PFI Green Finance Framework and Green Loan

NZX and media
announcement
—
20 July 2023

Page 1


PFI GREEN FINANCE FRAMEWORK AND
GREEN LOAN
Property for Industry Limited (PFI, the Company) is pleased to announce the launch of the Company’s
Green Finance Framework (the Framework, attached), recognising PFI’s commitment to invest in long-
term sustainability initiatives.

PFI was assisted by Westpac New Zealand (Westpac), acting as Sustainability Coordinator, in the
development of the Framework, and engaged DNV Business Assurance Australia Pty. Ltd (DNV) to
provide external independent review and verification. DNV’s Second Party Opinion confirmed that the
Framework has been developed in alignment with both the Asia Pacific Loan Market Association
(APLMA) Green Loan Principles (2023) and the International Capital Market Association (ICMA) Green
Bond Principles (2021).

As detailed in PFI’s 2022 Annual Results, an estimated $140 million
1
of new development spend has
been committed across the Company’s Bowden and Springs Road properties, with these developments
targeting a 5 Green Star Design and Built rating. PFI has been working towards financing this investment
through Green Loans.

Pleasingly, PFI today is able to announce the establishment of its inaugural $150 million Green Loan
tranches, in accordance with the Framework. The Green Loan facilities are provided by ANZ Bank New
Zealand Limited (ANZ), Bank of New Zealand (BNZ), Commonwealth Bank of Australia (CBA) and
Westpac.

Following the establishment of the $150 million Green Loan tranches, the BNZ facility expiring 31 March
2025 has been decreased from $175 million to $125 million.

PFI’s bonds and bank facilities are detailed in the table below:

Bond / bank facility Expiry Amount
CBA Term Loan 16 April 2028 $125M
Westpac 4-yr Green Loan 18 July 2027 $75M
BNZ 4-yr Green Term Loan 18 July 2027 $25M
ANZ & CBA 3-yr Green Loan 18 July 2026 $50M
Syndicated Bank Facility 2 July 2026 $150M
PFI020 Bond 1 October 2025 $100M
Syndicated Bank Facility 2 July 2025 $150M
BNZ Bank Facility 31 March 2025 $125M
PFI010 Bond 28 November 2024 $100M
Weighted average expiry: 2.7 years Total: $900M





--------

1
$140 million of incremental spend, bringing the total expected project cost (including land) to be
financed and refinanced through the Green Loan tranches to ~$215 million.

NZX and media
announcement
—
20 July 2023

Page 2


Post this activity, the weighted average term to expiry of the Company’s bonds and bank facilities has
increased to 2.7 years as at today’s date, as illustrated in the graph below:














PFI Chief Finance and Operating Officer, Craig Peirce, notes: “We are very pleased to have launched
the Green Finance Framework and established PFI’s inaugural Green Loan tranches, noting the strong
levels of support received from our existing banking partners. The proceeds of the new Green Loan
tranches will be used to fund the Company’s committed brownfield development opportunities at 30-32
Bowden Road and 78 Springs Road, both of which will target 5 Green Star Design and Built ratings,
consistent with PFI’s sustainability commitments.”

ENDS






ABOUT PFI & CONTACT

PFI is an NZX listed property vehicle specialising in industrial property. PFI’s nationwide portfolio of 93 properties is leased to
around 128 tenants.

For further information please contact:

SIMON WOODHAMS
Chief Executive Officer
----
Phone: +64 21 749 770
Email: woodhams@pfi.co.nz
CRAIG PEIRCE
Chief Finance and Operating Officer
----
Phone: +64 21 248 6301
Email: peirce@pfi.co.nz
----
Property for Industry Limited
Level 4, Hayman Kronfeld Building, 15 Galway Street,
Auckland 1010
PO Box 1147, Shortland Street, Auckland 1140
www.propertyforindustry.co.nz


100.0 100.0
150.0
150.0
125.0
50.0
25.0
75.0 125.0
$m
$50m
$100m
$150m
$200m
$250m
$300m
$350m
$400m
FY23FY24FY25FY26FY27FY28
BondsSyndicated Bank FacilitiesBNZ Bank Facility
ANZ & CBA 3-yr Green LoanBNZ 4-yr Green Term LoanWestpac 4-yr Green Loan
CBA Term Loan

---

Green
Finance
Framework
July 2023
YOUR
INDUSTIAL
PROPERTY
EXPERTS
PROPERTY FOR INDUSTRY LIMITED
20
23
GREEN
FINANCE
FRAMEWORK

01.
INTRODUCTION3
02.
ABOUT THIS FRAMEWORK5
03.
SUSTAINABILITY GOVERNANCE5
04.
GREEN LOANS AND GREEN BONDS6
05.
CONTINUOUS IMPROVEMENT11
06.
IMPORTANT NOTICE12
07.
FURTHER INFORMATION12
SECTION
CONTENTS
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

01.
INTRODUCTION
ABOUT PROPERTY FOR INDUSTRY
Property For Industry Limited (PFI or we) is an NZX listed property vehicle focused on the
industrial sector.
We first listed in 1994. More than twenty years on, we have over 5,000 shareholders and a portfolio of almost
100 properties valued at over $2.0 billion dollars.
PFI was created on the belief that investing in quality industrial property in prime locations has the
potential to deliver attractive shareholder returns. But we knew that consistently achieving such returns
would require focus, discipline and a conservative approach to risk. This has been the secret to success. Our
commitment to industrial property has not changed. We believe a portfolio that performs is more important
than growth. 
In terms of our impact on people and planet, we understand that meeting our ambitions requires long-term
commitment, long-term thinking, and no shortage of hard work. We believe PFI’s approach to sustainability
should enable us to mitigate risks and capitalise on opportunities for long-term value creation.
The purpose of this Green Finance Framework (Framework) is to document the approach for managing
Green Loans and/or Green Bonds by PFI. The entities that may enter into Green Loans and/or Green Bonds
under this Framework are Property For Industry Limited and its wholly owned subsidiary, P.F.I Property
No.1 Limited.
PFI’S APPROACH TO SUSTAINABILITY
Sustainability is increasingly embedded in what we do.
At PFI, we understand that sustainability requires us to be responsive to our changing external
environment, constantly challenge ourselves, and be open to trying new approaches.
In 2019, we created an Environmental, Social and Governance (ESG) framework for PFI. We also measured
our greenhouse gas (GHG) emissions for the first time, setting a baseline year from which to evaluate
progress. 2020 saw us enhance our health and safety systems, expand the scope of our GHG emissions
measurement, and formally assess our exposure to climate-related risks and opportunities.
Since then, PFI’s ESG achievements have included:
▪Phasing out especially harmful R22 refrigerant gases from heating, ventilation and air-conditioning
(HVAC) systems within our operational control, contributing to a reduction in our Scope 1 GHG
emissions as discussed in our 2022 Sustainability Report (available on our website and as part of the
2022 Annual Report); and
▪Producing three voluntary climate-related disclosure reports (TCFD Reports) which are prepared in
accordance with the recommendations of the Task Force on Climate-related Financial Disclosures
(available on our website and as part of the 2022 Annual Report).
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

In 2022, we reset our Sustainability Strategy with the following strategic objectives:
1. Create a future-proofed and resilient portfolio through sustainable refurbishments, developments,
acquisitions and divestments;
2. Maximise the useful lifespan of buildings to minimise waste by transforming our core portfolio;
3. Become a trusted partner for tenants when it comes to sustainability and reducing GHG emissions;
4. Collaborate with supply chain partners to minimise waste, use lower-impact materials, and promote
positive social impacts;
5. Maintain strong employee engagement and health and safety performance; and
6. Maintain high standards of financial and governance performance.
The Sustainability Strategy is centred on the following material topics and aspirations:
MATERIAL TOPICASPIRATION
Greenhouse
Gas Emissions
The embodied and operational GHG emissions associated with PFI’s
buildings are minimised.
Resources and WasteThe impacts from the materials that PFI uses and the waste PFI
produces during developments and refurbishments are minimised.
Disaster and
Climate Resilience
PFI’s buildings are resilient and we are well placed to respond
to disasters.
People and WellbeingOur people are safe and engaged, and we promote positive social
impacts through our operations.
Economic ValueThe value of PFI grows to create economic value for investors,
tenants, our people and others that we work with.
We have commenced a range of projects to operationalise this strategy, as discussed further in our 2022
Sustainability Report, with targets including:
1. Significant new buildings to target minimum New Zealand Green Building Council (NZGBC) 5 Green
Star Design and As Built certification.
2. Implement power metering and monitoring for 50% of properties by the end of 2025.
3. Install solar systems at five buildings by the end of 2025.
4. Minimise and offset residual Scope 1 and 2 GHG emissions.
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

1. As at the date of this Framework, these are the ICMA Green Bond Principles 2021 (with June 2022 Appendix) (GBP)
2. As at the date of this Framework, these are the APLMA Green Loan Principles 2023 (GLP)
02.
ABOUT THIS FRAMEWORK
PFI has developed this Framework to support progressive action towards our strategic objectives (outlined
above) and our strategic target to develop significant new buildings targeting minimum NZGBC 5 Green
Star Design and As Built certification, as discussed further in our 2022 Sustainability Report.
This Framework outlines the process by which PFI or a subsidiary intends to issue or enter into Green
Loans and/or Green Bonds (Green Debt), where an amount equal to the net proceeds of the Green Debt
will be notionally allocated to finance and/or refinance Eligible Assets (as defined below).
This Framework is consistent with the voluntary sustainable finance principles and guidelines (together
the Market Standards) outlined below:
▪Green Bonds will be issued in accordance with the Green Bond Principles (GBP)
1
issued by the
International Capital Market Association; and
▪Green Loans will be entered into in accordance with the Green Loan Principles (GLP)
2
issued by the
Asia-Pacific Loan Market Association, the Loan Market Association and the Loan Syndicates and
Trading Association.
While PFI has no immediate plans to execute a Sustainability-Linked Loan or issue a Sustainability-Linked
Bond, PFI may consider these sustainable finance instruments in the future and would update the
Framework accordingly.
03.
SUSTAINABILITY GOVERNANCE
PFI’s Board is responsible for oversight of PFI’s Sustainability Strategy and performance. PFI’s Board
receives quarterly reporting from Management on strategy, sustainability, operations and risk management.
This reporting includes progress against agreed initiatives within PFI’s Sustainability Strategy (which are
set with oversight from the Board).
In relation to this Framework, the Chief Finance and Operating Officer will be responsible for managing the
issuance of, or entry into, any Green Debt instruments and ensuring ongoing compliance with this
Framework. This includes having oversight of PFI’s reporting obligations under this Framework, including
the notional allocation to Eligible Assets (as defined below) under this Framework and reporting to the
Board on a quarterly basis.
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

04.
GREEN LOANS AND GREEN BONDS
4.1 USE OF PROCEEDS
PFI intends to notionally allocate an amount equal to the net proceeds from Green Debt to finance and/or
refinance, in whole or in part, new or existing buildings, buildings under development or building upgrade
projects that conform with the eligibility criteria set out below (Eligible Assets). A reference in this
Framework to proceeds being “allocated” means a notional allocation in PFI’s systems.
Eligible Assets may include projects delivered, or in the process of being delivered, which PFI
(or a subsidiary):
▪Owns outright;
▪Partially owns (for example, through a joint venture); or
▪Has an interest in because it holds a direct or indirect equity investment in the owner of the
relevant assets.
Allocation will be on the basis that the value of Eligible Assets (determined in accordance with section 4.3
below) will be at least equal to the aggregate amount of all outstanding Green Debt (subject to temporary
management of unallocated proceeds). In the case of partial ownership and direct or indirect equity
interests, the value attributed to an Eligible Asset for this purpose will be based on PFI’s proportionate
ownership share of the Eligible Asset or its owner.
3

Eligible Assets may include projects delivered, or in the process of being delivered, and may include the
funding of capex, opex and other related expenditure.
3. In the case of an equity investment, if the relevant owner of those Eligible Assets issues its own Green
Bonds or Green Loans to finance or refinance such Eligible Assets, we will reduce the allocation of our
Green Debt proceeds on a proportionate basis so that there is no double counting.
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

Eligible Asset Eligibility Criteria
The criteria for categorising Eligible Assets (Eligibility Criteria) is outlined below with reference to the
GBP and GLP.
ELIGIBLE CATEGORIES
(GBP/GLPs)ELIGIBILITY CRITERIA
Green BuildingsInvestments in new or existing buildings, buildings under development or
building upgrade projects that achieve at least one of the following
national green building ratings:
▪Certified as obtaining, or verified as targeting, a minimum NZGBC
5 Green Star Design and/or Built rating
4
.
▪Certified as obtaining, or verified as targeting one or more of the
following operational performance ratings:
–a minimum NZGBC 4 Green Star Performance rating;
–a NZGBC Green Star Performance rating achieving a minimum
score of 8/20 (base building) or 9/23 (whole building), within the
GHG emissions credit section of the NZGBC Green Star
Performance rating tool; or
–any other equivalent regional, national, or internationally recognised
rating or certification that becomes recognised as a credible
standard of environmental performance for green buildings.
New buildings are required to obtain an operational performance rating
(as referenced above) within three years of build completion or obtaining a
Green Star ‘Built’ rating (subject to PFI’s determination that there is the
availability of an appropriate rating tool and/or benchmark for the building
type), to continue qualifying as an Eligible Asset.
5
Buildings that are targeting ( but are yet to receive) one or more of the above ratings may also qualify as an
Eligible Asset if evidence can be provided that indicates the targeted rating will be achieved.
PFI supports the development of operational performance ratings for green buildings. In respect of its
Eligible Assets, PFI will endeavour to provide operational energy data to the NZGBC, using the NZGBC
Green Star Performance calculators (as applicable).
The list of Eligibility Criteria may be amended from time to time in accordance with the Market Standards.
4. As at the date of this Framework, the relevant Green Star Design and/or As Built rating tool is Version 1.0. The relevant version may be
updated over time.
5. As at the date of this Framework, there is not currently an operational performance rating tool that PFI determines to be suitable /
effective for its industrial and bespoke building types. Until PFI considers this position to have changed, PFI is not required to obtain an
operational performance rating and the buildings will still qualify as Eligible Assets.
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

4.2 PROJECT EVALUATION AND SELECTION
PFI has processes in place to ensure that Eligible Assets are identified and evaluated to ensure compliance
with this Framework.
In the first instance, PFI will utilise the NZGBC green building rating tools and systems to assess the
sustainability attributes of new and existing buildings, in alignment with the Eligibility Criteria in section
4.1. This includes Green Star, which is an internationally recognised rating system for the sustainable
design, construction and operation of buildings and fitouts. This can be used to assess sustainability
attributes of both new developments and existing buildings. Green Star provides a trusted mark of
independent verification. The NZGBC maintains and discloses a database of certified buildings on its
website
6
.
PFI will also consider the following factors in the selection of Eligible Assets:
▪Alignment to PFI’s Sustainability Strategy outlined in Section 1;
▪Conformance with the Market Standards;
▪Assessment of any potential negative social and/or environmental impacts from the Eligible Asset and
mitigants to these impacts; and
▪PFI’s own professional judgement, discretion and sustainability knowledge.
Once a building has been assessed as meeting the relevant Eligibility Criteria set out in this Framework,
it can be included as an Eligible Asset in the Register (as defined below). If an Eligible Asset is sold or
no longer meets the Eligibility Criteria set out in this Framework, then it will be declassified, and the
total value of the Eligible Assets will be reduced accordingly.
4.3 MANAGEMENT OF PROCEEDS
PFI will maintain a register of Eligible Assets that outlines (among other things) how an amount equal to
the net Green Debt proceeds have been notionally allocated to a pool of Eligible Assets. Detail on each
Eligible Asset will include the current or targeted green building rating, other information to support
Eligible Asset classification and the applicable Eligible Asset value (Register).
Each Eligible Asset may be valued at its latest independent market valuation, book value or project cost
(including land in each valuation method, where applicable). PFI will update this Register annually and in
alignment with its annual financial reporting. Where an Eligible Asset is not yet complete, the Register may
also disclose the total expected project cost on completion for transparency.
PFI is a long-term property investor, and our investment strategy may involve the acquisition of
suitable land for new development (or existing properties for re-development) many years in advance
of a green building development commencing. PFI will endeavour to prioritise the financing of new
Eligible Assets when notionally allocating an amount equal to the net proceeds from the Green Debt.
In the case of refinancing, a green building may be included as an Eligible Asset where the development
spend (i.e. construction, refurbishment or acquisition) has been incurred within three years of the Eligible
Asset first being recorded in PFI’s Register. No look back period will apply to the land acquisition costs for
these Eligible Assets.
6. NZGBC list of Green Star certified projects is available on NZGBC’s website
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

PFI will endeavour to notionally allocate an amount equal to the net Green Debt proceeds to Eligible Assets
within 24 months of issuance. Pending allocation, any unallocated proceeds shall be temporarily:
▪Held in cash or cash equivalent instruments with a Treasury function; or
▪Applied to reduce indebtedness of a short term or revolving nature before being redrawn for notional
allocation to Eligible Assets.
For revolving credit facilities, the drawn balance will be less than, or equal to, the current value of
Eligible Assets throughout the life of the revolving credit facility.
Where there are multiple Green Debt instruments, the total value of Eligible Assets will be at least
equal to the aggregate amount of all outstanding Green Debt (subject to temporary management of
unallocated proceeds).
PFI will service its debt obligations under Green Debt out of its general cashflows and not specifically
from revenues generated by Eligible Assets alone.
4.4 DISCLOSURE AND REPORTING
PFI recognises the importance investors place on transparency and disclosure and, in the case of
Green Bonds, will make the following information available on its website. In the case of Green Loans,
the information will be provided directly to lenders at a minimum.
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

ITEMFREQUENCY
Green Finance
Framework
Published at (or prior to) the first issuance of a Green Debt instrument
(and when this Framework is amended).
Pre-Issuance
External Review
Sought prior to the first issuance of a Green Debt instrument under
this Framework.
Annual Update ReportProvided annually for all outstanding Green Debt instruments.
Post-Issuance
External Review
Sought at least once post-issuance, upon full allocation of the first Green
Debt instrument (or at such other frequency as determined by PFI in
accordance with the Market Standards).
PFI intends to disclose Annual Update Reports in line with the Market Standards that include the
following information:
▪Allocation Reporting: A list and description of the Eligible Assets (location, building type, value)
and the amount of net proceeds notionally allocated towards such Eligible Assets. This includes
confirmation of the aggregate amount of Green Loans and Green Bonds, along with disclosure of
any unallocated proceeds.
▪Eligibility Reporting: Confirmation that the Eligible Assets meet the relevant Eligibility Criteria
requirements included in this Framework, including any current/targeted green building ratings.
▪Impact Reporting: PFI will endeavour to provide qualitative and/or quantitative reporting of the
environmental impacts of the Eligible Assets, in accordance with the impact reporting guidelines
detailed in the Market Standards. Examples of impact indicators that may be reported include:
– The green building ratings achieved by each of the Eligible Assets;
– Annual GHG emissions reduced or avoided;
– Additional new and total installed capacity of solar electricity generation and (subject to availability of
data) may include annual generation of electricity from solar installations;
– Percentage, or tonnes, of demolition and construction waste minimised, reduced or recycled; or
– Progress with energy efficiency initiatives and associated power savings.
4.5 EXTERNAL REVIEW
PFI has obtained external review in the form of a second party opinion from DNV that the Framework and
Eligible Assets currently listed in the Register (dated May 2023) align to the relevant Market Standards.
If the Framework is materially amended, PFI may obtain an external review report from an appropriately
qualified verifier that the Framework and Eligible Assets align to the Market Standards (at PFI’s discretion).
At least once post issuance, upon full allocation of the first Green Debt issuance, PFI will obtain an external
review report upon the Annual Update Report and the management of proceeds aligning to this Framework
and the Market Standards. Further post issuance external review reports may be obtained at a frequency
determined by PFI in accordance with the Market Standards.
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

05.
CONTINUOUS IMPROVEMENT
PFI will monitor how the Market Standards and global sustainable finance markets continue to develop
and intends to adapt its approach to sustainable finance as relevant. As a consequence, PFI may update
this Framework from time to time in its discretion, including to ensure it remains in line with market
practice and the Market Standards.
In parallel, and as part of our ongoing stakeholder engagement, we welcome feedback and input from
stakeholders on this Framework to support our commitment to continuously adapt our approach to
sustainable finance as the markets and our own Sustainability Strategy. Contact information is
outlined below.
11
PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

06.
IMPORTANT NOTICE
PFI intends to manage Green Debt in accordance with this Framework. However, this Framework does
not form part of the contractual terms of any Green Debt instrument. If PFI fails to comply with this
Framework, the Market Standards, PFI’s Sustainability Strategy or sustainability objectives, or the
Green Debt instruments cease to have a ‘green’ status, then:
▪This does not constitute an event of default, event of review, or any other breach in relation to any
Green Debt instruments; and
▪There is no requirement for PFI to repay the Green Debt instruments as a result of this non-compliance
and neither investors nor PFI have any right to early repayment as a result of this non-compliance.
This means there is no legal obligation on PFI to allocate the proceeds in the manner or by the time
described in the Framework or to comply with the Framework or the Market Standards on an ongoing basis.
As a result, Green Debt instruments may cease to be labelled as ‘green’. PFI will disclose if a Green Debt
instrument ceases to be labelled as ‘green’ in its Annual Update Report.
07.
FURTHER INFORMATION
More information on PFI’s approach to sustainability can be found on our website or in our annual report.
Contacts: Registered office: Level 4, Hayman Kronfeld Building,
15 Galway Street, Auckland, 1010
Telephone: +64 (0)9 303 9450
Email: info@propertyforindustry.co.nz
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PROPERTY FOR INDUSTRY LIMITED
GREEN FINANCE FRAMEWORK JULY 2023

www.propertyforindustry.co.nz
YOUR
INDUSTRIAL
PROPERTY
EXPERTS