72)
-
Bond issuance expense
(75)
-
Capital raising fee expense
-
(89)
Total
(8,655)
(8,393)
SPL
Dividends paid
(5,415)
(5,259)
Consideration paid on the acquisition of investment properties
-
(135,750)
Consideration received for issue of shares in capital raise
-
16,522
The following balance was payable to a related party
SIML
(31)
(707)
Investore has appointed SIML as its exclusive provider of ongoing real estate investment management services. Investore does not have any
employees, and accordingly, there are no senior managers of Investore who have a relevant interest in the shares of Investore.
The performance fee expense is calculated and payable on a quarterly basis as 10% of the actual increase in shareholder returns (being share
price, adjusted for dividend, and other changes in capital structure), which is above 2.5% and under 3.75% in a quarter. Where shareholder returns
exceed 3.75% in a quarter, no payment is due for the actual amount of the return above 3.75% but the amount of the return above 3.75% is
carried forward and added to the calculation of shareholder returns in the next seven quarters. However, if shareholder returns are less than 2.5%
in a quarter, the deficit is carried forward and subtracted from the calculation of shareholder returns in the next seven quarters. Additionally, the
performance fee for any twelve month period is capped at 0.2% of the value of Investore’s portfolio value, and any excess performance fee is
carried forward into the following quarter.
SIML received a performance fee of $0.85 million for the quarter ended 30 June 2021 (quarter ended 30 June 2020: $0.78 million) and
$0.82 million for the quarter ended 30 September 2021 (quarter ended 30 September 2020: $0.67 million). No performance fees were payable
for the quarters ended 31 December 2021 (quarter ended 31 December 2020: $nil) and 31 March 2022 (quarter ended 31 March 2021:
$0.63 million). The carried forward return for the performance fee calculation for the quarter ended 30 June 2022 is a 16.4% deficit (2021:
carried forward return for the quarter ended 30 June 2021 was a positive 0.02%) which has been calculated in accordance with the management
agreement. The performance fee for the year ended 31 March 2022 was capped at $2.41 million, being 0.2% of Investore’s portfolio value as at
31 March 2022.
As at 31 March 2022, SPL's shareholding in Investore is 18.8%, being 69.202 million shares (2021: 18.8%, being 69.202 million shares).
In the current year, Directors in total received dividends of $14,766 (2021: $14,341). Directors' fees recognised in administration expenses
comprise the following:
20222021
$000$000
Directors' fees
203
187
Chair's fees
92
85
295
272
No other benefits have been provided by Investore to a Director for services as a Director or in any other capacity, other than those amounts
disclosed above.
Investore Property Limited Annual Report 202257
3.0 Investor Returns
This section sets out Investore’s earnings per share and how distributable profit is calculated. Distributable profit is a non-GAAP
measure and is used by Investore to calculate profit available for distribution to shareholders by way of dividends.
3.1 Basic and diluted earnings per share (EPS)
Accounting Policy
Basic and diluted earnings per share amounts are calculated by dividing profit after income tax attributable to shareholders by the weighted
average number of shares on issue.
20222021
$000$000
Profit after income tax attributable to shareholders118,167
161,260
Weighted average number of shares for purpose of basic and diluted EPS
368,135
361,535
Basic and diluted EPS - weighted (cents)32.10
44.60
3.2 Distributable profit
Accounting Policy
Investore’s dividend policy is to target a cash dividend to shareholders that is between 90% and 100% of its distributable profit. Distributable
profit is presented to enable investors to see an earnings measure which more closely aligns to Investore’s underlying and recurring earnings
from its operations. Distributable profit is a non-GAAP measure and consists of profit/(loss) before income tax, adjusted for determined
non-recurring and/or non-cash items (including non-recurring adjustments for incentives payable to anchor tenants for lease extensions) and
current tax.
Adjusted Funds From Operations (AFFO) is also a non-GAAP measure and is intended as a supplementary measure of operating performance.
Although there is no standard meaning or measure per GAAP, AFFO has been determined based on guidelines established by the Property
Council of Australia. Cash spent during the period on capital expenditure as part of maintaining a building’s grade/quality, but not expensed as
part of distributable profit after current income tax, is adjusted to enable investors to see the cash generating ability of the business.
20222021
$000$000
Profit before income tax125,806
168,966
Non-recurring, non-cash and other adjustments:
Net change in fair value of investment properties
(91,017)
(139,287)
Reversal of lease liabilities movement in investment properties
(66)
(65)
Gain on disposal of investment property
(576)
-
Net change in fair value of derivative financial instruments
52
(24)
Spreading of fixed rental increases
(51)
(179)
Capitalised lease incentives net of amortisation
(73)
(797)
Borrowings establishment costs amortisation
865
683
Swap termination (income)/expense
(157)
3,553
Loss on rental guarantee
-
294
Distributable profit before current income tax34,783
33,144
Current tax expense
(4,925)
(3,652)
Adjusted for income tax movement in cash flow hedges
-
(392)
Distributable profit after current income tax
29,858
29,100
Adjustments to funds from operations
Maintenance capital expenditure
(3,671)
(1,299)
Adjusted Funds From Operations (AFFO)
26,187
27,801
Weighted average number of shares for purpose of basic and diluted distributable profit per share (000)
368,135
361,535
Basic and diluted distributable profit after current income tax per share - weighted (cents)8.11
8.05
AFFO basic and diluted distributable profit after current income tax per share - weighted (cents)7.11
7.69
56Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202256 Investore Property Limited Annual Report 202257
5.0 Capital Structure And Funding (continued)
5.1 Borrowings (continued)
Bank borrowings
Investore’s bank borrowings are via syndicated senior secured facilities with ANZ Bank New Zealand Limited, China Construction Bank Corporation,
New Zealand Branch, Industrial and Commercial Bank of China Limited, Auckland Branch, and Westpac New Zealand Limited.
In September 2021, Investore refinanced $70 million of debt facility, extending this facility for a further one year to 31 August 2023.
On 25 February 2022, following the issue of $125 million fixed rate bonds, Investore cancelled $126 million of bank facility of which $25 million
was due to expire in November 2023 and $101 million was due to expire in June 2024.
Fixed rate bonds
On 25 February 2022, Investore issued $125 million of fixed rate bonds (IPL030) with a 5 year term expiring on 25 February 2027, paying an
interest rate of 4.00% per annum.
The fixed rate bonds are quoted on the NZX Debt Market and their fair value is based on their listed market price as at balance date.
Interest on the 6 year fixed rate bonds issued in 2018 (IPL010) is payable quarterly in April, July, October and January in equal instalments, whilst
interest on the 7 year fixed rate bonds issued in 2020 (IPL020) and the 5 year fixed rate bonds issued in 2022 (IPL030) are payable quarterly in
August, November, February, and May, also in equal instalments.
Security
The bank borrowings and fixed rate bonds are managed through a security agent who holds a first registered mortgage on all the investment
properties owned by Investore and a registered first ranking security interest under a General Security Deed over substantially all the assets
of Investore.
Net debt reconciliation
Below sets out an analysis of net debt and the movements in net debt.
20222021
$000$000
Cash and cash equivalents
7,229
6,800
Borrowings
(351,530)
(277,363)
Lease liabilities
(18,434)
(15,418)
Net debt
(362,735)
(285,981)
Liabilities from financing activities
BorrowingsLeasesSub-totalCashTotal
$000$000$000$000$000
As at 31 Mar 20
(236,946)(11,117)(248,063)4,229(243,834)
Cash flows(41,597)847(40,750)2,571(38,179)
Re-assessment-(4,366)(4,366)-(4,366)
Other changes
1,180(782)398-398
As at 31 Mar 21(277,363)(15,418)(292,781)6,800(285,981)
Cash flows
(75,000)1,397(73,603)429(73,174)
Re-assessment
-(3,082)(3,082)-(3,082)
Other changes
833(1,331)(498)-(498)
As at 31 Mar 22
(351,530)(18,434)(369,964)7,229(362,735)
Investore Property Limited Annual Report 202259
5.0 Capital Structure And Funding
Investore's capital structure includes debt and equity, comprising shares and retained earnings as shown in the consolidated
statement of financial position. This section sets out how Investore manages its capital structure, funding exposure to interest
rate risk and related financing costs.
5.1 Borrowings
Accounting Policy
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost;
any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of
comprehensive income over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities
unless Investore has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
20222021
$000$000
Non-current
Bank facility drawn down
5,000
55,000
Fixed rate bonds
350,000
225,000
Unamortised borrowings establishment costs
(3,470)
(2,637)
Total net borrowings
351,530
277,363
Weighted average interest rate for debt (inclusive of current interest rate derivatives, bonds, margins and line
fees) at balance date
3.77%
4.04%
Interest rate on the bank facility (excluding margin) at balance date
1.96%
1.64%
Total
amount
Undrawn
facility
Drawn/
amountFair value
31 Mar 22Issue dateExpiry dateInterest rate$000$000$000$000
Bank Facility A31 Aug 2023Floating
70,00065,0005,0005,000
Bank Facility D16 Apr 2025Floating
50,00050,000--
Bank Facility F3 Nov 2023Floating
5,0005,000--
Bonds IPL01018 Apr 201818 Apr 20244.40%
100,000-100,000100,427
Bonds IPL02031 Aug 202031 Aug 20272.40%
125,000-125,00089,524
Bonds IPL03025 Feb 202225 Feb 20274.00%
125,000-125,00097,727
475,000120,000355,000292,678
31 Mar 21
Bank Facility A31 Aug 2022Floating70,00040,00030,00030,000
Bank Facility D16 Apr 2025Floating50,00050,000--
Bank Facility E9 Jun 2024Floating101,16376,16325,00025,000
Bank Facility F3 Nov 2023Floating30,00030,000--
Bonds IPL01018 Apr 201818 Apr 20244.40%100,000-100,000106,971
Bonds IPL02031 Aug 202031 Aug 20272.40%
125,000-125,000121,404
476,163196,163280,000283,375
58Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202258 Investore Property Limited Annual Report 202259
5.0 Capital Structure And Funding (continued)
5.2 Derivative financial instruments (continued)
Investore enters into interest rate swaps that have similar critical terms as the hedged item, such as reference rate, reset dates, payment dates,
maturities and notional amount. Investore hedged 100% of its floating rate borrowings as at 31 March 2022 (2021: 100%). As all critical terms
matched during the period, the economic relationship was 100% effective, with the exception of the $25 million fixed rate receiver interest
rate swap.
On 21 March 2018, Investore entered into a $25 million forward start fixed rate receiver swap for the duration of the fixed rate bonds with the
effect of converting a portion of the IPL010 $100 million fixed rate bonds to floating interest rate. The life to date ineffective portion on the receiver
swap, due to the misalignment to the fixed rate bonds as a result of the bonds commencing on 18 April 2018, is a fair value loss of $0.1 million
(2021: fair value loss of $0.05 million), resulting in a fair value loss movement of $0.05 million (2021: fair value gain movement of $0.02 million)
being recognised in the current year in the consolidated statement of comprehensive income.
On 25 February 2022, Investore terminated an interest rate derivative contract with a notional value of $20 million resulting in interest income of
$0.157 million. This income has been recognised in the consolidated statement of comprehensive income as the hedged future cash flows will no
longer occur.
The fair values of interest rate derivatives are determined from valuations prepared by independent treasury advisors using valuation techniques
classified as Level 2 in the fair value hierarchy (2021: Level 2). These are based on the present value of estimated future cash flows based on the
terms and maturities of each contract and the current market interest rates as at balance date. Fair values also reflect the current creditworthiness
of the derivative counterparties. The valuations were based on market rates at 31 March 2022 of between 1.61%, for the 90-day BKBM, and
3.41%, for the 10-year swap rate (2021: 0.35% and 1.95%, respectively). There were no changes to these valuation techniques during the
reporting period.
As at 31 March 2022, the fair value of the interest rate derivatives includes an accrued interest asset of $31,672 (2021: accrued interest
liability $44,075).
The following sensitivity analysis represents the change in fair value of the interest rate derivatives and shows the effect on equity if the floating
interest rates on swaps (hedged bank borrowings) had been 0.25% higher or lower, with other variables remaining constant.
20222021
Gain/(loss) on
+0.25%
Gain/(loss) on
-0.25%
Gain/(loss) on
+0.25%
Gain/(loss) on
-0.25%
$000$000$000$000
Impact on equity(107)109
(66)67
There would have been no impact on profit or loss in either year as the change in fair value is taken to the cash flow hedge reserve. The interest rate
sensitivity analysis is performed by using an instantaneous parallel shift in the yield curve at the testing date.
Investore does not hold derivative financial instruments for trading purposes.
Investore Property Limited Annual Report 202261
5.0 Capital Structure And Funding (continued)
5.2 Derivative financial instruments
Accounting Policy
Interest rate derivatives (derivative financial instruments) are initially recognised at fair value on the date a derivative contract is entered
into and are subsequently measured at their fair value at each reporting date. Fair value of over-the-counter derivatives, such as interest
rate swaps, is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on
entity-specific estimates.
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments
to ensure that an economic relationship exists between the hedged item and hedging instrument.
Hedge ineffectiveness for interest rate swaps may occur due to:
•the credit value/debit value adjustment on the interest rate swaps which is not matched by the loan; and
•differences in critical terms between the interest rate swaps and loans.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the cash
flow hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within the
consolidated statement of comprehensive income.
When a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity
and is recognised when the forecast transaction is ultimately recognised in profit or loss.
20222021
$000$000
Notional value of interest rate swaps - fixed rate payer start dates commenced
30,000
50,000
Notional value of interest rate swaps - fixed rate payer forward starting
30,000
30,000
Notional value of interest rate swaps - fixed rate receiver
25,000
25,000
Total
85,000
105,000
Interest rate derivative assets - non-current
667
1,788
Interest rate derivative liabilities - current
(134)
(498)
Interest rate derivative liabilities - non-current
(126)
(900)
Fair value of interest rate derivatives
407
390
Fixed interest rates payer (including forward starting interest rate swaps)
2.38%-2.84%
2.27%-2.54%
Fixed interest rate receiver
4.40%
4.40%
Weighted average fixed interest rate (excluding margins, including forward starting interest rate swaps)
2.40%
2.14%
Percentage of drawn debt fixed
100%
100%
60Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202260 Investore Property Limited Annual Report 202261
6.0 Risk Management
This section sets out Investore's exposure to financial assets and liabilities that potentially subject Investore to financial risk and
how Investore manages those risks.
6.1 Financial Instruments
Accounting Policy
A financial instrument is recognised if Investore becomes a party to the contractual provisions of the instrument. Financial assets are
de-recognised if Investore’s contractual rights to the cash flows expire, or if Investore transfers them without retaining control or substantially
all risks and rewards of the asset. Financial liabilities are de-recognised if Investore’s obligations specified in the contract are extinguished.
Investore classifies its financial assets and financial liabilities in the following measurement categories:
•those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss); and
•those to be measured at amortised cost.
20222021
Summary of financial instruments$000$000
Financial assets at amortised cost
Cash at bank
7,229
6,800
Trade and other receivables
872
451
NZX bond
75
75
Derivative financial instruments
Used for hedging
667
1,764
Held for trading at fair value through profit and loss
-
24
Total financial assets
8,843
9,114
Financial liabilities at amortised cost
Trade and other payables
5,564
5,723
Lease liabilities
18,434
15,418
Borrowings
351,530
277,363
Derivative financial instruments
Used for hedging
208
1,398
Held for trading at fair value through profit and loss
52
-
Total financial liabilities
375,788
299,902
6.2 Financial assets at amortised cost
Accounting Policy
Depending on the purpose for which the assets were acquired, Investore classifies its assets as financial assets at fair value through profit
or loss and financial assets at amortised cost. Classification is determined at initial recognition and this designation is re-evaluated at every
reporting date.
Financial assets at amortised cost are those assets with fixed or determinable payments that are not quoted in an active market. They
are included in current assets, except for those with maturities greater than 12 months after balance date, which are classified as non-
current assets.
On initial recognition of a financial asset, Investore assesses on a forward-looking basis the expected credit loss associated with its financial assets
carried at amortised cost. At each reporting date, the credit risk on a financial asset, apart from trade receivables, is assessed to determine whether
there has been a significant increase in the credit risk by considering both forward-looking information and the financial history of counterparties to
assess the probability of default or likelihood that full settlement is not received.
6.3 Financial liabilities at amortised cost
Liabilities in this category are measured at amortised cost and include borrowings and trade and other payables.
6.4 Financial risk management
Investore’s activities expose it to a variety of financial risks: interest rate risk, credit risk and liquidity risk. Investore’s overall risk management
strategy focusses on minimising the potential negative economic impact of unpredictable events on its financial performance.
Risk management is the responsibility of the Board. The Board identifies and evaluates financial risks in close co-operation with SIML. The Board
has a policy for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use of derivative
financial instruments and non-derivative financial instruments, and investing excess liquidity.
Investore Property Limited Annual Report 202263
5.0 Capital Structure And Funding (continued)
5.3 Net finance expense
Accounting Policy
Interest income is recognised on a time-proportional basis using the effective interest rate. Borrowing costs are expensed when incurred and
are recognised using the effective interest rate.
20222021
$000$000
Finance income
Bank interest income
10
4
Swap termination income (note 5.2)
157
-
Total finance income
167
4
Finance expense
Bank borrowings interest
(4,990)
(6,150)
Fixed rate bonds interest
(7,891)
(6,159)
Lease liabilities interest
(1,331)
(782)
Total finance expense(14,212)
(13,091)
Swap termination expense
-
(3,553)
Total finance expense
(14,212)
(16,644)
Net finance expense
(14,045)
(16,640)
5.4 Share capital
Accounting Policy
Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue
of new shares are shown in equity as a deduction, net of tax, from the proceeds.
There is only one class of shares, being ordinary shares, and they rank equally with each other. All issued shares are fully paid and have no par value.
Investore had 368,135,033 shares on issue as at 31 March 2022 (2021: 368,135,033).
5.5 Reserve
20222021
Cash flow hedge reserve$000$000
Opening balance357
(2,694)
Movement in fair value of interest rate derivatives
(60)
718
Tax on fair value movement
17
(201)
Transferred to profit or loss
52
(24)
Swap termination
-
3,553
Swap termination taxation benefit
-
(995)
Closing balance
366
357
Gains and losses recognised in the cash flow hedge reserve in equity, on interest rate derivative contracts as at 31 March 2022, will be reclassified
in the same period in which the hedged forecast cash flows affect profit or loss, until the repayment of the underlying borrowings.
5.6 Capital risk management
Investore’s objectives when managing capital are to safeguard Investore’s ability to continue as a going concern in order to provide returns for
shareholders, and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, Investore
may adjust the amount of dividends paid to shareholders, return capital to shareholders, buy back shares, issue new shares or sell assets to reduce
borrowings. As part of its capital risk management, Investore is required to comply with covenants imposed under its banking facility and its fixed
rate bonds (note 5.1). The Board regularly monitors these covenants and provides six monthly compliance certificates to the banks and the Bond
Supervisor as part of this process. Investore has complied with these covenants during the relevant periods.
62Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202262 Investore Property Limited Annual Report 202263
6.0 Risk Management (continued)
6.7 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit
facilities, and the ability to close out market positions. Investore’s liquidity position is monitored on a regular basis and is reviewed quarterly by the
Board to ensure compliance with internal policies and covenants per Investore’s banking facility and fixed rate bonds.
Investore generates sufficient cash flows from its operating activities to meet its obligations arising from its financial liabilities and has the bank
facility available to cover potential shortfalls. Further detail about the undrawn bank facility available is given in note 5.1.
The following table outlines Investore’s liquidity profile, as at 31 March, based on contractual non-discounted cash flows.
Total0-6 mths6-12 mths1-2 yrs2-5 yrs>5 yrs
$000$000$000$000$000$000
31 Mar 22
Trade and other payables
5,5645,564----
Secured bank borrowings
7,5205005006,092428-
Fixed rate bonds
402,3536,2006,20012,400124,220253,333
Lease liabilities
53,4836436051,2125,87345,150
Derivative financial instruments
1,759402024041,113-
470,67912,9477,50720,108131,634298,483
31 Mar 21
Trade and other payables5,7235,723----
Secured bank borrowings65,4551,3671,36734,78227,939-
Fixed rate bonds257,6703,7003,7007,400113,620129,250
Lease liabilities35,7826902989694,47529,350
Derivative financial instruments
(424)307(35)(285)(411)-
364,20611,7875,33042,866145,623158,600
6.8 Fair values
The carrying value of the following financial assets and liabilities approximate their fair value: cash at bank, trade and other receivables, NZX bond,
trade and other payables and bank borrowings. The fair value of the fixed rate bonds is disclosed in note 5.1.
Investore Property Limited Annual Report 202265
6.0 Risk Management (continued)
6.5 Interest rate risk
As Investore has no significant interest bearing assets, its income and operating cash flows are substantially independent of changes in market
interest rates.
Investore’s interest rate risk arises from bank borrowings (note 5.1) which are issued at variable rates and expose Investore to cash flow interest rate
risk. The long term interest rate policy provides bands that are applied on a rolling basis, which provide for both a high level of fixed interest rate
cover over the near term, as well as a lengthy period of known fixed interest rate cover for a portion of term debt. Investore manages its cash flow
interest rate risk by predominately using floating to fixed interest rate derivatives which have the economic effect of converting bank borrowings
from floating to fixed rates.
As Investore holds interest rate derivatives, there is a risk that their economic value will fluctuate because of changes in market interest rates. The
value of interest rate derivatives is disclosed in note 5.2.
At balance date, the total drawn bank debt was fully hedged (2021: fully hedged).
Investore’s exposure to variable interest rate risk and the weighted average interest rate for interest bearing financial assets and liabilities is
as follows:
20222021
$000$000
Financial assets
Cash at bank
7,229
6,800
Financial liabilities
Bank borrowings
5,000
55,000
Fixed rate bonds
350,000
225,000
Interest rates applicable at balance date
Cash at bank
0.15%
0.05%
Bank borrowings
2.21%
1.58%
Fixed rate bonds IPL010
4.40%
4.40%
Fixed rate bonds IPL020
2.40%
2.40%
Fixed rate bonds IPL030
4.00%-
Weighted average interest rate for drawn debt (inclusive of current interest rate derivatives, margins and line
fees) of the bank borrowings
3.77%
4.04%
Trade and other receivables and payables are interest free and have settlement dates within one year. All other assets and liabilities are
non-interest bearing.
6.6 Credit risk
Investore incurs credit risk from trade receivables and transactions with financial institutions including cash balances and interest rate derivatives.
The risk associated with trade receivables is managed with a credit policy which includes performing credit evaluations on customers requiring
credit and ensures that only those customers with appropriate credit histories are provided with credit. In addition, receivable balances are
monitored on an ongoing basis, with the result that Investore’s exposure to bad debts is not significant. Amounts which are past due are not
considered impaired as the majority are due from tenants who have demonstrated a good payment history.
As Investore’s tenant, General Distributors Limited (GDL), contributes most of Investore’s portfolio contract rental, Investore is exposed to a
significant concentration of credit risk. GDL is a large national retailer, the operator of Countdown supermarkets in New Zealand and an ultimate
subsidiary of Woolworths Group Limited.
The risk from financial institutions is managed by placing cash and deposits with high credit quality financial institutions only. Investore has placed its
cash and deposits with Westpac New Zealand Limited, which is AA- rated (Standard & Poor’s).
With respect to the credit risk arising from interest rate swap agreements, there is limited risk as all counterparties are registered banks in New
Zealand whose credit ratings are all AA- (Standard & Poor’s).
Investore is not exposed to any other concentrations of credit risk. The maximum exposure to credit risk is the carrying amount of each class of
financial assets as reported in note 6.1.
64Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202264 Investore Property Limited Annual Report 202265
7.0 Other (continued)
7.3 Ta x
Accounting Policy
The Parent is a listed Portfolio Investment Entity (PIE) for the purposes of the Income Tax Act 2007 and is required to pay tax to Inland Revenue
as required by the Income Tax Act 2007.
20222021
Income tax$000$000
Current tax
(4,925)
(3,652)
Deferred tax
(2,714)
(4,054)
Income tax expense per the consolidated statement of comprehensive income
(7,639)
(7,706)
Profit before income tax125,806
168,966
Prima facie income tax using the company tax rate of 28%(35,226)
(47,310)
Decrease/(increase) in income tax due to:
Net change in fair value of investment properties
25,485
39,000
Gain on disposal of investment property
161
-
Reversal of lease liabilities movement in investment properties
18
18
Movement in fair value of derivative financial instruments
(15)
7
Non-taxable income
23
216
Other permanent differences
101
170
Depreciation
4,461
4,368
Non-deductible expenses
107
(498)
Temporary differences
(40)
(18)
Swap termination expense released from reserve
-
392
Over-provision in prior year
-
3
Current tax expense
(4,925)
(3,652)
Investment property depreciation
(2,639)
(4,029)
Other
(75)
(25)
Deferred tax charged to profit or loss
(2,714)
(4,054)
Income tax expense per the consolidated statement of comprehensive income
(7,639)
(7,706)
Imputation credits available for use in subsequent reporting periods
1,220
739
Imputation credits available for use in subsequent reporting periods are based on a rate of 28% and represent the balance of the imputation
account as at the end of the reporting period, adjusted for imputation credits arising from provisional income tax paid.
Investore Property Limited Annual Report 202267
7.0 Other
This section contains additional information to assist in understanding the financial performance and position of Investore.
7.1 Operating segments
Accounting Policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker has been identified as the Board, as it makes all key strategic resource allocation decisions (such as those
concerning acquisitions, divestments and significant capital expenditure).
Investore is reported as a single operating segment, being large format retail properties. Investore’s revenue streams are earned from investment
properties owned in New Zealand, with no specific exposure to geographical risk. One tenant, General Distributors Limited (Countdown),
contributes 63% of Investore’s portfolio contract rental as at 31 March 2022 (2021: 64%).
7.2 Corporate expenses
20222021
$000$000
Administration expenses includes:
Auditor's remuneration
Audit and review of financial statements
171
157
Other assurance services - operating expense audits
19
15
Total Auditor's remuneration
190
172
66Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202266 Investore Property Limited Annual Report 202267
7.0 Other (continued)
7.4 Trade and other receivables
Accounting Policy
Trade and other receivables are recognised at their fair value and subsequently measured at amortised cost using the effective interest rate
method. Investore has applied the simplified approach to measuring expected credit loss as prescribed by NZ IFRS 9, which uses a lifetime
expected loss allowance. A loss allowance is made when there is objective evidence (such as the probability of insolvency or significant
financial difficulties of the debtor) that Investore will not be able to collect all of the amounts due under the original terms of the invoice.
20222021
$000$000
Current
Trade and other receivables
1,095
533
Less loss allowance
(223)
(82)
872
451
Carrying amount
872
451
Less than 30 days overdue
388
284
Over 30 days overdue
707
249
Less impaired assets
(223)
(82)
Movement in loss allowance
Opening balance(82)
(50)
Additional loss allowance
(165)
(82)
Reduction in loss allowance
24
50
Closing balance
(223)
(82)
7.5 Trade and other payables
Accounting Policy
Trade and other payables represent unsecured liabilities for goods and services provided to Investore prior to the end of the financial period
which are unpaid. Trade and other payables are usually paid within 30 days of recognition. The carrying amounts of trade and other payables
are assumed to be the same as their fair values, due to their short-term nature.
20222021
$000$000
Current
Unsecured liabilities
Trade payables
401
637
Related party payables (note 4.0)
31
707
Rent in advance
18
767
Capital expenditure payables and accruals
1,327
1,320
Interest expense accruals
1,666
1,228
Other accruals and payables
2,121
1,064
5,564
5,723
Other accruals and payables include Goods and Services Tax, interest expense accruals, tenant deposits, direct property operating expense
accruals and other corporate expense accruals.
Investore Property Limited Annual Report 202269
7.0 Other (continued)
7.3 Ta x (continued)
Accounting Policy
Deferred tax is provided, using the liability method, on all temporary differences between the tax base of assets and liabilities and their carrying
amounts for financial reporting purposes. Temporary differences include:
•tax liability arising from accumulated depreciation claimed on investment properties, where applicable;
•tax asset arising from loss allowance;
•tax liability arising from certain prepayments and other assets; and
•tax asset/liability arising from the unrealised gains/losses on the revaluation of interest rate swaps.
For deferred tax liabilities or assets arising on investment property measured at fair value, it is assumed that the carrying amounts of the
investment property will be recovered through sale. Investment properties are independently valued each year and the valuation includes a
split between the land and building components. Deferred tax is provided on the depreciation claimed to date on the building component of
the investment properties and this places reliance on the valuation split provided by the valuers.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset and when the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
2021
Recognised in
profit or loss
Recognised in
other
comprehensive
income2022
$000$000$000$000
Deferred tax assets
Derivative financial instruments
335-(273)62
Other temporary differences
46(75)279250
381(75)6312
Deferred tax liabilities
Depreciation on investment properties
(4,464)(2,639)-(7,103)
Derivative financial instruments
(457)-290(167)
(4,921)(2,639)290(7,270)
(4,540)(2,714)296(6,958)
20202021
$000$000$000$000
Deferred tax assets
Derivative financial instruments1,308-(973)335
Other temporary differences
71(25)-46
1,379(25)(973)381
Deferred tax liabilities
Depreciation on investment properties(435)(4,029)-(4,464)
Derivative financial instruments
(626)-169(457)
(1,061)(4,029)169(4,921)
318(4,054)(804)(4,540)
68Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202268 Investore Property Limited Annual Report 202269
Independent auditor’s report
To the shareholders of Investore Property Limited
Our opinion
In our opinion, the accompanying consolidated financial statements of Investore Property Limited (the Company), including its controlled entities
(the Group), present fairly, in all material respects, the financial position of the Group as at 31 March 2022, 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 consolidated financial statements comprise:
•the consolidated statement of financial position as at 31 March 2022;
•the consolidated statement of comprehensive income for the year then ended;
•the consolidated statement of changes in equity for the year then ended;
•the consolidated statement of cash flows for the year then ended; and
•the notes to the consolidated financial statements, which include 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 consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 area of assurance services over operating expense statements. The provision of these other
services has not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Description of the key audit matterHow our audit addressed the key audit matter
Valuation of investment properties
As disclosed in Note 2.2 of the financial statements,
the Group’s investment properties at valuation totalled
$1,204.4 million (excluding lease liabilities) which
represents majority of the assets held by the Group as
at 31 March 2022.
The valuation of the Group’s property portfolio is
inherently subjective due to, amongst other factors,
the individual nature of each property, location and
the expected future rental income for each property.
A relatively small percentage difference in any one of
the key individual assumptions used in the property
valuations, as disclosed in Note 2.2, when aggregated,
could result in a material misstatement of the overall
valuation of investment properties.
The valuations were performed by independent registered
valuers Bayleys Valuations Limited, CBRE Limited, CVAS
(NZ) Limited, CVAS (WLG) Limited, Jones Lang LaSalle
Limited and Savills (NZ) Limited (the Valuers), as engaged
by Stride Investment Management Limited (the Group’s
Manager). The Valuers engaged by the Manager are
reputable and experienced in the markets in which the
Group operates and are rotated for individual properties
on a three-yearly cycle.
In determining a property’s valuation, the Valuers
generally used two approaches to determine the fair
value of an investment property: the Income Capitalisation
approach and the Discounted Cash Flow approach to
arrive at a range of valuation outcomes, from which the
Valuers derive a point estimate.
For each property, the Valuers take into account
property-specific information such as the current tenancy
The valuation of investment properties is inherently subjective given that there are
alternative assumptions and valuation methods that may result in a range of values.
We held discussions with the Manager to understand the movements in the
Group’s investment property portfolio, changes in the condition of each property,
the controls in place over the valuation process, and the impact that COVID-19 has
had on the Group’s investment property portfolio including mandatory tenant rent
abatements and tenant occupancy risk arising from changes in the estimated churn
on lease renewal.
In assessing the individual valuations, we read the valuation reports for all
properties. We also held separate discussions with each of the Valuers in order
to gain an understanding of the assumptions and estimates used and the valuation
methodology applied. We also sought to understand and consider restrictions
imposed on the valuation process (if any) and the market conditions at the
balance date.
We confirmed that the valuation approach for each property was in accordance
with accounting standards and suitable for use in determining the fair value of
investment properties at 31 March 2022.
Our work over the assumptions focused on the largest properties in the portfolio
where the assumptions used and/or year-on-year fair value movement suggested
a possible outlier versus market data. In particular, we obtained an understanding
of the key inputs in the valuation, agreed contractual rental and lease terms to
lease agreements with tenants, considered whether seismic assessments and/or
capital maintenance requirements had been taken into account in the valuations
with reference to supporting documentation and validated that COVID-19 relief
provided to tenants had been factored into the valuations and that changes in
tenant occupancy risk were also incorporated.
We engaged our own in-house valuation specialist to critique and independently
assess the work performed and assumptions used by the Valuers on a
sample basis.
We considered whether or not there was a bias in determining significant
assumptions in individual valuations and found no evidence of bias.
Investore Property Limited Annual Report 202271
7.0 Other (continued)
7.6 Investment in subsidiaries
Accounting Policy
A subsidiary is an entity controlled by the Parent whereby the Parent has power over the investee, is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The financial statements of the Subsidiary are included in the financial statements of the Parent from the date that control commences until the date
that control ceases. The Subsidiary applies the same accounting policies as the Parent.
The acquisition method of accounting has been used to consolidate the Subsidiary of the Parent. All intra-group transactions and balances between
group companies have been eliminated on consolidation.
The Parent has the following subsidiary, which is 100% owned, has a 31 March balance date, and is principally involved in the ownership of an
investment property:
•Investore Property (Carr Road) Limited - acquired on 13 August 2021
The Subsidiary is a company which owns a large format retail property at 4 Carr Road, Auckland. The property owned by the Subsidiary is presented
as part of the Parent's investment property.
7.7 Contingent liabilities
Investore has no contingent liabilities at balance date (2021: $nil).
7.8 Subsequent events
On 18 May 2022, Investore declared a cash dividend for the period 1 January 2022 to 31 March 2022 of 1.975 cents per share, to be paid on
2 June 2022 to all shareholders on Investore’s register at the close of business on 26 May 2022. This dividend will carry imputation credits of
0.331357 cents per share. This dividend has not been recognised in the financial statements.
There have been no other material events subsequent to balance date.
70Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202270 Investore Property Limited Annual Report 202271
Independent auditor’s report (continued)
To the shareholders of Investore Property Limited
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the consolidated financial statements in
accordance with NZ IFRS and IFRS, and for such internal control as the Directors determine is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements, as a whole, are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated 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 Philip Taylor.
For and on behalf of:
Chartered Accountants
18 May 2022
Auckland
Investore Property Limited Annual Report 202273
Independent auditor’s report (continued)
To the shareholders of Investore Property Limited
Description of the key audit matterHow our audit addressed the key audit matter
agreements and rental income earned by the asset as well
as recent comparable transactions where available. They
then apply assumptions in relation to capitalisation rate,
discount rate, gross market rental, rental growth rate and
terminal yield.
Due to the unique nature of each property, the
assumptions applied take into consideration the individual
property characteristics at a granular tenant-by-tenant
level, as well as the qualities of the property as a whole.
We also assessed the Valuers’ qualifications, expertise and their objectivity and
we found no evidence to suggest that the objectivity of any Valuer, in their
performance of the valuations, was compromised.
It was also evident from our discussions with the Manager and the Valuers and
from our review of the valuation reports that close attention had been paid to each
property’s individual characteristics and its overall quality, geographic location and
desirability as a whole.
We considered the appropriateness of disclosures made in the
financial statements.
Our audit approach
Overview
MaterialityOverall group materiality: $1,739,000, which represents approximately 5% of profit before income tax excluding net change
in fair value of investment properties.
We chose adjusted profit before tax excluding net change in fair value of investment properties as the benchmark because,
in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a
generally accepted benchmark.
Key audit matterAs 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 consolidated 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.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance about whether
the consolidated 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
consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the
consolidated financial statements as a whole as set out above. These, together with qualitative considerations, helped us to determine the scope of
our audit, the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on
the consolidated financial statements as a whole.
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 consolidated financial statements as
a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
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 consolidated financial statements and our auditor's report thereon.
Our opinion on the consolidated 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 consolidated financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing
to report in this regard.
72Investore Property Limited Annual Report 2022
Investore Property Limited Annual Report 202272 Investore Property Limited Annual Report 202273
Corporate
Governance
The Board of Investore has
established a framework of policies,
practices, and processes as part of
its governance framework that are
intended to ensure that Investore
implements best practice standards
of corporate governance. The Board
sets the strategic direction and
objectives for the business, identifies
and manages risks, and strives to
continuously improve performance.
This section of the Annual Report
provides an overview of those
corporate governance policies,
practices and processes adopted and
followed by Investore. This statement
is current as at 1 May 2022.
Overview of Investore
Investore is a New Zealand incorporated
company, whose fully paid ordinary shares are
quoted on the NZX Main Board equity securities
market under the ticker code ‘IPL’, with a ‘non-
standard’ (NS) designation. Investore has a ‘non-
standard’ designation due to certain waivers that
have been granted from the Listing Rules, which
reflect the nature and operations of Investore.
These waivers are described on page 99.
Investore was established by SPL as a separate
listed company in 2016 to invest in large format
retail property throughout New Zealand. In
August 2021 Investore acquired all of the shares
in Investore Property (Carr Road) Limited, which
owns the property at 4 Carr Road, Mt Roskill,
Auckland. This section refers to Investore and
its subsidiary.
Investore is a listed Portfolio Investment Entity
(PIE) for taxation purposes.
Investore’s assets and operations are externally
managed by SIML, the real estate investment
management business that is part of the NZX
listed stapled group, Stride Property Group
(Stride). SIML, as Manager, has appointed two
Directors to the Investore Board.
Investore does not have any employees
and has appointed SIML as the manager of
Investore’s portfolio and its business pursuant
to a Management Agreement. Under this
Management Agreement, SIML is responsible for
the management and maintenance of Investore’s
property portfolio and its business, negotiating
the acquisition and disposal of property,
development management, treasury and capital
management, and ensuring Investore meets
its financial, reporting, and other statutory and
regulatory obligations.
Corporate Governance
The Board has adopted a corporate governance
framework that it considers is appropriate for
the size and nature of Investore’s operations.
The Board reviews and assesses Investore’s
governance structures and processes to ensure
they remain appropriate and effective and
are consistent with best practice standards.
This section of the Annual Report provides an overview
of Investore’s corporate governance framework and
includes commentary on Investore’s compliance
with each of the eight corporate governance principles
and recommendations of the NZX Code for the year
ended 31 March 2022, together with other legal and
regulatory disclosures.
Investore’s corporate governance framework and
practices are materially consistent with the NZX Code,
subject to the following exceptions, which are consistent
with practices reported in previous years’ Annual Reports:
• No Remuneration Committee has been established
(NZX Code Recommendation 3.3) and no
Remuneration Policy has been adopted (NZX Code
Recommendation 5.2), due to Investore having no
employees. Director remuneration is considered
by the Board as a whole and then recommended to
shareholders for approval.
• No Nomination Committee has been established
to recommend Director appointments (NZX Code
Recommendation 3.4), as this function is assumed
by the whole Board.
Investore’s Website:
For additional information on
Investore’s key corporate governance
documents and policies, please refer
to the Investore website at
www.investoreproperty.co.nz
External Stakeholders
External Auditor
Investore Board of Directors
ShareholdersBondholders
Management Agreement
Audit and Risk Committee
Risk Management
/Internal Controls
Delegations of Authority
Other SIML
Managed Fund
Other SIML
Managed Fund
(3x Independent and
2x SIML Nominee Directors)
SIML/Manager
SIML CEO/Management
Appointment
of Directors
Accountability
Risk Management Framework
SPL 18.8%
(as at 31 March 2022)
Other SIML
Managed Fund
Investore
Large Format Retail
Diagram 1: Governance Framework
• As there is no Chief Executive of Investore,
the requirement to disclose the remuneration
arrangements in place for the Chief Executive does
not apply (NZX Code Recommendation 5.3).
Investore Property Limited Annual Report 202274 Investore Property Limited Annual Report 202275
Principle 1:
Code of Ethical Behaviour
“Directors should set high standards of
ethical behaviour, model this behaviour
and hold management accountable
for these standards being followed
throughout the organisation.”
The Board sets a standard of ethical behaviour for
the conduct of Investore’s business and adopts an
ethics-based approach to Investore’s operations and
decision-making.
Code of Ethics
Investore has adopted a Code of Ethics which sets the
standard expected by Investore of its Directors and of
the employees of the Manager when conducting the
business of Investore.
This ethics-based approach to Investore’s operations
and decision-making is reinforced through a number
of policies in addition to the Code of Ethics, including
the Securities Trading Policy and Market Disclosure
Policy (see Principle 4: Reporting and Disclosure for a
description of the Market Disclosure Policy), as well as
the Manager’s Conflicts Policy. Investore does not have
a whistleblower policy, as it has no employees.
Diagram 2: Key principles underpinning Investore’s
Code of Ethics
Conflicts of Interest
Investore and the Board are very aware of the
risks posed by actual or perceived conflicts
of interest, and the management of conflicts
of interest is an integral feature of Investore’s
day to day governance practices. This is
particularly pertinent given the relationship
between Investore, Stride, and other entities
managed by SIML. The principles that govern
the management of conflicts of interest
are addressed in a number of Investore’s
governance documents, including the
Constitution, the Board Charter, the Code of
Ethics, and a range of internal policies of SIML,
the Manager. SIML has adopted a Conflicts
Policy which Investore has approved, and
which guides SIML in identifying and managing
conflicts of interest in its operations, including
its management of the business of Investore and
other entities managed by SIML.
Securities Trading Policy
The Board has adopted a Securities Trading
Policy which contains processes and procedures
governing trading in Investore securities. The
Securities Trading Policy raises awareness
of the insider trading provisions within the
Financial Markets Conduct Act 2013 and
reinforces those legislative requirements with
additional internal compliance requirements.
Directors of Investore and directors and
employees of SIML who wish to trade in quoted
financial products of Investore must comply with
the Securities Trading Policy. This policy imposes
limited trading windows and requires all persons
to whom the policy applies to obtain approval
prior to trading. Speculative trading is not
permitted. A minimum hold period of six months
for any securities acquired is imposed, except
in exceptional circumstances and with the prior
approval of the Company Secretary.
Principle 2:
Board Composition
and Performance
“To ensure an effective board, there
should be a balance of independence,
skills, knowledge, experience and
perspectives.”
The Board is responsible for overseeing the effective
management and operation of Investore. The Board’s role
is to represent the interests of Investore’s stakeholders
and ensure that the operations of Investore are managed
in a way that is consistent with the achievement of
Investore’s strategy and business objectives, within a
framework of regulatory and ethical compliance.
The Board’s roles and responsibilities are formalised in a
Board Charter, which is available on Investore’s website,
www.investoreproperty.co.nz. The Board Charter
outlines the functions that are reserved for the Board and
those that are formally delegated to SIML as Manager.
The Board reviews the Board Charter annually, to ensure
it remains consistent with the Board’s objectives and
responsibilities and ensures an appropriate balance
between governance matters, for which the Board retains
responsibility, and operational matters which have been
delegated to the Manager.
The Board retains responsibility for setting the strategic
direction of Investore, overseeing the performance of
Investore and communicating to the market. The Board
delegates the day to day management of Investore’s
business to SIML, as Manager, by way of a Management
Agreement and ensures appropriate operating
parameters through formal delegations of authority.
The relationship between the Board and SIML and
their respective roles and responsibilities is depicted in
Diagram 3.
Diagram 3: Board and Manager
Roles and Responsibilities
Board oversees operations of
Investore and implementation
of strategic objectives
• Ensures Investore has
adequate resources to meet
its objectives and obligations
• Reviews and approves
budgets, business plans,
dividend policy and
financial forecasts and
oversees Investore’s capital
management
• Monitors the financial
performance of Investore
• Implements effective audit
and risk management
systems
• Reviews and approves market
communications
SIML implements Board’s
strategy and follows approved
policies and procedures
• Oversees day to day operations
of Investore’s portfolio and
assets
• Ensures Investore is meeting
its legal, regulatory, financial
reporting and other statutory
obligations
• Makes recommendations to the
Board on company strategy and
initiatives
• Reports to the Board on
Investore’s operating
performance; prepares budgets
and business plans for Board
approval
• Manages business risk in
accordance with the risk appetite
adopted by the Board
• Implements health and safety
policies and procedures
Board sets strategic
direction and operating
frameworks
• Adopts policies, processes
and systems to ensure
the business of Investore
is operated in an honest,
ethical, safe and responsible
manner
• Adopts an appropriate risk
management framework
• Delegates day to day
operations to SIML within
a formal delegation of
authority
Act with honesty
and integrity and
demonstrate respect
for others
Protect Investore’s
assets and
resources, including
its confidential or
sensitive information
Make every effort to
protect the reputation
of Investore and avoid
a conflict between an
individual’s private
financial activities and
the business activities
of Investore
Adhere to all legal
and compliance
obligations
Investore Property Limited Annual Report 202276 Investore Property Limited Annual Report 202277
Composition of the Board and Director
Independence
Investore’s Constitution requires the Board to have no
less than four and no more than five Directors at any one
time. The Board must comprise:
• At least two Directors who are ‘Independent of the
Manager’ where the Board is comprised of four
Directors. If the Board is comprised of five Directors,
at least three Directors must be Independent of
the Manager.
• A non-executive Chair who is ‘Independent of
the Manager’ where SIML has (or is deemed to
have) appointed two Directors. Where the Chair
is ‘Independent of the Manager’, the Chair holds a
casting vote in respect of Board resolutions in the
case of an equality of votes.
• At least two Directors who are ordinarily resident in
New Zealand.
‘Independent of the Manager’ means, in respect
of a Director, that:
• The Director is not an ‘Associated Person’ (as
defined in the Listing Rules) of SIML, any person
who holds or controls more than 25% of the ordinary
shares of SIML, or any related company of a person
who holds or controls more than 25% of the ordinary
shares of SIML;
• The Director was not appointed by SIML under its
appointment rights in the Investore Constitution;
• The Director is not an executive officer of SIML and
has no ‘Disqualifying Relationship’ (as defined in the
Listing Rules) with SIML; or
• Pursuant to any NZX Regulation ruling or other
written consent of NZX, the Director is to be treated
as being independent of SIML.
SIML, as Manager, has the right to appoint and remove
two Directors. The independent Directors (being both
‘Independent of the Manager’ and ‘Independent
Directors’ pursuant to the Listing Rules) are appointed
and subject to removal in the normal manner by
Investore shareholders who are not associated
with SIML. This means that SPL, as a shareholder of
Investore, is not eligible to vote on the appointment of
independent Directors.
As at 1 May 2022, the Investore Board comprised:
The Board has reviewed the status of each of the
Directors and confirms that, as at the date of release of
this Annual Report, Directors Mike Allen, Gráinne Troute
and Adrian Walker are Independent Directors (as defined
in the Listing Rules), on the basis that none of these
Directors have any current or prior relationship with
Investore or any substantial product holder of Investore
(other than his or her role as a Director of Investore), and
none of these Directors has been a Director of Investore
for a length of time that may compromise independence.
Accordingly, as at the date of this Annual Report,
Investore’s Board comprises a majority of Independent
Directors, consistent with the recommendation in the
NZX Code.
In addition, the Chair of the Board and the Chief Executive
Officer of the Manager are independent of each other.
The Company Secretary of Investore is an employee
of SIML, as Investore has no employees. The Company
Secretary has direct access to the Chair of the Board and
Chair of the Audit and Risk Committee, and vice versa, to
ensure matters can be raised as appropriate.
Further information on the Directors of Investore who
held the office of Director during the 12 months to
31 March 2022, their status and (in the case of the
Independent Directors) date of appointment, expertise,
and experience, is set out on pages 10 and 11, with their
attendance at Board and Committee meetings set out
on page 84.
Appointment of Independent Directors
Potential candidates for appointment as an independent
Director are either nominated by the Board or Investore
shareholders and are voted on by the shareholders of
Investore. If a vacancy on the Board exists, then the
Board may appoint a Director to fill that casual vacancy,
however that Director is required to retire and stand for
election at the first Annual Shareholder Meeting after
their appointment.
To be eligible for selection, candidates must demonstrate
the appropriate qualities and experience for the role
of Director and will be selected on a range of factors,
including property industry knowledge, business acumen,
financial markets and governance experience. Other
relevant factors may include background, qualifications,
and professional expertise, and these will be considered
against the Board’s assessment of its needs at the time,
including any perceived gaps in skills and experience that
the Board identifies having regard to the strategy
of Investore.
Before appointing a new Director, the Board undertakes
appropriate pre-appointment checks, including
background checks on education, employment
experience, criminal history, and bankruptcy.
All new non-executive Directors are appointed by way of a
formal letter of appointment setting out the key terms and
conditions of their appointment, including expected time
commitment, remuneration entitlements and indemnity
and insurance arrangements. New Directors are provided
with an induction pack containing key governance
information, policies, and relevant information necessary
to prepare new Directors for their role. New Directors also
meet each of the key members of SIML management as
part of an induction programme, designed to provide new
Directors with an overview of Investore, its strategy and
operations, and the market in which it operates.
No new Directors were appointed during FY22.
Directors’ Skills and Experience
The Board regularly reviews its skills and experience
against the Board’s perceived skill requirements given
Investore’s business and strategic requirements.
Directors’ skills and experience are also closely
considered when appointing a new Director, so that an
appropriate mix of skills can be retained.
The Board is conscious to ensure that it collectively has
an appropriate mix of skills, knowledge, experience, and
diversity to enable the Board to meet its responsibilities
and contribute varying perspectives to Board
discussions. An appropriate balance is sought between
Directors with experience and knowledge of the property
sector, the history and operations of Investore, and new
Directors who bring fresh thinking, different perspectives,
and diverse skills and experience.
Set out in Diagram 4 is a summary of the identified mix of
skills and experience among Directors that the Board has
identified. This skills matrix takes account of the nature of
Investore’s business interests and its strategic principles.
Individual Director profiles are also set out on the
Investore website and on pages 10 and 11 of this Annual
Report. The Board considers the current mix of skills and
experience is appropriate for the responsibilities and
requirements of governing Investore.
Mike Allen
Independent Director
Independent of the Manager
Chair of the Board
Subject to retirement and
election by shareholders in
the usual manner
Gráinne Troute
Independent Director
Independent of the Manager
Chair of the Audit and Risk
Committee
Subject to retirement and
election by shareholders in
the usual manner
Adrian Walker
Independent Director
Independent of the Manager
Subject to retirement and
election by shareholders in
the usual manner
Tim Storey
SIML-appointed Director
Appointed by SIML to
the Investore Board and
accordingly is not required
to stand for election by
shareholders
John Harvey
SIML-appointed Director
Appointed by SIML to
the Investore Board and
accordingly is not required
to stand for election by
shareholders
Investore Property Limited Annual Report 202278 Investore Property Limited Annual Report 202279
Professional Development
The Board conducts continuing professional
development for Directors, which includes briefings from
senior SIML managers and industry experts and site
visits to properties owned by Investore. This is intended
to enable Directors to maintain the knowledge and skill
set required for the office of a Director of Investore,
and is particularly focussed on knowledge specific to
the property industry, macroeconomic factors, and
new regulatory and governance practices, all of which
may impact on Investore’s business and operations.
The Board also regularly schedules presentations from
external presenters as part of their Board meetings,
intended to ensure Directors remain current on factors
affecting Investore’s business. Presenters may include
valuers, investors and tenants. In addition, all Directors
undertake appropriate training to remain informed on
how to best perform their duties as Directors.
Board Review
Directors conduct a full external Board performance
review biannually to review the Board’s performance
and its engagement with SIML management. An external
Board review was conducted in FY21. This year the
Board conducted an internal self-review to ensure it was
functioning efficiently and to assess the implementation
of the recommendations made by the independent
consultant engaged in FY21. The internal review
consisted of separate interviews with each Director and
key members of SIML management. The internal review
concluded that processes implemented following the
FY21 external Board review had benefitted the Board
and its operations, and also identified opportunities for
the Board to further refine its meeting processes.
Diversity
The Investore Board understands that different
perspectives contribute to a more successful business
and recognises the value in diversity of thinking and
skills. Investore is committed to promoting diversity on
its Board by attracting, developing, and retaining high
calibre Directors from a diverse pool of individuals and
skill sets. The Board also monitors the diversity and
inclusion practices of the manager, SIML.
The Board has adopted a Diversity Policy, which applies
to the Board, given that Investore has no employees.
Investore’s Diversity Policy is available on its website.
Investore aligns its Diversity Policy with SIML’s Diversity
Policy. For more information on the Manager’s diversity
strategy, refer to the FY22 Annual Report of Stride (when
available) at www.strideproperty.co.nz.
The Investore Board notes that SIML has undertaken a
number of initiatives during FY22 intended to improve
its diversity practices, including instituting a training
programme for all employees on “Unconscious Bias”
which was developed by Diversity Works – a national
agency for diversity and inclusion in New Zealand. In
addition, SIML also revised and improved its flexible
work policy, and will be establishing an employee
Diversity & Inclusion Committee in FY23 to guide
internal policy and actions to foster and encourage
diversity and inclusion within SIML.
Investore has conducted a review of its Diversity Policy
and the performance of Investore against its annual
objectives for the year in review, and notes its progress
towards achieving its objectives in Table 1. In addition,
Investore continued to promote diversity during FY22
through its participation in the Future Directors’
programme, with the continuance of Emma McDonald as
a Future Director, and the work of the Board in mentoring
and supporting Emma through this programme.
Gender Composition of the Board of Investore
As at
31 March 2022
As at
31 March 2021
Male4 (80%)4 (80%)
Female1 (20%)1 (20%)
Diagram 4: Board Skills Matrix
Table 1: Diversity Objectives and Progress FY22
ObjectiveProgress as at 31 March 2022
Recruitment
Ensure recruitment procedures provide for a wide range of
potential Director candidates to be considered at Board level
When conducting a search for a new Director, Investore
considers diversity as one of the factors for consideration
and encourages applications from a diverse range of Director
candidates and utilises a variety of recruitment channels.
No new Directors were appointed during FY22.
Reporting
SIML will report periodically to the Board on diversity related
matters within its business, including diversity of employees
Investore has adopted a Diversity Policy to apply to the Board
which is aligned with SIML’s Diversity Policy. The Investore
Board takes an active approach to oversight of the Manager’s
diversity approach. SIML reported to the Investore Board on
progress in its diversity objectives, a summary of which can be
found in the Stride Annual Report for FY22 (when available).
Risk
management
Setting
corporate
strategy
Financial
reporting
Non-Independent
Independent
Female
Male
Legal
80%
60%
40%
20%
100%
4 6 years
T
e
n
u
r
e
G
e
n
d
e
r
D
i
v
e
r
s
i
t
y
S
k
i
l
l
s
a
n
d
C
o
m
p
e
t
e
n
c
i
e
s
0 3 years
Legal
Retail
Property
Capital markets
2
1
4
4
4
4
5
5
Governance
and leadership
C
o
m
p
o
s
i
t
i
o
n
Investore Property Limited Annual Report 202280 Investore Property Limited Annual Report 202281
Principle 3: Board Committees
“The board should use committees
where this will enhance its effectiveness
in key areas, while still retaining board
responsibility.”
Committees play an important role in Investore’s
governance framework, allowing a subset of the Board
to focus on a particular area of importance, while
still ensuring the Board as a whole is responsible for
decision-making for Investore.
The Board has one standing committee to assist in the
exercise of its functions and duties, the Audit and Risk
Committee. The Board may also establish non-standing
committees, as and when required, to deal with specific
matters. During FY22 the Board established a temporary
Due Diligence Committee, including members of the
Board, to oversee planning and preparation for the
listed bond issue undertaken during February 2022.
Directors Gráinne Troute, Mike Allen and Tim Storey were
members of the Due Diligence Committee, together with
representatives of the Manager and advisers. Investore’s
other Directors had a standing invitation to attend Due
Diligence Committee meetings.
The NZX Code recommends that a Remuneration
Committee and a Nominations Committee be established
to recommend remuneration packages for Directors
and senior employees and to recommend Director
appointments to the Board. As Investore has no
employees and a relatively small Board, the function of
Director remuneration and appointment is undertaken
by the full Board, with both Director remuneration and
independent Director appointments ultimately requiring
shareholder approval.
Audit and Risk Committee
The Audit and Risk Committee operates under a written
Charter which is reviewed annually by the Committee
to ensure that it remains appropriate and current.
This Charter is available in the Corporate Governance
Documents section of the Investore website. The
Charter requires that the Audit and Risk Committee be
comprised solely of non-executive Directors and have
at least three members, with the majority of members
being independent Directors. At least two Directors on
the Committee must be independent of SIML. The Chair
of the Audit and Risk Committee is to be an independent
Director and may not be the Chair of the Board. All Audit
and Risk Committee members are expected to have an
appropriate degree of financial acumen for the position
of Audit and Risk Committee member and at least one
member must have accounting or related financial
management expertise.
As at the date of this Corporate Governance statement,
the Audit and Risk Committee comprises three
Directors, of whom two, Gráinne Troute and Mike Allen,
are independent Directors. Gráinne Troute is the Chair
of the Committee, is an independent Director and is
not the Chair of the Board. The third member of the
Committee, John Harvey, is a SIML-appointed Director
with considerable financial and audit experience, having
been a partner at PwC for 23 years. Directors who are not
committee members have a standing invitation to, and do,
regularly attend the Audit and Risk Committee meetings.
Meetings of the Audit and Risk Committee are held at
least twice a year, having regard to Investore’s reporting
and audit cycle. Additional meetings may be held at the
discretion of the Chair, or if requested by any Audit and
Risk Committee member or the external auditor.
The NZX Code recommends that employees (which in
this case, would be senior management of SIML) should
only attend Audit and Risk Committee meetings at the
invitation of the Committee. The Chief Executive Officer
and senior management of SIML, and the external auditor,
have a standing invitation to attend Audit and Risk
Committee meetings. The Audit and Risk Committee
are free to meet separately with the external auditor
without senior management of SIML present, to discuss
audit matters.
The Audit and Risk Committee provides assistance to
Directors in fulfilling their responsibility to investors in
relation to the reporting practices of Investore, and the
quality, integrity, and transparency of the financial reports
of Investore.
Due Diligence Committee
During the year in review a temporary Board Committee
was established to oversee the offer of Investore’s third
tranche of listed bonds, which were issued in February
2022. Gráinne Troute, Mike Allen and Tim Storey were
appointed to the Due Diligence Committee, along with
members of SIML management and representatives
of Investore’s advisers, although all Directors had
a standing invitation to attend the Due Diligence
Committee meetings.
The key function of the Due Diligence Committee was
to oversee and coordinate the due diligence process for
the bond offer. The Due Diligence Committee was also
responsible for ensuring that all material information
known to Investore was disclosed to the market and
that the offer materials did not contain any statement
that was false, misleading, or deceptive or which was
unsubstantiated, and contained all of the information
required by statute and the Listing Rules. The Committee
also established a system of continuing enquiry, review,
and monitoring of developments between the date of the
bond offer materials and the issue of the bonds, to ensure
no material information arose which should be disclosed
to the market during this period.
The primary roles of the Audit and Risk Committee are:
Financial Reporting
• Review financial statements
and obtain the external
auditor’s views on
disclosures and content of
the financial statements to
be presented to investors
• Review with SIML and
external auditors the
results of analysis of
significant financial
reporting issues and
practices, including changes
in accounting principles
Audit
• Recommend appointment
of external auditors and
monitor services provided
by auditors to ensure
independence is maintained
• Agree scope of half year
review and annual audit,
review audit opinion,
and review auditor’s
compensation and
recommend such to
the Board
• Report results of annual
audit to the Board, including
whether the financial
statements comply with
applicable laws and
regulations
Risk
• Monitor and review the risk
management framework
established by the Manager
• Review key business risks
and controls, and review
reports on effectiveness of
systems for internal control,
financial reporting and risk
management
• Review and approve
key insurance policy
terms and cover adequacy
and recommend such to
the Board
Investore Property Limited Annual Report 202282 Investore Property Limited Annual Report 202283
Board and Committee Meetings and Attendance
The Board schedules a minimum of six meetings per
year, at which Directors receive written reports and
presentations from SIML’s Chief Executive Officer
and senior management covering a review of operations
and financial results for the period in review, matters for
Board approval, and an outline of key health, safety and
sustainability matters and, as appropriate, risk
and governance reports. The Board regularly
considers performance against strategy, sets strategic
plans, and approves initiatives to meet Investore’s
strategic principles.
Directors also attend briefings with senior managers of
SIML on an ad hoc basis and attend investor briefings
in connection with their role as a Director of Investore.
These attendances are not included in the disclosure
in Table 2 below but comprise an important element
of Investore Director responsibilities. Additional Board
meetings are held as and when required. In addition, the
Board held a strategy day during FY22 to review and
reassess the Company’s strategic priorities. All Directors
attended this strategy day.
The number of Board and Committee meetings held
during the year and details of Directors’ attendance at
those meetings are disclosed in Table 2.
Takeover Protocols
The Board has established takeover protocols which
set out the procedure to be followed in the event a
takeover offer for Investore is made or it is foreseeable
that an offer may be imminent. These protocols are
available on Investore’s website in the Corporate
Governance Documents section. The protocols provide
for an independent takeover committee to be formed,
comprising independent Directors of Investore, to
oversee the takeover process and ensure compliance
with Investore’s obligations under the Takeovers
Code. The protocols also govern the procedure for
communications with the bidder, with the market,
and with investors.
Principle 4: Reporting
and Disclosure
“The board should demand integrity in
financial and non-financial reporting,
and in the timeliness and balance of
corporate disclosures.”
Market Disclosure Policy
Investore has a Market Disclosure Policy, available on
Investore’s website, to ensure the Company meets its
obligation to keep the market informed of all material
information. This policy sets out Investore’s commitments
in relation to market disclosure, to:
BoardAudit and Risk Committee
Due Diligence Committee and
Related Board Meetings
Number of Meetings in FY22
8410
Mike Allen8410
Gráinne Troute8410
Adrian Walker848
Tim Storey8410
John Harvey849
Table 2: Board and Committee Meeting Attendance for Period 1 April 2021 to 31 March 2022
Ensure that shareholders, bondholders, and
the market are provided with full and timely
information about Investore’s activities
Comply with the continuous disclosure
principles contained in statute and in the
Listing Rules
Ensure that all market participants have
equal opportunities to receive externally
available information issued by Investore
The Policy requires all directors and members of the
executive of SIML and Directors of Investore to inform
the Chief Executive Officer of SIML or the SIML General
Manager Corporate Services (who is also the Disclosure
Officer under the Policy) of any potentially material
information or proposal immediately after the relevant
person becomes aware of that information or proposal.
A Disclosure Committee, comprising Investore’s Chair
and SIML’s Chief Executive Officer and General Manager
Corporate Services, is responsible for making decisions
about what information is material information and
ensuring that appropriate disclosures are made in a
timely manner to the market.
The policy and Investore’s compliance with the policy
were reviewed by the Board during FY22.
Availability of Key Governance Documents
Investore is committed to ensuring that investors
and potential investors are informed as to Investore’s
key governance policies and charters. The Board
Charter, Audit and Risk Committee Charter, annual and
interim reports, NZX announcements, key corporate
governance policies and other investor related material
(as recommended in the NZX Code) are available on the
Investore website.
A remuneration policy has not been prepared by Investore
as Investore has no employees. However, information
regarding Director remuneration is made available to
investors when shareholders are asked to approve any
changes to Director remuneration and additionally is
reported in the annual reports of Investore.
Investore Property Limited Annual Report 202284 Investore Property Limited Annual Report 202285
Clear and Balanced Reporting
Investore is committed to maintaining appropriate financial and non-financial reporting
Financial ReportingNon-Financial Reporting
Investore’s Audit and Risk Committee
is responsible for overseeing
Investore’s financial reporting,
including ensuring that such
reporting is balanced, clear and
objective. Further information on the
Audit and Risk Committee and its
responsibilities is contained in the
commentary on Principle 3.
Risks
The Audit and Risk Committee has
established processes to identify and
consider the material business risks
faced by Investore.
During FY22 the Committee conducted
a review of its risk appetite against key
risks identified by SIML management
and the Committee. Risk reporting was
also refreshed, with risk trends being
reported against these key risks, to
identify where the risk level may be
diverging from the Committee’s risk
appetite.
The Board regularly receives risk
management reports and reviews key
risks to the business of Investore and
the controls implemented to manage
exposure to those risks. All identified
risks have specific mitigation
strategies where appropriate, and
the Manager regularly reviews the
effectiveness of these strategies.
A high level summary of key risks to
Investore’s business as monitored by
the Board is set out in Table 4 under
Principle 6.
Environmental Sustainability,
Social Responsibility and
Corporate Governance
Investore is committed to ensuring
that Environmental Sustainability,
Social Responsibility and Corporate
Governance (ESG) are key
considerations in the operation and
governance of its business. Investore
works closely with its Manager, SIML,
and the SIML Board Sustainability
Committee to implement its
sustainability strategy and achieve its
objectives.
Sustainability has been a key focus for
the Board during FY22, with the Board
revising its Charter to incorporate
sustainability considerations as a
matter for Board attention.
Reporting on Investore’s sustainability
progress, particularly in relation to
climate-related disclosures, can
be found on pages 28 to 35 of this
Report.
Principle 5: Remuneration
“The remuneration of directors and
executives should be transparent,
fair and reasonable.”
Directors are remunerated in the form of Directors’
fees as approved by shareholders, with a higher level of
remuneration for the Chair of the Board and an additional
amount for the Chair of the Audit and Risk Committee, to
reflect the additional time and responsibilities that these
positions require. No Director of Investore is entitled to
any remuneration other than by way of Directors’ fees and
the reasonable reimbursement of travel, accommodation
and other expenses incurred in the course of performing
duties or exercising their role as a Director. Directors do
not participate in any Investore share or option plan.
No Director of an Investore subsidiary received any
remuneration or other benefits during the period in
relation to their duties as a Director of a subsidiary
company, other than the benefit of an indemnity from
Investore and the benefit of insurance cover in respect
of all liabilities (to the extent permitted by law) which
arise out of the performance of their normal duties
as Directors, subject to certain exceptions such as
deliberate breach of duty.
The Board is collectively responsible for recommending
Director remuneration packages to shareholders.
Directors’ remuneration was reviewed in 2021, being
two years since the last remuneration review. The Board
engaged Ernst & Young to provide an independent report
on Directors’ remuneration for Investore, utilising Ernst
& Young’s database of directors’ remuneration in New
Zealand. The report benchmarked the remuneration
paid to Investore’s Directors against an industry peer
group of NZX listed companies, selected on the basis
of comparable market capitalisation. A summary of
that report was made available to shareholders when
considering the resolution to increase Directors’
remuneration at the 2021 Annual Shareholder Meeting.
In proposing the increase in remuneration, the Board
took into account the Ernst & Young independent
benchmark report, as well as Directors’ workloads and
responsibilities, and Investore’s performance.
Shareholders approved an increase in Directors’
remuneration at the 2021 Annual Shareholder Meeting
with effect from 1 July 2021, increasing non-executive
Director remuneration from $45,000 to $50,000 per
annum; the Chair’s remuneration was increased from
$85,000 to $95,000 per annum; and the additional
remuneration for the Chair of the Audit and Risk
Committee was increased from $6,500 to $8,000 per
annum. Audit and Risk Committee Members receive
no additional remuneration. As previously advised to
the market, Investore intends to continue to review
Director remuneration every two years. Investore remains
committed to the principle that remuneration is set and
managed in a manner which is fair, transparent, and
reasonable.
Investore does not have a remuneration policy
because it has no employees, and accordingly pays
no executive remuneration.
Table 3 sets out Director remuneration for those Directors
who held office in the year to 31 March 2022. These fees
are consistent with those approved by shareholders.
As noted at the Annual Shareholder Meeting in 2021,
Investore does not operate a fee pool, and has no pool for
additional attendances.
Table 3: Directors’ Remuneration
DirectorRemuneration
Mike Allen (Chair)$92,500
Gráinne Troute
(Chair of Audit and Risk Committee)
$56,375
Adrian Walker$48,750
Tim Storey$48,750
John Harvey$48,750
Total*$295,125
*Total Directors’ fees exclude GST and reimbursed costs directly
associated with carrying out Directors’ duties. No additional fees
were paid to Directors who were members of the Due Diligence
Committee.
Investore Property Limited Annual Report 2022
86 Investore Property Limited Annual Report 202287
Principle 6: Risk Management
“Directors should have a sound
understanding of the material risks
faced by the issuer and how to
manage them. The board should
regularly verify that the issuer has
appropriate processes that identify and
manage potential and material risks.”
Risk Management Framework
The Board recognises that identification and management
of risks to Investore’s business is essential to the continued
success of Investore and an important part of the Board’s
responsibilities. The Board is responsible for overseeing
and approving Investore’s risk management strategy
and policies, as well as ensuring effective audit, risk
management and compliance systems are in place.
The Audit and Risk Committee assists the Board in fulfilling
its risk assurance and audit responsibilities and the Board
then delegates the implementation of a Board approved
risk management framework to the Manager, SIML.
Investore has established a risk management framework,
supported by a set of risk-based policies appropriate
for Investore, including a Treasury Policy, the Manager’s
Conflicts Policy, Investment Mandate and Delegations
of Authority (which are endorsed and approved by the
Investore Board). The principal purpose of this framework
is to integrate risk management into Investore’s operations,
and to formalise risk management as part of Investore’s
internal control and corporate governance arrangements.
As part of the risk management framework, the Manager
maintains a comprehensive risk register for Investore,
recording the key risks to its business, and assigning each
risk a rating based on the likelihood and impact of the risk,
both before and after application of mitigating controls.
The risk register is reviewed on a semi-annual basis and
newly emerging risks as well as risk trends and reporting
against key risks are reported to the Board.
As noted in relation to reporting on Principle 4, during
FY22 the Audit and Risk Committee of Investore
conducted a review of its risk appetite against key risks
identified by SIML management and the Committee.
Risk reporting was also refreshed, with risk trends being
reported against these key risks, to identify where the risk
level may be diverging from the Committee’s specified risk
appetite. Table 4, although not an exhaustive list, sets out a
high level summary of the key risks to Investore’s business
that are reported to, and monitored by the Board as part of
Investore’s Risk Management Framework.
Management of Health and Safety Risk
Investore’s health and safety framework reflects
its commitment to health and safety. The Board
acknowledges that effective governance of health and
safety is essential for the continued success of Investore.
Investore’s health and safety approach reflects the
externally managed nature of its business. In appointing
SIML to manage the Investore business, Investore relies
on SIML to ensure that Investore is complying with
its health and safety obligations. The Investore Board
works closely with SIML to understand the key risks to
Investore’s business from a health and safety perspective,
ensure that these risks are eliminated or minimised, and
that SIML is implementing appropriate systems and
procedures to ensure effective management of health
and safety risks when managing Investore’s assets
and business.
SIML sets key performance indicators on an annual basis
and reports regularly against those key performance
indicators to the Investore Board. In addition, the
Investore Board reviews any incidents across the
Investore sites and SIML’s remedial actions in relation
to incidents, and seeks to ensure that there is continual
learning from any incidents or near misses. During FY22
Investore continued to promote a positive health and
safety culture throughout its area of influence, including
SIML, tenants and its supply chain.
A key area of focus for both Investore and SIML is
contractor management, ensuring that contractors with
appropriate health and safety practices are engaged, and
when engaged they are minimising risks to staff, public
and tenants in undertaking their activities.
During FY22, the key health and safety issue facing
Investore continued to be the impact of COVID-19
on its operations and those of its tenants. As many
of the Investore tenants are considered ‘essential
businesses’ within the Government definition on the
www.covid19.govt.nz website, the sites those tenants
operated from were required to be kept operational,
presenting unique risks to Investore. SIML, as Manager
of Investore, implemented specific protocols to ensure
compliance with COVID-19 requirements, as well as
meeting tenant and contractor expectations. SIML
adopted a proactive approach to the management of
COVID-19, efficiently changing its approach as rules
and requirements changed, ensuring ongoing
compliance and minimising disruption to tenants’
operations as much as possible.
Table 4: Investore’s Key Risks
Key RiskControl
Risk to business caused by COVID-19 disruptionsInvestore has a high proportion of supermarkets and other
‘essential businesses’ as tenants, which are not impacted by
COVID-19 restrictions, which mitigates against the impact
of this risk. Investore takes a conservative approach to the
impact of COVID-19. Investore provided an amount for
tenant rent abatements as at 30 September 2021, and now
that negotiations are largely complete, the total cost of rent
abatements is less than this provision.
Rising costs as a result of external factors, including
inflation and the conflict in Ukraine, potentially impacting
tenants’ businesses and impacting their ability to meet their
obligations under their leases
Investore has a high proportion of essential businesses which
do not typically fall into the ‘discretionary spending’ category
and tend to be more resilient in varying market conditions.
Investore also has a relatively long WALT which minimises the
risk of vacancies.
Interest rate increases, impacting cost of debt to Investore100% of Investore’s debt is currently fixed or hedged,
providing protection against rising interest rates in the
medium term.
Impact of outcome of Commerce Commission review of
supermarkets in New Zealand
Investore has assessed the recommendations of the
Commerce Commission following its investigation into
supermarket competition in New Zealand, and considers that
the recommendations do not significantly impact its business.
Customer concentration and single sector focusInvestore considers that the large format retail sector is
a beneficial sector to invest in. The sector has typically
experienced high demand from investors which benefits
asset values.
Geographical and tenant portfolio diversification are sought
where appropriate to mitigate this risk.
Rising costs impacting expenditure, making developments
and maintenance expenditure more expensive
Investore will continue to monitor construction cost escalation
and implement strategies as appropriate to manage this risk,
including early commitment to materials for projects that are
identified, thus reducing the risk of cost escalation during the
course of a project.
Sustainability and climate changeAs reported in this Annual Report, Investore has a focus
on sustainability and ensuring that its business remains
sustainable for the long term. Investore, in conjunction with
its Manager, SIML, has prepared a preliminary climate risk
assessment and is implementing strategies to address the
impact of climate risk on Investore’s business.
Investore Property Limited Annual Report 202288 Investore Property Limited Annual Report 202289
Principle 7: Auditors
“The board should ensure the
quality and independence of the
external audit process.”
PwC is the auditor of Investore. The principles that govern
the relationship between Investore and its external
auditor are set out in the Audit and Risk Committee
Charter, which includes the Audit Independence
Guidelines. These Guidelines require compliance with
the Listing Rules, which in turn, requires rotation of the
lead audit partner at least every five years. During FY22,
Investore rotated its lead audit partner, with Philip Taylor
replacing Sam Shuttleworth as the lead audit partner for
the next five years.
Investore does not have a policy of rotating its audit
firm, on the basis that there is a limited pool of external
audit firms within New Zealand and Investore engages
the other major firms for non-audit services, meaning
they would be conflicted if approached to act as auditor.
However, as Investore has only been operational for six
years, Investore’s Audit and Risk Committee will continue
to consider its audit independence framework.
Investore’s Audit Independence Guidelines set out
a description for determining the non-audit services
that may be provided by the external auditor without
compromising the external auditor’s independence.
The Audit and Risk Committee regularly monitor any
non-audit services that may be provided by the external
auditor and confirm whether these services prejudice
the maintenance of independence of the auditor. The
purpose of the audit independence framework is to
ensure that audit independence is maintained, both in
fact and appearance, so that Investore’s external financial
reporting is reliable and credible. Any non-audit services
provided by the external auditor must be approved by the
Chair of the Audit and Risk Committee. For FY22, PwC,
as auditor, did not provide any services for Investore other
than audit and review of financial statements and other
assurance services.
Principle 8: Shareholder
Rights and Relations
“The board should respect the
rights of shareholders and foster
constructive relationships with
shareholders that encourage them
to engage with the issuer.”
Investor Communications
The Board believes that open communication with
investors is very important to ensure effective governance
and oversight of the business of Investore. Investors
deserve to be provided with such information as may
be required to enable them to make informed decisions
about their investment in Investore.
The Board has adopted a Market Disclosure Policy that
establishes procedures aimed at ensuring Directors are
aware of and fulfil their disclosure obligations under
the Listing Rules. Significant market announcements
require the prior approval of the Board. Material
announcements are posted on Investore’s page on
the NZX website, www.nzx.com, under the ticker
“IPL”, and are also posted on Investore’s website,
enabling investors and stakeholders to access these
announcements easily. In addition, the Investore
website has copies of all presentations and reports
(including annual and interim reports) released by
Investore, and shareholders are encouraged to refer
to the website www.investoreproperty.co.nz for
information on Investore.
While annual and interim reports are made available on
the NZX website, www.nzx.com, and are also available
on Investore’s website, investors can also request hard
copies (where available) by contacting Investore’s Share
Registrar (whose contact details can be found in the
Corporate Directory at the back of this Annual Report).
Additionally, each notice of meeting for shareholder
meetings and transcripts of those meetings are made
available on Investore’s website and on the NZX.
Director John Harvey was formerly a partner at PwC,
the audit firm for Investore. However, as John Harvey
retired from the PwC partnership in 2009, the Board has
determined that his prior relationship with PwC does not
prejudice the independence of the auditor.
The Audit and Risk Committee meet at least twice a year
with the external auditor, with the opportunity to meet
without any representatives of the Manager present.
The Board invites the external auditor to attend
meetings of the Audit and Risk Committee as required.
Directors are free to make direct contact with the
external auditor as necessary to obtain independent
advice and information. The external auditor also
attends shareholder meetings to answer questions from
shareholders in relation to the audit.
Investore engages SIML to manage its business, as it has
no employees, and accordingly Investore does not have
an internal audit function. SIML, as Manager, does not
operate an internal audit function due to its size. However,
the Investore Board and/or Manager engage consultants
to undertake internal reviews from time-to-time on a
project-by-project basis, and can monitor, amongst other
things, internal controls, risk management or the integrity
of financial systems. Such projects can operate both
with and independently from the Manager, with findings
reported directly to the Board.
The Company encourages investors to receive investor
communications by electronic means where possible.
Investore participates in the regular initiative undertaken
by its Share Registrar, Computershare, to encourage
investors to receive communications electronically,
as this saves money for Investore and also supports
Investore’s sustainability initiatives by avoiding the use of
resources for printed documents.
Shareholder Meetings
Investore’s shareholders have the right to vote on major
decisions in accordance with the Listing Rules.
The Board endeavours, where possible, to distribute
every Notice of Meeting for shareholder meetings at least
20 working days prior to any shareholder meeting.
During FY22, shareholders were given at least
20 working days’ notice of the Annual Shareholder
Meeting held on 8 July 2021.
Shareholders are encouraged to attend Investore’s
Annual Shareholder Meeting and take the opportunity
to meet the Board and senior managers of the Manager.
Directors and senior managers of the Manager attend
shareholder meetings and are available for questions.
The Chair provides time for questions from the floor,
and these are answered by the appropriate member
of the Board or Manager. Investore’s external auditor
attends the meeting and is available to take questions
on the preparation of the financial statements and the
auditor’s report. The next Annual Shareholder Meeting for
Investore is scheduled to be held on 30 June 2022.
Investore Property Limited Annual Report 202290 Investore Property Limited Annual Report 202291
Disclosures of Interest
The general disclosures of interest made by Directors of Investore and its subsidiaries during the reporting period 1 April
2021 to 31 March 2022 pursuant to section 140 and section 211(e) of the Companies Act 1993, are shown in Table 5.
Table 5: Interests Register Entries
Statutory
Disclosures
DirectorCompanyPosition
Mike Allen (Chair)
Breakwater Consulting LimitedDirector
Taumata Plantations LimitedDirector
China Construction Bank (New Zealand) LimitedDirector (1)
QuayStreet Asset Management LimitedChair
Vincent Capital AdvisoryChair (2)
Armstrong Motor GroupMember of Advisory Board (2)
Gráinne Troute
Tourism Holdings LimitedDirector
Summerset Group Holdings LimitedDirector
Tourism Industry AotearoaChair
Adrian WalkerNil
Tim Storey
Stride Property Limited and subsidiariesChair
Stride Investment Management LimitedChair
Industre Property Nominee Limited and related entitiesDirector
Prolex LimitedDirector
Prolex Investments LimitedDirector
Prolex Management LimitedDirector
LawFinance Limited Chair
John Harvey
Stride Property Limited and subsidiariesDirector
Stride Investment Management LimitedDirector
Pomare Investments LimitedDirector/Shareholder
Kathmandu Holdings LimitedDirector
Heartland Bank LimitedDirector
Port of Napier LimitedDirector
Fabio Pagano
Stride Investment Management LimitedEmployee
(1) Entries removed by notices given by Directors during the year ended 31 March 2022.
(2) Entries added by notices given by Directors during the year ended 31 March 2022.
No declarations of specific interests in a transaction or proposed transaction with Investore were made pursuant to section
140 (1) of the Companies Act 1993 during the reporting period.
Investore Property Limited Annual Report 202293 Investore Property Limited Annual Report 202292
Directors of Subsidiary Companies
Investore had one subsidiary as at 31 March 2022, being
Investore Property (Carr Road) Limited. The directors
of this company are Mike Allen and Fabio Pagano. This
company is a wholly owned direct subsidiary of Investore.
No additional fees were paid to Mike Allen (and no fees
were paid to Fabio Pagano) in respect of the directorship
of this company.
Indemnity and Insurance
As permitted by Investore’s Constitution, Investore has
entered into a deed of access, indemnity and insurance to
indemnify its Directors and the Directors of its subsidiary
for liabilities or costs they may incur for acts or omissions
in their capacity as a Director to the extent permitted
under the Companies Act 1993. The indemnity does
not cover wilful default or fraud, criminal liability, liability
for failure to act in good faith and in the best interests
of the relevant company, or liabilities that cannot be
legally indemnified. Investore also has a Directors and
Officers liability insurance policy in place. Among other
things, the Directors and Officers liability insurance policy
excludes cover for deliberate dishonesty, insider trading,
fines and penalties (except for legally indemnifiable civil
fines or civil penalties), liability arising out of a breach of
professional duty other than as a professional director,
and liability for which the insured is legally indemnified.
During FY22, the Board authorised the placement of
insurance in respect of Investore’s senior secured fixed
rate bond offer in accordance with the Companies Act
1993 and Investore’s Constitution. In authorising any
insurance to be effected, each Director signs a certificate
stating that, in their opinion, the cost of insurance is fair to
the Company.
Use of Company Information
No notices have been received by Investore under section
145 of the Companies Act 1993 with regard to the use
of information received by Directors in their capacities as
Directors of Investore or its subsidiary, Investore Property
(Carr Road) Limited.
Loans to Directors
There are no loans to the Directors of Investore or its
subsidiary, Investore Property (Carr Road) Limited.
Disclosures of Directors’ Interests in Share
Transactions
For the purposes of section 148 (2) of the Companies
Act 1993, no disclosures were made by the Directors in
respect of changes in shareholdings in Investore or its
subsidiary, Investore Property (Carr Road) Limited.
Directors’ Interests in Shares
Directors disclosed the following relevant interests in
Investore shares as at 31 March 2022:
Director
Relevant interest held
in ordinary shares
Mike Allen56,592
Gráinne Troute32,590
Tim Storey49,759
John Harvey49,759
Directors are not required to hold shares in the Company,
but may choose to do so in order to demonstrate
alignment of interests in the performance of the Company
with shareholders.
Directors have not disclosed any relevant interests in
Investore bonds as at 31 March 2022.
Twenty Largest Registered Shareholders as at 31 March 2022
NameNumber of SharesPercentage of Shares
Stride Property Limited69,201,97718.80
Accident Compensation Corporation - NZCSD31,304,2728.50
Forsyth Barr Custodians Limited28,962,7627.87
Custodial Services Limited19,210,4315.22
JBWere (NZ) Nominees Limited 17,823,9634.84
HSBC Nominees (New Zealand) Limited - NZCSD15,892,7564.32
ANZ Wholesale Trans-Tasman Property Securities Fund - NZCSD 15,432,4114.19
FNZ Custodians Limited14,641,8253.98
National Nominees Limited - NZCSD11,619,0553.16
Citibank Nominees (New Zealand) Limited - NZCSD9,901,8252.69
New Zealand Depository Nominee Limited9,294,6232.52
Generate Kiwisaver Public Trust Nominees Limited - NZCSD8,674,8082.36
BNP Paribas Nominees (NZ) Limited - NZCSD7,877,2292.14
ANZ Wholesale Australasian Share Fund - NZCSD7,505,1722.04
ANZ Wholesale Property Securities - NZCSD5,539,9431.50
TEA Custodians Limited Client Property Trust Account - NZCSD5,511,5871.50
BNP Paribas Nominees (NZ) Limited - NZCSD5,350,4541.45
MFL Mutual Fund Limited - NZCSD5,149,4261.40
Hobson Wealth Custodian Limited4,910,0621.33
Simplicity Nominees Limited - NZCSD2,758,1010.75
Total296,562,68280.56
Numbers may not sum due to rounding.
Twenty Largest Registered Bondholders (IPL010) as at 31 March 2022*
NameNumber of UnitsPercentage of Units
Custodial Services Limited17,529,00017.53
National Nominees Limited - NZCSD14,388,00014.39
Forsyth Barr Custodians Limited14,280,00014.28
FNZ Custodians Limited13,589,00013.59
Hobson Wealth Custodian Limited6,642,0006.64
HSBC Nominees (New Zealand) Limited - NZCSD5,518,0005.52
Generate Kiwisaver Public Trust Nominees Limited - NZCSD3,275,0003.28
JBWere (NZ) Nominees Limited 2,905,0002.91
ANZ Fixed Interest Fund - NZCSD1,744,0001.74
Mint Nominees Limited - NZCSD1,600,0001.60
FNZ Custodians Limited1,231,0001.23
Hobson Wealth Custodian Limited1,080,0001.08
Investment Custodial Services Limited818,0000.82
Forsyth Barr Custodians Limited696,0000.70
ANZ Bank New Zealand Limited - NZCSD665,0000.67
Kiwigold.co.nz Limited500,0000.50
Rita Maria Halanke400,0000.40
Su Li300,0000.30
JBWere (NZ) Nominees Limited265,0000.27
Dunedin Diocesan Trust Board250,0000.25
JBWere (NZ) Nominees Limited250,0000.25
Total87,925,00087.93
*Note: Two holders hold the same number of bonds, meaning that 21 holders have been reported above in the top 20 holders table.
Numbers may not sum due to rounding
Investore Property Limited Annual Report 202294 Investore Property Limited Annual Report 202295
Substantial Product Holders as at 31 March 2022
As at 31 March 2022, the names of all persons who are substantial product holders in Investore pursuant to sub-part 5 of
part 5 of the Financial Markets Conduct Act 2013 are noted below:
Name
Date of substantial
product holder notice
Relevant interest
in the number of
ordinary shares
% of
ordinary shares held
Stride Property Limited20 May 202069,201,97718.8
ANZ New Zealand Investments 25 August 202133,726,5559.2
Accident Compensation Corporation31 March 202128,746,6247.8
Salt Funds Management Limited24 December 202118,453,3355.0
Forsyth Barr Investment Management Limited13 November 202018,464,6655.0
The number of ordinary shares listed in the table are as per the last substantial product holder notice filed on or prior to 31 March 2022.
Distribution of Ordinary Shares and Shareholdings as at 31 March 2022
Size of holding
Number of
shareholders
% of
shareholders
Number of
ordinary shares
% of
ordinary shares
1 – 99270.551,1170.00
100 – 199160.322,0430.00
200 – 4991222.4845,8040.01
500 – 9992855.79204,7460.06
1,000 – 1,99970014.211,020,5660.28
2,000 – 4,9991,25125.404,041,4591.10
5,000 – 9,9991,04321.177,208,5151.96
10,000 – 49,9991,24225.2124,369,4536.62
50,000 – 99,9991392.829,188,0472.50
100,000 – 499,999711.4412,456,2683.38
500,000 – 999,99940.082,817,0430.77
1,000,000 and over260.53306,779,97283.33
Total4,926100.00368,135,033100.00
Numbers may not sum due to rounding.
Distribution of Holders of IPL010 Listed Bonds as at 31 March 2022
Size of holding
Number of
bondholders
% of
bondholders
Issued bonds
($)
% of
issued bonds
5,000 – 9,999377.87208,0000.21
10,000 – 49,99934072.346,455,0006.46
50,000 – 99,9995110.852,848,0002.85
100,000 – 499,999265.534,029,0004.03
500,000 – 999,99940.852,679,0002.68
1,000,000 and over122.5583,781,00083.78
Total470100.00100,000,000100.00
Numbers may not sum due to rounding.
Twenty Largest Registered Bondholders (IPL020) as at 31 March 2022
NameNumber of UnitsPercentage of Units
Forsyth Barr Custodians Limited24,675,00019.74
FNZ Custodians Limited16,635,00013.31
Custodial Services Limited 15,360,00012.29
National Nominees Limited - NZCSD11,500,0009.20
Generate Kiwisaver Public Trust Nominees Limited - NZCSD9,396,0007.52
Hobson Wealth Custodian Limited8,473,0006.78
TEA Custodians Limited Client Property Trust Account - NZCSD5,215,0004.17
HSBC Nominees (New Zealand) Limited - NZCSD4,250,0003.40
ANZ Fixed Interest Fund - NZCSD3,546,0002.84
Queen Street Nominees ACF PIE Funds - NZCSD3,500,0002.80
Citibank Nominees (New Zealand) Limited - NZCSD2,680,0002.14
JBWere (NZ) Nominees Limited1,630,0001.30
Forsyth Barr Custodians Limited1,608,0001.29
FNZ Custodians Limited1,103,0000.88
NZPT Custodians (Grosvenor) Limited - NZCSD1,000,0000.80
Investment Custodial Services Limited776,0000.62
FNZ Custodians Limited745,0000.60
Forsyth Barr Custodians Limited655,0000.52
Queen Street Nominees ACF Hobson Wealth - NZCSD555,0000.44
Social Service Council of the Diocese of Christchurch505,0000.40
Total 113,807,00091.05
Numbers may not sum due to rounding.
Twenty Largest Registered Bondholders (IPL030) as at 31 March 2022
NameNumber of UnitsPercentage of Units
Forsyth Barr Custodians Limited19,459,00015.57
National Nominees Limited - NZCSD19,410,00015.53
Generate Kiwisaver Public Trust Nominees Limited - NZCSD16,472,00013.18
ANZ Fixed Interest Fund - NZCSD8,600,0006.88
NZPT Custodians (Grosvenor) Limited - NZCSD8,175,0006.54
Hobson Wealth Custodian Limited7,340,0005.87
Custodial Services Limited6,601,0005.28
HSBC Nominees (New Zealand) Limited - NZCSD5,095,0004.08
TEA Custodians Limited Client Property Trust Account - NZCSD4,310,0003.45
Citibank Nominees (New Zealand) Limited - NZCSD4,300,0003.44
JBWere (NZ) Nominees Limited3,569,0002.86
BNP Paribas Nominees (NZ) Limited - NZCSD2,995,0002.40
FNZ Custodians Limited2,505,0002.00
Investment Custodial Services Limited1,633,0001.31
Forsyth Barr Custodians Limited1,529,0001.22
Adminis Custodial Nominees Limited1,140,0000.91
I J Investments Limited515,0000.41
JBWere (NZ) Nominees Limited500,0000.40
Anthony Eugene Smith & Carolyn Jean Smith & David Kenneth Brown440,0000.35
BGLIR Trustee Limited 340,0000.27
Total 114,928,00091.94
Numbers may not sum due to rounding.
Investore Property Limited Annual Report 2022
96 Investore Property Limited Annual Report 202297
Distribution of Holders of IPL020 Listed Bonds as at 31 March 2022
Size of holding
Number of
bondholders
% of
bondholders
Issued bonds
($)
% of
issued bonds
5,000 – 9,9993711.67255,0000.20
10,000 – 49,99920765.304,366,0003.49
50,000 – 99,999319.781,784,0001.43
100,000 – 499,999206.313,788,0003.03
500,000 – 999,99972.214,236,0003.39
1,000,000 and over154.73110,571,00088.46
Total317100.00125,000,000100.00
Numbers may not sum due to rounding.
Distribution of Holders of IPL030 Listed Bonds as at 31 March 2022
Size of holding
Number of
bondholders
% of
bondholders
Issued bonds
($)
% of
issued bonds
5,000 – 9,9996115.56339,0000.27
10,000 – 49,99926467.354,930,0003.94
50,000 – 99,999276.891,605,0001.28
100,000 – 499,999225.613,978,0003.18
500,000 – 999,99920.511,015,0000.81
1,000,000 and over164.08113,133,00090.51
Total392100.00125,000,000100.00
Numbers may not sum due to rounding.
Donations
Neither Investore nor its subsidiary made any donations in
the year ended 31 March 2022.
Credit Rating
As at the date of this Annual Report, Investore does not
have a credit rating.
Exercise of NZX Disciplinary Powers
The NZX did not exercise any of its powers under Listing
Rule 9.9.3 in relation to Investore during FY22.
Auditor’s Fees
As noted, PwC has continued to act as auditor for
Investore and its subsidiary and the amount payable by
Investore to PwC, for audit fees and non-audit work fees
undertaken in respect of FY22, is set out in note 7.2 to
the Financial Statements.
NZX Waivers
During FY22 Investore was granted or relied on
certain waivers from the Listing Rules, which are
described below. A copy of these waivers is available
at www.nzx.com/companies/IPL.
Investore has been granted a number of waivers from
the Listing Rules in relation to its structure, including
the right of SIML to appoint two directors, which are
outlined below.
Listing Rules 2.2 to 2.8
Listing Rules 2.2 to 2.8 stipulate certain requirements
in relation to the appointment, removal and rotation of
Directors. A waiver from Listing Rules 2.2 to 2.8 was
granted to the extent that SIML, as the Manager of
Investore, has exercised its right to appoint two Directors
(the SIML-appointed Directors). This waiver is subject to a
number of conditions, including that:
• the Chair of the Board must be independent and
have a casting vote on any Board resolutions;
• the Management Agreement is in force;
• Investore is not permitted to count any votes cast
by SPL (and its Associated Persons (as defined
in the Listing Rules) (other than votes cast by a
Director in respect of shares owned or held in their
personal capacity)) on the election or removal of the
independent Directors;
• Investore will continue to be identified by a
“Non-Standard Designation” (NS Designation);
• the NS Designation be disclosed as a part of
Investore’s offer documents and annual reports; and
• this waiver is disclosed as part of Investore’s
annual reports.
This waiver was requested and granted to ensure that
SIML, while it is Manager of Investore, is able to have
influence over the strategic direction of Investore by
being able to appoint two (but not less than two) Directors
and to remove any such Director and appoint another in
their place.
Listing Rule 2.10.1
Listing Rule 2.10.1 limits the ability of Directors to vote
on matters in which they are “interested” for the purposes
of the Companies Act 1993. A waiver from Listing Rule
2.10.1 was granted to permit the SIML-appointed
Directors to vote on matters in which they are “interested”
solely due to their directorship of both Investore and
SIML. This waiver is subject to the conditions that:
• the Chair of the Board must be independent and
have a casting vote on any Board resolutions;
• any Directors appointed by SIML must be identified
in Investore’s offer documents and its annual reports;
• at any time that a new person is appointed to the
Investore Board, that each Director certifies to
NZX Regulation that any Board resolution that they
approve will, in their opinion, be in what the Director
believes to be the best interests of Investore; and
• this waiver is disclosed as a part of Investore’s annual
reports.
This waiver was requested, and granted, to ensure that
SIML-appointed Directors were not restricted from
voting on Investore Board resolutions solely due to being
Directors of SIML.
Directors’ Statement
This Annual Report is dated 18 May 2022 and is signed
for and on behalf of the Board of Directors of Investore
Property Limited by:
Mike Allen
Independent Director
and Chair of the Board
Gráinne Troute
Independent Director and
Chair of the Audit
and Risk Committee
Investore Property Limited Annual Report 202298 Investore Property Limited Annual Report 202299
GlossaryCorporate Directory
Board
Board of Directors of Investore Property Limited
Contract Rental
Contract Rental is the amount of rent payable by each tenant, plus
other amounts payable to Investore by that tenant under the terms of
the relevant lease as at the relevant date, annualised for the 12-month
period on the basis of the occupancy level for the relevant property as at
the relevant date, and assuming no default by the tenant
Distributable Profit
Distributable profit is a non-GAAP measure and consists of profit/
(loss) before income tax, adjusted for determined non-recurring and/
or non-cash items (including non-recurring adjustments for incentives
payable to anchor tenants for lease extensions) and current tax. Further
information, including the calculation of distributable profit and the
adjustments to profit before income tax, is set out in note 3.2 to the
Consolidated Financial Statements
FY21
The financial year ended 31 March 2021
FY22
The financial year ended 31 March 2022
FY23
The financial year ending 31 March 2023
Investore or the Company
Investore Property Limited, together with its wholly owned subsidiary,
Investore Property (Carr Road) Limited
Listing Rules
The main board listing rules of NZX
LV R
Loan to value ratio
NLA
Net Lettable Area
NZX
NZX Limited
NZX Code
NZX Corporate Governance Code 2020
SIML or the Manager
Stride Investment Management Limited, the Manager of Investore under
a Management Agreement dated 10 June 2016 (as may be amended
from time to time)
SPL
Stride Property Limited
Stride
Stride Property Group, comprising the stapled entities of SPL and SIML
TCFD
Taskforce on Climate-related Financial Disclosures
WA LT
Weighted Average Lease Term
Board of Directors
Mike Allen (Chair)
Gráinne Troute
Adrian Walker
Tim Storey (SIML-Appointed Director)
John Harvey (SIML-Appointed Director)
Registered Office
Level 12, 34 Shortland Street, Auckland 1010
PO Box 6320, Victoria Street West
Auckland 1142, New Zealand
W investoreproperty.co.nz
Manager
Stride Investment Management Limited
Level 12, 34 Shortland Street, Auckland 1010
PO Box 6320, Victoria Street West
Auckland 1142, New Zealand
T +64 9 912 2690
Auditor
PwC
PwC Tower
15 Customs Street West
Private Bag 92162, Auckland 1142
Share Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road, Takapuna
Private Bag 92119, Victoria Street West
Auckland 1142
T +64 9 488 8777
F +64 9 488 8787
E enquiry@computershare.co.nz
Legal Adviser
Bell Gully
Level 21, Vero Centre
48 Shortland Street, Auckland 1010
PO Box 4199, Auckland 1140
Bankers
ANZ Bank New Zealand Limited
China Construction Bank Corporation,
New Zealand Branch
Industrial and Commercial Bank of China Limited,
Auckland Branch
Westpac New Zealand Limited
Bond Supervisor
Public Trust
Private Bag 5902
Wellington 6140
Investore Property Limited Annual Report 2022100 Investore Property Limited Annual Report 2022101
Investore
Property Limited
Level 12, 34 Shortland Street
Auckland 1010
PO Box 6320
Victoria Street West,
Auckland 1142, New Zealand
T +64 9 912 2690
W investoreproperty.co.nz
---
Investore Property Limited | FY22 Annual Results Presentation
Annual Results
Presentation
For the year ended 31 March 2022
18 May 2022
Investore Property Limited | FY22 Annual Results Presentation
Contents
Financial highlights
03
Portfolio metrics
04
Growth
05
Portfolio
11
Financial performance
17
Capital management
21
Looking ahead
26
2
Countdown, Petone, Wellington
Investore Property Limited | FY22 Annual Results Presentation
Profit after income tax
$118.2m
down $43.1m from FY21 due to a
lower revaluation movement
Financial
highlights
for the 12 months ended 31 March 2022 (FY22)
1.Distributable profit is a non-GAAP measure and consists of profit/(loss) before income tax, adjusted for determined
non-recurring and/or non-cash items (including non-recurring adjustments for incentives payable to anchor tenants
for lease extensions) and current tax. Further information, including the calculation of distributable profit and the
adjustments to profit before income tax, is set out in note 3.2 in the consolidated financial statements.
Investore Property Limited | FY22 Annual Results Presentation
3
Profit before other income /
(expense) and income tax
$34.3m
up $4.3m from FY21
Distributable profit
1
after
current income tax
$29.9m
up $0.8m from FY21
7.90 cents
per share cash dividend
up 0.30 cents from FY21
$0.7m
COVID-19 abatements
representing 1.0% of gross rent
Investore Property Limited | FY22 Annual Results Presentation
1.As at 31 March 2022. Portfolio value excludes (1) the seismic works ($3.0m) to be completed by SPL in relation to 2 CarrRoad, Auckland, acquired from SPL and settled on 30 April 2020; and (2) lease liabilities.
2.Comprises the acquisitions of Countdown, Petone for $37.3m, 4 CarrRoad, Mt Roskill for $36.0m, an adjoining unit to Countdown, Meadowbank for $0.6m and the acquisition of the property at WaimakJunction, Kaiapoi for $10.5m, which remains
conditional.
3.Loan to Value Ratio (LVR) is calculated based on independent valuations, which include seismic works to be funded by SPL in relation to 2 CarrRoad, Auckland, acquired from SPL and settled in April 2020. The independent valuations also
exclude lease liabilities.
Portfolio metrics
29.5%
Loan to Value Ratio
3
as at 31 March 2022
3.77%
Weighted average interest rate
as at 31 March 2022, down 27 basis points from
31 March 2021
$125m
5 year listed bonds issued
February 2022
$1.2bn
Portfolio value
1
Net valuation increase of 8.2% for
12 months to 31 March 2022
99.7%
portfolio occupancy
by area
$84.3m
Portfolio acquisitions
2
for 12 months to 31 March 2022
4
4.81%
Average property market
capitalisationrate
9.1 years
Weighted average lease term (WALT)
2.9%
Increase in rentals from rent reviews
across 40% of the portfolio
Capital management
Investore Property Limited | FY22 Annual Results Presentation
Growth
5
Investore Property Limited | FY22 Annual Results Presentation
Targeted Growth -Acquisitions
6
Investore successfully completed key acquisitions which enhance the portfolio, delivering on its strategy of
targeted growth
•Countdown, Petone in Wellington, purchased for
$37.3m, with a WALT of 11 years at the time of
acquisition
•4 Carr Road, Mt Roskill in Auckland, purchased
for $36.0m,with a WALT of 10years at the time
of acquisition, increasing Carr Rd land holding to
3.85ha
Investore also has a conditional agreement to acquire
development land at WaimakJunction, Kaiapoi, for a
purchase price of $10.5m, on which it will develop a
Countdown supermarket as part of Stage 1, leaving
further land for future development
Divestment of 35 MacLagganSt, Dunedin, in August
2021 for $10.2m, an 8.5% premium to the book value
of the property as at 31 March 2021
Recent acquisitions:
✓Are earnings accretive
✓Provide secure income for shareholders
✓Increase exposure to high quality, resilient tenants
✓Are located in major urban centers
CarrRoad, Auckland
Investore Property Limited | FY22 Annual Results Presentation
Countdown, Browns Bay
Investoreand Countdown collaborated to undertake a full store
refurbishment and infrastructure improvement project, completed
in FY22.
Investore undertook a number of infrastructure upgrades,
including roof replacement, parking upgrades and improving
other core services. At the same time, Countdown completed a
full refurbishment of the interior of the store and installed a new
dedicated online pick up room.
The works improve the customer experience and are expected to
drive increased turnover.
Countdown, Highland Park
Investorehas agreed with Countdown to expand the customer
amenity at Countdown, Highland Park, Auckland.
This expansion will include new parking areas, improved customer
access ways and a dedicated online pick up area.
Investore expects to receive a rental return of 5.5% per annum on
the cost of the upgrade works, with Countdown to commit to a
longer lease term on completion of the works.
Targeted Growth –Developing the existing portfolio
7
Investore continues to seek opportunities to add value to the existing portfolio, including through
collaborating with key tenants to undertake capital projects
Investore Property Limited | FY22 Annual Results Presentation
Auckland, 33%
Auckland, 37%
Wellington, 17%
Wellington, 16%
Other North
Island, 11%
Other North
Island, 12%
Bay of
Plenty, 2%
Bay of Plenty,
10%
Waikato, 7%
Waikato, 9%
Canterbury, 14%
Canterbury, 9%
Otago, 7%
Otago, 2%
Other South
Island, 8%
Other South
Island, 5%
IPOMar-22
South
Island,
16%
Portfoliovalue:
$641m
Portfoliovalue:
$1.2b
Strategically located portfolio
8
Geographic
diversification by
portfolio value
South
Island,
29%
North
Island,
71%
North
Island,
84%
Investore has focused on acquiring properties located in highly
populated areas or areas with strong population growth, ensuring
ongoing demand for its properties.
Investore’sfocus on strategic locations means its properties are
well suited to support fulfilment of online ordering. Investore
believes the store-based fulfilment model (where online orders
are met by local stores) will remain the predominant model for
online grocery fulfilment in New Zealand due to relatively low
population densities, large travel distances and established
existing supply chains. Investore expects this to result in
continued demand for its stores, to serve customers both in store
and online.
Investore’sproperties are:
✓Well-located, close to or within
residential communities
✓On large sites
✓With relatively low site coverage
1.IPO portfolio value is as set out in the IPO product disclosure statement for Investore dated 10 June 2016 and comprises
the IPO portfolio of 39 properties.
1
Investore Property Limited | FY22 Annual Results Presentation
41.4
41.8
42.5
43.2
44.4
44.3
IPOMar-18Mar-19Mar-20Mar-21Mar-22
Rental growth since IPO
9
•Since listing, Investore has delivered a like-for-like portfolio rental
cumulative annual growth rate (CAGR) of 1.7%
1
p.a. from IPO
1
to
March 2022 (2.0% p.a. to March 2021)
•Post-IPO transaction activity has been growth-oriented, with a
2.7% rental growth CAGR across assets acquired post IPO and
held for a complete financial period for FY22. The rental growth
CAGR across assets divested after IPO would be 0.6% p.a
(IPO
1
to March 22)
•Countdown leases (which comprise 63% of portfolio net contract
rental) contain MAT turnover thresholds which are generally
reviewedevery five years. When MAT is higher than the threshold
at review dates the base rent is increased to reflect the growth in
turnover
•Based on the original turnover thresholds (i.e. excluding
anyresets that have occurred since 2016, such as the fixed 5%
increase in 2020 on the former Antipodean portfolio), as at
31 March 2022:
–Approximately 38% of the current portfolio would earn
turnover income in 2022, up from 11% in 2018
–69% of the portfolio is higher than 80% of turnover
thresholds, up from 60% in 2018
•Based on our historical data, generally stores continue to generate
turnover rental once initial MAT thresholds have been exceeded
(i.e. stores do not tend to dip below the threshold once the
threshold has been reached)
Rolling 12 month portfolio rent (like-for-like) ($m)
1.IPO is defined as the date from which Investore acquired its IPO portfolio of 39 properties (including the SCA portfolio acquired after the date of the IPO) (IPO Portfolio). Portfolio rent is calculated as the rolling
12 month portfolio rent based on the IPO Portfolio and excluding divestments since the IPO.
2.Moving annual turnover (MAT) is based on thresholds in July 2016. Rolling 12-month MAT compared to historical MAT thresholds.
Current portfolio turnover mix (weighted by MAT)
2
1
11%
13%
24%
27%
38%
30%
31%
38%
49%
55%
47%
41%
27%
30%
36%
31%
40%
32%
28%
32%
35%
39%
33%
31%
0%
20%
40%
60%
80%
100%
Sep-18Mar-19Sep-19Mar-20Sep-20Mar-21Sep-21Mar-22
> 100%80% - 100%< 80%
Investore Property Limited | FY22 Annual Results Presentation
Outlook for Moving Annual Turnover
10
Annual Consumer Price Index (%)
1,2
-2.5%
-0.5%
1.5%
3.5%
5.5%
7.5%
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
Mar-20
Sep-20
Mar-21
Sep-21
Mar-22
Sep-22
Mar-23
Sep-23
Mar-24
Sep-24
Mar-25
Historical CPIForecast CPI
1
2
1.Historical CPI growth and food price data as published by Statistics NZ.
2.Forecast CPI is calculated as the simple average of consumer price index data published by
commercial banks and the RBNZ.
3.Woolworths Group Australia Third Quarter Sales Results released 3 May 2022
Annual consumer price index vs annual food prices (1980 vs 2021)
1
Forecast
average CPI to
be 3.5% p.a.
over next 3
years
•A higher inflationary environment is expected to benefit
Investore through higher MAT growth driving incremental
turnover rental, supported bycontinued portfolio
investmentactivities
•There is also a demonstrated long run positive relationship
between the CPI and food prices, with correlation (R
2
) of
~83% over the last 40 years
•Annual CPI and food price inflation published by Statistics
NZ is at 6.9% and 7.6% respectively as at 31 March 2022.
Consensus from the RBNZ and NZ commercial banks
currently forecast average CPI to be 3.5% p.a. over the
next three years
•Woolworths Australia announced a 3.8% increase in
quarterly sales to 3 April 2022 across their New Zealand
business, primarily driven by higher overall prices
3
R² = 0.8249
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-15%-10%-5%0%5%10%15%20%25%
Food price
inflation (%)
Consumer price inflation (%)
Investore Property Limited | FY22 Annual Results Presentation
Portfolio
11
Countdown, Newtown, Wellington
Investore Property Limited | FY22 Annual Results Presentation
Active portfolio management
12
Portfolio metrics
As at
31 Mar 22
As at
31 Mar 21
As at
31 Mar 20
Number of properties444340
Number of tenants14313078
Net lettable area (NLA) (sqm)249,829246,272208,125
Net ContractRental
2
($m)60.257.147.5
WALT(years)9.19.811.5
Market capitalisation rate (%)4.815.236.06
Occupancy rate by area (%)99.799.199.7
Portfolio value($m)1,201.3
1
1,037.9
3
761.4
4
Total site area (sqm)611,077594,660507,411
Average site coverage (%)40.941.441.0
Car parking ratio (bays per
100sqm of NLA)
4.24.33.9
Key portfolio activities
✓Portfolio value
1
increased to $1,201.3m, with a net
valuation gain of $91.0m or 8.2% over the 12 months to
31 March 2022
✓76 rent reviews completed over 100,533 sqm (40.2% of
the portfolio), resulting in a 2.9% increase to previous
rentals
✓88.2% of the rent reviews completed were structured
reviews –CPI or fixed
✓Investore’sportfolio comprises 61.1 hectares of
commercial property with an average site coverage of
40.9%, providing future development opportunities
1.See footnote 1 on page 4.
2.Contract Rental is the amount of rent payable by each tenant, plus other amounts payable to Investore by that tenant under the terms of the relevant lease, annualisedfor the 12-month period on the basis of the occupancy level of the relevant
property as at 31 March 2022, and assuming no default by the tenant.
3.Portfolio value as at 31 March 2021: (1) excludes seismic works and rental underwrites (total $7.1m) to be completed by SPL in relation to the three properties acquired from SPL and settled on 30 April 2020; (2) excludes lease liabilities;
(3) includes 35 MacLagganStreet, Dunedin, which was held as property intended for sale.
4.Excludes lease liabilities.
Investore Property Limited | FY22 Annual Results Presentation
Long lease expiry profile
13
Lease Expiry Profile
1
by Contract Rental
2
As at 31 March 22
Long portfolio WALT of 9.1 years, with
73% of Contract Rental
2
expiring in FY30
and beyond
0.1% of Contract Rental vacant as at Mar-22
FY23
2.3% Contract Rental expiring:
•NZ Post, Freedom Furniture, Lighting Direct and Bed, Bath &
Beyond, Bay Central Shopping Centre, Tauranga (1.6%)
•Other expiries total 0.7% across 12 tenants
FY24
4.2% Contract Rental expiring:
•Countdown, CnrAnglesea & Liverpool Streets, Hamilton (2.3%)
•Super Cheap Auto, Mt Wellington Shopping Centre, Auckland,
(0.4%)
•Other expiries total 1.5% across 15 tenants
FY25
4.7% Contract Rental expiring:
•Countdown leased properties in Upper Hutt (1.3%), Onehunga
(1.0%) and Morrinsville (0.8%)
•Other expiries total 1.6% across 15 tenants
1.Represents the scheduled expiry for each lease, excluding any rights of renewal that may be granted under each lease, for theentire portfolio as at 31 March 2022 as a percentage of Contract Rental.
2.See footnote 2 on page 12.
0.1%
2.3%
4.2%
4.7%
2.7%
4.1%
6.8%
1.2%
14.6%
6.2%
0.2%
18.4%
5.9%
28.6%
VacantFY23FY24FY25FY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
WALT
9.1 years
Investore Property Limited | FY22 Annual Results Presentation
1.See footnote 2 on page 12.
Anchor tenant classification by Contract Rental
1
Resilient tenants underpin income
14
1%
3%
3%
4%
12%
63%
NZ Post
Briscoes Group
Mitre 10
Foodstuffs
Bunnings
Countdown
Everyday
needs, 73%
Hardware,
16%
General
Merchandise /
Retail, 7%
Food /
Beverage, 4%
Investore has a high concentration of anchor tenants (87% of
Contract Rental) and tenants that operate in the “Everyday Needs” category (73% of
Contract Rental), resulting in a resilient portfolio in varying market conditions
Investore Property Limited | FY22 Annual Results Presentation
Climate-relateddisclosures
Investore is focused on adapting its portfolio for a sustainable future and meeting the challenges
of climate change
Investore Property Limited | FY22 Annual Results Presentation
Investore is proactively working to address the risks of climate change
•Investore intends to seek a Green Star Performance rating for two portfolios of
Investore properties –all hardware stores and select standalone Countdown
stores. Investore is working in collaboration with the tenants of these stores on
this initiative
•Minimum 4 star Green Star Design & As Built rating targeted for the planned
Countdown supermarket at WaimakJunction, with options to seek a
5 star Green Star Design & As Built rating being explored
GovernanceRisk ManagementStrategyMetrics and
Targets
Investore Board
oversees
sustainability and
climate risk
matters, supported
by Stride as
Manager
Climate risks
assessed through
Stride working
group, based on
two climate
change scenarios
–low carbon (0.3 –
1.7°C; RCP 2.6)
and business as
usual (2.6 –4.8°C;
RCP 8.5)
First climate risk
assessment
completed,
identifying
transition and
physical risks;
climate risk
considered as part
of strategic
decision making
Scope 1 and 2
emissions
collected and
limited assurance
review being
completed; Scope
3 emissions is
focus. Emissions
reduction plan to
be developed in
FY23
15
Investore Property Limited | FY22 Annual Results Presentation
Climate-relatedrisks and opportunities
Climate transition issues are more material in the low carbon scenario, where the short term focus is on
reducing carbon, while physical risks will have more impact under the business as usual scenario with
higher temperature rises
Investore Property Limited | FY22 Annual Results Presentation
Transitionrisks and opportunitiesPhysical risks
RiskImpactTimeframe and
preliminary risk
rating
Increasing
demands of
tenants and
customers for
climate resilient
properties
Cost to upgrade buildings
and install infrastructure
(such as EV chargers)
Opportunity to be an
“early mover” and capture
more value from buildings
Short / medium
timeframe (to 2035)
Moderate risk
Increasing
standards for
buildings,
including
embodied carbon
assessments and
potential carpark
reduction
More costly to develop
buildings
Uncertainty of changes
can impact developments
which are long term
projects
Short / medium
timeframe (to 2035)
Moderate risk
Increased
urbanisationof
populations
Opportunity for well
located assets catering
for “everyday needs”
tenants
Medium timeframe
(2026 to 2035)
Opportunity
16
RiskImpactTimeframe and
preliminary risk
rating
Sea level rise
and greater sea
surge events
Assets located near the
coast are impacted –
individual property risk
assessments to be
completed in FY23 to
assess risk
Medium /long
timeframe
(2026 to 2050)
Moderate risk
Rising
temperatures
Increased operating costs
for common areas
Increased operating costs
for tenants, potentially
impacting capacity for rent
Medium timeframe
(2026 to 2035)
Moderate risk
More frequent
and severe
weather events
Higher costs to repair
buildings and improve
resilience of buildings
Higher insurance costs
Medium timeframe
(2026 to 2035)
High risk
Increased water
scarcity
Increased operating costs
for common areas
Increased operating costs
for tenants
Medium timeframe
(2026 to 2035)
Moderate risk
Investore Property Limited | FY22 Annual Results Presentation
Financial performance
17
Countdown Browns Bay, Auckland
Investore Property Limited | FY22 Annual Results Presentation
Financial performance
18
31 Mar 22
$m
31 Mar 21
$m
Change
$m%
Net rental income58.355.8+2.5+4.4
Corporate expenses(10.0)(9.2)(0.7)(8.0)
Profit before net finance expense, other income and income tax48.346.6+1.7+3.7
Net finance expense(14.0)(16.6)+2.6+15.6
Profit before other income/(expense) and income tax34.329.9+4.3+14.4
Other income/(expense)
1
91.5139.0(47.5)(34.2)
Profit before income tax125.8169.0(43.2)(25.5)
Income tax expense(7.6)(7.7)+0.1+0.9
Profit after income tax attributable to shareholders118.2161.3(43.1)(26.7)
1.Other income/(expense) includes net change in fair value of investment properties.
Values in the table above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
Investore Property Limited | FY22 Annual Results Presentation
31 Mar 22
$m
31 Mar 21
$m
Change
$m%
Profit before income tax125.8169.0(43.2)(25.5)
Non-recurring, non-cash items and other adjustments:
-Net change in fair value of investment properties(91.0)(139.3)+48.3+34.7
-Reversal of lease liabilities movement in investment properties(0.1)(0.1)(0.0)(1.5)
-Gain on disposal of investment property(0.6)0.0(0.6)(100.0)
-Spreading of fixed rental increases(0.1)(0.2)+0.1+71.5
-Capitalised lease incentives net of amortisation(0.1)(0.8)+0.7+90.8
-Borrowings establishment cost amortisation0.90.7+0.2+26.6
-Swap break (income)/expenses(0.1)3.5(3.6)(103.0)
-Loss on rental guarantee0.00.3(0.3)(100.0)
Distributable profit before current income tax34.833.1+1.6+4.9
Current income tax(4.9)(4.0)(0.9)(21.8)
Distributable profit after current income tax29.929.1+0.8+2.6
Adjustments to funds from operations:
-Maintenance capital expenditure(3.7)(1.3)(2.4)(182.6)
Adjusted Funds From Operations (AFFO)
2
26.227.8(1.6)(5.8)
Weighted average number of shares (millions)368.1361.5
Basic and diluted distributable profit after current income tax per share -weighted
(cents)8.118.05
AFFO basic and diluted distributable profit after current income tax per share -
weighted (cents)7.117.69
Distributable profit
19
1
1.Distributable Profit –refer footnote 1 on page 3 for definition.
2.AFFO is a non-GAAP measure and is intended as a supplementary measure of operating performance. Cash spent during the period on capital expenditure as part of maintaining a building’s grade/quality, but not expensed as part of
distributable profit after current income tax, is adjusted to enable the investors to see the cash generating ability of the business.
Values in the table above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
Investore Property Limited | FY22 Annual Results Presentation
Financial summary
20
1.LVR is calculated based on independent valuations, which include seismic works to be funded by SPL in relation to 2 CarrRoad, Auckland, acquired from SPL and settled in April 2020. The independent valuations also exclude lease
liabilities.
2.Excludes the after tax fair value of interest rate derivatives.
As at
31 Mar 22
As at
31 Mar 21Change
Investment property value ($m)1,201.31,037.9+163.5
Drawn debt ($m)(355.0)(280.0)+75.0
Loan to Value Ratio (LVR)29.5%
1
26.8%
1
+2.7
Equity ($m)855.0765.7+89.4
Shares on issue (millions)368.1368.10.0
Net TangibleAssets (NTA) per share$2.32$2.08+$0.24
Adjusted NTA
2
per share$2.32$2.08+$0.24
Investore Property Limited | FY22 Annual Results Presentation
Capital management
21
Countdown Browns Bay, Auckland
Investore Property Limited | FY22 Annual Results Presentation
Proactive capital management
22
1.China Construction Bank Corporation, New Zealand Branch (CCB).
2.Industrial and Commercial Bank of China Limited, Auckland Branch (ICBC).
3.See footnote 3 on page 4.
4.The unexpired lease term in a property or portfolio, assuming the property or portfolio is fully leased. This is weighted by theincome applicable to each lease and a current market rental with nil term for vacant space.
Highlights
•$70m of bank facilities extended to
August 2023, with no debt maturing until FY24
•$125m of 5 year senior secured listed bonds
issued February 2022 at a fixed 4.00% p.a.
interest rate, representing an issue margin of
1.15% p.a., the lowest ever for an unrated New
Zealand issuer at the time
•$125m bank debt repaid and $126m bank debt
facility cancelled
•LVR policy reviewed, reducing target LVR to
between 30% and 40% on a long term basis
Debt facilities
As at
31 Mar 22
As at
31 Mar 21
Debt facilities limit
(ANZ, CCB
1
, Westpac, ICBC
2
),
including $350m bonds
$475m$476m
Debt facilities drawn$355m$280m
Weighted average maturity of debt facilities3.7 years3.8 years
Debt covenants
LVR
(Drawn Debt / Property Values)
Covenant: ≤ 65%; board policy target: 30% -40%
29.5%
3
26.8%
Interest Cover Ratio
(EBIT/Interest and Financing Costs)
Covenant: ≥ 1.75x
3.7x3.1x
WALT
4
Covenant: > 6.0 years
9.0
years
9.7
years
Investore Property Limited | FY22 Annual Results Presentation
$75m
$50m
$100m
$125m$125m
FY23FY24FY25FY26FY27FY28
Debt maturity profile
As at 31 March 2022
Bank Facilities (Mar-22)IPL010IPL020IPL030
Improved debt profile
23
Total debt facilities of $475m with $355m drawn, leaving $120m undrawn and available to
fund future growth (or $65m after committed acquisitions and developments)
1
1.Committed acquisitions and developments comprise the acquisition of the land at WaimakJunction (which acquisition remains conditional), the completion of Stage 1 of the development with an estimated cost (including land)
of $32.6 and other capital commitments of $22.7m.
Investore Property Limited | FY22 Annual Results Presentation
Loan to value ratio
1
24
Numbers may not sum due to rounding.
1.See footnote 3 on page 4.
2.Represents the purchase price for WaimakJunction, plus the expected cost of Stage 1 of the development. This acquisition remains conditional.
Investore has continued to actively manage its debt, maintaining a
relatively low loan to value ratio given the stability of its portfolio
29.5%
32.6%
(0.6%)
(2.4%)
26.8%
2.5%
2.3%
0.9%
1.8%
1.3%
LVR as at 31 Mar
2021
Countdown
Petone Acquisiton
4 Carr Road
Acquisition
Capital
expenditure and
other adjustments
MacLaggan Street
Divestment
RevaluationsLVR as at 31 Mar
2022
Waimak JunctionOther capital
commitments
Pro forma LVR as
at 31 Mar 2022
2
Investore Property Limited | FY22 Annual Results Presentation
Hedging and cost of debt
25
•Investoreconsiders it is protected against changes in
interest rates over the short to medium term due to its
proactive approach to managing cost of debt
•Weighted average cost of debt decreased 27bp to 3.77%
•Weighted average tenor of fixed rate debt increased to
4.0 years from 3.9 years
•100% drawn debt hedged or subject to a fixed interest rate
Cost of debt
As at
31 Mar 22
As at
31 Mar 21
Weighted average cost of
debt (incl. current interest
rate derivatives, bonds and
bank margins, and line fees)
3.77%4.04%
Weighted average fixed
interest rate (excl. margins)
1.96%1.64%
Weighted average fixed
interest rate maturity (incl.
bonds and interest rate
swaps)
4.0 years3.9 years
% of drawn debt fixed100%100%
$355m $355m $355m
$280m
$250m
$125m
1.96%
2.00%2.00%
1.76%
1.63%
0.40%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
-
$50m
$100m
$150m
$200m
$250m
$300m
$350m
$400m
Mar-22Mar-23Mar-24Mar-25Mar-26Mar-27
Fixed rate interest profile as at 31 March 2022
Notional fixed rate debt (net of fixed-to-floating hedging)
Weighted average interest rate of fixed rate debt (excl. margin and line fees)
Investore Property Limited | FY22 Annual Results Presentation
Looking ahead
26
Bunnings, Hamilton
Investore Property Limited | FY22 Annual Results Presentation
•Continued focus on targeted growth to
enhance the portfolio and maximise returns
•Grow Investore’sportfolio and income
through improving and developing the
existing portfolio
•Prudent management of developments.
•Cash dividend guidance for FY23 of 7.90
cents per share
FY23 cash
dividend guidance
7.90 cps
Looking ahead
Investore Property Limited | FY22 Annual Results Presentation
Supplementary Information
28
Investore Property Limited | FY22 Annual Results PresentationInvestore Property Limited | FY22 Annual Results Presentation
Strategy
Investore’sstrategy is to invest in quality, large format retail properties throughout New Zealand
and actively manage shareholders’ capital, to maximisedistributions and total returns over the
medium to long term
Active Portfolio
Management
Focus on owning well-located
properties with long lease terms
and high occupancy with
nationally recognisedquality
tenant brands and maintaining
strong and enduring tenant
relationships that support the
portfolio
Proactive Capital
Management
Proactive capital management
to maintain a healthy and
flexible balance sheet for
growth, while preserving
sustainable returns to investors.
Targeted Growth
Undertake considered
acquisitions and developments
which deliver growth, while
continuing to enhance
geographical and/or tenant
portfolio diversification
Optimisation of the
Portfolio
Development of existing
properties to meet the needs of
tenants and the surrounding
catchment, which may include
acquiring sites adjacent to
existing assets, to provide
development options for the
future
Investore Property Limited | FY22 Annual Results Presentation
29
Investore Property Limited | FY22 Annual Results Presentation
National portfolio
Values in the tables above are
calculated based on the numbers in
the financial statements for each
respective financial period and may
not sum due to rounding.
30
North
Island
84%
South
Island
16%
Auckland
(37% of Contract Rental)
13 properties
54 tenants
79,359 sqm NLA
$451m asset value
Waikato & Bay of Plenty
(18% of Contract Rental)
7 properties
40 tenants
50,990 sqm NLA
$183m asset value
Wellington
(17% of Contract Rental)
8 properties
24 tenants
35,005 sqm NLA
$194m asset value
Other North Island
(13% of Contract Rental)
6 properties
11 tenants
48,121 sqm NLA
$182m asset value
Canterbury & Otago
(11% of Contract Rental)
7 properties
9 tenants
25,399 sqm NLA
$137m asset value
Other South Island
(5% of Contract Rental)
3 properties
5 tenants
10,956 sqm NLA
$58m asset value
Investore Property Limited | FY22 Annual Results Presentation
Appendix A
Values in the tables above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
31
$29.9m
$34.3m
$3.5m
($0.5 m)
($0.5 m)
($0.6 m)
$3.1m
($0.4 m)
($0.4 m)
31-Mar-21Net rental
increase from
acquisitions
Net rental
decrease from
disposals
Net rental
decrease from
existing portfolio
Net rental
decrease from
Covid abatements
and other IFRS
adjustments
Lower net finance
expense
Higher
performance and
management fee
expense
Higher
administration
expense
31-Mar-22
Profit before other income/(expense) and income tax
$2.08
$2.32
$0.34
($0.02)
($0.08)
As at
31-Mar-21
Profit before taxIncome tax expenseDividends paidAs at
31-Mar-22
Net Tangible Assets
Investore Property Limited | FY22 Annual Results Presentation
Appendix B
32
Values in the tables above are calculated based on the numbers in the financial statements for each respective financial period and may not sum due to rounding.
$1,037.9m
$1,201.3m
($9.4 m)
$91.0m
$4.4m
$73.8m
$3.5m
$0.1m
($0.1 m)
As at
31-Mar-21
Disposal of 35
MacLaggan
Street
Net change in
fair value (excl
IFRS16)
Capital
expenditure
AcquisitionsRecognition of
prepayment
Spreading of
fixed rental
increases
Lease incentivesAs at
31-Mar-22
Investment Properties (excl. lease liabilities)
$57.1m
$60.2m
$3.0m
($0.8m)
$0.5m
$0.6m
($0.1m)
As at
31-Mar-21
AcquisitionsDisposalNew leasesRent reviewsOtherAs at
31-Mar-22
Net Contract Rent
Investore Property Limited | FY22 Annual Results PresentationInvestore Property Limited | FY22 Annual Results Presentation
Thank you
33
Important Notice: The information in this presentation is an overview and does not
contain all information necessary to make an investment decision.It is intended to
constitute a summary of certain information relating to the performance of Investore for
the year ended 31 March 2022. Please refer to Investore’s Annual Report 2022 for
further information in relation to the year ended 31 March 2022. The information in this
presentation does not purport to be a complete description of Investore. In making an
investment decision, investors must rely on their own examination of Investore, including
the merits and risks involved. Investors should consult with their own legal, tax, business
and/or financial advisors in connection with any acquisition of securities.
No representation or warranty, express or implied, is made as to the accuracy, adequacy
or reliability of any statements, estimates or opinions or other information contained in
this presentation, any of which may change without notice. To the maximum extent
permitted by law, Investore, Stride Investment Management Limited and their respective
directors, officers, employees, agents and advisers disclaim all liability and responsibility
(including without limitation any liability arising from fault or negligence on the part of
Investore, Stride Investment Management Limited and their respective directors, officers,
employees, agents and advisers) for any direct or indirect loss or damage which may be
suffered by any recipient through use of or reliance on anything contained in, or omitted
from, this presentation.
This presentation is not a product disclosure statement or other disclosure document.
Level 12, 34 Shortland Street
Auckland 1010, New Zealand
PO Box 6320, Victoria Street
West, Auckland 1142,
New Zealand
P+64 9 912 2690
Winvestoreproperty.co.nz
---
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019
Results for announcement to the market
Name of issuer Investore Property Limited (NS)
Reporting Period 12 months to 31 March 2022
Previous Reporting Period 12 months to 31 March 2021
Currency NZD – New Zealand Dollars
Amount (000s) Percentage change
Revenue from continuing
operations
$58,274 4.41%
Total Revenue $58,274 4.41%
Net profit/(loss) from
continuing operations
$118,167 (26.72%)
Total net profit/(loss) $118,167 (26.72%)
Final Dividend
Amount per Quoted Equity
Security
$0.01975000
Imputed amount per Quoted
Equity Security
$0.003313571
Record Date 26/05/2022
Dividend Payment Date 02/06/2022
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.32 $2.08
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please refer to the attached Annual Report and Annual Results
Presentation for the year ended 31 March 2022.
Authority for this announcement
Name of person
authorised
to make this announcement
Louise Hill
Contact person for this
announcement
Louise Hill
Contact phone number +64 275 580033
Contact email address louise.hill@strideproperty.co.nz
Date of release through MAP
18/05/2022
Audited financial statements accompany this announcement.
---
Template
Distribution Notice
Updated as at 18 December 2019
Please note: all cash amounts in this form should be provided to 8 decimal places
Section 1: Issuer information
Name of issuer INVESTORE PROPERTY LIMITED
Financial product name/description Ordinary Shares of Investore Property Limited
NZX ticker code IPL
ISIN (If unknown, check on NZX
website)
NZIPLE0001S3
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly X
Half Year Special
DRP applies
Record date 26/05/2022
Ex-Date (one business day before the
Record Date)
25/05/2022
Payment date (and allotment date for
DRP)
02/06/2022
Total monies associated with the
distribution
1
$7,270,667
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD – New Zealand Dollar
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.02306357
Gross taxable amount
3
$0.01183417
Total cash distribution
4
$0.01975000
Excluded amount (applicable to listed
PIEs)
$0.01122940
Supplementary distribution amount $0.00150364
Section 3: Imputation credits and Resident Withholding Tax
5
Is the distribution imputed Fully imputed
If fully or partially imputed, please
state imputation rate as % applied
6
28%
1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.
6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.
Imputation tax credits per financial
product
$0.00331357
Resident Withholding Tax per
financial product
n/a
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
n/a
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Louise Hill
Contact person for this
announcement
Louise Hill
Contact phone number +64 275 580033
Contact email address louise.hill@strideproperty.co.nz
Date of release through MAP
18/05/2022
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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