FY23 Annual Results

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tim.storey@strideproperty.co.nz
philip.littlewood@strideproperty.co.nz

jennifer.whooley@strideproperty.co.nz
louise.hill@strideproperty.co.nz

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Annual Report 2023
Stride Property Group

Financial Overview 2
Strategic Overview 4
Chair and CEO’s Report 6
Board of Directors 10
People 12
Executive Team 14
Performance 16
Products 18
SPL Look-Through Portfolio 20
SPL Portfolio 21
Town Centres 22
Office 24
Industre 26
Investore 32
Diversified 36
Capital Management 38
Five Year Financial Summary 40
Financial Statements 42
Independent Auditor’s Report 92
Corporate Governance 96
Statutory Disclosures 127
Implications of Investing in Stapled Securities 134
Glossary 135
Corporate Directory 136
Contents
This document comprises the Annual Report for each of Stride Investment
Management Limited (SIML) and Stride Property Limited (SPL), which are members
of Stride Property Group (Stride).
Each of SPL, SIML and Stride has been designated as “Non-Standard” (NS) by
NZX. The implications of investing in stapled securities of Stride are set out at
page 134 of this report.
A copy of the waivers granted by NZX in respect of SPL, SIML and Stride’s “NS”
designation can be found at www.nzx.com/companies/SPG/documents
Stride Property GroupAnnual Report 20231

Financial Overview
for the 12 months ended 31 March 2023 (FY23)
portfolio value
4
including $1.1bn directly held
office and town centre portfolio
$1.3bn
1. Profit before other (expense)/income and income tax is a
non-GAAP measure. For more information see note 1.6 to the
consolidated financial statements.
2. See glossary on page 135.
3. See page 19 for committed acquisitions, developments
and disposals.
4. Excludes lease liabilities. Includes SPL’s 51.7% interest in the
joint operation component of the Industre Property Joint Venture
as at 31 March 2023 (for more information, see note 3.2 to the
consolidated financial statements). Includes the value of Stride’s
offices at 34 Shortland Street, Auckland, and 22 The Terrace,
Wellington, which are shown in the consolidated financial
statements as ‘Property, plant and equipment’ and ‘Assets
classified as held for sale’ respectively.
Portfolio
Overview
as at 31 March 2023
profit before other
(expense)/income and
income tax
1
up $7.0m from FY22 ($46.5m)
$53.5m
loss after income tax
(FY22: $112.3m profit after
income tax)
$(116.7)m
loss before income tax
down from FY22 ($124.7m profit)
largely due to a net portfolio
valuation reduction of $(118.5)m
compared with a net portfolio valuation
gain of $30.7m for FY22
$(109.7)m
distributable profit
2
after
current income tax
up $3.5m (FY22: $54.2m)
$57.6m
SPL’s look-through portfolio is valued
at $1.7bn, including its interests in
the portfolios of each of Investore,
Diversified and Industre, which are
managed by SIML
as at 31 March 2023,
including $2.3bn of
external assets under
management. Assets under
management increase to
$3.4bn on a pro forma
basis taking into account
committed acquisitions,
developments and
disposals
3

$3.2bn
Assets under
management
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 202323

Strategic Overview
Stride has continued to focus on improving its office
portfolio to ensure it has enduring demand. FY23
transactions have contributed to the transformation of
the office portfolio to a more sustainable and high quality
portfolio, and have led to a reduction in the weighted
average age of SPL’s office and town centre portfolio
1
, to
9.8 years, down from 16.7 years as at 31 March 2020
Industre’s portfolio focusses on strategically located
industrial assets, often with development potential,
providing opportunities for the future. Since 2019, Stride
has completed 4 industrial developments, with a further
development in progress. The Industre portfolio has 10
further properties with development potential, with total
current estimated development costs in excess of $300m
Stride has been active in managing the Investore portfolio,
including negotiating arrangements with tenants to
optimise existing assets, together with the acquisition of
a development site at Hakarau Road, Kaiapoi, providing
Investore with a strong development pipeline
FY23 has seen the completion of the rebuild of part of
Queensgate Shopping Centre that was damaged in the
2016 Kaikoura earthquake. The newly completed cinema
and carpark have contributed to increased sales, with total
centre sales for the year ended 31 March 2023 up 20%
on the prior year. Stride has also undertaken a number of
initiatives to reduce the LVR
2
of Diversified
Stride is conscious of the challenging economic climate and has
taken proactive steps to manage the resulting risks
1. On a pro forma basis as at 31 March 2023, as if the acquisition of 110 Carlton Gore Road, Auckland, had settled as at that date. Excludes properties categorised as
‘Development and Other’ and ‘Assets classified as held for sale’ in the consolidated financial statements.
2. See glossary on page 135.
3. SPL commitments include: (1) the settlement of 110 Carlton Gore Road, Auckland; (2) upgrade works at 34 Shortland Street, Auckland; (3) various capital expenditure
commitments contracted for; and (4) the estimated FY24 impact of capital management initiatives announced by Stride in November 2022, excluding the impact of any
potential disposals.
Stride is an active real estate investment manager
Refined dividend policy
introduced, targeting a total
cash dividend to shareholders
that is between 80% and
100% of SPL’s distributable
profit
2
and between 25%
and 75% of SIML’s distributable
profit, reflecting Stride’s
transition to a maturing real
estate investment manager
Cash dividend reduced
to 8.0cps for FY23,
representing a combined
payout ratio of 75% of
Stride’s distributable
profit
2
, reflecting a prudent
approach to capital
management in the
current macroeconomic
environment
80% of SPL’s drawn debt as at
31 March 2023 was hedged.
Average remaining duration of
SPL’s hedging is 2.2 years
36.4% LVR
2
as at 31 March
2023, increasing to 37%-38%
on a committed basis
3
SPL cancelled $75m of bank
debt facilities, reducing costs
Dividend reinvestment plan
implemented, with
approximately 40% of shares
taking up the offer for the
first dividend to which the
plan applied
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 202345

Chair and CEO’s Report
Stride is an active real estate investment manager, and
continues to optimise the portfolios of its managed entities,
Investore Property Limited (Investore), Industre Property
Joint Venture (Industre) and Diversified NZ Property Trust
(Diversified) (together, the Stride Products). While market
transactional activity has been lower recently due to the
challenging macroeconomic conditions, Stride continues
to deliver improvements to its assets under management,
including new developments and refurbishments, pursuing
sustainability objectives including obtaining green ratings,
and ensuring the Stride Products are well positioned
to manage the risks posed, and potential opportunities
created, by the current economic conditions.
FY23 has been a mixed year for commercial property in New
Zealand, largely due to the impact of the current inflationary
environment. On one side, Stride and its managed funds
have seen record growth in like-for-like market rentals, with
like-for-like market rentals for Stride’s own portfolio
1
up
7.1% over the 12 months to 31 March 2023, and for Stride’s
look-through portfolio
2
(which includes Stride’s interests in
the Stride Products) up 7.7%. Conversely, the rapid increase
in the Official Cash Rate over the past year has resulted in
softer capitalisation rates, corresponding lower valuations, and
lower transactional activity across the group. These factors
have influenced Stride’s share price, along with the prices of
other listed property companies, with Stride’s current share
price not reflective of the value of our net tangible assets.
The Board remains confident in the value of our assets
and our business, particularly given the strong occupancy
market and the diversification in our income, which is derived
from our portfolio of quality, directly held town centre and
office assets, our investments in the Stride Products of
Industre, Investore and Diversified, and the fees earned
from our real estate investment management business.
Financial performance
Stride has delivered positive underlying earnings for FY23.
Net rental income at $71.1 million is $5.2 million higher
than FY22 (FY22: $65.8 million). Some of this higher
net rental income from the SPL portfolio was offset by
lower management fee income, which at $23.3 million
was $1.0 million lower than FY22 (FY22: $24.3 million),
largely due to no performance fees being received
from Investore during FY23 which was partially offset
by higher asset management fees of $0.4 million.
While total corporate expenses were lower in FY23 than
FY22 (FY23: $23.7 million; FY22: $27.4 million), net finance
expenses were higher than FY22 (FY23: $17.1 million;
FY22: $16.1 million) as a result of higher net bank borrowings
due to the advances made to the vendor of the property at
110 Carlton Gore Road, Auckland, offset by debt repayments
following the receipt of funds from the sale of four non-core
office assets during FY23.
Overall, this led to profit before other (expense)/income
and income tax of $53.5 million, which is $7.0 million higher
than FY22 (FY22: $46.5 million). The high inflationary
environment, which has led to higher interest rates, has in
part led to lower capitalisation rates for SPL’s property
portfolio, resulting in a net portfolio valuation reduction of
$(118.5) million for FY23, compared with a $30.7 million net
valuation gain for FY22. The softening capitalisation rates
across the commercial property sector also impacted the
portfolio values of the Stride Products, which has resulted
in a share of loss in equity-accounted investments of
$(42.4) million for FY23, compared with a $65.6 million share
of profit in equity-accounted investments for FY22.
This has contributed to a loss before income tax of
$(109.7) million, and while income tax expense was lower in
FY23 than FY22 (FY23: $7.0 million; FY22: $12.4 million), this
resulted in a loss after income tax of $(116.7) million
(FY22: $112.3 million profit after income tax).
Distributable profit
3
after current income tax, which Stride
considers more closely aligns with its underlying and
recurring earnings from its operations, was $3.5 million
higher than FY22 at $57.6 million (FY22: $54.2 million).
Portfolio
Stride’s directly held portfolio comprises office and
town centre properties. Stride’s town centre properties
are located in fast growing regions within Auckland –
Silverdale Centre is located in the north of Auckland, near
the regions of Silverdale, the Hibiscus Coast and Orewa,
while NorthWest Shopping Centre is located in the west of
Auckland, near the rapidly growing suburbs of Whenuapai,
Hobsonville and Red Hills. These locations have driven
higher sales within the Stride town centre portfolio
2
, with
sales for FY23 up 16% from FY22. Higher sales are driving
increased demand for space from retailers across the
Stride town centre portfolio and other shopping centre
assets managed by Stride, which supports growing rent
levels. This is helping to at least partially offset increases in
capitalisation rates for these assets, supporting asset values.
Stride has taken steps over the past two years to reposition its
office portfolio to improve the resilience of this portfolio. During
FY23 Stride sold four lower grade non-core office assets and
committed to the acquisition of the premium grade property
at 110 Carlton Gore Road, Auckland, which has recently been
completed. Stride expects to settle the acquisition on 31 May
2023. On a pro forma basis as at 31 March 2023 including
110 Carlton Gore Road, Stride’s office portfolio
2
has a value
of $748 million, a weighted average age of 10.2 years, 84%
of the portfolio by value categorised as Prime or Grade A,
and 74% of the portfolio by value having either a 4 star
NABERSNZ rating or 5 Green Star rating or higher.
Stride will continue to explore improvement opportunities
for its three office assets that have either no green rating
or a low rating, to seek to achieve a minimum green rating
over time of 4 star NABERSNZ or 5 Green Star. By way
of example, the Stride Boards have recently committed to
an upgrade of the office property at 34 Shortland Street,
Auckland, including a refurbishment of the lobby, installation
of end of trip facilities, and a mechanical upgrade. The
Stride Boards approved additional expenditure to upgrade
the mechanical services at the property in order to enable
the building to achieve a 4 star NABERSNZ rating. Aligning
the office portfolio towards newer, higher quality and more
sustainable properties positions the portfolio to meet
both tenant and investor demand, resulting in a more resilient
office portfolio.
In addition to its directly held properties, Stride (through
SPL) owns an interest in each of the Stride Products
managed by SIML:

• Industre invests solely in industrial properties, primarily
in the Auckland region, and is a joint venture between
JPMAM
3
and SPL. SPL currently owns 51.7% of the joint
venture, with this interest valued at $268 million as at
31 March 2023

• Investore is a listed entity, and invests solely in large format
retail property. SPL owns 18.8% of Investore, with this
equity interest valued at $110 million as at 31 March 2023
Dear Shareholders,
The Boards of Directors of Stride
Property Limited (SPL) and Stride
Investment Management Limited (SIML)
(which together form Stride Property
Group (Stride)) are pleased to deliver
Stride’s annual report for FY23. Stride
has delivered positive underlying
operating earnings for FY23, as its
real estate investment management
business continues to mature.
• Diversified is an Australian trust which owns
shopping centre properties in New Zealand.
SPL owns 2.1% of Diversified, with this interest
valued at $5 million as at 31 March 2023
Taking SPL’s interests in each of the Stride Products into
account, Stride’s look-through portfolio
2
is valued at
$1.4 billion, and is diversified across each of the core property
sectors, with 39% office, 21% town centres, 14% large format
retail and 26% industrial.
Real estate investment
management business
Stride is an active real estate investment manager, tailoring
its approach to the needs of each specific portfolio and
business that it manages. While FY23 has required careful
management of the risks posed by the current economic
conditions for each entity, Stride has also sought to optimise
the portfolios of each of the Stride Products. With Investore,
this has involved the acquisition of land at Hakarau Road,
Kaiapoi, where Stride is now managing the construction of
a new Countdown supermarket, due for completion in late
2023. Stride has also, on behalf of Investore, negotiated
an agreement with Countdown, Investore’s largest tenant,
to expand the customer amenity at Countdown, Rangiora,
delivering a 7.5% per annum return on cost of up to $1.0 million.
Stride’s development team continues to deliver quality new
projects for the Stride Products. In addition to the new
Countdown for Investore, the Stride development team has
also managed the development of a new industrial facility
for Industre at 439 Rosebank Road, Auckland, which was
completed in February 2023. Stride is also managing the
development of a new industrial building at 34 Airpark
Drive, Auckland, due for completion in June 2023. This
will be the fifth new industrial development managed by
Stride for Industre since 2019, with recent acquisitions
providing a pipeline of further development opportunities.
The Stride development team has also been involved in the
rebuild of part of the Queensgate Shopping Centre in Lower
Hutt, Wellington, which is owned by Diversified. Part of this
centre was demolished as a result of the 2016 Kaikoura
earthquake, and the Stride team has managed the rebuild
of the centre, together with the insurance claim. The carpark
component was completed in late 2021, with the cinema
reopening prior to Christmas 2022. The centre has benefited
from additional customer visitation due to the cinema
reopening, which has contributed to strong sales growth at
the centre, with sales for FY23 up 20% on the prior year. This
strong sales position has contributed to strong demand for
the Diversified portfolio
2
, with occupancy at 97.5% as at
31 March 2023. Stride has also undertaken a number of
capital management initiatives on behalf of Diversified in
order to strengthen Diversified’s balance sheet, including the
sale of Remarkables Park Town Centre, which settled on
14 April 2023.
1. Excludes: (1) SPL’s 51.7% interest in the joint operation component of the Industre Property Joint Venture portfolio which is reported as part of the assets of SPL in the
consolidated financial statements (see note 3.2 to the consolidated financial statements for further information); (2) properties categorised as ‘Development and Other’ and
‘Assets classified as held for sale’ in the consolidated financial statements.
2. Excludes properties categorised as ‘Development and Other’ and, where applicable, ‘Assets classified as held for sale’ in the consolidated financial statements.
3. See glossary on page 135.
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 202367

Chair and CEO’s Report
Tim Storey
Chair,
SPL and SIML
Philip Littlewood
Chief Executive Officer,
SIML
1. See glossary on page 135.
Capital Management
The Boards are conscious of the risks posed by the current
macroeconomic environment, particularly inflation levels
which are driving higher interest rates and putting pressure
on capitalisation rates, impacting portfolio valuations.
The Stride Boards have taken steps to seek to mitigate
the impact of these risks on Stride’s business, including
maintaining a prudent hedging programme, reducing costs,
and implementing initiatives to reduce Stride’s LVR
1
.
As at 31 March 2023, 80% of Stride’s drawn debt was
hedged, with a weighted average cost of debt of 3.96%.
This represents an increase of 41 basis points since
31 March 2022, compared with a 375 basis point increase
in New Zealand’s Official Cash Rate over the same period.
During FY23 Stride entered into a further $80 million of
forward start interest rate swaps for an average hedged term
of 2.7 years and an average interest rate of 3.93%, helping to
manage future interest rate volatility.
While Stride has strong interest rate hedging in place and
a stable distributable profit profile, during FY23 the Boards
implemented additional initiatives in order to reflect market
conditions and Stride’s prudent and proactive approach
to cost and capital management, designed to protect
shareholder value.
These initiatives included the implementation of a dividend
reinvestment plan, with approximately 40% of Stride’s
issued capital taking up the offer in relation to the first
dividend to which it applied, meaning that Stride was able
to retain additional cash in the business or reduce bank
debt. The Boards also updated the dividend policy to be
more appropriate for Stride’s transition to a maturing real
estate investment management business. The refined
policy is to target a total cash dividend to shareholders
that is between 80% and 100% of SPL’s distributable
profit
1
and between 25% and 75% of SIML’s distributable
profit. Consistent with this refined policy, Stride updated
its FY23 cash dividend guidance to 8.0 cents per share.
Aligned with these initiatives, Stride also reviewed its costs,
including cancelling $75 million of bank facilities during FY23,
thereby avoiding fees in relation to these facilities. Stride also
indicated it would consider disposals of selected properties
of between $30 million to $60 million, and this initiative
continues to progress.
People
Stride values its people highly, and the Boards focus on
ensuring the retention of people, particularly in the current
restricted labour market. We seek to do this through
supporting the wellbeing of our people, respecting their
differences, recognising achievements and remunerating
our people fairly. Wellbeing was a focus of our 2022
employment engagement survey. Stride already provides a
number of benefits aimed at ensuring our people remain
healthy and safe, including access to an Employee Assistance
Programme, annual flu vaccinations, increased employer
KiwiSaver contributions, and additional leave benefits.
Stride is reviewing its wellbeing initiatives to ensure we
have addressed all elements of wellbeing for our people –
physical, mental, financial, social, environmental and career.
Over the past year we celebrated a significant achievement
for five of our people who reached a milestone of having
served 20 years with Stride. Stride began approximately
27 years ago, and so these five people have been with
us for most of Stride’s history, which we consider to be
a great achievement. The Boards would like to take this
opportunity to thank Jennifer, Jessica, Eve, Karen and
David for their long and loyal service with our company.
Governance
The Stride Boards are conscious of the need to ensure
continuity and experience in the oversight of the Stride
business, while also recognising the value that fresh
perspectives and thought can bring to the Stride Boards.
The Boards conduct an ongoing refresh process to ensure
this balance is maintained. As signalled at the 2022 Annual
Shareholder Meetings, Philip Ling retired from the Stride
Boards in April 2023, with a new Director, Tracey Jones,
appointed upon Philip’s retirement.
Philip has been a director of Stride since 2017, and his
extensive property and funds management experience has
proven extremely valuable to the Stride Boards over the past
six years, a period of considerable development and change
within our business, as Stride transitions to a more mature
real estate investment manager. On behalf of the Boards, we
would like to thank Philip for his significant contribution to
the Stride business, and we wish him well in his retirement.
The Stride Boards also welcome Tracey as a Director.
Tracey is a Chartered Accountant with a strong background
in funds management, operations and finance, and has
considerable experience in property. Tracey’s skills
complement the existing Board skills and we are confident
that she will be a valuable addition to the Stride Boards.
Sustainability
Stride has made significant advances in its approach to
sustainability during FY23, including obtaining green ratings
for additional properties under management, and setting
a number of environmental and social targets, including
reducing scope 1 and 2 greenhouse gas emissions by 42%
by 2030 from the FY20 baseline year. Stride is conscious of
the need to ensure that, when it sets targets, these are able
to be achieved, and accordingly we have been progressing
a decarbonisation plan for the office and shopping centre
portfolios which will identify specific actions that can
be taken to help meet our carbon reduction targets.
Further information on Stride’s sustainability progress can
be found in Stride’s FY23 Sustainability Report, which for
the first time is being presented as a separate report.
Outlook
While Stride has strong interest rate hedging in place and
a stable distributable profit profile, we will continue to
take a prudent approach to capital management given the
current economic environment. Initiatives that have been
implemented and which will continue include the dividend
reinvestment programme, closely managing costs, and
progressing the disposal of selected properties of between
$30 million and $60 million.
As an active real estate investment manager, Stride will
continue to focus on optimising the assets and portfolios
managed by it, including the SPL portfolio of town centre
and office properties. We will also continue to explore
opportunities to progress the growth of our real estate
investment management business.
The Boards confirm that they currently intend to pay a
combined cash dividend for SPL and SIML for FY24 of
8.00 cents per share, which is consistent with the revised
dividend for FY23.
On behalf of the Boards and staff, thank you for your
continued support of Stride Property Group.
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 202389

Tim Storey
LLB, BA
Independent Director, Chair of the Boards and Chair of the Remuneration
and Nomination Committee
Term of Office: Appointed to SPL on 1 April 2009 and to SIML on 16 February
2016; last elected 2022
Tim was appointed Chair of Stride in 2009. He has more than 30 years’ experience
across a range of sectors and has practiced as a lawyer in New Zealand and
Australia, retiring from the Bell Gully partnership in 2006. Tim is a member of the
Institute of Directors in New Zealand (Inc) and is chair of LawFinance Limited (ASX
listed), a director of Investore Property Limited and of a number of private companies.
Ross Buckley
BBS, FCA, FCPA, CMInstD
Independent Director and Chair of the Audit and Risk Committee
Term of Office: Appointed to SPL and SIML on 9 August 2021; elected 2021
Ross has a strong background in auditing and management, with 27 years as a
partner at the global accounting and consulting firm KPMG, including nine years as
Executive Chairman of KPMG in New Zealand and a member of KPMG’s Asia Pacific
Board and KPMG’s Global Council. During his career with KPMG he managed the
firm’s Audit, Risk and Tax practices, in addition to the firms’ People, Performance
and Culture function. Ross currently chairs the Auckland Branch of the Institute of
Directors, is a council member of Massey University, and is a member of the Audit
Oversight Committee of the Financial Markets Authority. He is also a director of ASB
Bank Limited and Investore Property Limited and independent chair of Service Foods
NZ Limited.
Tracey Jones
BCom, CA, CMInstD
Independent Director
Term of Office: Appointed to SPL and SIML on 11 April 2023
Tracey has considerable experience in accounting and finance, as well as funds
management and property. Tracey worked for 15 years with Tappenden Holdings
Limited, including as Chief Operating Officer and Chief Financial Officer, managing
a large investment portfolio including a number of property interests. Tracey
moved into a governance career in 2016, and is currently an independent director
of Partners Life and Punakaiki Fund Limited, as well as independent chair of
Nikko Asset Management NZ Limited and director and chair of the audit and risk
committee of Harmoney Corp Limited.
Nick Jacobson
LLB, BCom
Independent Director
Term of Office: Appointed to SPL and SIML on 18 July 2019; last elected 2021
Nick has over 30 years’ experience with leading global and investment banks
and global financial services companies, specialising in real estate advisory and
capital markets across Australia, Europe, and Asia. Nick is currently Managing
Director at Wingate in Sydney, Australia, investing in significant CRE private credit
transactions. Nick was previously Managing Director and Head of Investment
Banking Services at Goldman Sachs in Sydney, and Chairman of Goldman Sachs’
Real Estate Investment Banking division.
Michelle Tierney
BA, MBA
Independent Director
Term of Office: Appointed to SPL on 17 July 2014 and to SIML on
16 February 2016; last elected 2020
Michelle has more than 30 years’ experience in the property industry as a listed
Non-Executive Director, and former Chief Operating Officer, and has a background
in funds management, real estate investment, property and asset management,
transformation, and sustainability. Michelle is currently a Non-Executive Director
of Growthpoint Properties Australia and previously was Chief Operating Officer
of ASX100 company Region Property Group (formerly SCA Property Group) in
Australia. She was previously the General Manager of Business Development and
Strategy for the National Australia Bank Global Institutional Bank, Fund Manager of
the $3.8bn GPT Wholesale Shopping Centre Fund and Head of Property and Asset
Management for ASX50 company The GPT Group. Michelle is also a member of the
Australian Institute of Company Directors and Women on Boards in Australia.
Jacqueline Cheyne
BAcc, FCA, CMInstD
Independent Director and Chair of the Sustainability Committee
Term of Office: Appointed to SPL and SIML on 13 March 2019; last elected 2022
Jacqueline has 25 years of experience in financial audit and advisory services, including
11 years as a partner at Deloitte in audit and assurance. Jacqueline led Deloitte’s
Corporate Responsibility and Sustainability services function for Deloitte New Zealand
for nine years. Jacqueline is currently a Member of the External Reporting Board, a
member of the Audit Oversight Committee of the Financial Markets Authority, chair of
Snow Sports NZ, and a director of New Zealand Green Investment Finance Limited,
PaySauce Limited and Pioneer Energy Limited.
Board of Directors
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20231011

We celebrate length of service at Stride and over the past year
we have had five employees complete 20 years of service
with Stride. This is a great achievement – Stride started
approximately 27 years ago with around 30 employees and
these five have been there for a large part of Stride’s history.
Congratulations to our long-serving employees, Jennifer,
Jessica, Karen, David and Eve.
The Stride team works
closely together, with team
collaboration highly valued
People
At Stride we value our open and collaborative working environment which creates an
atmosphere that enables us to think strategically and creatively, delivering solutions
for Stride and each of the Stride Products. This is particularly evident in our focus on
delivering growth for each of the Stride Products.
Growing the Industre portfolio
Industre acquired the property at 439 Rosebank Road, Auckland, in 2020. At
the time the property comprised an old factory in fairly poor condition and with
an asbestos roof. Following the acquisition Industre considered refurbishing the
factory to remove the asbestos, but ultimately decided to demolish the existing
building and construct new industrial facilities. The acquisition was managed by the
industrial team within SIML, and they worked closely with the SIML development
team to design and construct a new industrial development on the site. During
construction the industrial team negotiated a lease with Arnott’s for the largest of
the factory spaces. The site also houses three additional industrial tenancies, which
were all leased prior to the completion of the development in early 2023. This
property is an excellent example of the SIML industrial and development teams
working together to deliver a quality development for Industre, which is fully leased
at completion.
Adding to Stride’s quality office portfolio
Stride’s investment team initially managed the acquisition of the new office development
at 110 Carlton Gore Road, Auckland, in 2021 from Mansons. This building was in the
initial stages of construction at the time of the transaction, and the investment team
worked closely with the office team and in-house counsel within Stride’s corporate
services team to deliver this high quality acquisition. This building has achieved a
6 Green Star Design rating and is targeting a 6 Green Star As Built rating on
completion. On settlement of the acquisition, the building will be 100% occupied
1
with
a weighted average lease term of over 11 years, furthering Stride’s strategy of improving
the overall quality and sustainability features of its office portfolio. A key member of
Stride’s investment team for the acquisition, Jessica Rod, was subsequently appointed
General Manager Office, and has remained closely involved with the construction of the
new building, along with Stride’s development team. This high quality office building has
now been completed, and Stride expects to settle the acquisition on 31 May 2023.
Delivering a quality rebuild for Diversified
Part of the Queensgate Shopping Centre in Wellington was demolished following the
Kaikoura earthquake in 2016. The Stride shopping centre team capably managed to
continue shopping centre operations during the demolition of part of the site and the
subsequent rebuild process. This included navigating the loss of a carpark over several
busy Christmas seasons, manoeuvring the changing access arrangements for the
centre, and ensuring clear separation between construction and the public. The rebuild
of part of the centre was overseen by the SIML development team, based in Auckland,
who also managed the insurance claim process. Together, the shopping centre team
and the development team delivered an excellent project, testament to the close and
trusted working relationship between the two teams. The reopening of the cinema
has attracted even more customer visitation to the centre, driving higher sales and
generating additional leasing demand, contributing to an outstanding shopping centre.
1. The vendor has committed to take a lease of any remaining vacant space at settlement in accordance with
commercial terms agreed between the parties.
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20231213

Philip Littlewood
BProp, BCom, MBA
Chief Executive Officer
Philip joined Stride in 2014 and has led the team since 2017. Philip is responsible for the
overall strategy and management of Stride. Philip has extensive experience in property
investment, funds management, development, asset management and finance, in New
Zealand and overseas, including roles with Morgan Stanley’s merchant banking division (UK),
a partnership in a large private-equity real estate firm (UK) and AMP Capital Investors (NZ).
Jennifer Whooley
CA
Chief Financial Officer
Jennifer is responsible for Stride’s overall financial plans and policies, ensuring the
compliance of its accounting practices. Jennifer is also responsible for the people and
culture function within Stride. Jennifer has been with Stride for 20 years, and prior to
joining Stride, she was Chief Accountant for Fletcher Property. Jennifer was named the
EY CFO of the Year for 2018.
Mark Luker
Dip.Val.Prop
General Manager Development
Mark is responsible for Stride’s development activities. He has over 25 years of experience
in the property development and investment industry, acquired through complex large-
scale retail and commercial development projects, both within New Zealand and Australia.
Mark joined Stride from Kiwi Property Group, where he held the roles of General Manager
Development and Project Director, Sylvia Park.
Louise Hill
BCom, LLB
General Manager Corporate Services
Louise has more than 20 years’ legal experience and is responsible for a range of corporate
functions within Stride, including legal, governance, compliance, IT, insurance, health and
safety, sustainability and risk. Louise’s previous roles included Head of Legal (NZ) for Fletcher
Building and senior associate in the corporate/commercial team at Bell Gully.
Adam Lilley
BCom, LLB, CA
General Manager Investment | Investore Fund Manager
Adam has more than 10 years’ experience in the property and finance industries, and
was previously an Institutional Equities Research Analyst at Craigs Investment Partners,
specialising in the New Zealand listed property sector. Prior to that, Adam was an
Investment Manager at Stride and rejoined in 2021 to lead Stride’s Investment team. In
2022 Adam also took responsibility for managing the Investore business as Investore
Fund Manager.
Andrew Hay
BProp, MBA
General Manager Industrial
Andrew joined Stride in 2004 and has more than 25 years’ property industry experience.
Andrew is responsible for managing the business of Industre, including overseeing and
growing the industrial portfolio. Andrew is the immediate past president of the Auckland
Branch of the Property Council.
Jessica Rod
BProp, BA
General Manager Office
Jessica is responsible for growing and managing Stride’s office portfolio. Jessica has been
with Stride for 20 years, and prior to her current role was an Investment Manager. Jessica has
been responsible for a number of recent office acquisitions, including the acquisition of the
property at 110 Carlton Gore Road.
Roy Stansfield
ACA
General Manager Shopping Centres
Roy is responsible for the shopping centre portfolios owned and managed by Stride.
His role includes all aspects of asset management, retail leasing and planning. Roy
has 30 years’ experience in the retail shopping centre industry. Prior to joining Stride,
he was employed by Challenge Properties, St Lukes Group and Kiwi Property Group.
Executive Team
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20231415

Stride continues to deliver
growth in distributable
profit, despite challenging
market conditions
Stride benefits from diversification of its revenue sources,
with revenue being delivered from its directly held
portfolio, its investment in each of the Stride Products,
and real estate investment management fees. SIML’s real
estate investment management fees represented 21% of
Stride’s FY23 look-through revenue.
Distributable profit
1
growth
FY23 look-through revenue sources
3
1. See glossary on page 135.
2. Net of management fees received from SPL.
3. Stride’s revenue comprises SIML management fees and SPL revenue. SPL revenue comprises income derived from SPL’s directly held property plus
revenue derived from its interests in the Stride Products which is calculated based on net Contract Rental on a look-through basis as at 31 March 2023.
Management fees comprise FY23 management fees from Stride Products (i.e. excluding fees from SPL).
Performance
Growing Stride’s Real Estate
Investment Management Business
Assets under management
$3.2bn
as at 31 March 2023,
including $2.3bn of external
assets under management
Pro forma assets under
management
$3.4bn
taking into account committed
acquisitions, developments
and disposals
FY23 recurring management fees were $17.6m,
representing 9.5% growth on FY22. Activity fees
were lower than FY22, due to economic conditions
impacting market activity and lower performance fees
SIML management fees
2
OfficeRetail Shopping Centres/Town Centres
Recurring management fees
Large Format Retail
Industrial
31%
16%
16%
5%
11%21%
$12.6m
$2.1m
$14.7m
FY19
$12.3m
$5.0m
$17.3m
FY20
$13.5m
$10.7m
$24.2m
FY21
$8.2m
$24.3m
$16.1m
FY22
$23.3m
$5.7m
$17.6m
FY23FY22
$54.2m
FY23
$57.6m
FY21
$46.3m
FY20
$37.7m
FY19
$38.8m
Activity and performance fees
Recurring fees
Activity and performance fees
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20231617

Products
Stride will continue to build portfolios of assets within SPL that could be used for the
establishment of future Products, when market and economic conditions are conducive.
While continuing to prepare for the establishment of one or more future Products, Stride
focusses on growing and optimising the existing Stride Products.
The Stride Products comprise a range of listed and unlisted
entities, which provide diversification of opportunities in
different market conditions. Stride takes an active approach to
management of the Stride Products, tailoring its activity to the
property sector in which each Stride Product invests as well as
the nature and objectives of the investors in each Product
Portfolio composition as at 31 March 2023
Stride is a listed stapled entity which directly owns office and town centre assets
and has an interest in each of the Stride Products. SIML, the manager of the Stride
Products, forms part of Stride.
Investore owns a portfolio of large format retail properties. Investore is listed on the
NZX, with Stride owning 18.8%. The focus is on optimising the Investore portfolio
and delivering successful portfolio improvement and development projects.
Industre is a joint venture between Stride and JPMAM
1
and owns a portfolio of
industrial assets primarily located in the Auckland region. Industre’s strategy is to
grow a portfolio of strategically located industrial assets, often with development
potential, providing future growth opportunities.
Diversified is a trust that is owned primarily by two Australian superannuation entities,
with Stride owning 2.1%. Diversified owns shopping centre assets. The recent
focus has been on completing the Queensgate Shopping Centre capital works and
managing the balance sheet.
Numbers may not add due to rounding.
1. See glossary on page 135.
2. Commitments include: (1) Stride: the settlement of 110 Carlton Gore Road, Auckland; building upgrades at 34 Shortland Street, Auckland; and various capital expenditure
commitments contracted for (refer note 3.4 to the consolidated financial statements); (2) Investore: the development of the Countdown at Hakarau Road, Kaiapoi, and
other capital expenditure commitments; (3) Diversified: the disposal of Remarkables Park Town Centre; and (4) Industre: estimated costs of construction for two committed
developments.
3. Excludes SPL’s 51.7% interest in the joint operation component of the Industre Property Joint Venture as at 31 March 2023 (for more information, see note 3.2 to the
consolidated financial statements). Includes the value of Stride’s offices at 34 Shortland Street, Auckland, and 22 The Terrace, Wellington, which are shown in the consolidated
financial statements as ‘Property, plant and equipment’ and ‘Assets classified as held for sale’ respectively.
4. Includes Johnsonville Shopping Centre, which is owned 50:50 by SPL and Diversified.
Value of investment
properties ($m)

Number of investment
properties

SPL investment in Stride
Products
Office and town centre portfolio
3
91311
4
100%
Investore
1,0624718.8%
Diversified
4674
4
2.1%
Industre
7862351.7%
Total
3,22984
Number and value of properties managed by SIML as at 31 March 2023
$553m
$294m
$205m
$67m
$1,090m
$1,119m
$1,033m
$29m
$28m
$412m
$387m
$80m
$(56)m
$798m
$716m
$70m
$12m
Property categorised as
‘Developments and Other’ and/or
‘Assets held for sale’
Retail Shopping Centres/Town Centres
Office
Industrial
Large Format Retail
Commitments
2
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20231819

SPL Look-Through PortfolioSPL Portfolio
SPL owns a portfolio of town centre and office assets directly,
as well as having an interest in each of the Stride Products.
This ensures alignment of interests between Stride and each
of the Stride Products and provides SPL with a diversified
look-through portfolio
1
that is well balanced across each of
the core property sectors, demonstrating strong metrics.
SPL’s directly held portfolio comprises
office and town centre properties with
enduring demand.
SPL’s weighted look-through
portfolio
1,3
as at 31 March 2023
1. All metrics relate to the stabilised investment portfolio, and exclude properties categorised as ‘Development and
Other’ and ‘Assets classified as held for sale’ in the respective financial statements.
2. Excludes lease liabilities. Includes the value of Stride’s office at 34 Shortland Street, Auckland, which is shown in the
consolidated financial statements as ‘Property, plant and equipment’.
3. As at 31 March 2023 and excluding committed acquisitions, developments and disposals, and excluding lease
liabilities.
4. Excludes: (1) SPL’s interest in the joint operation component of the Industre Property Joint Venture portfolio which is
reported as part of the assets of SPL in the consolidated financial statements (see note 3.2 to the consolidated financial
statements for further information); (2) in respect of 31 March 2023 only, properties categorised as ‘Development and
Other’ and ‘Assets classified as held for sale’ in the consolidated financial statements.
5. As at 31 March 2023, as if the acquisition of 110 Carlton Gore Road, Auckland, had occurred as at that date.
6. Includes Johnsonville Shopping Centre, which is owned 50:50 by SPL and Diversified.
7. See glossary on page 135.
8. Occupancy has been calculated including casual licences with an initial term greater than three months, and
excluding units held for committed redevelopment or remix works.
9. Includes the Auckland properties at 7-9 Fanshawe Street, 80 Greys Avenue, 25 Teed Street and 35 Teed Street,
shown in the consolidated financial statements as ‘Investment properties classified as held for sale’.
Pro forma
4,5
31 March 2023
31 March
2023
4
31 March
2022
4
Properties (no.)9815
6
Tenants (no.)237233358
Net Lettable Area (sqm)131,144117,063151,212
Net Contract Rental
7
($m)
62.751.963.0
WA LT
7
(years)
6.55.55.6
Occupancy Rate (% by area)
97.6
8
97.3
8
96.1
Weighted Average Age (years)
9.812.0
13.3
Weighted Average
Capitalisation Rate (%)
6.06.25.5
Portfolio Value
2
($m)1,041.9846.61,062.8
9
Look-through value
2
($m) 1,419.7
Look-through WALT (years) 6.7
Look-through occupancy (%)98.7
Office
Retail Shopping Centres/Town Centres
Industrial
Large Format Retail
39%
26%
21%
14%
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20232021

Town Centres
Stride’s town centres are located in fast-growing regions within
Auckland, driving growth in sales and demand for space within
the centres, delivering higher rental income and occupancy.
1. Metrics relate to the stabilised investment portfolio and exclude properties classified as ’Development and Other’ in the consolidated financial statements.
2. Hibiscus and Bays Local Board Economic Overview 2020.
3. Auckland Plan 2050.
4. See glossary on page 135.
5. Includes Johnsonville Shopping Centre, which is owned 50:50 by SPL and Diversified.
6. Occupancy has been calculated including casual licences with an initial term greater than three months, and excluding units held for committed redevelopment or remix works.
7. Excludes lease liabilities.
31 March 2023
1
31 March 2022
Properties (no.)34
5
Tenants (no.)160231
Net Lettable Area (sqm)58,67965,526
Net Contract Rental
4
($m)20.522.0
WA LT
4
(years)4.54.1
Occupancy Rate (% by area)
99.2
6
96.7
Weighted Average Capitalisation Rate (%)7.06.5
Portfolio Value
7
($m)
293.5324.5
The Stride town centre portfolio
1
delivered sales growth of
+16% over the 12 months to 31 March 2023 compared to
the previous 12 months. This growth has supported Stride’s
town centre market rental and valuations given capitalisation
rate softening resulting in part from the higher interest
rate environment. While Silverdale Centre experienced
capitalisation rate expansion of +38 basis points to 6.63%,
a 13.5% increase in net market rent helped to achieve an
overall 5.3% net valuation gain for the 12 months to
31 March 2023. Similarly, the capitalisation rate for NorthWest
Shopping Centre and NorthWest Two (combined) increased
by 93 basis points over the 12 months to 31 March 2023
to 7.24%. However, growth in market rental partly offset this
movement, resulting in a (5.0)% net valuation movement
for the 12 months. Overall, the Stride town centre portfolio
achieved a $(7.7)m or (2.4)% net valuation movement for
FY23, with net market rents increasing by +8.6% over
the prior year and partially offsetting the capitalisation
rate movement.
This increase in market rental rates is evidenced in the rent
reviews and renewals completed across the Stride town
centre portfolio. Rent reviews and renewals were completed
across 63% of the portfolio
1
by area during FY23, with an
increase of +4.3% on the previous rentals. 46% of the
portfolio
1
is subject to a rent review in FY24, with 24%
subject to reviews linked to movements in the Consumer
Price Index (CPI).
The sales growth experienced by the Stride town centre portfolio,
which contributed to the growth in rentals achieved, is at least
partly due to the growing locations in which the Stride town
centres are located:
• Silverdale Centre is located in a high growth area of
Auckland, the Hibiscus and Bays area, where the population
is forecast
2
to grow by 1.7% per annum or roughly 2,400
extra people annually between 2018 and 2038
• NorthWest Shopping Centre is located in Auckland’s
west, near the rapidly growing urban areas of Red
Hills and Whenuapai, which are anticipated to achieve
population growth
3
of 36,000 over the next 30 years
Portfolio Overview
Sales growth
1
+16% over FY23
Gross occupancy costs
4
for
specialty tenants
1
have
reduced from 12.8% in FY19
(pre Covid-19) to 11.0% in FY23
Rent reviews and renewals across
63% of the portfolio
1
by area
achieved +4.3% increase on
previous rentals
Town centre portfolio net
valuation movement of $(7.7)m
or (2.4)% over the 12 months to
31 March 2023
Portfolio
1
occupancy 99.2%
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20232223

Office
During FY23 Stride continued its strategy of
repositioning its office portfolio to meet market
demand for green rated, high quality buildings.
1. As at 31 March 2023, as if the acquisition of 110 Carlton Gore Road, Auckland had completed as at that date.
Excludes properties classified as ‘Development and Other’ and ‘Assets classified as held for sale’ in the consolidated
financial statements.
2. Excludes properties classified as ‘Development and Other’ and ‘Assets classified as held for sale’ in the consolidated
financial statements.
3. See glossary on page 135.
4. Excludes lease liabilities. Includes the value of Stride’s offices at 34 Shortland Street, Auckland, which is shown in the
consolidated financial statements as ‘Property, plant and equipment’.
5. Includes the Auckland office properties at 7-9 Fanshawe Street, 80 Greys Avenue, 25 Teed Street and 35 Teed Street,
which are shown as ‘Investment properties classified as held for sale’ in the consolidated financial statements.
Four non-core office assets sold
Stride committed to the acquisition of 110 Carlton Gore Road, Auckland, a new office
development which has achieved a 6 Green Star Design rating and is targeting a
6 Green Star As Built rating on completion
Stride has committed to $8.4m of capital expenditure to upgrade 34 Shortland Street,
Auckland, to meet market demand, including installing end of trip facilities, upgrading the
lobby and improving the heating and cooling systems to be more energy efficient
Following the acquisition of 110 Carlton Gore Road, Auckland, 74% of office
properties
1
by value will have 5 Green Star or 4 star NABERSNZ ratings or higher.
Plans are in place to obtain ratings for two additional properties, including the works
at 34 Shortland Street which are expected to enable the building to achieve a 4 star
NABERSNZ rating
Net market rents for Stride’s office portfolio increased 6.2%
2
over the 12 months to
31 March 2023. This increase in rental partially offset the softening in capitalisation rates,
resulting in a total office portfolio net valuation movement of $(86.8m) or (10.0)% over
the 12 months to 31 March 2023
Pro forma

31 March
2023
1
31 March
2023
2
31 March
2022
Properties (no.)6511
Tenants (no.)7773127
Net Lettable Area (sqm)72,46558,38485,687
Net Contract Rental
3
($m)42.331.440.9
WA LT
3
(years)7.56.26.4
Occupancy Rate (% by area)96.395.495.4
Weighted Average
Capitalisation Rate (%)
5.65.75.1
Portfolio Value
4
($m)748.4553.1
738.5
5
Portfolio Overview
FY23: rent reviews and renewals
completed across 75% of the
office portfolio
2
by area, delivering
+4.0% increase in passing rent on
previous rentals
FY24: 71% of the office
portfolio
2
subject to a rent
review, with 20% subject to a
CPI-linked review
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20232425

Industre’s strategy is
to build a portfolio of
strategically located
industrial properties with
future growth potential
1. See glossary on page 135.
2. CBRE Auckland Industrial Space Market Trends report dated February 2023.
3. Excludes properties classified as ‘Development and Other’ in the financial statements.
4. Based on Industre’s valuation reports as at 31 March 2023 and comparing passing
rent to market rent on a face rental basis.
Industre invests in the industrial sector, primarily focussed on
properties in the Auckland region. Industre has benefited from
the ability of Stride to identify properties with growth potential.
Industre commenced following the redevelopment of
318 East Tamaki Road, Auckland, the award-winning Waste
Management Auckland Headquarters, which was the
cornerstone development for the joint venture. As a result
of that successful collaboration with Waste Management,
Industre has subsequently developed two further properties
for Waste Management, with a further expansion planned.
Industre has also acquired a property in Gisborne which is
tenanted by Waste Management.
Since its inception, Industre has developed, or is in the
process of developing, 5 properties, including 439 Rosebank
Road, Auckland, which was recently completed and 34 Airpark
Drive, Auckland, due to be completed in June 2023. Industre
has 10 further properties with development potential, giving it
the ability to continue to grow in a market where there is little
available space. Stride is pleased to partner with JPMAM
1
to
deliver growth in the portfolio, with SIML’s active approach to
portfolio management and local market expertise, together
with JPMAM’s available capital, contributing to growth in
the portfolio, from $398m on commencement of the joint
venture, to $786m as at 31 March 2023 (or $716m excluding
properties categorised as ‘Development and Other’ in the
financial statements).
Industrial space remains very much in demand, particularly
in Auckland where 93% of the Industre portfolio (by value)
is located. Auckland Grade A industrial property currently
has no vacancy (overall Auckland industrial vacancy is 0.1%)
as at December 2022
2
, reflecting strong tenant demand
and limited supply.
This strong demand for industrial property is contributing
to higher market rental. Industre’s Auckland portfolio
3
has
potential reversion to market rental of 16.1% or 15.1% for
the portfolio as a whole. With 33.5% of Industre’s portfolio
3

by net Contract Rental
1
subject to market review or expiry
in FY24 and FY25, this is expected to enable Industre to
capture the higher market rents. Higher market rents across
the industrial portfolio offset some of the capitalisation
rate movement, resulting in a total net portfolio valuation
movement for the 12 months to 31 March 2023 of
$(94.6)m or (10.7)%.
31 March
2023
3
31 March
2022
Properties (no.)1922
Tenants (no.)7067
Net Lettable Area (sqm)185,049176,689
Net Contract Rental
1
($m)
33.3
31.2
WA LT
1
(years)9.79.3
Occupancy Rate (% by area)
99.9
99.8
Weighted Average
Capitalisation Rate (%)
5.24.3
Portfolio Value ($m)715.9849.4
Portfolio Overview
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20232627

SIML’s active approach to portfolio management, including its ability to identify well-located
properties with development potential, has helped the Industre portfolio grow from $398m
on commencement of the joint venture, to $716m as at 31 March 2023 (or $786m when
including properties categorised as ‘Development and Other’ in the consolidated financial
statements). Since commencement, Industre has acquired additional properties which have a
valuation of $204m as at 31 March 2023, all of which have future development potential.
Stabilised investment properties
Development properties at
joint venture commencement
Properties owned at commencement with future development potential
Acquisitions since commencement with future development opportunity
1 July 2020
October 2020December 2019
November 2020
February 2023
202231 March 2023
June 2023
34 Airpark Drive
development expected
to be completed
439 Rosebank Road
redevelopment completed
16 Wickham Street
development completed
11 Selwood Road
development completed
Waste Management Auckland
Headquarters developed -
318 East Tamaki Road
Commencement of Industre
Property Joint Venture
$786.0m
$302.2m
$76.4m
$19.6m
$379.1m
$171.1m
$31.3m
$398.2m
$204.4m
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20232829

Industre Developments Completed or In Progress since 2019
PropertyOriginal
valuation
1

($m)
Nature of
development
Site area
(sqm)
Net Lettable
Area
Development
completion date
Valuation
31 March 2023
($m)
318 East Tamaki Road98.0
Office and workshop for
Waste Management
52,4529,784Dec 2019102.3
11 Selwood Road
2
50.6
Processing facility for
Waste Management
21,6644,253Oct 202082.9
16 Wickham Street
16.8
Resource recovery
centre for Waste
Management
40,0075,503Nov 202038.9
439 Rosebank Road
8.0
Factory and logistics
spaces
11,7087,978Feb 202332.8
34 Airpark Drive
(under development)
8.5Logistics facility10,3296,359
June 2023
(expected)
16.6
Number of propertiesTotal cost of development
(excluding land)
Developments completed to date / under development
5$116m
Future development potential
10$300m+
1. The “original valuation” is the valuation at 1 July 2020 (being the commencement date of the Industre Property Joint Venture) or, where the
property was not owned as at 1 July 2020, the purchase price of the property on the date of acquisition.
2. Valuations are for the entire property at 1 – 3 Selwood Road and 6 – 12 The Concourse, of which 11 Selwood Road forms part.
Financial Information
Summarised statement of financial position ($000)
Summarised statement of comprehensive income ($000)
IndustreSPL’s interests
Joint
Venture
2023
Joint
Operations
2023
Total
2023
Joint
Venture
2023
Joint
Operations
2023
Total
2023
Assets
Current assets4,0831,3955,478
2,1137222,835
Investment properties496,025289,950785,975
256,626150,010406,636
Other non-current assets85,549-85,549
44,260-44,260
Total assets
585,657291,345877,002
302,999150,732453,731
Liabilities
Current liabilities(7,035)(472)(7,507)
(3,639)(244)(3,883)
Borrowings(270,744)(78,088)(348,832)
(140,073)(40,400)(180,473)
Other non-current liabilities(2,356)-(2,356)
(1,218)-(1,218)
Total liabilities
(280,135)(78,560)(358,695)
(144,930)(40,644)(185,574)
Net assets
305,522212,785518,307
158,069110,088268,157
IndustreSPL’s interests
Joint
Venture
2023
Joint
Operations
2023
Total
2023
Joint
Venture
2023
Joint
Operations
2023
Total
2023
Income21,64615,55737,20311,1998,04919,248
Expenses(16,111)(8,754)(24,865)
(8,335)(4,529)(12,864)
Net change in fair value of
investment properties
(32,496)(62,311)(94,807)
(16,812)(32,238)(49,050)
Net loss*
(26,961)(55,508)(82,469)
(13,948)(28,718)(42,666)
Numbers may not add due to rounding.
*Relates to the year to 31 March 2023. SPL’s share in Industre remained at 51.7% throughout the year.
For further information refer to note 7.0 in the consolidated financial statements.
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20233031

Investore’s portfolio of large format retail properties
delivered strong operational performance in FY23,
although the value of its portfolio was impacted by
the higher interest rate environment placing upwards
pressure on property capitalisation rates.
1. Distributable profit is a non-GAAP measure and consists of (loss)/profit 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 (loss)/profit before income tax, is
set out in note 3.2 to Investore’s consolidated financial statements.
2. Excludes properties classified as ‘Development and Other’ in the Investore
consolidated financial statements.
3. See glossary on page 135.
4. Vacant tenancies with current or pending development works are excluded from
occupancy statistics. As at 31 March 2023 metric excluded 2,947 sqm at Bay
Central, Tauranga.
5. Excludes lease liabilities.
6. Excludes seismic works ($3.0m) to be completed by SPL in relation to 2 Carr
Road, Auckland, acquired by Investore from SPL and settled on 30 April 2020.
Investore’s portfolio
2
comprises 44 large format retail
properties, from standalone supermarkets to large format
retail centres, with a high concentration of nationally
recognised brands and tenants that provide “everyday
needs”. This focus on everyday needs means Investore’s
tenants are resilient in challenging macroeconomic
conditions, due to their products comprising non-
discretionary categories of expenditure for consumers.
As at
31 March
2023
2
As at
31 March
2022
Properties (no.)4444
Tenants (no.)143143
Net Lettable Area (sqm)249,906249,829
Net Contract Rental
3
($m)61.860.2
WA LT
3
(years)8.19.1
Occupancy Rate (% by area)99.5
4
99.7
Weighted Average
Capitalisation Rate (%)
5.74.8
Land area (sqm)611,077611,077
Average site coverage (%)4141
Portfolio Value
5
($m)1,033.21,201.3
6

Portfolio Overview
$60.3m
net rental income
up $2.0m from FY22
$(150.2)m
loss after income tax
due to a net investment property
devaluation of $(185.2)m in FY23
$31.0m
distributable profit
1
after
current income tax,
up $1.2m from FY22
The Investore portfolio is valued at $1.1bn as at
31 March 2023, representing a net valuation decrease
of $(185.2)m or (14.9)%. This decrease is primarily due
to the average portfolio
2
capitalisation rate increasing
to 5.7%, up 0.9% from 31 March 2022.
Investore continues to seek opportunities to grow and
optimise its portfolio:
• Completed the acquisition of land at Hakarau Road,
Kaiapoi, for $10.1m, and commenced construction
of a new Countdown on this site, targeting a
5 Green Star rating
• Acquisition of land at Countdown Papakura, which
was previously held as leasehold land, giving
Investore control and improved development options
• Agreement with Countdown to expand the customer
amenity at Countdown Rangiora, including an online
room and new pickup bays, delivering a 7.5% per
annum return on cost of up to $1.0m
• Completed 82 rent reviews during FY23 across
130,000 sqm, comprising over half of the portfolio
Contract Rental
3
, delivering a rental increase of 3.3%
on prior rentals
• 16 properties achieved Green Star Performance
ratings in FY23
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20233233

Investore continues to take a proactive
and prudent approach to capital
management which has insulated FY23
underlying earnings from the full effects
of higher interest rates
Proactive capital management
92%
Debt that is hedged or subject to a fixed rate of interest as at 31 March 2023
4.0%
Weighted average cost of debt per annum as at 31 March 2023
3.0 years
Weighted average maturity of debt facilities as at 31 March 2023
$75m
Bank facilities extended by two years
During FY23 Investore refinanced two bank facilities
totalling $75 million, extending their tenor by a further
two years. During that process, Investore negotiated the
removal of the weighted average lease term covenant,
and agreed to lower the LVR
1
covenant from 65% to
52.5%.
Investore has a weighted average cost of debt of 4.0%
per annum as at 31 March 2023, an increase of 24 basis
points since 31 March 2022, which compares favourably
with the increase in New Zealand’s Official Cash Rate
of 375 basis points over the same period. This relatively
small movement in the weighted average cost of debt is
due to the significant proportion of Investore’s debt that
is hedged or subject to a fixed rate of interest.
Investore has an LVR
1
of 36.5% as at 31 March 2023,
with a committed LVR of 38.1%. Commitments include the
Countdown supermarket at Kaiapoi and other smaller capital
expenditure commitments.
Investore commenced an on-market share buyback
programme of up to 5% of its ordinary shares in July 2022.
As at the close of trading on 8 September 2022, when the
programme was paused pending the release of Investore’s
interim results, Investore had acquired and cancelled
632,398 shares for a total cost of $1.1 million (including
transaction costs). The Investore board has now resolved to
cancel the share buyback programme.
Following the refinancing of $75m
of bank debt facilities during
FY23, Investore now has no debt
maturing until FY25 and no bank
debt maturing until FY26
1. See glossary on page 135.
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20233435

Stride has delivered a number of
vital projects for Diversified during
FY23, which have benefited
the portfolio through increased
occupancy, higher rentals and an
improved balance sheet
1. Excludes properties categorised as ‘Development and Other’ and ‘Investment properties held for sale’ in the financial statements.
2. See glossary on page 135.
3. Includes Johnsonville Shopping Centre, which is owned 50:50 by SPL and Diversified.
4. Occupancy has been calculated including casual licences with an initial term greater than three months, and excluding units held for committed redevelopment or remix works.
During FY23 SIML, on behalf of Diversified, completed the
rebuild of part of the Queensgate Shopping Centre that
was damaged during the 2016 Kaikoura earthquake, with
EVENT Cinemas reopening prior to Christmas 2022. With
the carpark and cinemas opened, the centre has benefited
from increased visitation, with total sales for the year ended
31 March 2023 up 19.7% on the prior year, and up 18.4%
on the year ended 31 March 2019 (pre Covid-19). This
increased visitation is helping to drive leasing activity for
the centre, resulting in higher rents, which has partially
offset the softening of the capitalisation rate for this centre.
The increased leasing activity, as well as the current
inflationary macroeconomic environment, is helping to drive
increased rental for the Diversified portfolio
1
, with
101 rent reviews completed during FY23 across 39%
of the Diversified portfolio
1
by area resulting in +8.3%
increase on previous rentals. Nearly half of the base rent in
the Diversified portfolio
1
is due for rent review in FY24, with
approximately 30% being CPI-linked reviews.
Due to the softening capitalisation rates across the
Diversified portfolio, this has resulted in a net portfolio
valuation movement for the 12 months to 31 March
2023 of $(42.1)m or (8.3)%.
Higher sales across the Diversified centres, together with
SIML’s focus on costs, have resulted in gross occupancy
costs
2
for specialty tenants across the portfolio
1
reducing
to 13.0% in FY23, down from 13.9% in FY19 (prior to
Covid-19).
SIML, on behalf of Diversified, resolved the insurance claim
related to the rebuild of part of Queensgate Shopping
Centre and the net proceeds were used to repay debt,
reducing Diversified’s LVR
2
and improving the balance
sheet. In addition, Diversified entered into an unconditional
agreement to sell Remarkables Park Town Centre in
Queenstown, with settlement occurring post balance date
on 14 April 2023. The net proceeds of this sale were used
to repay debt, further reducing Diversified’s LVR.
31 March
2023
1
31 March
2022
Properties (no.)24
3
Tenants (no.)233356
Net Lettable Area (sqm)84,424105,185
Net Contract Rental
2
($m)32.338.2
WA LT
2
(years)2.93.0
Occupancy Rate (% by area)
97.5
4
94.2
Weighted Average
Capitalisation Rate (%)
7.86.9
Portfolio Value ($m)387.0492.6
Portfolio Overview
“EVENT Queensgate has been
an instant success and customers
are travelling far and wide to
experience IMAX, our standard
cinemas, the amazing food and
beverage on offer, and the ever
popular PLAY entertainment
arcade. This saw EVENT
Queensgate smash previous
opening records. EVENT couldn’t
be more thrilled with how this
complex has come together.”
CEO, EVENT NZ
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20233637

Capital Management
Stride takes a prudent approach to capital management, to
mitigate against risks arising from high inflation, including rising
interest rates and economic uncertainty. Stride undertook a
number of initiatives during FY23 to manage these risks.
1. See glossary on page 135.
2. Green loan facilities are made in accordance with the Green Finance Framework of Fabric Property Limited (Fabric, a wholly owned subsidiary of SPL), which requires that the
value of Fabric’s green assets (defined as properties rated at least 4 star NABERSNZ or 5 Green Star) exceeds the value of Fabric’s green loans. The Framework complies with
the Green Loan Principles published by the Asia Pacific Loan Market Association, the Loan Market Association and the Loan Syndication and Trading Association dated
February 2021.
3. Calculated as bank debt as a percentage of investment property. Includes: (1) SPL’s office and retail properties; (2) debt associated with these properties; and (3) the ‘as is’
value of 110 Carlton Gore Road (in accordance with SPL’s debt facility agreement); and excludes SPL’s interest in the Industre joint operation and associated bank debt which
are reported as part of the assets and liabilities of SPL (see note 7.3 to the consolidated financial statements for further information).
4. 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.
5. SPL commitments include: (1) the settlement of 110 Carlton Gore Road, Auckland; (2) upgrade works at 34 Shortland Street, Auckland; (3) various capital expenditure
commitments contracted for; and (4) the estimated FY24 impact of capital management initiatives announced by Stride in November 2022, excluding the impact of any
potential disposals.
6. Look-through LVR includes SPL’s directly held property (including loan to vendor of 110 Carlton Gore Road) and debt, as well as its proportionate share of the property and debt
of each of the Stride Products.
7. Balance sheet LVR includes SPL’s office and town centre properties (including loan to vendor of 110 Carlton Gore Road) as well as the value of SPL’s interests in each of the
Stride Products, and SPL’s direct debt.
31 March 202331 March 2022
Banking Facility Limit ($m)525600
Debt Facilities Drawn ($m)402306
Weighted Average Debt Maturity (years)2.33.4
Weighted Average Cost of Debt (%)
3.96
3.55
Percentage of Drawn Debt Hedged (%)80110
LV R
3
(%) (Covenant: ≤ 50%)
36.428.7
Interest Cover Ratio
(Covenant: ≥2.125x)
3.6x3.4x
Weighted Average Lease Term
4
(years) (Covenant: >3.0 years)
4.95.2
Fixed rate interest profile
SPL’s bank LVR
3
was 36.4% as at 31 March 2023, rising to 37%-38% on a committed
basis
5
. However, this LVR only reflects SPL’s directly held office and town centre properties,
and does not take into account SPL’s interests in the Stride Products. Taking these interests
into account, SPL’s committed gearing is approximately 37% on a look-through basis
6
or
around 28% on a balance sheet basis
7
when taking into account SPL’s equity interests in
the Stride Products.
Stride takes a prudent approach to capital management, and accordingly as at 31 March
2023, 80% of drawn debt was hedged, or approximately 75% on a committed basis, to
help manage interest rate risk. The weighted average cost of debt (including margin and line
fees) is 3.96% per annum as at 31 March 2023, increasing 41 basis points since 31 March
2022, compared with a 375 basis point increase in New Zealand’s Official Cash Rate over
the same period.
During FY23 Stride entered into a further $80m of forward start interest rate swaps for an
average hedged term of 2.7 years and an average interest rate of 3.93% per annum,
helping to manage future interest rate volatility by further extending Stride’s interest rate
hedging profile.
LVR and Interest Rate Management
Mar-27
$55m
Mar-26
$105m
Mar-25
$180m
Mar-24
$280m
Mar-23
$320m
1.28%
1.35%
2.64%
3.38%
3.98%
Debt maturity profile
as at 31 March 2023
FY26
$100m
FY27
$100m
FY24FY25
$200m
$100m
Green loan facilities
2
Other bank facilities
Dividend policy refined, targeting total
cash dividend to shareholders that is
between 80% and 100% of SPL’s
distributable profit
1
and between 25%
and 75% of SIML’s distributable profit
Dividend reinvestment plan
implemented, with approximately
40% of shares taking up the offer for
the first dividend to which it applied
$75m of bank debt facilities cancelled,
one of several measures taken to
reduce costs
$25m
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20233839

Five Year Financial
Summary
Five Year Financial Summary
The five year financial summary table reflects the numbers in the consolidated
financial statements for each respective year.
On 1 July 2020, Industre commenced operations. Industre is a joint arrangement between SPL and a group of international institutional
investors, through a special purpose vehicle, advised by J.P. Morgan Asset Management (JPMAM). As at 31 March 2023, SPL held a
51.7% interest in Industre (2022: 51.7%).
The accounting for the arrangements by SPL is a combination of a joint operation (proportionate share of assets, liabilities, revenue
and expenses) and joint venture (equity accounted). Only JPMAM’s special purpose vehicle’s participating interest was treated as
discontinued in respect of the joint operation as SPL retained a partial direct ownership interest in the properties. All of the
financial performance and cash flows pertaining to the properties that were transferred to the Industre joint venture were treated
as discontinued. The financial performance for the discontinued operations are for the period ended 30 June 2020 (2021 column) and
the year ended 31 March 2020 (2020 column) and have been presented as “(Loss)/profit from discontinued operations”.
20232022202120202019
Five Year Financial Summary($m)($m)($m)($m)($m)
Net rental income
1
71.1
65.850.750.457.3
Management fee income
1
23.3
24.324.218.315.7
Profit before net finance expenses, other (expense)/
income and income tax from continuing operations
70.7
62.753.946.353.7
Net finance expenses
(17.1)
(16.1)(13.4)(16.5)(15.7)
Profit before other (expense)/income and income tax
from continuing operations
53.5
45.640.429.838.0
Other (expense)/income
(163.3)
78.1100.9(28.9)43.4
(Loss)/profit before income tax from
continuing operations
(109.7)
124.7141.30.981.4
Income tax expense
(7.0)
(12.4)(9.4)(1.0)(5.2)
(Loss)/profit after income tax from continuing operations
(116.7)
112.3132.0(0.1)76.2
(Loss)/profit from discontinued operations
-
-(0.1)25.4-
(Loss)/profit attributable to shareholders
(116.7)
112.3131.925.376.2
Basic earnings per share - weighted from continuing and
discontinued operations
(21.6) cents
22.7 cents32.99 cents6.93 cents20.86 cents
Distributable profit before income tax
2
68.1
62.652.447.745.8
Distributable profit after income tax
57.6
54.246.337.738.8
Basic distributable profit after income tax per share
- weighted
10.66 cents
10.95 cents11.58 cents10.32 cents10.62 cents
Property values
3
1,254.1
1,244.61,050.5996.1966.3
Total assets
1,590.5
1,642.31,383.61,150.31,076.4
Bank debt drawn
402.4
305.5261.0386.2332.9
Loan to value ratio
4
36.4%
28.7%29.3%39.1%34.3%
Total equity
1,075.7
1,231.11,017.8698.2704.2
NTA per share
$1.98
$2.28$2.15$1.91$1.92
Adjusted NTA per share
5
$1.95
$2.25$2.15$1.93$1.94
12021 figure has been restated to eliminate the building management fees charged from SIML to SPL.
2Distributable profit definition is outlined in the glossary, see page 136.
3Excludes lease liabilities. Includes assets classified as held for sale and SPL’s 51.7% interest in the joint operation component of the Industre Property Joint Venture. For more information,
refer note 3.2 in the consolidated financial statements. Includes the value of Stride’s offices located at 34 Shortland Street, Auckland, which is recognised in the consolidated financial
statements as property, plant and equipment refer note 8.7.
4Excludes lease liabilities and SPL’s 51.7% interest in the joint operation component of the Industre Property Joint Venture. Includes assets classified as held for sale and the value of
Stride’s offices located at 34 Shortland Street, Auckland, which is recognised as property, plant and equipment in the consolidated financial statements, refer note 8.7.
5Excludes after tax fair value of interest rate derivatives.
Stride Property Group Annual Report 2023
41
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20234041

Financial
Statements
Consolidated Statement of Comprehensive Income 43
Consolidated Statement of Changes in Equity 44
Consolidated Statement of Financial Position 45
Consolidated Statement of Cash Flows 46
Notes to the Financial Statements 48
Independent Auditor’s Report 92
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2023
20232022
Notes$000$000
Gross rental income
94,600
89,025
Direct property operating expenses
(23,518)
(23,191)
Net rental income3.171,082
65,834
Management fee income23,312
24,272
Less corporate expenses
Corporate overhead expenses
8.2(18,311)
(17,469)
Administration expenses
8.2(5,424)
(5,435)
Project costs relating to Fabric Property Limited
-
(4,533)
Total corporate expenses
(23,735)
(27,437)
Profit before net finance expense, other (expense)/income and income tax70,659
62,669
Net finance expense
5.3
(17,116)
(16,136)
Profit before other (expense)/income and income tax53,543
46,533
Other (expense)/income
Net change in fair value of investment properties
3.2(118,491)
30,662
Share of (loss)/profit in equity-accounted investments
7.2(42,392)
65,607
Impairment of equity-accounted investment
-
(18,461)
Loss on disposal of investment properties
(2,038)
(930)
Hedge ineffectiveness of cash flow hedges
5.2
(369)
1,250
(Loss)/profit before income tax(109,747)
124,661
Income tax expense
8.1
(7,000)
(12,369)
(Loss)/profit after income tax attributable to shareholders(116,747)
112,292
Other comprehensive (loss)/income:
Items that may be reclassified subsequently to profit or loss
Deferred tax on share based payment expense
(391)
(58)
Movement in cash flow hedges, net of tax
5.62,752
14,589
Changes in cash flow hedge reserve in equity-accounted investments
751
2,157
Items that will not be reclassified to profit or loss
Revaluation (deficit)/surplus
8.7
(700)
400
Total other comprehensive income after tax
2,412
17,088
Total comprehensive (loss)/income after tax attributable to shareholders
(114,335)
129,380
Stride Property Limited (SPL) total comprehensive (loss)/income after tax attributable
to shareholders
(123,156)
117,850
Stride Investment Management Limited (SIML) total comprehensive income after tax attributable
to shareholders
8,821
11,530
Total comprehensive (loss)/income after tax attributable to shareholders
(114,335)
129,380
Earnings per share (EPS)4.1
Basic EPS (cents)(21.60)
22.70
Diluted EPS (cents)(21.60)
22.63
Stride Property Group Annual Report 2023
43
The attached notes form part of and are to be read in conjunction with these financial statements.
Stride Property GroupAnnual Report 202343Stride Property GroupAnnual Report 202342

Consolidated Statement of Financial Position
As at 31 March 2023
20232022
Notes$000$000
Current assets
Cash at bank
16,833
20,621
Trade and other receivables
8.57,729
4,229
Prepayments
212
1,130
Derivative financial instruments
5.21,761
290
Other current assets
98
75
26,633
26,345
Assets classified as held for sale
1.7
30,500
94,253
57,133
120,598
Non-current assets
Investment properties
3.21,233,767
1,171,317
Deposit and other prepayments on investment property
-
1,583
Equity-accounted investments
7.2268,096
318,586
Loan to associate
8.43,398
3,398
Other investments
250
250
Property, plant and equipment
8.76,238
7,050
Derivative financial instruments
5.2
21,581
19,535
1,533,330
1,521,719
Total assets
1,590,463
1,642,317
Current liabilities
Trade and other payables
8.642,630
22,547
Lease liability
3.37
3
Current tax liability
1,880
1,076
44,517
23,626
Lease liability associated with assets classified as held for sale
-
11,433
44,517
35,059
Non-current liabilities
Bank borrowings
5.1401,769
304,395
Borrowings (joint operation participating interest)
7.340,400
39,857
Lease liability
3.315,903
15,910
Deferred tax liability
8.112,012
16,012
Derivative financial instruments
5.2
125
-
470,209
376,174
Total liabilities
514,726
411,233
Net assets1,075,737
1,231,084
Share capital
863,309
858,740
Retained earnings
192,279
355,454
Reserves
5.6
20,149
16,890
Equity
1,075,737
1,231,084
SPL equity
1,060,691
1,218,001
SIML equity (non-controlling interest)
5.5
15,046
13,083
Equity
1,075,737
1,231,084
For and on behalf of the Boards of Directors of SPL and SIML, dated 26 May 2023:
Tim Storey
Chair of the Boards
Ross Buckley
Chair of the Audit and Risk Committee
Stride Property Group Annual Report 2023
45
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 2023
Number of
shares
Share
capital
Retained
earnings
Other
reservesTotal
Notes000$000$000$000$000
Balance at 31 Mar 22540,189858,740355,45416,8901,231,084
Transactions with shareholders:
Dividends paid
4.3--(46,667)-(46,667)
Q3 2023 dividend reinvestment
4.32,9903,942--3,942
Transfer to share capital on vesting of employee
incentive rights
5.6142627-(627)-
Lapsed employee incentive rights
5.6--239(239)-
Forfeited employee incentive rights
5.6---(74)(74)
Share based payment expense
5.6
---1,7871,787
Total transactions with shareholders
3,1324,569(46,428)847(41,012)
Total other comprehensive income
---2,4122,412
Loss after income tax
--(116,747)-(116,747)
Total comprehensive (loss)/income
--(116,747)2,412(114,335)
Balance at 31 Mar 23
543,321863,309192,27920,1491,075,737
Balance at 31 Mar 21
472,828726,680291,423(317)1,017,786
Transactions with shareholders:
Dividends paid
4.3
--(48,557)-(48,557)
Transfer to share capital on vesting of employee
incentive rights
5.6
407634-(634)-
Lapsed employee incentive rights
5.6
--296(296)-
Share based payment expense
5.6
---1,0491,049
New shares issued
66,954131,426--131,426
Total transactions with shareholders
67,361132,060(48,261)11983,918
Total other comprehensive income---17,08817,088
Profit after income tax
--112,292-112,292
Total comprehensive income
--112,29217,088129,380
Balance at 31 Mar 22
540,189858,740355,45416,8901,231,084
44
Stride Property Group Annual Report 2023
The attached notes form part of and are to be read in conjunction with these financial statements.
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20234445

Consolidated Statement of Cash Flows (continued)
For the year ended 31 March 2023
Reconciliation of (loss)/profit after income tax attributable to shareholders to net cash provided by operating activities
20232022
Notes$000$000
(Loss)/profit after income tax attributable to shareholders(116,747)
112,292
(Less)/add non-cash items:
Movement in deferred tax
8.1(5,175)
3,702
Net change in fair value of investment properties
118,491
(30,662)
Share of loss/(profit) in equity-accounted investments
42,392
(65,607)
Impairment of equity-accounted investment
-
18,461
Loss on disposal of investment properties
2,038
930
Hedge ineffectiveness of cash flow hedges
369
(1,250)
Spreading of fixed rental increases
(1,052)
(1,437)
Capitalised lease incentives net of amortisation
485
(943)
Movement in loss allowance
(220)
372
Share based payment expense
1,787
1,049
Forfeited employee incentive rights
(74)
-
Depreciation and revaluation deficit recognised in profit and loss
211
203
Software asset expense
-
1,025
Borrowings establishment costs amortisation
474
1,261
Non-cash interest income received
(214)
(245)
Accrued interest movement in derivative financial instruments
(225)
(62)
42,540
39,089
Less activity reclassified from operating activities:
Movement in working capital items relating to investing activities
(20,954)
(2,127)
Movement in borrowings establishment costs classified as operating activities
-
(1,226)
21,586
35,736
Movement in working capital:
(Increase)/decrease in trade and other receivables
(3,500)
4,839
Decrease/(increase) in prepayments and other current assets
895
(848)
Increase in trade and other payables
20,083
402
Decrease/(increase) in current tax liability
804
(3,800)
Net cash provided by operating activities
39,868
36,329
Stride Property Group Annual Report 2023
47
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 2023
20232022
Notes$000$000
Cash flows from operating activities
Gross rental received
89,856
86,955
Management fee income
24,008
25,961
Bank interest received
422
1
Direct property operating and corporate expenses
(46,337)
(47,829)
Interest paid
(16,710)
(14,729)
Borrowings establishment costs
-
(1,226)
Finance expense - swap termination expense
-
(337)
Income tax paid
(11,371)
(12,467)
Net cash provided by operating activities
39,868
36,329
Cash flows from investing activities
Dividend income from equity-accounted investments
8.49,032
9,443
Interest received in relation to the loan advance on 110 Carlton Gore Road, Auckland
1.76,859
-
Acquisition of investment properties
1.7(177,865)
(152,307)
Net proceeds from disposal of investment properties
1.783,452
-
Capital expenditure on investment properties
(12,863)
(19,006)
Purchase price adjustment paid on disposal of investment property
1.7(5,730)
-
Seismic and other works on investment properties disposed of
(604)
(2,345)
Deposit and other prepayments made on investment property
-
(1,583)
Property, plant and equipment purchased
(74)
(195)
Net cash applied to investing activities
(97,793)
(165,993)
Cash flows from financing activities
Drawdown on bank borrowings
179,800
173,600
Repayment of bank borrowings
(82,900)
(129,100)
Lease liabilities payments
(38)
(108)
Dividends paid
4.3(42,725)
(48,557)
Net proceeds from capital raise
-
131,426
Net cash provided by financing activities
54,137
127,261
Net decrease in cash and cash equivalents held(3,788)
(2,403)
Opening cash and cash equivalents
20,621
23,024
Closing cash and cash equivalents
16,833
20,621
46
Stride Property Group Annual Report 2023
The attached notes form part of and are to be read in conjunction with these financial statements.
Stride Property GroupStride Property GroupAnnual Report 2023Annual Report 20234647

1.0 General Information
This section sets out Stride Property Group’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 Stride Property Limited and its subsidiaries Stride Holdings Limited, Stride Industrial Property Limited
and Fabric Property Limited (together referred to as SPL), and Stride Investment Management Limited (SIML), each of SPL and SIML being a “Stapled
Entity”, and together the Stride Property Group (Stride). For accounting purposes, stapling gives rise to the combination of the Stapled Entities into
a consolidated group. For the purposes of financial reporting, one of the combining entities is required to be identified as the parent entity of the
consolidated group. In the case of Stride, SPL has been identified as the parent for the purposes of preparing the financial statements and consequently
SIML’s equity is presented as the non-controlling interest in the financial statements.
SPL is principally involved in the ownership of investment properties in New Zealand and SIML is principally involved in the management of real estate
investment entities in New Zealand. SPL and SIML are both domiciled in New Zealand, are both registered under the Companies Act 1993 and are both
FMC reporting entities under Part 7 of the Financial Markets Conduct Act 2013.
Shares of SPL and SIML are stapled and quoted on the Main Board equity securities market of NZX under the ticker code SPG.
The financial statements were approved for issue by the Board of Directors of SPL (SPL Board) and the Board of Directors of SIML (SIML Board),
together the “Boards”, on 26 May 2023.
1.2 Basis of preparation
The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (GAAP). Stride is a for-profit
entity for the purposes of financial reporting. 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). The financial statements were prepared in accordance with the Financial
Markets Conduct (Stride Property Group) Exemption Notice 2022 and waivers granted to Stride from certain of the NZX Listing Rules on May 2020,
which each permit SPL and SIML, subject to the conditions of the exemption notice and waivers (respectively), to prepare financial statements in respect
of Stride in place of separate financial statements of each Stapled Entity. Stride notes that the Financial Markets Conduct (Stride Property Group)
Exemption Notice 2022 came into force on 26 May 2022 and applies to Stride’s accounting period ended 31 March 2022 and subsequent accounting
periods, up to and including the accounting period ending 31 March 2026. The exemption notice is of the same effect as Stride’s previous Financial
Markets Conduct (Stride Property Group) Exemption Notice 2017, which expired on 6 April 2022.
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 annual financial periods commencing on or after 1 January 2023 based
upon climate standards issued by the External Reporting Board (XRB). Stride's first climate-related statement will be required for the year ending
31 March 2024.
In December 2022 the XRB issued the following standards:
•Aotearoa New Zealand Climate Standard 1 Climate-related Disclosures (NZ CS 1);
•Aotearoa New Zealand Climate Standard 2 Adoption of Aotearoa New Zealand Climate Standards (NZ CS 2); and
•Aotearoa New Zealand Climate Standard 3 General Requirements for Climate-related Disclosures (NZ CS 3).
NZ CS 1 contains the climate-related disclosure requirements for each of the four thematic areas (Governance, Strategy, Risk Management and Metrics
and Targets) and the assurance requirements for greenhouse gas emissions disclosures. NZ CS 2 provides optional adoption provisions. NZ CS 3
contains the principles, the underlying concepts such as materiality, and the general requirements.
At the date of approval of the financial statements, there were no relevant standards on issue but not applied.
Stride Property Group Annual Report 2023
49
Notes to the Financial Statements
For the year ended 31 March 2023
1.0General Information
49
1.1Reporting entity49
1.2Basis of preparation49
1.3New standards, amendments and interpretations49
1.4Significant judgements, estimates and assumptions50
1.5Fair value estimation50
1.6Non-GAAP measures50
1.7Significant events and transactions50
2.0Operating Segments
52
3.0Property
54
3.1Net rental income54
3.2Investment properties56
3.3Lease liabilities62
3.4Capital expenditure commitments contracted for63
3.5Assets classified as held for sale63
4.0Investor Returns
64
4.1Basic and diluted earnings per share (EPS)64
4.2Distributable profit65
4.3Dividends paid66
5.0Capital Structure and Funding
67
5.1Borrowings67
5.2Derivative financial instruments69
5.3Net finance expense70
5.4Share capital71
5.5SIML equity (non-controlling interest)71
5.6Reserves72
5.7Capital risk management72
6.0Risk Management
73
6.1Financial instruments73
6.2Fair values74
6.3Financial risk management74
6.4Interest rate risk74
6.5Credit risk75
6.6Liquidity risk75
7.0Investments in Property Entities
76
7.1Industre76
7.2Interests in associates and joint venture76
7.3Interest in joint arrangements80
8.0Other
82
8.1Income tax82
8.2Total corporate expenses84
8.3Remuneration84
8.4Related party disclosures86
8.5Trade and other receivables88
8.6Trade and other payables89
8.7Property, plant and equipment90
8.8Investment in subsidiaries90
8.9Contingent liabilities91
8.10Subsequent events91
48
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1.0 General Information (continued)
1.7 Significant events and transactions (continued)
Acquisition of 110 Carlton Gore Road, Auckland
On 5 April 2022, SPL’s wholly owned subsidiary, Fabric Property Limited (Fabric), entered into an unconditional agreement in relation to the acquisition
of 110 Carlton Gore Road for $213.0 million. Fabric has paid deposits totaling $8.0 million, comprising $1.0 million paid prior to 31 March 2022
recognised as deposit and other prepayments on investment property in the consolidated statement of financial position as at 31 March 2022, and
$7.0 million paid on the unconditional date.
As at 31 March 2023, this property was under development. This development has subsequently been completed and the acquisition is expected to
settle on 31 May 2023. The final settlement price will be subject to building measure on completion. Fabric has advanced $178.7 million, including
the $8.0 million deposits previously paid, to the vendor by way of a loan during the period of construction. The vendor pays interest on the amount
outstanding at a rate of 5.0% p.a., with the loan amount to be set off against the purchase price on settlement. The remainder of the purchase price (less
an amount of $0.5 million) will be paid on settlement, with the final $0.5 million paid following a defects liability period. The property will be fully leased
on settlement, as the vendor has committed to take a lease of any remaining vacant space at settlement in accordance with commercial terms agreed
between the parties.
For accounting purposes, the agreement to purchase 110 Carlton Gore Road and the loan agreement are considered as a single contract with the
contractual substance being Fabric will pay (by way of loan drawdowns) to acquire control of the property from the unconditional date through to
settlement date. Fabric is providing the funding for the development and has security over the property. As at 31 March 2023, the loan advanced to the
vendor of $178.7 million has been recognised as $170.3 million of development investment property and $8.4 million of interest ($6.9 million received
(refer note 4.2) and $1.5 million receivable (refer note 8.5)). Interest receivable is recognised on each loan drawdown with an equivalent adjustment to
the purchase price of the property. Interest payable by the vendor is recognised on an accrual basis, reducing the interest receivable asset. The interest
received from the vendor is considered underlying earnings from operations and is included in distributable profit (refer note 4.2).
As at 31 March 2023, a payable of $29.7 million has been recognised (refer note 8.6) and represents the difference between the total consideration
payable of $213.0 million, less the loan advanced of $178.7 million and less the estimated cost to complete the construction of the property of
$4.6 million (refer note 3.4).
Divestment of investment properties
On 5 April 2022, Fabric entered into an unconditional agreement to sell four Auckland office properties, being 21-25 Teed Street, 35 Teed Street,
7-9 Fanshawe Street and 80 Greys Avenue, for an aggregate price of $83.6 million, to Mansons CGR Limited. As part of the disposal, Fabric committed
to undertake seismic upgrades at 35 Teed Street, the remaining cost of which is expected to be $0.2 million as at 31 March 2023. In addition,
Fabric has agreed to provide a rental guarantee for certain space at 80 Greys Avenue for a period of up to 12 months from 1 October 2022.
A remaining rental guarantee provision of $0.5 million has been recognised in trade and other payables in the consolidated statement of financial
position (refer note 8.6). The sale of 25 Teed Street completed on 29 April 2022, 35 Teed Street completed on15 July 2022, and 80 Greys Avenue
and 7-9 Fanshawe Street both completed on 30 September 2022. As part of this transaction, the ground lease associated with the $11.4 million
right-of-use asset at 7-9 Fanshawe Street was novated to the purchaser.
Seismic works on investment property disposed of
In April 2020, SPL divested three large format retail properties, one being 2 Carr Road, Auckland, to Investore. Under the sale and purchase agreement,
SPL was to complete certain seismic works in relation to the property. In March 2023, SPL paid Investore $5.7 million as a purchase price adjustment as
full and final settlement of SPL's obligations to undertake the seismic works. As at 31 March 2022, $5.0 million had been recognised in the seismic work
accrual (refer note 8.6). As at 31 March 2023, a further $0.7 million has been recognised as loss on disposal of investment properties in the consolidated
statement of comprehensive income.
Assets classified as held for sale
As at 31 March 2023, the office property located at 22 The Terrace, Wellington, with a total value of $30.5 million has been reclassified from investment
properties and property, plant and equipment to assets classified as held for sale (refer note 3.5).
Revaluation of investment properties
SPL undertook independent valuations of the portfolio as at 31 March 2023 which resulted in a net reduction in fair value of investment properties
of $(118.5) million (2022: $30.7 million net gain) (refer note 3.2) and a revaluation deficit on property, plant and equipment of $(0.7) million
(2022: surplus of $0.4 million) (refer note 8.7).
The investment properties held by Investore, Industre Property Joint Venture (Industre) and Diversified NZ Property Trust (Diversified) were also valued by
independent valuers as at 31 March 2023. SPL’s share of the valuation (loss)/gains are reflected in share of (loss)/profit in equity-accounted investments
and, for those properties in the Industre joint operation, reflected in net change in fair value of investment properties.
Impairment of equity-accounted investment - Investore
On 31 March 2023, the market value of SPL's investment in Investore, based on the closing quoted market price of Investore, was below the
investment's carrying amount under the equity method of accounting. SPL assessed whether objective evidence of impairment exists, the outcome of
which was that an impairment test has been performed. The result of the impairment test was that the investment's recoverable amount was greater than
the carrying amount as at 31 March 2023 but less than the recoverable amount as at 31 March 2022, and therefore SPL has not recognised a reversal
of previous impairment losses (2022: impairment loss of $(18.5) million) (refer note 7.2).
Stride Property Group Annual Report 2023
51
1.0 General Information (continued)
1.4 Significant judgements, estimates and assumptions
In the application of NZ IFRS, the Boards and management 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
judgements, estimates and assumptions made by the Boards and management.
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 Boards and management 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 as follows:
•Investment properties (note 3.2);
•Lease liabilities (note 3.3);
•Derivative financial instruments (note 5.2);
•Investment in associates - Investore Property Limited (Investore) (note 7.2);
•Industre joint venture (note 7.2); and
•Deferred tax (note 8.1).
1.5 Fair value estimation
Stride 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 1quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2inputs 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 3inputs for the asset or liability that are not based on observable market data.
1.6 Non-GAAP measures
The consolidated statement of comprehensive income includes two non-GAAP measures: Profit before net finance expense, other (expense)/income
and income tax; and Profit before other (expense)/income and income tax. These non-GAAP measures have been presented to assist investors in
understanding the different aspects of Stride’s financial performance.
Note 4.2 sets out Stride’s calculation of distributable profit and Adjusted Funds From Operations (AFFO) which are both non-GAAP measures.
Distributable profit is presented to provide an earnings measure which more closely aligns to Stride’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 current income tax, is adjusted to reflect cash earnings for
the year.
These non-GAAP measures do not have a standard meaning prescribed by GAAP and therefore may not be comparable to information presented by
other entities.
1.7 Significant events and transactions
The financial position and performance of Stride was affected by the following events and transactions that occurred during the year:
Dividend reinvestment plan (DRP)
On 24 November 2022, the Boards approved the adoption of a DRP. On 23 February 2023, the Boards approved the implementation of the DRP for the
third quarter dividends for the period 1 October 2022 to 31 December 2022, with a 2% discount applied to the volume weighted average price on all
sales of Stride Stapled Securities during the five trading days commencing on the ex-dividend date.
Revised dividend policy and dividend guidance
On 24 November 2022, the Boards refined the dividend policy to target a total cash dividend to shareholders that is between 80% and 100% of
SPL’s distributable profit and 25% and 75% of the distributable profit of SIML. The Boards also updated dividend guidance to 8.00cps combined cash
dividend for SPL and SIML for the year ending 31 March 2023, down from 9.91cps, reflecting a prudent approach to capital management in the current
macroeconomic environment.
50
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2.0 Operating Segments (continued)
SPL
SPL
eliminationsSIML
SIML
eliminations2022
Segment profit$000$000$000$000$000
Net rental income
62,5993,235--65,834
Management fee income
--36,554(12,282)24,272
Total corporate expenses
(15,039)7,484(20,414)532(27,437)
Profit before net finance expense, other income/(expense) and
income tax
47,56010,71916,140(11,750)62,669
Net finance expense
(16,115)-(123)102(16,136)
Profit before other income/(expense) and income tax
31,44510,71916,017(11,648)46,533
Other income/(expense)
Net change in fair value of investment properties29,671991--30,662
Share of profit in equity-accounted investments65,607---65,607
Impairment of equity-accounted investment(18,461)---(18,461)
Loss on disposal of investment properties(930)---(930)
Hedge ineffectiveness of cash flow hedges
1,250---1,250
Profit before income tax
108,58211,71016,017(11,648)124,661
Income tax expense
(7,940)-(4,429)-(12,369)
Profit after income tax attributable to shareholders
100,64211,71011,588(11,648)112,292
Total other comprehensive income after tax
17,146-(58)-17,088
Total comprehensive income after tax attributable to shareholders
117,78811,71011,530(11,648)129,380
SPL
SPL
eliminationsSIML
SIML
eliminationsTotal
Segment assets and liabilities$000$000$000$000$000
Balance at 31 Mar 23
Total assets
1,580,045-20,048(9,630)1,590,463
Total liabilities
519,521(8,096)5,002(1,701)514,726
Balance at 31 Mar 22
Total assets1,624,670-19,873(2,226)1,642,317
Total liabilities406,797(435)6,789(1,918)411,233
As at 31 March 2023, SPL had assets of $271.5 million (2022: $322.0 million) relating to equity-accounted investments (refer note 7.2) and loan to
associate (refer note 8.4) which decreased by $50.5 million from the prior financial year (2022: $52.9 million increase).
Stride Property Group Annual Report 2023
53
2.0 Operating Segments
This section sets out how Stride’s revenue streams are reported internally, reflecting the two operating segments, being SPL and SIML.
Accounting policy
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, identified as the
respective Board of each of SPL and SIML, as each makes all key strategic resource allocation decisions.
SPL’s revenue streams are earned from investment properties owned in Auckland and Wellington in New Zealand. Given SPL’s diverse client base, no
one tenant represents greater than 10% of the portfolio contract rental. SPL also generates income from its share of profit in equity associates being
Investore, Industre joint venture and Diversified (refer to note 7.2).
SIML’s revenue streams are earned from the management of the real estate investments of Investore, Industre, Diversified and SPL (including Fabric).
For the revenue earned from Investore, Industre joint venture and Diversified, refer to note 8.4 on related party disclosures and to note 7.3 on Industre
joint operation.
The following is an analysis of Stride’s results, by reportable segments.
SPL
SPL
eliminationsSIML
SIML
eliminations2023
Segment profit$000$000$000$000$000
Net rental income68,4212,661--71,082
Management fee income--34,814(11,502)23,312
Total corporate expenses
(9,645)7,318(22,045)637(23,735)
Profit before net finance expense, other (expense)/income and
income tax58,7769,97912,769(10,865)70,659
Net finance expense
(17,358)914984(17,116)
Profit before other (expense)/income and income tax41,4189,98812,918(10,781)53,543
Other (expense)/income
Net change in fair value of investment properties
(118,858)367--(118,491)
Share of loss in equity-accounted investments
(42,392)---(42,392)
Loss on disposal of investment properties
(2,504)466--(2,038)
Hedge ineffectiveness of cash flow hedges
(369)---(369)
(Loss)/profit before income tax(122,705)10,82112,918(10,781)(109,747)
Income tax expense
(3,294)-(3,706)-(7,000)
(Loss)/profit after income tax attributable to shareholders(125,999)10,8219,212(10,781)(116,747)
Total other comprehensive income/(loss) after tax
2,803-(391)-2,412
Total comprehensive (loss)/income after tax attributable
to shareholders
(123,196)10,8218,821(10,781)(114,335)
Transactions between SPL and SIML include management fees and interest on the loan (refer note 8.4) charged from SIML to SPL and net rental income
charged from SPL to SIML. These transactions are eliminated on consolidation (refer note 8.4 for details on the composition of the transactions).
52
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3.0 Property (continued)
3.1 Net rental income (continued)
Accounting policy
Leases are classified at their inception 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 a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases.
Properties leased out under operating leases are included in investment properties and assets classified as held for sale as separately disclosed in
the consolidated statement of financial position.
SPL has determined that it retains all significant risks and rewards of ownership of properties and has therefore classified the leases as operating leases.
The future aggregate minimum rentals receivable under non-cancellable operating leases (excluding the development property at 110 Carlton Gore
Road, Auckland) are as follows:
20232022
$000$000
Within one year
57,197
68,899
Between one and two years
49,374
61,053
Between two and three years
40,714
52,496
Between three and four years
34,596
42,804
Between four and five years
28,709
36,834
Later than five years
136,482
183,556
Future rentals receivable
347,072
445,642
Stride Property Group Annual Report 2023
55
3.0 Property
This section covers property assets which generate Stride’s trading performance.
3.1 Net rental income
Accounting policy
Investment property is leased by SPL 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 assets 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 net 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 are included in 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.
The recovery of employee expenses from SIML managed entities are included in the gross rental income (as service charges recovered from
tenants) with the employee related expenses included in corporate overhead expenses.
20232022
SPL$000$000
Gross rental income
Rental income
74,547
69,485
Service charge income recovered from tenants
18,720
18,036
Spreading of fixed rental increases
1,052
1,437
Capitalised lease incentives
935
2,651
Lease incentives amortisation
(1,509)
(1,583)
Movement in rental income abatement provision due to COVID-19
855
(1,001)
Total gross rental income
94,600
89,025
Direct property operating expenses
Rates and insurance
(12,749)
(11,695)
Property maintenance costs
(5,545)
(5,730)
Utilities
(1,957)
(1,809)
Other property operating expenses
(3,576)
(3,460)
Lease incentives capitalised
177
-
Lease incentives amortisation
(88)
(125)
Movement in loss allowance
220
(372)
Total direct property operating expenses
(23,518)
(23,191)
Net rental income
71,082
65,834
Other property operating expenses includes operating expenses not recoverable from tenants and property leasing expenses. Salaries and wages
expenses of $1.6 million (2022: $1.5 million) charged by SIML to SPL have been eliminated in the direct property operating expenses.
54
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3.0 Property (continued)
3.2 Investment properties (continued)
OfficeTown CentreIndustrial
Development
and OtherTotal
SPL$000$000$000$000$000
Balance at 31 Mar 21
573,301325,766160,88411,9301,071,881
Addition152,307---152,307
Recognition of prepayment in investment properties1,684---1,684
Capital expenditure3,7028854615,95520,588
Spreading of fixed rental increases1,324(253)366-1,437
Capitalised lease incentives5411897387890
Lease incentives amortisation(365)(308)(7)(5)(685)
Capitalised lease incentives - COVID-191801,54338-1,761
Lease incentives amortisation - COVID-19(189)(825)(2)(7)(1,023)
Reclassification32,000--(32,000)-
Disposals--(13,932)-(13,932)
Transfer to assets classified as held for sale(94,253)---(94,253)
Net change in fair value
(21,182)13,41634,3884,04030,662
Balance at 31 Mar 22649,050340,413181,854-1,171,317
Addition (refer note 1.7)
---200,786200,786
Capital expenditure
7,4842,0739146510,113
Spreading of fixed rental increases
980(199)282(11)1,052
Capitalised lease incentives
61741564161,112
Lease incentives amortisation
(382)(1,121)(48)(46)(1,597)
Transfer to property, plant and equipment
(450)---(450)
Reclassification
(14,250)(26,250)-40,500-
Transfer to assets classified as held for sale (refer note 1.7)
(30,075)---(30,075)
Net change in fair value
(65,574)(5,921)(32,233)(14,763)(118,491)
Balance at 31 Mar 23
547,400309,410150,010226,9471,233,767
Comprised of:
Investment properties at valuation
547,400293,500150,010226,9471,217,857
Lease liability (note 3.3)
-15,910--15,910
Balance at 31 Mar 23
547,400309,410150,010226,9471,233,767
Stride is conscious of the need to identify the impact of climate risk on its business and assets. The independent valuers that valued SPL’s investment
properties have considered climate risk and environmental factors and the associated impact on the value of a property. The valuers are not climate risk
experts but consider market transactional data as part of their valuation assessment and that market values may be impacted by climate risk factors, for
example, higher green rated properties or properties with sustainable features or which are less vulnerable to climate risk potentially having higher market
values than an equivalent property without such features. Accordingly, valuations can take these factors into account as part of the overall assessment of
a property's market value. Apart from the consideration of the factors above, the valuers have made no explicit adjustment in respect of climate risks.
Capital expenditure consists of seismic strengthening, base-build fit-outs and other physical enhancements to the investment properties, with ownership
of such capital amounts being retained by SPL.
The net reduction in fair value of $(118.5) million (2022: $30.7 million net gain) includes $(3,000) (2022: $(71,000)) in relation to the change in the
value of the lease liability. A revaluation movement of $0.4 million (2022: $1.0 million) arising from the elimination of fees charged by SIML to SPL
(refer note 2.0) has been reflected in the consolidated statement of comprehensive income.
The lease liability of $15.9 million (2022: $15.9 million) is in respect of the ground lease at NorthWest Shopping Centre, Auckland.
Stride Property Group Annual Report 2023
57
3.0 Property (continued)
3.2 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. 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 SPL 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.
The fair value of an investment property represents the estimated price for which a property could be sold at the date of valuation in an orderly
transaction between willing 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.
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.
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.
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 properties and assets classified as
held for sale at fair value.
Investment property is adjusted for cash flows relating to lease liabilities already recognised separately in the consolidated statement of financial
position and also reflected in the investment property valuations.
SIML does not hold investment properties but provides management services over SPL’s investment property portfolio.
SIML has offices located in the SPL owned office buildings at 34 Shortland Street, Auckland, and 22 The Terrace, Wellington. The value attributable to
these floor areas has been recognised as property, plant and equipment (refer note 8.7) and assets classified as held for sale, respectively.
Valuations are performed by independent registered valuers who hold an annual practising certificate with the Valuers Registration Board and are
members of the New Zealand Institute of Valuers. Valuers are engaged on terms ensuring that no valuer values the same investment property for more
than three consecutive years. The investment properties were valued either by Jones Lang LaSalle Limited (JLL)), CBRE Limited (CBRE), CVAS (NZ)
Limited (CVAS (NZ)), CVAS (WLG) Limited (CVAS (WLG)), or Savills (NZ) Limited (Savills). In the prior year, some of the investment properties were valued
by Bayleys Valuations Limited (Bayleys). All valuations are dated effective 31 March 2023.
At each reporting date, SIML’s asset managers verify all major inputs to the independent valuation reports and assess property valuation movements
when compared to the prior year valuation reports. SIML’s executive team review the valuations performed by the independent valuers for financial
reporting purposes. This team reports directly to SIML’s Chief Executive Officer. Discussions of valuation processes and results are held between
members of SIML’s executive team and the independent valuers. Discussions of valuation processes and results are also held between SIML’s Chief
Executive Officer and the Audit and Risk Committee, at least once every six months, in line with SPL’s reporting dates. This review includes a review of
specific independent valuations and discussions with the independent valuers as considered necessary. Ultimately, SPL’s directors are responsible for
reviewing and approving the investment property valuations.
Investment property measurements are categorised as Level 3 in the fair value hierarchy. There were no transfers of investment properties between
levels of the fair value hierarchy (2022: nil transfers) during the year.
56
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3.0 Property (continued)
3.2 Investment properties (continued)
NLA
Cap
rate
Contract
yieldOccupancyWA LT
As at 31 Mar 22Valuerm
2
$000%%%years
Office
34 Shortland Street, AucklandJLL8,12857,0005.504.2767.02.6
46 Sale Street, AucklandJLL11,352154,2004.635.27100.06.5
55 Lady Elizabeth Lane, WellingtonCVAS (WLG)5,21715,0005.3817.62100.07.1
1 Grey Street, WellingtonCBRE10,49267,8506.136.46100.04.9
215 Lambton Quay, WellingtonCVAS (WLG)10,93491,0005.405.3998.33.2
20 Customhouse Quay, WellingtonCVAS (WLG)17,505232,0004.504.55100.011.2
22 The Terrace, WellingtonJLL
4,81132,0005.885.3185.84.9
Office total
68,439649,0505.015.3494.86.9
Town Centre
61 Silverdale Street, AucklandSavills23,008100,5006.256.79100.03.6
NorthWest Shopping Centre, AucklandCVAS (NZ)27,766152,5006.507.2096.74.7
NorthWest Two, AucklandCVAS (NZ)7,90444,0005.636.11100.03.8
Johnsonville Shopping Centre, Wellington (50%)CBRE
6,84727,5008.385.6382.02.3
Town Centre total
65,526324,5006.466.7996.74.1
Industrial (51.7% interest in Industre (joint
operation) refer note 7.3)
30 Airpark Drive, AucklandBayleys8,16224,0544.503.50100.02.7
20 Rockridge Avenue, AucklandSavills4,48815,3904.003.63100.02.5
25 O’Rorke Road and 15 Rockridge Avenue, AucklandSavills18,62677,2593.873.76100.06.9
318 East Tamaki Road, AucklandJLL
5,04765,1513.883.88100.022.8
Industrial total
36,322181,8543.963.76100.011.9
170,2871,155,4045.255.5096.66.5
20232022
Breakdown of valuations by valuer$000$000
JLL
601,973
308,351
CBRE
362,300
95,350
Savills
21,471
193,149
CVAS (NZ)
220,363
196,500
CVAS (WLG)
11,750
338,000
Bayleys
-
24,054
Investment properties per independent valuations
1,217,857
1,155,404
Stride Property Group Annual Report 2023
59
3.0 Property (continued)
3.2 Investment properties (continued)
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 SPL.
The cap rate %, contract yield %, occupancy % and WALT years for the property class totals and the total of investment properties are weighted
averages. For investment properties classified as Development and Other, the NLA, cap rate %, contract yield %, occupancy % and WALT years are not
applicable. The totals may not sum due to rounding.
NLA
Cap
rate
Contract
yieldOccupancyWA LT
As at 31 Mar 23Valuerm
2
$000%%%years
Office
34 Shortland Street, AucklandJLL8,12149,3006.135.0268.71.6
46 Sale Street, AucklandJLL11,352135,8005.386.16100.05.5
1 Grey Street, WellingtonCBRE10,47262,9507.006.97100.04.2
215 Lambton Quay, WellingtonCBRE10,93578,6006.256.2098.72.8
20 Customhouse Quay, WellingtonCBRE
17,505220,7505.254.99100.010.2
Office total
58,384547,4005.715.6895.46.2
Town Centre
61 Silverdale Street, AucklandCVAS (NZ)23,008106,0006.636.82100.05.0
NorthWest Shopping Centre, AucklandJLL27,766145,5007.387.1198.44.5
NorthWest Two, AucklandJLL
7,90442,0006.756.91100.02.9
Town Centre total
58,679293,5007.026.9899.24.5
Industrial (51.7% interest in Industre (joint
operation) refer note 7.3)
30 Airpark Drive, AucklandSavills8,16221,4715.504.00100.01.7
20 Rockridge Avenue, AucklandJLL4,48814,1765.384.04100.01.5
25 O’Rorke Road and 15 Rockridge Avenue, AucklandCVAS (NZ)18,62661,4635.374.93100.06.6
318 East Tamaki Road, AucklandCVAS (NZ)
5,06252,9004.884.91100.021.7
Industrial total
36,337150,0105.214.71100.011.1
Development and Other
110 Carlton Gore Road, AucklandJLL190,660
55 Lady Elizabeth Lane, WellingtonCVAS (WLG)11,750
Johnsonville Shopping Centre, Wellington (50%)JLL
24,537
Development and Other total226,947
153,4001,217,8576.025.9198.06.2
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3.0 Property (continued)
3.2 Investment properties (continued)
The valuation for Johnsonville Shopping Centre, Wellington, utilises the Land Value approach as this approach reflects the highest and best use for the
property, in addition to the Income Capitalisation and Discounted Cash Flow approaches.
All properties were valued on a consistent approach to 31 March 2022.
The significant 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 rental 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
Forecast
development costs
All costs associated with the development of the
property. This cost typically includes construction
costs, consultancy costs and financing.
DecreaseIncreaseResidual
Profit and risk allowanceThis allowance reflects the risk and surety surrounding
cost of remedial works, timing of works as well as
assumed future occupancy arrangements following
completion of all required works.
DecreaseIncreaseResidual
When calculating fair value using the Income Capitalisation approach, the gross market rental has a strong interrelationship with the adopted cap rate,
given the methodology involves assessing the total gross market rental receivable from the investment property and capitalising this in perpetuity to
derive a capital value. An increase in the gross market rental and an increase (softening) in the adopted cap rate could potentially offset the impact to the
fair value. A decrease in the gross market rental and a decrease (tightening) in the adopted cap rate could also potentially offset the impact to fair value. A
directionally opposite change in the gross market rental and the adopted cap rate could potentially magnify the impact on 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 adopted
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.
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61
3.0 Property (continued)
3.2 Investment properties (continued)
A valuation is determined based on a range of unobservable inputs, which are not freely available or explicit in the market and are developed by analysing
transactional data. Key unobservable inputs are the cap rate, discount rate, gross market rental, rental growth rates and terminal yield. The following
table details the key unobservable inputs and the ranges adopted across the various investment property classes (excluding properties classified as
Development and Other):
Cap rateDiscount rate
Gross
market rental
Rental
growth rateTerminal yield
%%$/m
2
%%
As at 31 Mar 23
Office
5.25-7.006.50-8.00579-9062.12-2.575.50-7.25
Town Centre
6.63-7.388.00-8.38380-6612.15-2.327.00-7.63
Industrial
4.88-5.507.13-7.35162-2092.94-3.055.63-5.79
Total portfolio
4.88-7.386.50-8.38162-9062.12-3.055.50-7.63
As at 31 Mar 22
Office4.50-6.136.00-7.25519-8002.13-2.794.88-6.38
Town Centre5.63-8.387.13-8.00338-647(0.88)-2.405.00-6.63
Industrial
3.87-4.505.63-5.90146-1962.82-2.994.13-4.50
Total portfolio
3.87-8.385.63-8.00146-800(0.88)-2.994.13-6.63
The estimated sensitivity of the fair value of the total investment property portfolio to changes in the cap rate or discount rate, assuming the cap rate or
discount rate move equally on all the properties (excluding properties classified as Development and Other) 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 %
Impact on fair value-0.25+0.25-0.25+0.25
As at 31 Mar 23
Change $000
44,926(41,365)19,251(18,682)
Change %
5(4)2(2)
As at 31 Mar 22
Change $00061,652(58,360)22,404(21,818)
Change %5(5)2(2)
Predominant valuation methods used:
•Income Capitalisation approach - is based on the current contract and market rental 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. The present value reflects the market-based rental 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.
Works are required to improve the seismic performance of the office property at 55 Lady Elizabeth Lane, Wellington. The works required are
complex in nature, due to stabilisation required in the ground and a number of remedial options are being considered. The cost to complete stated
in the 31 March 2023 valuation was determined by a registered quantity surveyor in March 2022 together with management estimates of the ‘on
cost‘ elements (design, consultant, legal and contingency allowances) and is the best available information at the date of valuation. The final cost could be
higher or lower and this could impact on the fair value of the property. This property has been fair valued utilising the Residual approach, calculating
what the property is expected to be worth on completion of the works and deducting all expected costs to complete the works, including a profit and risk
allowance. SPL has discussed the seismic status of the building and the potential works required with tenants and the majority of the office tenants have
surrendered or terminated their leases.
The Residual approach has also been utilised for the property at 110 Carlton Gore Road, Auckland, which was under development as at
31 March 2023 (refer note 1.7).
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3.0 Property (continued)
3.4 Capital expenditure commitments contracted for
As at 31 March 2023, SPL has the following commitments (2022: $6.3 million):
•$34.3 million further loan advances and final settlement payments to be made in relation to the acquisition of 110 Carlton Gore Road, Auckland,
of which $29.7 million is included in trade and other payables (refer note 8.6). Subsequent to balance date, $7.8 million of loan advance has been
made (refer note 8.10)
•$8.4 million for further building upgrades at 34 Shortland Street, Auckland
•$1.5 million for various other capital expenditure to be undertaken
Stride has no other material capital commitments as at 31 March 2023.
3.5 Assets classified as held for sale
Accounting policy
Stride reclassifies an investment property to assets classified as held for sale when:
•the carrying value of the property is expected to be recovered through sale;
•the property is available for sale immediately subject only to terms that are usual and customary for such transactions; and
•the transaction is highly probable to occur.
The carrying value of the assets classified as held for sale is the contracted sale price, being the best indicator of fair value. If a contracted price is
not available, the fair value is determined by an independent valuation.
Any gain or loss arising from a change in the fair value to the contracted price is recognised in the consolidated statement of comprehensive income
within net change in fair value of investment properties.
During the year, the SPL Board approved disposing the office property located at 22 The Terrace, Wellington. Upon the change in intention from holding
the investment property to disposing of it, SPL reclassified the property and its associated office space from investment properties and property, plant
and equipment to assets classified as held for sale at a value of $30.1 million and $0.4 million respectively.
Stride Property Group Annual Report 2023
63
3.0 Property (continued)
3.3 Lease liabilities
Accounting policy
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 the consolidated statement of comprehensive
income 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 Stride, 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.
SIML has an operating lease for its offices at 34 Shortland Street, Auckland, and 22 The Terrace, Wellington, where SIML is the lessee and SPL is the
lessor. SIML has recognised right-of-use assets within property, plant and equipment and corresponding lease liabilities within interest bearing liabilities
in relation to these leases. For the 34 Shortland Street lease a 5.13% discount rate has been applied, being the estimated incremental borrowing
rate as at 1 April 2019. For the 22 The Terrace lease, a 5.88% discount rate has been applied, being the estimated incremental borrowing rate as at
1 June 2022. These lease liabilities and right-of-use assets are eliminated in the financial statements.
SPL is committed under two operating leases where SPL is the lessee. The SPL leases relate to ground rent on leasehold properties and contain renewal
and termination options exercisable only by SPL. There is one at each of the following properties:
•NorthWest Shopping Centre, Auckland; and
•55 Lady Elizabeth Lane, Wellington.
Included in the 31 March 2023 balance of investment property at valuation is an implicit right-of-use asset of $9.1 million (2022: $11.4 million) in
relation to a peppercorn ground lease at 55 Lady Elizabeth Lane, with an associated immaterial lease liability.
20232022
Right-of-use assets$000$000
Opening balance15,913
27,454
Reclassification
-
(11,433)
Depreciation
(3)
(108)
Closing balance
15,910
15,913
Lease liabilities
Opening balance15,913
27,454
Reclassification
-
(11,433)
Cash lease payments
(992)
(1,886)
Finance lease interest
989
1,778
Closing balance
15,910
15,913
Current liability
7
3
Non-current liability
15,903
15,910
Total lease liability
15,910
15,913
62
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4.0 Investor Returns (continued)
4.2 Distributable profit
Accounting policy
Stride’s dividend policy is to target a total cash dividend to shareholders that is equivalent to the sum of 25% to 75% of SIML’s distributable profit
and 80% to100% of SPL’s distributable profit. Distributable profit is presented to enable investors to see an earnings measure which more closely
aligns with Stride’s underlying and recurring earnings from its operations. Distributable profit is a non-GAAP measure and consists of (loss)/profit
before income tax, adjusted for determined non-recurring and/or non-cash items, share of (loss)/profit in equity-accounted investments, dividends
received from equity-accounted investments 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.
20232022
$000$000
(Loss)/profit before income tax(109,747)
124,661
Non-recurring, non-cash, and other adjustments:
Net change in fair value of investment properties
118,491
(30,662)
Reversal of the lease liability movement in net change in fair value of investment properties
(39)
(71)
Share of loss/(profit) in equity-accounted investments
42,392
(65,607)
Impairment of equity-accounted investment
-
18,461
Loss on disposal of investment properties
2,038
930
Project costs relating to Fabric Property Limited
-
4,533
Project management and disposal fees eliminated in SIML
833
991
Dividend income from equity-accounted investments (refer note 8.4)
9,032
9,443
Interest received in relation to loan advance on 110 Carlton Gore Road, Auckland
6,859
-
Spreading of fixed rental increases
(1,052)
(1,437)
Capitalised incentives net of amortisation
485
(943)
Share based payment expense
1,787
1,049
Forfeited employee incentive rights
(74)
-
Software asset expense
-
1,025
Depreciation and revaluation deficit recognised in profit and loss
211
203
Lease liabilities for head office
-
(35)
Borrowings establishment costs amortisation
474
1,261
Non-cash interest income
(214)
(245)
Non-cash rental surrender income
(3,750)
-
Finance expense - swap termination expense
-
337
Hedge ineffectiveness of cash flow hedges
369
(1,250)
Distributable profit before current income tax68,095
62,644
Current tax expense(12,175)
(8,667)
Adjusted for:
Tax expense on capitalised interest
-
(26)
Tax expense on depreciation recovered on disposal of investment properties
1,713
206
Distributable profit after current income tax
57,633
54,157
Adjustments to funds from operations:
Maintenance capital expenditure
(1,802)
(2,693)
Incentives and associated landlord works
(4,256)
(1,407)
Adjusted Funds From Operations (AFFO)
51,575
50,057
Stride Property Group Annual Report 2023
65
4.0 Investor Returns
This section sets out Stride’s earnings per share, dividends paid and how distributable profit is calculated. Distributable profit is a non-GAAP
measure and is used by Stride to calculate profit available for distribution to shareholders by way of dividends.
4.1 Basic and diluted earnings per share (EPS)
Accounting policy
Basic and diluted earnings per share amounts are calculated by dividing (loss)/profit after income tax attributable to shareholders by the weighted
average number of shares on issue.
20232022
$000$000
(Loss)/profit after income tax attributable to shareholders
(116,747)
112,292
Weighted average number of shares for purpose of basic EPS (000)
540,407
494,726
Basic EPS - SPL
(23.30)
20.36
Basic EPS - SIML
1.70
2.34
Basic EPS - weighted (cents)
(21.60)
22.70
Weighted average number of shares for purpose of diluted EPS (000)
542,847
496,175
Diluted EPS - SPL
(23.30)
20.29
Diluted EPS - SIML
1.70
2.34
Diluted EPS - weighted (cents)
(21.60)
22.63
The movement in the weighted average number of shares over the comparable periods reflects the 66.95 million shares issued in November and
December 2021 as part of an equity capital raise and the 2.99 million shares issued as part of the DRP in March 2023. Weighted average number of
shares for the purpose of diluted EPS has been adjusted for 2.49 million (2022:1.49 million) rights issued under SIML’s employee incentive schemes.
SPL has reported a loss after income tax attributable to shareholders for the year ended 31 March 2023. As a loss after income tax attributable to
shareholders results in an anti-dilutive position for SPL diluted EPS, the diluted EPS is reported as Basic EPS of (23.30) cents.
(Loss)/profit after income tax attributable to shareholders is lower in 2023 than 2022 by $(229.0) million as a result of:
•lower net change in fair value of investment properties of $(149.2) million over the comparable period;
•reduction in profit in equity-accounted investments of $(108.0) million; partly offset by
•higher net rental income of $5.2 million primarily due to the growth in the office investment property portfolio and lease surrender
income recognised;
•project costs incurred in 2022 relating to the withdrawal of the proposed demerger and IPO of Fabric of $4.5 million; and
•impairment of equity-accounted investment recognised in 2022 in relation to Investore of $18.5 million.
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5.0 Capital Structure and Funding
Stride'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 Stride's funding exposure to interest rate risk and related financing costs (excluding borrowings within
Industre joint operations, refer note 7.3).
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 SPL has an
unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
20232022
$000$000
Non-current
Bank facility drawn down
402,400
305,500
Unamortised borrowing establishment costs
(631)
(1,105)
Total net borrowings
401,769
304,395
Weighted average interest rate of debt (inclusive of current interest rate derivatives, margins and
line fees) at balance date
3.96%
3.55%
Total
Undrawn
facility
Drawn
amount
31 Mar 23Expiry date$000$000$000
Facility A15 Dec 2024
100,000-100,000
Facility B15 Dec 2025
25,00012,50012,500
Facility F115 Dec 2024
100,000-100,000
Facility F215 Dec 2025
100,000-100,000
Facility F315 Dec 2026
100,00010,10089,900
Facility F415 Dec 2024
100,000100,000-
525,000122,600402,400
31 Mar 22
Facility A15 Dec 2024100,000-100,000
Facility B15 Dec 202560,00054,5005,500
Facility C15 Dec 202640,00040,000-
Facility F115 Dec 2024100,000-100,000
Facility F215 Dec 2025100,000-100,000
Facility F315 Dec 2026100,000100,000-
Facility F415 Dec 2024
100,000
100,000-
600,000294,500305,500
SPL’s bank borrowings are via syndicated senior secured facilities with ANZ Bank New Zealand Limited (ANZ), China Construction Bank Corporation
(New Zealand Branch), Industrial and Commercial Bank of China Limited, Auckland Branch, MUFG Bank Limited (Auckland Branch), The Hongkong and
Shanghai Banking Corporation Limited, incorporated in the Hong Kong SAR, acting through its New Zealand Branch, and Westpac New Zealand Limited.
The bank security on the facilities is managed through a security agent who holds a registered first mortgage on all the investment properties directly
owned by SPL, a registered second mortgage over the development property at 110 Carlton Gore Road, Auckland, (on which Fabric holds a registered
first mortgage) and a registered first ranking security interest under a General Security Deed over substantially all the assets of SPL. SPL has been
compliant with bank covenants during the respective periods.
Due to the net reduction in fair value of investment properties recognised by SPL’s wholly owned subsidiary, Fabric, in respect of Fabric’s office portfolio
as at 31 March 2023, the total value of assets for Fabric were less than its total liabilities as at that date.  This resulted in a deemed representation
provided to the banking syndicate in respect of the bank facility agreement between SPL, Fabric and the banking syndicate on 1 April 2023 that the
value of Fabric’s assets is greater than its liabilities being incorrect. No action has been taken by the banking syndicate in respect of this deemed
representation, and a waiver has been provided by the banking syndicate which disapplies this deemed representation for the period 31 March 2023
to 31 March 2024. On 23 May 2023, SPL subscribed for 150 million new shares in Fabric, for total consideration of $150.0 million, which was set off
against $150.0 million of the intercompany loan owed by Fabric to SPL. This share issue provides further comfort that the assets of Fabric are greater
than its liabilities at this time.
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67
4.0 Investor Returns (continued)
4.2 Distributable profit (continued)
20232022
$000$000
Weighted average number of shares for the purpose of basic distributable profit per share (000)
540,407
494,726
Basic distributable profit after current income tax per share - weighted (cents)10.66
10.95
AFFO basic distributable profit after current income tax per share - weighted (cents)9.54
10.12
Weighted average number of shares for the purpose of diluted distributable profit per share (000)
542,847
496,175
Diluted distributable profit after current income tax per share - weighted (cents)10.62
10.91
AFFO diluted distributable profit after current income tax per share - weighted (cents)9.50
10.09
4.3 Dividends paid
Accounting policy
Dividends are recognised as a liability in the financial statements in the period in which the dividends are approved.
20232022
$000$000
The following dividends were declared and paid by SPL during the year:
Q4 2022 final dividend 1.8455 cents (Q4 2021 1.6075 cents)
9,972
7,607
Q1 2023 interim dividend 2.0702 cents (Q1 2022 1.9345 cents)
11,186
9,155
Q2 2023 interim dividend 1.39532 cents (Q2 2022 1.7475 cents)
7,539
8,270
Q3 2023 interim dividend 1.68083 cents (Q3 2022 1.9135 cents)
9,082
10,336
Total dividends paid - SPL
37,779
35,368
The following dividends were declared and paid by SIML during the year:
Q4 2022 final dividend 0.632 cents (Q4 2021 0.87 cents)
3,415
4,117
Q1 2023 interim dividend 0.4073 cents (Q1 2022 0.543 cents)
2,201
2,570
Q2 2023 interim dividend 0.44552 cents (Q2 2022 0.73 cents)
2,407
3,455
Q3 2023 interim dividend 0.16 cents (Q3 2022 0.564 cents)
865
3,047
Total dividends paid - SIML
8,888
13,189
Total dividends paid - Stride
46,667
48,557
Supplementary dividends of $0.56 million (2022: $0.23 million) were paid to SPL shareholders not resident in New Zealand for which SPL received a
foreign investor tax credit entitlement.
Supplementary dividends of $0.22 million (2022: $0.22 million) were paid to SIML shareholders not resident in New Zealand for which SIML received a
foreign investor tax credit entitlement.
Dividends paid in relation to the Q3 2023 dividend of $4.01 million ($3.66 million in SPL and $0.35 million in SIML) were reinvested in Stride as part of
the dividend reinvestment plan (refer note 1.7) and 2,989,536 Stapled Securities were issued.
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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 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.
20232022
SPL$000$000
Active interest rate derivative contracts
320,000
335,000
Forward dated interest rate derivative contracts
80,000
-
Total notional principal value of interest rate derivative contracts
400,000
335,000
Interest rate derivative assets - current
1,761
290
Interest rate derivative assets - non-current
21,581
19,535
Interest rate derivative liabilities - non-current
(125)
-
Fair values of interest rate derivative contracts
23,217
19,825
Fixed interest rates ranges on active interest rate derivative contracts (excluding margins and line fees)
0.53% - 1.80%
0.39% - 1.80%
Weighted average fixed interest rate on active interest rate derivative contracts (excluding margins and
line fees)
1.28%
1.24%
Percentage of drawn debt fixed
80%
110%
SPL typically designates its interest rate derivatives as cash flow hedges of the interest flows on its variable rate borrowings. SPL 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.
At 31 March 2023, SPL had interest rate derivative contracts with a notional value of $20.0 million (2022: $35.0 million) that had no drawn bank
borrowings hedged against them. Consequently, the fair value movement of $(0.4) million (2022: $1.3 million) has been recognised in other income in the
consolidated statement of comprehensive income.
Stride Property Group Annual Report 2023
69
5.0 Capital Structure and Funding (continued)
5.1 Borrowings (continued)
The carrying amount of the bank borrowings is considered a reasonable approximation of fair value.
In November 2022, $35.0 million of Facility B and the full $40.0 million of Facility C were cancelled.
In accordance with the Green Finance Framework (Framework) of Fabric, $400.0 million of the facilities are classified as green loan facilities. The
Framework has been developed to be consistent with the Asia Pacific Loan Market Association (APLMA) Green Loan Principles (2021).
SIML does not have any bank borrowings (2022: $ nil) however it does have a $3.0 million overdraft facility with ANZ which has not been utilised during
the current year.
Net debt reconciliation
Below sets out an analysis of net debt and the movements in net debt.
20232022
$000$000
Cash and cash equivalents
16,833
20,621
Borrowings - non-current
(401,769)
(304,395)
Lease liability
(15,910)
(15,913)
Lease liability associated with assets classified as held for sale
-
(11,433)
Net debt
(400,846)
(311,120)
Liabilities from financing activities
BorrowingsLeasesSub-totalCashTotal
$000$000$000$000$000
As at 31 Mar 21
(259,860)(27,454)(287,314)23,024(264,290)
Cash flows(43,274)108(43,166)(2,403)(45,569)
Other changes
(1,261)-(1,261)-(1,261)
As at 31 Mar 22(304,395)(27,346)(331,741)20,621(311,120)
Cash flows
(96,900)38(96,862)(3,788)(100,650)
De-recognition (refer note 1.7)
-11,39811,398-11,398
Other changes
(474)-(474)-(474)
As at 31 Mar 23
(401,769)(15,910)(417,679)16,833(400,846)
Other changes include borrowing establishment cost amortisation.
As at 31 March 2022, lease liabilities included the lease liability associated with assets classified as held for sale as disclosed in the consolidated
statement of financial position.
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5.0 Capital Structure and Funding (continued)
5.4 Share capital
Accounting policy
Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from the proceeds.
There is only one class of shares, being ordinary shares, and they rank equally with each other. All issued shares are fully paid and have no par value.
SPL and SIML shares are “stapled” and jointly listed on the NZX (Stapled Securities). Each of SPL and SIML has 543,320,476 shares on issue as at
31 March 2023 (2022: 540,188,683).
Stapling of shares is a contractual and constitutional arrangement between the two Stapled Entities whereby each Stapled Entity’s equity securities are
combined with (or stapled to) the equity securities issued by the other Stapled Entity. The Stapled Entities have the same shareholders, and their shares
cannot be traded or transferred independently of one another. The Stapled Securities are traded as a single economic unit with a single quoted price.
In April 2022, the Boards of SPL and SIML issued 142,257 Stapled Securities pursuant to a special share award granted to executives on
16 December 2020.
In March 2023, 2,989,536 Stapled Securities were issued in accordance with the dividend reinvestment plan (refer note 1.7).
5.5 SIML equity (non-controlling interest)
Total
Notes$000
Balance 31 Mar 2213,083
Transactions with shareholders:
Dividends paid
4.3(8,888)
Other movements in reserves
1,086
Transfer to share capital on vesting of employee incentive rights
627
Q3 2023 dividend reinvestment
317
Total transactions with shareholders
(6,858)
Total other comprehensive loss
(391)
Profit after income tax
9,212
Total comprehensive income
8,821
Balance 31 Mar 23
15,046
Balance 31 Mar 21
13,693
Transactions with shareholders:
Dividends paid
4.3
(13,189)
Other movements in reserves415
Issued capital net of capital raising expenses
634
Total transactions with shareholders
(12,140)
Total other comprehensive loss(58)
Profit after income tax
11,588
Total comprehensive income
11,530
Balance 31 Mar 22
13,083
Stride Property Group Annual Report 2023
71
5.0 Capital Structure and Funding (continued)
5.2 Derivative financial instruments (continued)
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 (2022: Level 2). Judgement is involved in determining the fair value by the independent treasury advisors. The fair
values 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 2023 of between 5.23%, for the 90-day BKBM, and 4.30%, for the 10-year swap rate (2022: 1.61% and 3.41%, respectively). There
have been no transfers between Level 1 and 2 during the respective periods. There were no changes to these valuation techniques during the reporting
period. As at 31 March 2023, the fair value of the interest rate derivatives includes an accrued interest asset of $0.3 million (2022: $0.1 million).
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 the interest rate swaps had been 0.25% lower or higher, with other variables remaining constant.
20232022
Gain/(loss)Gain/(loss)Gain/(loss)Gain/(loss)
on -0.25%on +0.25%on -0.25%on +0.25%
$000$000$000$000
Impact on equity(1,773)1,757
(2,011)1,993
Impact on profit(35)35
(110)109
SPL does not hold derivative financial instruments for trading purposes.
SIML does not hold any interest rate derivatives (2022: $ nil).
5.3 Net finance expense
Accounting policy
Interest income is recognised on a time-proportional basis using the effective interest rate.
Where SPL borrows funds specifically for the purpose of obtaining a qualifying asset, the amount of borrowing costs capitalised are the actual
borrowing costs incurred on that borrowing, less any investment income on the temporary investment of those borrowings. A qualifying asset is one
that takes six months or longer to prepare for its intended use or sale. Where SPL borrows funds generally and uses them to fund a qualifying asset,
the amount of borrowing costs capitalised is determined by applying a capitalisation rate to the expenditure on that asset. The capitalisation rate
is the weighted average of the borrowing costs applicable to the borrowings that are outstanding during the period, other than borrowings made
specifically for the purpose of funding a qualifying asset.
Other borrowing costs are expensed when incurred and are recognised using the effective interest method.
20232022
$000$000
Finance income
Bank interest income
422
1
Other finance income
214
245
636
246
Finance expense
Bank borrowings interest
(16,370)
(14,360)
Bank borrowings interest capitalised
-
93
Lease liabilities interest
(1,382)
(1,778)
Finance expense - swap termination expense
-
(337)
(17,752)
(16,382)
Net finance expense
(17,116)
(16,136)
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6.0 Risk Management
This section sets out Stride’s exposure to financial assets and liabilities that potentially subject Stride to financial risk and how Stride
manages those risks.
6.1 Financial instruments
Accounting policy
A financial instrument is recognised if Stride becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised if
Stride’s contractual rights to the cash flows expire, or if Stride transfers them without retaining control or substantially all risks and rewards of the
asset. Financial liabilities are de-recognised if Stride’s obligations specified in the contract are extinguished.
Stride 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.
Depending on the purpose for which the assets were acquired, Stride 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, Stride 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 and other 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.
Financial liabilities at amortised cost are measured at amortised cost and include borrowings and trade and other payables.
20232022
Summary of financial instruments$000$000
Financial assets at amortised cost
Cash at bank
16,833
20,621
Trade and other receivables
7,729
4,229
NZX bond
75
75
Total financial assets at amortised cost
24,637
24,925
Financial assets at fair value through profit or loss
Loan to associate
3,398
3,398
Total non-derivative financial assets at fair value through profit or loss
3,398
3,398
Derivative financial instruments
Used for hedging
23,342
19,825
Total financial assets
51,377
48,148
Financial liabilities at amortised cost
Trade and other payables recognised as financial liabilities
34,289
13,211
Lease liability
15,910
15,913
Lease liability associated with assets classified as held for sale
-
11,433
Borrowings (joint venture participating interest)
40,400
39,857
Bank borrowings
401,769
304,395
Total financial liabilities at amortised cost
492,368
384,809
Derivative financial instruments
Used for hedging
125-
Total financial liabilities
492,493
384,809
Stride Property Group Annual Report 2023
73
5.0 Capital Structure and Funding (continued)
5.6 Reserves
20232022
Reserves consist of the following Stride reserves$000$000
Cash flow hedge reserve
15,792
13,040
Share option reserve
1,404
948
Associate reserve - cash flow hedge
2,953
2,202
Revaluation surplus
-
700
Closing balance
20,149
16,890
Cash flow hedge reserve - SPL
Opening balance13,040
(1,549)
Movement in fair value of interest rate derivatives
3,536
20,661
Deferred tax on fair value movements
(784)
(6,072)
Closing balance
15,792
13,040
Share option reserve - SIML
Opening balance948
887
Share based payment expense
1,787
1,049
Deferred tax on share based payment expense
(391)
(58)
Transfer to share capital on vesting of employee incentive rights
(627)
(634)
Lapsed employee incentive rights
(239)
(296)
Forfeited employee incentive rights
(74)
-
Closing balance
1,404
948
Associate reserve - cash flow hedge - SPL
Opening balance2,202
45
Changes in reserves of associate
751
2,157
Closing balance
2,953
2,202
Revaluation surplus - SPL
Opening balance700
300
Revaluation (deficit)/surplus
(700)
400
Closing balance
-
700
Gains and losses recognised in the cash flow hedge reserve on interest rate derivative contracts will be reclassified in the same period in which the
hedged forecast cash flows affect profit or loss until the repayment of the bank borrowings.
5.7 Capital risk management
Stride’s objectives when managing capital are to safeguard Stride’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, Stride 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, SPL is required to comply with covenants imposed under its banking facilities. The SPL Board regularly monitors these covenants
and provides six-monthly compliance certificates to the banking syndicate as part of this process. SPL has complied with these covenants during the
relevant periods.
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