PFI Announces Annual Results
NZX and media
announcement
—
26 February 2024
Page 1
PFI ANNOUNCES ANNUAL RESULTS
The PFI management team will present the results via live webcast from 10am NZT on 26 February
2024. To view and listen to the webcast, please visit https://edge.media-server.com/mmc/p/i3sigtua.
Anyone wishing to participate in the webcast (for example, to ask a question) must pre-register for the
conference call at https://register.vevent.com/register/BI94fa315da6cf418e979dd8a2783c2874. Upon
registering, participants will be provided with participant dial-in numbers, a passcode and a unique
registrant ID. In the 10 minutes prior to the call start time, you will need to use the conference access
information provided in the email received at the point of registering, in addition to opening the webcast
(using the details above).
Highlights
▪ Annual result: Fair value losses on properties of $140.8m (-6.7%) contributing to a loss after tax of
$97.8m. Funds From Operations (FFO)
1
down 1.8% on FY22 to 10.03 cents per share (cps),
Adjusted Funds From Operations (AFFO) up 1.0% on FY22 to 8.92 cps, FY23 cash dividends of
8.30 cps, up 2.5% on FY22 dividends.
▪ Under-renting
2
provides platform for rental growth: Auckland industrial vacancy remains near
all-time lows, driving rental growth. $68.9m of contract rent reviewed during FY23 delivering an
average annualised uplift of 4.2%, 14.8% of contract rent leased during FY23 at an average of 26.4%
above previous contract rents. ~$2.0b industrial property portfolio independently assessed as being
~16% under-rented.
▪ Green Star development pipeline expanded and on track: 5.8 hectares of land under contract at
Spedding Road, active brownfield sites on track with ~$73m of committed spend remaining, all
buildings targeting 5 Green Star ratings.
▪ Sustainability at our core: In house facilities management services enabling an increased focus
on the operational performance of buildings, solar and power metering initiatives advanced, Green
Star developments matched with Green Finance.
▪ Proactive capital management: $251m of available bank liquidity within existing funding envelope,
gearing comfortable at 32.0%. Green Finance Framework launched and inaugural $150m Green
loan tranches established, initial $25m draw made on Pricoa shelf-facility.
Property for Industry Limited (PFI, the Company) today announced the Company’s annual result for the
year ended 31 December 2023. PFI’s balance date is changing from 31 December to 30 June and PFI’s
next annual report will reflect a six-month period to 30 June 2024 (FY24).
“Strong leasing outcomes have delivered cashflow and stability,” says PFI Chief Executive Officer,
Simon Woodhams. “Despite significant increases in interest rates during the year, low gearing, low
vacancies and growing rents have all worked in our favour.”
Annual result
PFI reported a loss after tax for FY23 of $97.8m (loss of 19.48 cps), as compared to a loss of $13.9m
(loss of 2.76 cps) in FY22. A $140.8m fair value loss on the independent valuation of the Company’s
property portfolio, as compared to a $56.7m fair value loss in FY22, was the main contributor to this
reduction.
--------
1
Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) are non-GAAP financial information and are
common property investor metrics, which have been calculated in accordance with the guidelines issued by the Property Council
of Australia. Please refer to Appendix 1 for more detail as to how these measures were calculated.
2
Under-renting in commercial property occurs when contractual rent is below independent valuer assessments of market rents.
This presents an opportunity to achieve reversion to market rents over time through rent reviews and re-leasing activity, all else
remaining equal.
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FY23 net rental income
3
of $94.9m was down $0.8m (0.7%) on FY22, due to the impacts of brownfield
development projects (-$3.2m) and divestment activity (-$1.5m), partly offset by positive leasing activity
($3.6m).
Interest expense and bank fees increased by $4.5m, the result of an increase in the Company’s weighted
average cost of debt to 5.70% from 4.77% as at the end of FY22. Current taxation of $5.6m was down
$4.9m on FY22, the change from the prior year being largely due to an increase in deductible capital
expenditure and tax deductions associated with redevelopment projects.
As a result, FFO earnings were down -1.8% on FY22 to 10.03 cps, whilst AFFO earnings of 8.92 cps
were up 0.9% from FY22.
In line with PFI’s dividend policy to distribute between 90% to 100% of AFFO on a rolling three-year
historic average basis, the PFI Board today resolved to pay a fourth quarter final cash dividend of 2.45
cps. The dividend will have imputation credits of 0.34 cps attached and a supplementary dividend of
0.15 cps will be paid to non-resident shareholders. The record date for the dividend is 4 March 2024,
and the payment date is 13 March 2024. The dividend reinvestment scheme will not operate for this
dividend.
The fourth quarter dividend will take cash dividends for FY23 to 8.30 cents per share, up 2.5% from
FY22 dividends (refer Appendices 2 and 3 for all pay-out ratio calculations).
Under-renting provides platform for rental growth
Portfolio snapshot as at 31 December 2023 31 December 2022
Book value $2,027.7m $2,117.2m
Number of properties 92 94
Number of tenants 126 132
Contract rent $96.6m $98.2m
Occupancy 100.0% 100.0%
Weighted Average Lease Term (WALT) 5.06 years 5.08 years
Auckland property 85.3% 83.2%
The strong levels of rental growth reported for the first half of FY23 continued into the second half of the
year.
Rent reviews were completed on 111 leases during FY23, resulting in an average uplift of 5.0% on
~$68.9m of contract rent. CBRE forecast
4
Auckland industrial rental growth over the next five years to
average 2.9% per annum for prime properties and 1.8% per annum for secondary properties, following
growth of 45% and 37% over the past five-years to 31 December 2023, respectively.
Around 148,000 square metres (sqm), or $17.7m (18.3%) of PFI’s portfolio by rent, was leased during
FY23 to five new and 24 existing tenants for an average increase in term of 5.2 years, with negligible
incentives across these leasing transactions. Rents were agreed on $14.3m of contract rent, achieving
a positive re-leasing spread of around 26% on annual passing rents. The remaining $3.4m of contract
rent secured during FY23 will be subject to market reviews on renewal. After factoring in rent review
caps those leases are ~18% under-rented as at 31 December 2023.
Combined, over 92% of contract rent was reviewed, varied, or leased during FY23.
--------
3
Refer note 2.5 of the financial statements. Excludes service charge income recovered from tenants and management fee income.
4
CBRE “Auckland Property Market Outlook”, December 2023
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At the end of FY23 the Company’s portfolio was fully occupied and just 1.3% of contract rent is due to
expire in FY24, with the largest single expiry totalling 0.9% of contract rent. FY24 expiries and market
reviews (5.6% of contract rent) are ~30% under-rented at the end of FY23 after factoring in review caps.
Multiple recent leasing transactions have recorded re-leasing spreads of ~40% on previous contract
rents and settling at or above independent valuer assessments of December 2023 market rent. With the
next leasing event for 17% of PFI’s properties being an expiry or market rent review, PFI’s well-located
portfolio is set to continue realising rental growth in the coming years.
The Company recorded an annual decrease in the value of its property portfolio from independent
valuations of $140.8m (-6.7%) to $2,027.7m. Realised rental growth was estimated to have added
around ~6% to the value of the portfolio, with the remainder of the valuation outcome due to a softening
in yields or cap rates as a result of the higher interest rate environment. As a result of portfolio and
valuation activity, and excluding the Company’s brownfield development properties, PFI’s passing yield
softened by 0.51% to 5.01%, while the portfolio market cap rate softened by 0.74% to 5.74%. An
independent market rental assessment of the entire portfolio was completed as part of the valuation
process, this assessment estimates that PFI’s portfolio is around 16% under-rented.
Net tangible assets (NTA) as at the end of FY23 of 270.9 cps are down 27.9 cps on FY22, largely as a
result of decreases in the value of properties and derivatives.
Green Star development pipeline expanded and on track
During the year, PFI entered into a conditional contract to acquire approximately 5.8 hectares of land
within the proposed industrial subdivision at Spedding Road, located at the end of the Northwestern
Motorway in Auckland, for $40.6m.
Indicative plans demonstrate that site coverage of up to 70% of the
lots to be purchased can be achieved, with early concepts allowing for ~40,000 sqm of covered workable
area once complete, for an estimated total project spend of ~$150m (including land). Consistent with
PFI’s sustainability strategy, all buildings will be designed and developed to target a minimum of 5 Green
Star ratings.
In addition to Spedding Road, PFI currently has around $267m (13%) of the portfolio held in brownfield
opportunities. Progress at the Company’s current sites (30-32 Bowden Road and 78 Springs Road) has
continued apace, with all buildings set to be delivered on time and on budget.
At the Company’s 3.9-hectare 30-32 Bowden Road property, ~40% of the development has been pre-
leased to Tokyo Food for a lease term of 12-years, with the remainder being developed on a speculative
basis, and PFI is in advanced discussions with a tenant for this space.
At 78 Springs Road, the Company is developing a 25,500 sqm warehouse for existing tenant Fisher &
Paykel Appliances, with an option to expand the warehouse to 30,000 sqm. PFI has also signed a non-
binding Heads of Agreement with a prospective tenant to develop ~6,500 sqm of warehouse, anchoring
stage 2 of the redevelopment. Should this tenant commitment be secured, the balance of stage 2 (~4,800
sqm of warehouse) will likely be developed on a speculative basis, and construction could commence
as early as Q1 2025, upon completion of Stage 1. Plans for the balance of the site, Stage 3, allow for a
~17,500 sqm warehouse with 500 sqm of office, 4,200 sqm of breezeway and canopies and 2,300 sqm
of yard, with any redevelopment likely to be tenant led. All future stages will be committed to on an
individual basis, taking into consideration their ability to meet hurdle rates of return, market conditions
and availability of capital.
Sustainability at our core
Further progress has been made across a variety of areas in the Company’s sustainability programme,
including: embedding in-house facilities management services, enabling an increased focus on the
operational performance of our buildings; advancing the Company’s solar and power metering initiatives,
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26 February 2024
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with 240 solar panels installed as part of the sustainable refurbishment of 3-5 Niall Burgess Road, 20
properties within the portfolio now have power metering and monitoring installed.
PFI will also publish its first mandatory Climate-Related Disclosures in accordance with the Aotearoa
New Zealand Climate Standards by 30 April 2024.
Proactive capital management
“FY23 has been a busy year for capital management at PFI,” says PFI Chief Finance and Operating
Officer, Craig Peirce. “We’ve actively managed our funding envelope, providing funding certainty on our
near-term capital commitments, while at the same time diversifying our sources of funding.”
Financing activities included launching a Green Finance Framework and establishing the Company’s
inaugural $150m Green loan tranches. PFI also made a $25m drawdown on the Company’s Note
Purchase and Private Shelf Agreement with PGIM, Inc (also known as Pricoa). The drawdown was for
six years on a float-rate basis, with the margin fixed for the duration of the drawdown. Following this
activity, the weighted average term to expiry of PFI’s bonds and bank facilities is 2.4 years and the
Company has over $251m of available bank liquidity as at the end of the year.
PFI’s gearing as at the end of FY23 was 32.0% (covenant: 50%) and the interest cover ratio for the year
then ended was 2.8 times (covenant: 2 times). Interest rate hedging provides for an average of ~57% of
the Company’s debt to be hedged at an average fixed rate of ~2.46% for FY24, offering some protection
from floating interest rates. PFI’s guidance (see below) assumes an average BKBM throughout FY24 of
5.53%.
Closing and outlook
Favourable market conditions, coupled with a portfolio that is around 16% under-rented, provides a
platform for the Company to continue to grow rental income. Following a period of rapid Official Cash
Rate increases from 0.25% in August 2021 to 5.5% as at the end of 2023, as the Reserve Bank of New
Zealand sought to reduce inflation, financial markets both here and around the globe have begun to
price in interest rate cuts. With around 40% of PFI’s borrowings on floating interest rates, these cuts
would provide some relief to the Company’s interest bill.
However, changes to depreciation rules, which are likely to impact PFI from 1 July 2024, will see the
Company’s tax bill rise by approximately ~$2m a year. In addition, a range of economic indicators
suggest that 2024 may be a challenging year for businesses.
Balancing these factors, and noting that the FY24 financial year will be a short six-month period due to
a change in year end to 30 June, dividend guidance for this six-month period has been set at 4.15 cents
per share, which on an annualised basis is 8.30 cents per share, in line with dividends for FY23. Cash
dividends of 4.15 cps are anticipated to result in a dividend pay-out at the bottom of PFI’s dividend policy
range (after pro-rating for the balance date change).
“PFI’s strategic response to market conditions has been to focus on projects and bolt-on acquisitions
that have the potential to increase shareholder returns beyond current levels, to divest sensibly, and to
enhance our engine room,” says PFI Chair Anthony Beverley. “We have continued to deliver stable cash
returns for investors, while positioning the Company to continue to grow in the years ahead.”
ENDS
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ABOUT PFI & CONTACT
PFI is an NZX listed property vehicle specialising in industrial property. PFI’s nationwide portfolio of 92 properties is leased to
126 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
Attachments
NZX Form – Results Announcement
NZX Form – Distribution Notice
Annual Results Presentation
Annual Report
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26 February 2024
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Appendices
Appendix 1 – FFO and AFFO Calculations
Funds / Adjusted Funds From Operations For the year
ended
For the year
ended
(unaudited, $000, unless noted)
31 December
2023
31 December
2022
Profit (loss) and total comprehensive income after income
tax attributable to the shareholders of the Company
(97,792) (13,944)
Adjusted for:
Fair value loss / (gain) on investment properties 140,830 56,735
Impairment of goodwill or intangibles - 29,086
Material damage insurance income (689) -
Loss / (gain) on disposal of investment properties 1,859 (575)
Fair value loss / (gain) on derivative financial instruments 10,151 (18,536)
Amortisation of tenant incentives 2,616 2,799
Straight lining of fixed rental increases (577) (942)
Deferred taxation (6,565) (3,114)
Other 553 40
Funds From Operations (FFO) 50,386 51,549
FFO per share (cents) 10.03 10.21
Maintenance capex (5,288) (3,870)
Incentives and leasing fees given for the period (493) (3,173)
Other (incl. reversal of accounting entries for COVID-19 abatement
and deferral deals)
168 72
Adjusted Funds From Operations (AFFO) 44,773 44,578
AFFO per share (cents) 8.92 8.83
Appendix 2 – FFO and AFFO Dividend Pay-out Ratios
2023 2022
Full year dividends per share (cents) 8.30 8.10
FFO dividend pay-out ratio (%) 83% 79%
AFFO dividend pay-out ratio (%) 93% 92%
Appendix 3 – Rolling three-year AFFO Dividend Pay-out Ratios
2023 2022 2021 2020 2019
Rolling three-year AFFO dividend pay-
out ratio (%)
90% 91% 92% 98% 99%
---
Results announcement
(for Equity Security issuer/Equity and Debt Security
issuer)
Updated as at June 2023
Results for announcement to the market
Name of issuer Property for Industry Limited (PFI)
Reporting Period 12 months to 31 December 2023
Previous Reporting Period 12 months to 31 December 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$92,777 -1%
Total Revenue $92,777 -1%
Net profit/(loss) from
continuing operations
($97,792) -601%
Total net profit/(loss) ($97,792) -601%
Final Dividend
Amount per Quoted Equity
Security
$0.02450000
Imputed amount per Quoted
Equity Security
$0.00339904
Record Date 04 March 2024
Dividend Payment Date 13 March 2024
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.709 $2.988
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
This dividend is fully credited with imputation credits to the
extent permitted by the imputation credit rules and to the extent
that the directors of PFI determine were available.
This announcement is extracted from PFI’s audited financial
statements as at and for the twelve months ended 31 December
2023. PFI has rearranged the presentation of the information
disclosed in the Consolidated Statement of Comprehensive
Income in the reporting period ended 31 December 2023 and to
the comparative figures for the 12 months ended 31 December
2022. Rearrangements have been made to align with the
reporting of other entities in the same industry as PFI and to
provide more relevant and comparable information to the users
of the financial statements. A copy of these audited financial
statements is attached to this announcement.
Authority for this announcement
Name of person
authorised
to make this announcement
Craig Peirce
Contact person for this
announcement
Craig Peirce
Contact phone number +64 9 303 9651
Contact email address peirce@pfi.co.nz
Date of release through MAP
26 February 2024
Audited financial statements accompany this announcement.
---
Distribution Notice
Updated as at June 2023
Section 1: Issuer information
Name of issuer Property for Industry Limited
Financial product name/description Property for Industry Limited Shares
NZX ticker code PFI
ISIN (If unknown, check on NZX
website)
NZPFIE0001S5
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 04 March 2024
Ex-Date (one business day before the
Record Date)
01 March 2024
Payment date (and allotment date for
DRP)
13 March 2024
Total monies associated with the
distribution
$12,302,168
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.02789904
Gross taxable amount $0.01213944
Total cash distribution $0.02450000
Excluded amount (applicable to listed
PIEs)
$0.01575960
Supplementary distribution amount $0.00154242
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed X
Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
28%
Imputation tax credits per financial
product
$0.00339904
Resident Withholding Tax per
financial product
N/A
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
Date strike price to be announced (if
not available at this time)
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
DRP strike price per financial product
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Craig Peirce
Contact person for this
announcement
Craig Peirce
Contact phone number +64 21 248 6301
Contact email address peirce@pfi.co.nz
Date of release through MAP
26 February 2024
---
SUSTAINABILITY AT OUR CORE:
In house facilities management services enabling an increased focus on the
operational performance of buildings, solar and power metering initiatives
advanced, Green Star developments matched with Green Finance.
GREEN STAR DEVELOPMENT PIPELINE EXPANDED AND ON TRACK:
5.8 hectares of land under contract at Spedding Road, active brownfield sites
on track with ~$73m of committed spend remaining, all buildings targeting 5
Green Star ratings.
Highlights
Annual
Results
Briefing
2023
4
ANNUAL RESULT:
Fairvaluelossesonpropertiesof$140.8(-6.7%)contributingtoalossaftertax
of$97.8million.FundsFromOperations(FFO)down1.8%onFY22to10.03
centspershare(cps),AdjustedFundsFromOperations(AFFO)up1.0%on
FY22to8.92cps,2023cashdividendsof8.30cps,up2.5%onFY22
dividends.
PFI’sbalancedatetochangefrom31Decemberto30June(PFI’snextannual
reportwillreflectasix-monthperiodto30June2024).
PROACTIVE CAPITAL MANAGEMENT:
$251m of available bank liquidity within existing funding envelope, gearing
comfortable at 32.0%. Green Finance Framework launched and inaugural
$150m Green loan tranches established, initial $25m draw made on Pricoa
shelf-facility.
UNDER-RENTING PROVIDES PLATFORM FOR RENTAL GROWTH:
Auckland industrial vacancy remains near all-time lows, driving rental growth.
$68.9m of contract rent reviewed during FY23 delivering an average
annualised uplift of 4.2%, 14.8% of contract rent leased during FY23 at an
average of 26.4% above previous contract rents.
~$2.0b industrial property portfolio ~16% under-rented.
78 SPRINGS ROAD – JANUARY 2024
1
2
4
78
1
2
3
INCLUDING
BROWNFIELD
LEASES
1
DECEMBER 2023DECEMBER 2022
BOOK VALUE
$2,027.7m$2,117.2m
NUMBER OF PROPERTIES
9294
NUMBER OF TENANTS
127 (▲1)126132
CONTRACT RENT
$102.4m (▲$5.8m)$96.6m$98.2m
OCCUPANCY
97.0% (▼3.0%)100.0%100.0%
WEIGHTED AVERAGE LEASE TERM
(W ALT)
5.78 years (▲0.72 years)5.06 years5.08 years
AUCKLAND PROPERTY
85.3%83.2%
Portfolio
Snapshot
▪PFI's portfolio is diversified across 92 properties
and 126 tenants, with 100.0% occupancy and a
weighted average lease term of 5.06 years,
weighted towards Auckland
Annual
Results
Briefing
2023
1
6
1
Includes impact of Fisher & Paykel Appliances lease at 78 Springs Road, Tokyo Food lease at 30-32 Bowden Road, and 30-32 Bowden Road spec build
▪Rents agreed on $14.3 million of contract
rent secured during 2023
▪Rents were settled 26.4% above previous
contract rents
Annual
Results
Briefing
2023
Leasing
eighted
verage
ease
erm
W
A
L
T
across 2023
leasing transactions
▪Remaining $3.4 million of contract rent
secured during 2023 all subject to market
reviews on renewal
▪After factoring in review caps, those renewals
are ~18% under rented at December 2023
▪Weighted average review date of September
2024
7
▪Total of $17.7 million of contract rent
secured during 2023
0.0%
1.3%
12.1%
7.8%
16.6%
13.0%
11.1%
12.3%
3.6%
9.4%
12.8%
0%
5%
10%
15%
20%
25%
VacantFY24FY25FY26FY27FY28FY29FY30FY31FY32Onwards
Total ExpiriesBrownfield Opportunities
FY24
Lease
Expiries
▪Portfolio is 100.0% occupied (0.0% vacancy) and 1.3% of contract rent is due
to expire in FY24
1
(chart below), largest single expiry 70.9% of that (0.9% of
contract rent) (chart on right)
−15 Artillery Place and 10C Stonedon Drive have been sold, with
settlements due to take place in March and June 2024, and are
excluded from any expiries analysis
▪Vacancy remains near historical lows: CBRE reports
2
Auckland prime
industrial vacancy at 0.6% and secondary industrial vacancy at 0.5%, noting
a slightly softer demand outlook through 2024 & 2025, with vacancy forecast
to increase to ~2% in 2024
1
FY24 reflects the six-month period to 30 June 2024 to account for PFI’s balance date change,
2
CBRE “Auckland Property Market Outlook” December 2023
Annual
Results
Briefing
2023
8
Fixed26.2%
CPI8.9%
Market4.3%
Expiries1.3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
▲
▲
Rent
Reviews
1
CBRE “Auckland Property Market Outlook” December 2023 – includes 2023 rental growth,
2
15 Artillery Place and 10C Stonedon Drive are due to settle in March and June 2024 and are therefore excluded from FY24 lease events analysis
Annual
Results
Briefing
2023
9
▪111 rent reviews delivered an increase of 5.0% on ~$68.9 million of
contract rent (~4.2% annualised, up from 4.0% in 2022)
−76 fixed reviews delivered an increase of 3.6% on ~$52.3 million
of contract rent (~2.4% annualised)
−Nine market rent reviews delivered an increase of 19.3% on
$2.5 million of contract rent (annualised increase of 7.2% over
an average review period of 2.7 years)
▪FY24 expiries and market reviews (5.6% of contract rent) ~30%
under-rented at December 2023 after factoring in review caps
CBRE five-year average rental growth estimates
1
for Auckland:
10
94.9
+1.1
+0.1
+2.5
+0.4
-3.2
-1.5
-0.1
95.6
$88m
$89m
$90m
$91m
$92m
$93m
$94m
$95m
$96m
$97m
2022 net rental
income
DevelopmentsDisposalsVacancyNew leases &
renewals
AcquisitionsRent reviews &
adjustments
Other2023 net rental
income
Net Rental
Income
▪Net rental income (excluding service
charges) of $94.9 million down $0.8
million or 0.7% on the prior year
($95.6 million), growth on stabilised
portion of the portfolio of 3.1%
▪Decreases due to lost income from
brownfield development projects (-
$3.2 million), current and prior year
disposal activity (-$1.5 million) and
vacancy (-$0.1 million)
▪Positive leasing activity contributed
to an increase totalling +$3.6 million
(rent reviews & adjustments +$2.5
million, new leases & renewals
+$1.1 million)
▪Prior year acquisitions resulted in an
increase of +$0.1 million
Annual
Results
Briefing
2023
12
+0.04
+0.98
+0.43
-0.90
-0.28
-0.11
-0.08
8.83
8.92
8.0
8.5
9.0
9.5
10.0
10.5
2022 AFFORebase for
shares
purchased
Current taxationNet rental
income
Interest expense
and bank fees
Maintenance
capex
Administrative
expenses /
Other
Non-recoverable
property costs
2023 AFFO
Adjusted
Funds From
Operations
(cps)
▪AFFO earnings of 8.92 cps, 0.09
cents per share (cps) or 1.0% up on
the prior year
▪Effective tax rate of 10.5% down
3.4% on the prior year following
commencement of brownfield
developments
▪Net rental income (including AFFO
adjustments) up $2.2 million or 0.43
cps on the prior year
▪Interest expense and bank fees up
$4.5 million or 0.90 cps on the prior
year
▪Maintenance capex up $1.4 million
on the prior year to 26 basis points
▪Admin expenses increased due to
continued investment in key
projects, team and systems
Annual
Results
Briefing
2023
13
60%
70%
80%
90%
100%
110%
120%
6.50
7.00
7.50
8.00
8.50
9.00
9.50
FY19FY20FY21FY22FY23
AFFO (cps)DPS (cps)Pay-out % (3-year - rhs)Pay-out % (1-year - rhs)
Earnings,
Dividends,
Guidance
▪2023 cash dividends total 8.30 cents per share
(cps), up 0.20 cps or 2.5% from 2022
▪FY24 dividend guidance of 4.15 cps, flat on 2023
dividends after pro-rating for balance date change
(FY24 reflecting six-month period to 30 June 2024)
▪Higher interest rates continue to drag earnings,
guidance assumes an average BKBM throughout
FY24 of 5.53%
▪Upside risks from capturing sector rental growth
and portfolio under renting, downside risk
predominantly from tenant failure
▪Dividend policy to distribute between 90% to 100%
of AFFO on a rolling three-year historic average
basis
▪FY24 cash dividends of 4.15 cps anticipated to
result in a dividend pay-out at the bottom of this
dividend policy range
EARNINGS2023 CPS2022 CPSCHANGE
FUNDS FROM OPERATIONS
10.0310.21-0.18 CPS or -1.8%
ADJUSTED FUNDS FROM OPERATIONS
8.928.83+0.09 CPS or +1.0%
Annual
Results
Briefing
2023
14
2,027.7
+82.1
-140.8
-28.7
-2.0
2,117.2
$1,500m
$1,600m
$1,700m
$1,800m
$1,900m
$2,000m
$2,100m
$2,200m
December 2022
investment properties &
AHFS
Fair value lossDisposalsMovement in lease
incentives, fees and
fixed rental income
Capitalised expenditure
& interest
December 2023
investment properties &
AHFS
Investment
Properties
▪Portfolio value of $2.028 billion
1
▪Decrease from annual independent
valuations of $140.8 million or 6.7%
▪8A & 8B Canada Crescent,
Christchurch, disposal settled
March 2023
▪Capex at 30-32 Bowden Road and
78 Springs Road (Green Star
developments), 28 ParaiteRoad
(yard works), 314 Neilson Street
(warehouse extension)
Annual
Results
Briefing
2023
15
1
Includes Non-current Assets Held for Sale (AHFS)
298.8
270.9
+1.8
-27.7
-2.0
240
250
260
270
280
290
300
310
December 2022 NTAFair value loss on investment
properties
Fair value loss on derivative
financial instruments
Retained earningsDecember 2023 NTA
▪Net tangible assets (NTA) per share
decreased by 27.9 cps or 9.3%
▪Change in NTA per share driven by
the decrease in the fair value of
investment properties
(-27.7 cps), a decrease in the net
fair value asset for derivative
financial instruments (-2.0 cps) and
retained earnings (+1.8 cps)
Net Tangible
Assets
(cps)
Annual
Results
Briefing
2023
16
Funding,
Covenants,
Interest Rates
▪BNZ facility increased to $175 million and extended by
two years to 31 March 2025, subsequently reduced to
$100 million on establishment of the new Green loan
tranches and initial Pricoadrawdown
▪Green Finance Framework launched, inaugural $150
million Green loan tranches established
▪Initial $25 million, six-year drawdown made on Pricoa
shelf facility, providing both diversification and access to
long-term funding
▪$38.6 million of assets divested in H2 2023, with
proceeds to be recycled into current brownfield
redevelopment projects upon settlement
▪PFI’s comfortable gearing, sufficient hedging and ample
bank liquidity combine to provide certainty on committed
brownfield developments
DECEMBER 2023DECEMBER 2022
FUNDING
BANK FACILITIES DRAWN
$423.9m$403.7m
BANK FACILITIES LIMIT
$675.0m$525.0m
BANK FACILITIES HEADROOM
$251.1m$121.3m
DCM
1
$225.0m$200.0m
FUNDING TERM (AVERAGE)
2.4 years3.0 years
BANKS
ANZ, BNZ, CBA,
Westpac
ANZ, BNZ, CBA,
Westpac
COVENANTS
LOAN-TO-VALUE RATIO (COVENANT: <50%)
32.0%28.5%
INTEREST COVER RATIO (COVENANT: >2.0X)
2.8 times3.4 times
INTEREST RATES
WEIGHTEDAVERAGE COST OF DEBT
5.70%4.77%
INTERESTRATE HEDGING (EXCL. FORWARD
STARTING)
$370m/ 2.35% / 2.7 years$390m/ 2.44% / 3.1 years
FORWARD STARTING INTEREST RATE
$165m / 3.89% / 3.8 years$60m / 2.75% / 4.3 years
Annual
Results
Briefing
2023
18
1
Includes Note Purchase and Private Shelf Agreement with PGIM, Inc (Pricoa)
100.0 100.0
150.0
150.0
100.0
50.0
75.0
25.0
125.0
25.0
$m
$50m
$100m
$150m
$200m
$250m
$300m
FY24FY25FY26FY27FY28FY29FY30
Pricoa 6-yr
CBA 7-yr Term Loan
BNZ 4-yr Green Term Loan
Westpac 4-yr Green Loan
ANZ & CBA 3-yr Green Loan
BNZ Bank Facility
Syndicated Bank Facilities
Bonds
1.5%
1.9%
2.3%
2.7%
3.1%
3.5%
3.9%
4.3%
$0m
$50m
$100m
$150m
$200m
$250m
$300m
$350m
$400m
$450m
Dec-23Jun-24Dec-24Jun-25Dec-25Jun-26Dec-26Jun-27Dec-27
Cover (lhs)Interest Rate (rhs)
Debt Facility
Maturity Profile,
Hedging
▪PFI’s debt instruments have an
average term to expiry of ~2.4
years (top graph), with significant
unutilised bank facility capacity
▪Fixed rate payer hedging profile
(bottom graph) provides for an
average of ~57% of debt to be
hedged at an average fixed rate of
~2.46% during FY24, offering
some protection from floating
interest rates
Annual
Results
Briefing
2023
19
32.0%
35.0%
+0.2%
+0.8%
+1.6%
+0.0%
+1.3%
-0.3%
-0.7%
December 2023
LVR %
45 Cryers Road
acquisition
15 Artillery Place
disposal
10C Stonedon
Drive disposal
30-32 Bowden
Road
development
78 Springs Road
development
(stage 1)
Other capital
commitments
Spedding Road
land acquisition
Committed LVR
%
▪December 2023 gearing of 32.0%
lifting to ~33.7% in Q1 2025 after
committed acquisitions, divestments
and projects
▪SpeddingRoad land acquisition
($40.6 million) conditional on titles
being received and works being
complete (expected mid-2025),
pushing gearing to ~35.0%, the
middle of PFI’s target range
▪Any spend on future stages of 78
Springs Road excluded (see slide 33
for further detail)
▪Funding for near term development
pipeline secured within existing
funding envelope, exploring funding
options for future stages of Springs
Road and SpeddingRoad
Gearing
Annual
Results
Briefing
2023
20
~
Presentatio
n title
22
1
When compared to a reference building, being a typical building that would get built today without considering any implications on carbon emissions, with the design being driven mostly by cost and programme.
1
Presentatio
n title
23
24
$100
$120
$140
$160
$180
$200
$220
20192020202120222023
Prime Industrial RentsSecondary Industrial Rents
Market Update
▪Following a period of rapid growth, with prime and
secondary industrial rents in Auckland increasing
45% and 37% over the past five years (top chart),
CBRE
1
is forecasting an increase in incentives
through 2024, slowing growth in net effective rents
▪PFI’s ~16% portfolio under-renting provides platform
for further rental growth
▪After two years battling a global inflation surge, the
latter part of 2023 saw markets begin to contemplate
interest rate cutting cycles
▪This downward pressure on the yield curve could
provide support for asset values, including industrial
property, however, the risk of further tightening from
central banks around the world remains
▪Looking forward, PFI’s strong balance sheet and
defensive, well-located portfolio allows the Company
to execute on its Green Star development pipeline
while continuing to extract value from its core assets
CBREAUCKLAND MARKET OUTLOOK
1
DECEMBER 2023
5-YEAR
FORECAST:
DECEMBER2023
5-YEAR
FORECAST:
JUNE2023
PRIME INDUSTRIAL –VACANCY0.6%1.1%▼1.3%
–RENTS$206+2.9% (p.a.)▼+3.4% (p.a.)
–YIELDS5.62%5.44%▲5.32%
SECONDARY INDUSTRIAL –VACANCY0.5%2.1%▲0.8%
–RENTS$151+1.8% (p.a.)▼+2.9% (p.a.)
–YIELDS6.18%5. 95%▲5.75%
1
CBRE “Auckland Rent & Yield Update” various publications & CBRE “Auckland Market Outlook” December 2023, please note that the yields forecast are cap rates representing initial yields on market rents
Annual
Results
Briefing
2023
26
▪PFI continues to extract value from
its core property portfolio, with
recent deals securing benchmark
portfolio rents across key Auckland
industrial precincts, as detailed to
the right
▪Both properties featured on right
form part of PFI’s Autumn Place
estate, encapsulating ~20,000 sqm
of contiguous land in Penrose.
▪After inclusion of these deals the
Autumn Place estate ($1.9 million
of contract rent) remains ~20%
under-rented
▪With ~85% of the portfolio located
in Auckland, PFI is well positioned
to capture further rental growth,
with entire portfolio assessed as
~16% under-rented at December
2023
TOTAL RENT
WAREHOUSE
$ / SQM RATE
PREVIOUS PASSING RENT$170K$132
DECEMBER 2023 MARKET RENT$242K$190
NEWLY AGREED PASSING RENT$242K$190
VS PREVIOUS PASSING RENT▲$72K (▲43%)▲$58 (▲44%)
VS DECEMBER 2023 MARKET RENT◄►NC◄►NC
Rental Growth
Annual
Results
Briefing
2023
▪Improvements comprise an office and
warehouse constructed in the 1990’s, ~2,500
sqm warehouse with a stud-height of 6.6m
▪Post balance date, existing tenant has
renewed for 4-years from March 2025
▪PFI’s neighbouring Hugo Johnston Drive
estate combines for $1.8M of contract rent at
an average warehouse rate of $128/sqm
▪~1,100 sqm warehouse manufactured in the
mid 2000’s with a stud-height of 8.0m
▪Existing tenant renewed for 3-years in
December 2022, with a market review on
renewal date (November 2023)
▪PFI’s Neilson Street estate, located nearby,
combines for $3.5M of contract rent at an
average warehouse rate of $139/sqm
1
Deal not included in 31 December 2023 statistics,
2
Deal included in 31 December 2023 statistics
TOTAL RENT
WAREHOUSE
$ / SQM RATE
PREVIOUS PASSING RENT$530K$124
DECEMBER 2023 MARKET RENT$721K$175
NEWLY AGREED PASSING RENT$716K$185
VS PREVIOUS PASSING RENT▲$186K (▲35%)▲$60 (▲48%)
VS DECEMBER 2023 MARKET RENT▼$6K (▼1%)▲$10 (▲6%)
27
Our Portfolio
(Target & Current)
Annual
Results
Briefing
2023
29
▪8A & 8B Canada Crescent (Christchurch) settled March
2023
▪11 Sheffield Street (Blenheim) settled December 2023
▪15 Artillery Place (Nelson) and 10C StonedonDrive
(East Tamaki) remain on-balance sheet as at 31
December 2023 ($29.4 million) and are due to settle in
March 2024 and June 2024, respectively
▪Combined, these four properties have / will generate
gross proceeds of $57.9 million and have been sold at
an average of -0.8% below their most recent book
values (with the three disposals contracted in H2 2023
generating gross proceeds of $36.8 million)
Assets Held
For Sale / Sold
PROPERTYSALE PRICE
MOST RECENT
BOOK VALUE
GAIN / (LOSS) ON
SALE
8A & 8B CANADA CRESCENT (SOLD)$21.0m$19.8m▲$1.3M (+6.3%)
11 SHEFFIELD STREET (SOLD) H2 2023$7.5m$8.0m▼$0.6m (-6.9%)
15 ARTILLERY PLACE H2 2023$8.5m$9.7m▼$1.2m (-11.9%)
10C STONEDONDRIVE H2 2023$20.9m$20.9m◄►$0.0m (0.0%)
TOTAL$57.9M$58.3M▼$0.5M (-0.8%)
Annual
Results
Briefing
2023
30
Brownfield
Opportunities
▪~$267 million or 13% of the portfolio held in brownfield
opportunities, providing a growing pipeline of near-term
development opportunities
▪30-32 Bowden Road and Stage 1 of 78 Springs Road
redevelopments well progressed (see following slides)
▪Existing tenant has exercised right-of-renewal at 170
Swanson Road, final expiry now 31-Jan-30
▪SpeddingRoad
1
provides the opportunity to invest an
additional ~$150 million (including land) into PFI’s
development pipeline, with works expected to
commence mid-2025
▪Early-stage concepts in place across other key medium
term brownfield opportunities
▪Redevelopment of obsolete sites to a Green Star
standard is a key part of PFI’s transition to a low-carbon,
climate-resilient portfolio
▪All projects subject to meeting hurdle rates of return,
market conditions and availability of capital
PROPERTYDECEMBER
2023 VALUE
LETTABLE
AREA(SQM)
SITE
COVERAGE
% OF
CONTRACT
RENT
LEASE
EXPIRY
30-32 BOWDEN ROAD$70.7m
N/A
N/A 0.0%N/A
78 SPRINGS ROAD$111.1m
24,510
23%4.1%31-Jan-25
304 NEILSON STREET$19.2m
4,538
22%0.9%30-Jun-27
318 NEILSON STREET$5.8m
59012%0.2%30-Jun-27
92-98 HARRIS ROAD$27.0m
7,194
27%1.5%3-Nov-28
170 SWANSON ROAD$33.0m
5,183
12%1.2%31-Jan-30
TOTAL$267M
42,015
7.8%
Annual
Results
Briefing
2023
31
1
Spedding Road excluded from table on right until unconditional (expected mid-2025)
Brownfield
Opportunities
30-32 BOWDEN ROAD – JANUARY 2024
▪~40% of development pre-leased to Tokyo Food for a
lease term of 12-years, balance of site being developed
on a speculative basis, estimated completion mid-2024
▪~106,400 sqm of registered warehouse interest across
spec build during 2023, equating to ~$31 million of
contract rent
▪Estimated project cost unchanged at ~$65 million
▪Both buildings will target a 5 Green Star rating, creating
PFI’s first fully Green Star rated industrial estate, with
close to 24,000 sqm of covered workable area once
complete
Annual
Results
Briefing
2023
32
▪Stage 1 of the project will see the delivery of a 25,500
sqm 5 Green Star rated warehouse for long-term tenant
Fisher & Paykel Appliances, with completion expected
Q1 2025
▪Heads of Agreement signed with prospective tenant to
develop ~6,500 sqm of warehouse, anchoring Stage 2,
with the balance (~4,800 sqm of warehouse) likely to be
developed on a speculative basis. Construction could
commence in Q1 2025
▪Current plans for the balance of the site (Stage 3)
include a ~17,500 sqm warehouse with 500sqm of office,
4,200sqm of breezeway and canopies and 2,300 sqm of
yard
Brownfield
Opportunities
Annual
Results
Briefing
2023
33
78 SPRINGS ROAD: MASTER PLAN CONCEPT
▪SpeddingRoad land acquisition ($40.6 million)
conditional on titles being received and works being
complete (expected mid-2025)
▪5% deposit payable on subdivision consents being
obtained (no later than 30 August 2024), 45% payable
on titles being received and vendor works complete,
remaining 50% payable in two instalments, 12 and 24-
months following titles
▪Early plans allow for ~40,000 sqm of covered
workable area once complete, estimated total project
spend of ~$150 million (including land)
▪~63,000 sqm of registered warehouse interest since
October 2023
Brownfield
Opportunities
Annual
Results
Briefing
2023
35
Annual
Results
Briefing
2023
Governance
37
▪Appointment of Jeremy Simpson as Independent Director,
effective 27 February 2024.
▪Change in People Committee Chair from Dean Bracewell
to David Thomson, effective 3 April 2024.
▪Anthony Beverley will be stepping down as Chair of PFI’s
Board immediately following PFI’s Annual Meeting on 3
April 2024, but will remain on the Board as an Independent
Director. Dean Bracewell will be appointed as the new
Chair of the Board from that date.
▪Greg Reidy plans to retire from the Board effective 3 April
2024.
Review &
Questions
Questions?
CLOSING:
▪“Strong leasing outcomes have delivered
cashflow and stability,” says PFI Chief
Executive Officer, Simon Woodhams. “Despite
significant increases in interest rates during the
year, low gearing, low vacancies and growing
rents have all worked in our favour.”
HIGHLIGHTS:
▪Annual result
▪Under-renting provides platform for rental
growth
▪Green Star development pipeline expanded
and on track
▪Sustainability at our core
▪Proactive capital management
Annual
Results
Briefing
2023
38
Disclaimer
The information included in this presentation is provided as at 26 February 2024 and should be read in conjunction with the interim financial statements, NZX results
announcement, NZX Form –Results Announcement and NZX Form –Distribution Notice issued on that same day.
Property for Industry Limited (PFI) does not guarantee the repayment of capital or the performance referred to in this presentation.
Past performance is not a reliable indicator of future performance.
The presentation includes a number of forward looking statements. Forward looking statements, by their nature, involve inherent risks and uncertainties. Many of those risks and
uncertainties are matters which are beyond PFI’s control and could cause actual results to differ from those predicted. Variations could either be materially positive or materially
negative.
Our results are reported under NZ IFRS. This presentation includes non-GAAP financial measures which are not prepared in accordance with NZ IFRS. The non-GAAP
financial measures used in this presentation include Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO). The calculation of FFO and AFFO is set in
Appendix 1 of PFI’s interim results announcement to which this presentation is attached.
FFO and AFFO are common property investor metrics and therefore we believe they provide useful information to readers to assist in the understanding of our financial
performance, financial position and returns. They should not, however, be viewed in isolation, nor considered as a substitute for measures reported in accordance with NZ
IFRS. Non-GAAP financial measures may not be comparable to similarly titled measures reported by other entities.
While every care has been taken in the preparation of this presentation, PFI makes no representation or warranty as to the accuracy or completeness of any statement in it
including, without limitation, any forecasts.
This presentation has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs.
An investor should, before making any investment decisions, consider the appropriateness of the information in this presentation, and seek professional advice, having regard to
the investor’s objectives, financial situation and needs.
This presentation is solely for the use of the party to whom it is provided.
Annual
Results
Briefing
2023
39
---
LANDING
FUTURE
Annual
Report
31
December
THE
LONGEVITY
ISSUE
SUSTAINABILITY
SUSTAINING OUR EFFORTS
2023
REVIEW
STABILITY IS CHANGING
LOOKING
AHEAD
GUIDING US FORWARD
PROPERTY FOR INDUSTRY LIMITED
20
23
03
PAGE
12
PAGE
19
PAGE
YOUR
INDUSTRIAL
PROPERTY
EXPERTS
The industrial property sector continued
to see strong rental growth in 2023,
with above-trend leasing outcomes
driven by high levels of demand for
quality warehouse spaces. However,
the availability and cost of capital
slowed our growth, and we absorbed
a range of cost increases.
In response, our focus shifted to prioritising
value-creating opportunities: focusing on
projects and bolt-on acquisitions that have
the potential to increase shareholder
returns beyond current levels. We also
focused on enhancing our “engine room”:
upgrading internal enablers to de-risk our
business, increase our capacity and
capability for growth, and to build trust
and credibility in our brand.
At the end of the year, core holdings
continued to comprise around 80% of our
portfolio allocation. The development of
three significant buildings in Auckland is
well underway at Bowden Road in Mount
Wellington, and Springs Road in East
Tamaki. We have divested a number of
properties to sharpen our portfolio and
recycle capital, and we have entered
into a long-term agreement to acquire
land at an industrial park currently under
development. We have firm foundations
for growth.
This report covers our last 12 months of
activity, from 1 January to 31 December
2023. Because we are changing to a 1 July
to 30 June financial year, our next report
will cover six months of activity, from
1 January 2024 to 30 June 2024.
+ FUTURE-FIT
_ Laying the
foundations at
Bowden Road.
We are New Zealand’s only listed, internally managed, pure-play
industrial platform. Our well diversified, high-quality industrial property
portfolio is focused on strategic locations near key amenities with
significant growth opportunity.
AGILE AND
AGILE
1
BALANCING
PRIORITIES
GUIDING US
FORWARD
S TA BIL I T Y I S
CHANGING
1
CONTENTS
THE LONGEVITY ISSUE
SECTION
03
READ MORE
ON PAGE
2023 IN REVIEW
2
12
19
28
READ MORE
ON PAGE
READ MORE
ON PAGE
READ MORE
ON PAGE
LOOKING AHEAD
3
ESG
SUSTAINING
OUR EFFORTS
4
FINANCIAL STATEMENTS AND OTHER DISCLOSURES
2
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
1
Industrial dynamics stay strong / Market performance and
outlook p03. An active participant / Portfolio management p07.
Continuing to develop / Prioritising value creating opportunities
p08. Strong and steady / Track record with dividends p09.
Picturing our next era of growth / Our developments p10.
IS
ACCORDING TO CBRE’S December 2023 Auckland Market outlook, industrial
property vacancy was very low through 2023. As a result, rental growth in 2023
remained strong, with CBRE’s January 2024 Auckland Yield and Rent Update
estimating that market rents grew by 9.6% during the period. This continues a
trend seen for a number of years, with growth over the past five years estimated
to be 38.8%. However, this upward trend is expected to moderate during 2024,
as demand gradually softens and an active industrial supply pipeline releases
more industrial space to meet demand.
IN THIS SECTION
Auckland industrial vacancy
levels remain at near record
low levels.
INDUSTRIAL DYNAMICS STAY STRONG /
MARKET PERFORMANCE AND OUTLOOK
2023 IN REVIEW
3
ALLOCATION
PORTFOLIO
PROPERTIES
92
TENANTS
126
WALT 5.06
YEARS
5.06
73 - 84%
CORE GENERIC HOLDINGS
77%
10 - 15%
BROWNFIELD OPPORTUNITIES
13%
5 - 10%
SPECIALISED ASSETS
8%
CURRENT:
CURRENT:
CURRENT:
CURRENT:
1 - 2%
ASSETS HELD FOR SALE
2%
AUCKLAND
75 – 85%
85%
CURRENT:
OUT OF AUCKLAND
15 – 25%
15%
CURRENT:
4
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
2023 IN REVIEW
LOOKING TO THE FUTURE
For more information on our annual results, please visit:
propertyforindustry.co.nz/investor-centre/resultscentre
PERFORMANCE
CONTRACT
RENT
96.6
$
M
FUNDS FROM
OPERATIONS
(FFO)
10.03
CPS
CURRENT PORTFOLIO
VALUATION
2.028
$
BN
CPS
ADJUSTED
FUNDS FROM
OPERATIONS
(AFFO)
8.92
TENANT
RETENTION
83
%
UNDER —
RENTING
16
%
PASSING YIELD
5.01
%%
GEARING
32.0
SUSTAINABILITY TARGETS
SIGNIFICANT NEW
BUILDINGS TO TARGET
MINIMUM 5 GREEN STAR
CERTIFICATION
IMPLEMENT POWER
METERING AND
MONITORING FOR
50% OF PROPERTIES
BY END 2025
INSTALL SOLAR SYSTEMS
AT 5 BUILDINGS BY
END 2025
LEASING
ACTIVITY
148,
̃
000
SQM
_ Wall blocks
being placed
Springs Road.
5
Robust cashflow
PFI’s portfolio performed strongly during 2023
across both rent reviews and leasing outcomes.
At year end, 111 rent reviews had been
completed on $68.9 million of contract rent,
resulting in an average annualised uplift of 4.2%.
Nine market rent reviews delivered an annualised
increase of 7.2% over an average review period of
2.7 years on $2.9 million of contract rent.
147,711 square metres or 18.3% of the portfolio
by rent was leased during 2023, with 83% of deals
completed as renewals by existing tenants. A total
of $17.7 million of contract rent was secured during
2023. Of that amount, rents were agreed on $14.3
million of contract rent at 26.4% above previous
contract rents. For the remaining $3.4 million of
contract rent secured during 2023, all are subject to
market reviews on renewal. After factoring in
review caps, those renewals are currently ~18%
under-rented, providing an opportunity for
significant growth on settlement of those rent
reviews. On top of that, lower levels of incentives
and leasing costs also saw a saving of ~$2.7 million
as compared with last year.
Solid results in a choppy environment
“Strong leasing outcomes have delivered cashflow
and stability,” says PFI Chief Executive Officer,
Simon Woodhams. “Despite significant increases
in interest rates during the year, low gearing, low
vacancies and growing rents have all worked in
our favour.”
Offsetting the strong rent reviews and leasing
outcomes achieved was a reduction in net rental
income from divestments and the properties we are
currently developing, but all told the decrease was
just 0.7% or $0.8 million.
Interest expense and bank fees, administration
costs and maintenance capex all increased, but
tax decreased significantly as a result of the tax
implications of the redevelopment projects.
Fund From Operations or FFO dipped by
0.18 cents per share or 1.8%, and Adjusted Funds
from Operations or AFFO increased by 0.09 cents
per share or 1.0%; basically, a flat result, which
we were pleased with considering the overall
operating environment.
“Our performance this year reflects the
experience of the team,” says PFI Chief Finance and
Operating Officer, Craig Peirce. “We have delivered
FFO and AFFO results in line with the previous
year, which is a solid result in the present climate.”
Strong leasing
outcomes
have delivered
cashflow and
stability”
SIMON WOODHAMS
Chief Executive
Officer
Total development area:
43,000 sqm
SPRINGS ROAD,
EAST TAMAKI
—
78
DEVELOPMENT COST
~$76 million
CASE STUDY
SPRINGS ROAD UPDATE
1
8
8
1
OTARAOTARA
PAPATOETOEPAPATOETOE
EAST
EAST
TAMAKITAMAKI
GREENMOUNT
LocationLocation
Stage 1 of the redevelopment of PFI’s
10.4 hectare Springs Road site is well
underway with the construction of
a 25,500 square metre warehouse
for Fisher & Paykel Appliances.
On completion of this stage of the
project, which is scheduled to finish in
the first quarter of 2025, Fisher & Paykel
Appliances will start a 15-year lease,
paying in excess of $6 million of rent
for this 5 Green Star warehouse. n
2023 IN REVIEW
6
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
2023 IN REVIEW
AN ACTIVE PARTICIPANT /
PORTFOLIO MANAGEMENT
As was the case in 2022, and
in comparison with long-
run averages, 2023 was a
muted year for transactions.
Notwithstanding this, we
secured a number of key
divestments and acquisitions.
Portfolio valuation reflected
market conditions
Our industrial property portfolio
was written down in value by
$140.8 million to $2,027.7 million, a
6.7% write-down for the year. This
decrease was driven by ~74 basis
points of market capitalisation
rate expansion. As a result of
these revaluations and portfolio
activity, our passing yield, excluding
brownfield development properties,
has increased by ~0.51% to 5.01%. Our
portfolio remains under-rented, with
A number of key divestments were well priced
We continued to recycle capital with a number of key divestments. Combined,
the divestment of 10c Stonedon Drive (East Tamaki, Auckland), 15 Artillery
Place (Nelson) and 11 Sheffield Street (Blenheim) has or will realise gross
proceeds of $36.7 million, more than 95% of the combined latest valuations of
$38.6 million, with the proceeds being used to fund the Company’s on-going
brownfield opportunities.
Two important acquisitions are underway
During the year, we entered into a contract to purchase two lots, totalling 5.8
hectares, within the proposed 46-hectare industrial subdivision at Spedding
Road at the end of the Northwestern Motorway in Auckland.
The contract to purchase the lots for $40.6 million equates to a land cost
of ~$700 per square metre, which compares favourably to market rates for
Auckland industrial land. Based on the current programme of works, we
expect to pay a 5% deposit once subdivision consent has been obtained in
mid-2024, and an initial settlement of 45% of the purchase price when titles
are received and works completed in mid-2025. Deferred settlement sums of
25% of the purchase price are then due 12 and 24 months following the initial
settlement date.
Simon Woodhams said: “The acquisition of these two lots will provide PFI
with a future opportunity to develop best-in-class Green Star buildings in an
Auckland location that is currently severely under-supplied for both industrial-
zoned land and industrial buildings of quality or scale.”
“In contrast to upgrading our older portfolio, like the redevelopments at
Bowden Road and Springs Road, starting with a blank slate at Spedding Road
means we have the opportunity to access further development margin and keep
that for the benefit of our shareholders,” says Simon Woodhams.
“Our decision to invest at Spedding Road is PFI’s first project where we are
working at scale from bare land. We plan to deliver Green Star properties in an
area that currently has a shortage of quality industrial buildings. Settling the
land purchase and staging the development also gives us time to gauge demand
and market dynamics, and adjust as we go.”
the valuers estimating this is to the
tune of ~16%.
Commenting on these changes,
Simon Woodhams noted, “A rapid rise
in interest rates in recent years has
caused an increase in capitalisation
rates for all property types, including
industrial property. However,
during 2023, there remained a gap
between vendor and purchaser price
expectations, albeit a narrowing one,
with CBRE reporting no change in
indicative yields for the last quarter
of 2024.” n
7
THE REMAINDER of our portfolio looks
ahead, anticipating future demand by
securing and developing sites to
ensure PFI shareholders benefit from
the ongoing shift towards
e-commerce and the anticipated
demand for quality logistics space.
Brownfield development
projects progressed
At year end, $267 million of our
portfolio is allocated to brownfield
opportunities, providing a growing
pipeline of near-term development
opportunities. We have early-
stage concepts in place for our
Neilson Street and Harris Road
properties, and additional sites under
consideration for medium-term
redevelopment include our properties
at Nesdale Avenue and some of our
Rosebank Road holdings.
Our Bowden Road
redevelopment is progressing well
and is on time and on budget. ~40%
of the development is pre-leased to
Tokyo Food for a lease term of 12
years, with the balance of site being
developed on a speculative basis.
While we have not secured tenant
commitment for the speculative
element of this project, we are
engaged with a number of prospective
tenants on rental rates that are in
~90% of our portfolio
is allocated to properties
that drive the strong, stable
returns investors look for
from us.
CONTINUING TO DEVELOP /
PRIORITISING VALUE CREATING
OPPORTUNITIES
In addition to the Spedding Road transaction, late in 2023, we also secured
another bolt-on acquisition: a ~5,000 square metre site at 45 Cryers Road in
East Tamaki, Auckland for $6.7 million. Simultaneously with the acquisition,
we negotiated a new lease to Astron Plastics Limited (Astron) for ~9.4 years
over 45 Cryers Road together with the neighbouring property, 43 Cryers Road,
already owned by PFI and leased to Astron.
43 Cryers Road was previously leased to Astron with a final lease expiry in
May 2027. On completion of the acquisition and new lease, PFI’s land holding at
Cryers Road will be enlarged to ~2.0ha and the lease term will increase from ~3.4
years to ~9.4 years. Settlement is expected to take place during February 2024.
In the longer term, as the owner of both sites, this acquisition allows us the
option to build a significantly larger warehouse, giving the ability to offer
drive-through access. n
_ Earthworks
underway at
Spedding Road.
_ Bowden Road
construction
progress
January 2024.
8
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
2023 IN REVIEW
STRONG AND STEADY /
TRACK RECORD WITH DIVIDENDS
Looking forward, there are a
number of factors influencing
the outlook for PFI’s earnings
and dividends.
_ Springs Road
progressing
well.
excess of those we estimated when
we commenced the project. We
estimate completion in the third
quarter of 2024, and both buildings
are targeting a 5 Green Star rating,
creating PFI’s first fully Green Star-
rated industrial estate, with close
to 24,000 square metres of covered
workable area.
Stage 1 of the redevelopment of
our Springs Road property is also well
underway. Here, PFI is developing
a 25,500 square metre warehouse
for our long-time tenant Fisher &
Paykel Appliances, with an option
to expand the warehouse to 30,000
square metres. The estimated total
incremental cost for this stage is
~$76 million. The facility will target
a 5 Green Star rating and we are
estimating completion in early
2025. Over five hectares of available
land remain for future stages, and
we are continuing to work through
redevelopment schemes for this land.
FAVOURABLE OCCUPIER market conditions, coupled with a portfolio that is
around 16% under-rented, provides a platform for the company to continue to
grow rental income.
Following a period of rapid Official Cash Rate increases from 0.25% in
August 2021 to 5.5% at the end of 2023, as the Reserve Bank of New Zealand
sought to reduce inflation, financial markets both here and around the globe
have begun to price in interest rate cuts. With around 40% of PFI’s borrowings
on floating interest rates, these cuts would provide some relief to the company’s
interest bill.
However, changes to depreciation rules, which are likely to impact PFI
from 1 July 2024, will see the company’s tax bill rise by about $2 million a year.
In addition, a range of economic indicators suggest 2024 may be a challenging
year for businesses.
Balancing these factors, and noting that the 2024 financial year will be a
short six month period due to a change in year-end to 30 June, dividend
guidance for this six-month period has been set at 4.15 cents per share, which
on an annualised basis is 8.30 cents per share, in line with dividends for 2023.
“PFI’s strategic response to market conditions has been to focus on
projects and bolt-on acquisitions that have the potential to increase
shareholder returns beyond current levels, to divest sensibly, and to enhance
our engine room,” says PFI Board Chair Anthony Beverley. “We have continued
to deliver stable cash returns for investors, while positioning the company to
continue to grow in the years ahead.” n
Ensuring best use of capital
“At the same time as we have seen
industrial rents continue to grow
strongly, we have seen valuations
ease,” says Simon Woodhams. “As a
result, our net tangible assets or NTA
per share eased 27.9 cents per share
over the course of the year, and our
gearing lifted to 32%.”
“Our strategy ensures the best
use of our capital by prioritising
value-creating opportunities
like our Bowden, Springs and
Spedding roads projects and bolt-on
acquisitions like the one at Cryers
Road, as those projects have the
potential to increase shareholder
returns beyond current levels.
We’ve also focused on financing our
investments to align much more
closely with our sustainability
objectives, and we have a clear
sustainability focus incorporated
into our facilities, property and asset
management teams.” n
9
PICTURING OUR NEXT ERA OF GROWTH /
OUR DEVELOPMENTS
_ Architect render
of 78 Springs Road.
SPRINGS ROAD,
EAST TAMAKI
—
78
BOWDEN ROAD,
MOUNT WELLINGTON
—
30-32
1
2
_ Architect render of
Bowden Road.
_ Progress
January 2024.
_ Architect render
of 78 Springs Road.
_ Progress
January 2024.
10
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
2023 IN REVIEW
_ Architect design concept,
aerial view of Spedding Road.
SPEDDING ROAD
INDUSTRIAL ESTATE,
WHENUAPAI
—
3
_ Earthworks underway
at Spedding Road.
_ Architect design concept,
ground level of Spedding Road.
_ Architect design concept,
ground level of Spedding Road.
11
2
Current market / Macro-changes p12. Changes at board
level / Continued evolution p14. Closer to our assets /
Facilities management p16. Data driven / Systems and
data expertise p17. Striking the right balance / Capital
management p18.
IN THIS SECTION
The current market
environment, typified by a
rapid rise in interest rates,
presents a number of
challenges.
CURRENT MARKET /
MACRO-CHANGES
GUIDING
US
AFTER MANY YEARS of revaluation gains, revaluation losses are being recorded
across the sector. Many listed property vehicle share prices are trading at
a discount to net tangible assets (NTA), making it a difficult time to raise
additional capital to fund growth.
We are not exempt from these macro changes. The pace of our intended
growth has slowed and we acknowledge that capital constraints will limit
what we can achieve within our existing funding envelope. However, our
commitment to our value-creating areas of conviction remains the same, even
if we have to pursue these opportunities later than originally planned, in order
to buy well.
LOOKING AHEAD
FORWARD
12
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
We have
consistently
invested in a sector
with strong macro
trends...”
CRAIG PEIRCE
Chief Finance and
Operating Officer
High conviction investments
“As trading activity pulls back, our strategy continues to focus on consolidating
a portfolio of high conviction investments and positioning PFI for when growth
returns,” says PFI Chief Finance and Operating Officer, Craig Peirce.
The regulatory environment within which PFI operates also continues to
tighten and become more complex. These changes have increased compliance
workloads and overheads.
Climate change now has people’s attention
There were only limited impacts to PFI’s portfolio from the January 2023 floods
and Cyclone Gabriele, but these events brought the potential impacts of climate
change to everyone’s attention. At the same time, competitors are placing their
bets on sustainable properties and developments, with green buildings and
financing becoming increasingly common.
2023 has been about leveraging our gains to respond to present market
conditions, and taking the opportunity to reorient for what we believe is ahead.
Our historic performance has served us well: we have a low overhead cost base,
a strong returns profile, specialist knowledge and an under-rented portfolio.
Those advantages have enabled us to deliver the dividend of 8.30 cents per share
we guided to at the beginning of the year, and to advance the redevelopment of
our portfolio.
Market changes in the last year have brought revaluation losses and a lift in
gearing, albeit well within our covenants and self-imposed guidelines, but they
have also encouraged us to look judiciously for the best deals in a tightening
market and to focus on sustainability as an opportunity.
Our strategic response
In response, our strategic focus has shifted to prioritising value-creating
opportunities: focusing on projects and bolt-on acquisitions that have the
potential to increase shareholder returns beyond current levels. We also
focused on enhancing our “engine room”: upgrading internal enablers to de-risk
our business, increase our capacity and capability for growth, and to build trust
and credibility in our brand.
This is no time for backward steps. On the contrary, we believe
opportunities will begin to materialise soon, and we are readying for that shift.
We are recalibrating our ambition to extending a market leading position within
the industrial property sector.
Building our engine room
While we wait for the right opportunities to present themselves, we have been
quietly strengthening the underlying business. Our historic capabilities and
capacities suited our current operational size but were insufficient to respond
to an increased scope of activities, changing regulations and further growth.
You can learn more about some of these changes on the pages that follow,
including the transition to an in-house facilities management model, our digital
transformation, and the link between sustainability and financing. n
_ Focusing on
projects with
value creating
opportunities.
13
In February 2023, we
welcomed Angela Bull
to our Board as an
Independent Director.
CHANGES AT BOARD LEVEL /
CONTINUED EVOLUTION
Our focus is firmly
on sustainable growth
that will deliver
positive outcomes
for our tenants,
our investors and
for our planet.”
ANGELA BULL
Independent Director
ANGELA HAS SIGNIFICANT experience in governance and executive roles in the
property sector. She is currently a director of a number of property and related
sector companies, having previously been the Chief Executive of Tramco Group
and a Board member of the Property Council of New Zealand. Angela also held a
number of senior positions over a 10-year period with Foodstuffs Auckland and
Foodstuffs North Island.
In February 2024, we announced that Anthony Beverley will be
stepping down from his role as Board Chair at the close of PFI’s Annual
Meeting on Wednesday, 3 April 2024, but will remain on the PFI Board as
Independent Director.
Following this change, Independent Director Dean Bracewell will be
stepping down from his role as People Committee Chair and will take on the role
of Board Chair, and Independent Director David Thomson will take on the role
of People Committee Chair, with both changes to take effect from the close of
the Annual Meeting.
In other Board changes, Independent Director Gregory Reidy will retire
from the PFI Board with effect from the close of the Annual Meeting on
Wednesday, 3 April 2024.
“Greg has been a Director of PFI since 2012, having played a key role in
many of the strategic milestones of the Company since that time. On behalf of
the Board and management team, I would like to thank Greg and to wish him all
the very best in his future endeavours,” said Anthony Beverley.
Finally, Jeremy Simpson will join the PFI Board, with the appointment
intended to take effect from Tuesday, 27 February 2024. Jeremy has had a
career of more than 30 years in financial markets in New Zealand and Australia,
including 27 years as an equity analyst, culminating with a Senior Equity
Analyst / Director role at Forsyth Barr from 2002 to 2021. Jeremy has a strong
knowledge of the listed property sector.
Jeremy is a Chartered Financial Analyst (CFA) and for around 10 years
was a Director of the Chartered Financial Analyst Society of NZ. Jeremy is also
a Chartered Member of the Institute of Directors and a Trustee for the Pinc &
Steel Cancer Rehabilitation Foundation NZ.
These changes are all part of the PFI Board’s ongoing succession plans,
which seeks to balance technical and specialist governance skills, while at the
same time maintaining a Board with strong, practical, commercial capability
and diversity of experience. n
14
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
LOOKING AHEAD
_ Angela Bull,
Independent
Director.
15
CLOSER TO OUR ASSETS /
FACILITIES MANAGEMENT
THE CHANGE ALLOWS us to improve our service to our tenants, increase our
focus on sustainability and health and safety, and bring us closer to our assets.
We now offer integrated, proactive and sustainable property solutions
that add value for customers and shareholders. Repairs, maintenance and
capital projects for our buildings are now coordinated by a talented internal
team rather than an external provider. The change has not only enhanced our
relationships with our tenants; it has strengthened our processes and systems
internally, and means we have access to data that directly assists our drive
for sustainability.
_ Facilities management
team onsite with tenants.
From property investment to property solutions
The insourcing of facilities management is part of a shift in focus from a
company more narrowly focused on property investment to a company which
provides holistic property solutions.
“We recognised an opportunity to define our facilities management
services more comprehensively by capturing the key components of each
property and establishing full planned and preventative maintenance
schedules,” says Lead Facilities Manager, Kieran Ingall.
“The change-over also included formalising direct relationships with
key contractors, creating more systematic approaches to onboarding, health
and safety management, and site inspections, and the introduction of new
capabilities within our software suite.”
Continuing to see benefits
The benefits of the transition include streamlined operations, greater
consistency across the property portfolio and deepened relationships
with tenants.
While the benefits will continue to be realised in the coming years, the most
obvious immediate outcome is that PFI now has an internal team close to our
assets allowing enhanced decision-making and integrated service delivery.
The project has
delivered its planned
objectives on time,
on budget and to
the desired quality
standards”
KIERAN INGALL
Lead Facilities Manager
PFI transitioned to
an in-house facilities
management model in
the middle of the year.
16
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
LOOKING AHEAD
_ Working
closely with
contractors to
improve building
performance.
DATA DRIVEN /
SYSTEMS AND DATA EXPERTISE
This year we have
continued building
up our in-house
expertise around
systems and data.
RECOGNISING the growing importance of data in our business, the company has
developed a data warehouse and business analytics solution using a Microsoft
SQL Server repository and PowerBI.
More data required better analysis
We had already introduced a new company-wide software solution, Yardi,
which meant we were capturing and processing considerably more data
than previously.
“Our range of data is now considerable,” explains Systems and Reporting
Manager, Samantha Schwartz. “It includes not just financial detail but also
valuable and insightful data around customers, tenants, vendors and our
interactions and arrangements with them. Making better use of these data
sources enables us to make decisions and take actions that improve our
understanding of a range of situations and opportunities.
“Inevitably, as we’ve paid more attention to our data, we’ve needed a
flexible solution that works alongside Yardi, but considerably outperforms the
capabilities of that system alone.”
Accelerating our digital transformation
“SQL and data warehousing are accelerating our digital transformation,” says
Craig Peirce. “By harnessing these tools, we can drive operating leverage as we
grow, standardise our approaches and make decisions that are increasingly
driven by data, not just feel.”
PFI worked with its managed-IT services provider to develop a data
warehouse and analytics solution that receives data from Yardi.
Supporting sustainability objectives
“This critical change supports the execution of our refreshed sustainability
strategy and positions us for responsible, future growth,” comments Head of
Sustainability and Operations, Sarah Beale. “From a sustainability perspective,
this change delivers benefits across all five of our focus areas.”
In terms of monitoring greenhouse gas emissions, the team are currently
overseeing the installation of metering in our buildings to enable the company
to understand the energy performance of our buildings.
From a resource management point of view, having an in-house team
means PFI can also make smarter decisions about capital expenditure on our
buildings, reducing the unnecessary use of materials, while providing financial
benefits for our investors. We will also be able to work with contractors to use
better materials and reduce waste.
Disaster and climate resilience is also an increasing area of focus. The
in-house team has enhanced our preventative maintenance practices to make
our portfolio more resilient to storms and floods and is progressing seismic
strengthening projects.
And all of these initiatives boost economic value. “Our in-house team
enables us to provide a full service to our tenants, driving value for PFI while
helping us to carefully manage operational and capital spending for our
buildings,” says Sarah Beale. n
17
With gearing at 32.0% and
around $250 million of un-
drawn bank facilities we have
the gearing headroom and
liquidity needed to complete
the developments at Bowden
Road and the first stage of
Springs Road.
STRIKING THE RIGHT BALANCE /
CAPITAL MANAGEMENT
Use of the tools is growing rapidly, with about 80 percent of the PFI team
receiving reports from the analytics solution daily. “Development is ongoing as
we look to roll out more reports focused on specific individual needs and
business deadlines,” Samantha Schwartz says.
“Better reporting is fuelling a growing appetite for insights. The
foundations for a robust data-driven future are now in place. Technical
infrastructure is one aspect of this, but we’ve also been working to develop
things like custom forms to maintain discipline in data capture. Casting the
data net wide and capturing accurate, appropriately structured data has set us
up well for nuanced and value-adding analysis.” n
IN THE MIDDLE of the year, we established $150 million of Green Loans tranches
with our existing banking syndicate, and at the end of the year we made a small
$25 million draw from our Note Purchase and Private Shelf Agreement with
PGIM Inc (also known as Pricoa). The weighted average term to expiry of our
bonds and bank facilities at the end of 2023 stands at 2.4 years.
Green Finance Framework launched
The inaugural $150 million of Green Loan tranches, following the launch of our
Green Finance Framework, recognises PFI’s commitment to invest in
long-term sustainability initiatives.
“Green financing aligns with our desire to transition to a more sustainable
portfolio, as we look to achieve Green Star certification for our new buildings,
and to significantly upgrade the operational performance of our existing
buildings using our in-house facilities management expertise,” says
Craig Peirce.
“There is now clear line of sight between our financing and our
environmental strategy. We believe that transitioning our portfolio to higher
sustainability standards will in turn mean our assets attract better rents, cost
less to own, and have a lower cost of capital.”
Market expectations are changing
Our efforts to be a more sustainable company are also being recognised by
others. Our rating with Forsyth Barr’s Carbon & ESG scores jumped up from
“Explorer” to “Fast Follower”, making us the third-best in the property sector
this year. Forsyth Barr acknowledged broad-based improvements across all
categories in their rankings. “This was most evident in the Governance
category, where strong gains across most G sub-categories resulted in a sector
high 77% (A) rating.”
“Market expectations are changing, and as professional landlords, we need
to leverage our skills to achieve a growing portfolio that meets stakeholder’s
sustainability demands, is efficiently financed, and attracts high-quality
tenants,” explains Simon Woodhams. “The successful launch of our Green
Finance Framework and standing up our in-house facilities management team
reflect how strongly we have incorporated sustainability into how we work,
think and strategise.” n
$
18
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
LOOKING AHEAD
3
2030 Strategy / p19. Greenhouse gas emissions / p22.
Resource and waste / p26. Disaster and climate resilience /
p26. People and wellbeing / p26. Economic value / p27.
PFI PLAYS AN IMPORTANT ROLE in the hard-working industrial
sector by providing workplaces for industrial tenants. PFI owns
long-term assets, so making sustainable, enduring decisions is
critical for delivering positive outcomes for our tenants and
investors. For many years, PFI has focused on progressively
embedding sustainability in everything we do, to position the
business for the future.
In early 2023, we shared our refreshed sustainability strategy
(on page 20). We have made great progress already in delivering
toward the first stage of this strategy, and we are excited to share
that progress in this report.
Of particular significance this year, PFI:
§
Started construction on three new buildings targeting
5 Green Star ratings. This is a big shift for PFI and will
result in 9% of our portfolio ( by market value) achieving
Green Star ratings on completion. See our case study on
pages 23-24.
PLATFORM FOR THE FUTURE /
OUR SUSTAINABILITY STRATEGY
§
Successfully transitioned to an in-house facilities
management model. Repairs, maintenance and capital
projects for our buildings are now coordinated by a talented
internal team rather than an external provider. This brings
us closer to our tenants, buildings and contractors,
positioning us to improve our service to our tenants and
increase our focus on the operational performance of our
buildings. This was a critical change for PFI that supports
the execution of our refreshed sustainability strategy and
positions PFI for future growth. See pages 16-17 for
further information.
§
Installed power metering and monitoring at 20 properties
in our portfolio to help us to understand the operational
performance (energy and water use) of the buildings at
those sites.
§
Established our inaugural green funding facilities.
IN THIS SECTION
SUSTAINING
EFFORTS
The purpose of this report is to transparently communicate the positive and negative
impacts we have on people and the planet, to explain how we are addressing such
impacts, and to provide insight into our sustainability-related risks and opportunities.
OUR
19
SUSTAINABILITY
Significant new buildings
to target minimum
5 Green Star certification.
PFI also aims to minimise and offset residual Scope 1 + 2 greenhouse gas emissions.
Install solar systems
at five buildings by the
end of 2025.
Implement power
metering and monitoring
for 50% of properties by
the end of 2025.
SOLAR SYSTEMS
METERINGGREEN STAR
GREENHOUSE GAS
EMISSIONS
Aspiration
The embodied and
operational greenhouse
gas emissions
associated with
PFI’s buildings
are minimised.
RESOURCES
AND WASTE
Aspiration
The impacts from the
materials that PFI uses
and the waste PFI
produces during
developments
and refurbishments
are minimised.
DISASTER AND CLIMATE
RESILIENCE
Aspiration
PFI’s buildings
are resilient and we
are well placed to
respond to disasters.
PEOPLE AND
WELLBEING
Aspiration
Our people are safe
and engaged, and we
promote positive social
impacts through
our operations.
ECONOMIC
VALUE
Aspiration
The value of PFI
grows to create
economic value for
investors, tenants,
our people and others
that we work with.
IMMEDIATE TARGETS
MATERIAL
FOCUS AREAS
CORE
PRINCIPLES
Create a future-proofed and resilient portfolio through sustainable refurbishments, developments, acquisitions and divestments.
Maximise the useful lifespan of buildings to minimise waste by transforming our core portfolio.
Become a trusted partner for tenants when it comes to sustainability and reducing greenhouse gas emissions.
Collaborate with supply chain partners to minimise waste, use lower-impact materials and promote positive social impacts.
Maintain strong employee engagement and health and safety performance.
Maintain high standards of financial and governance performance.
Our Sustainability Strategy: 2030
We have committed to a range of projects and targets through to 2025 to operationalise this strategy,
which are described in the sections that follow. Key targets include:
DYNAMIC IMPLEMENTATION
Our implementation of the strategy will be dynamic.
We will continuously review and adapt our response as we learn and as our external
environment changes.
20
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
SUSTAINABILITY
SCOPECATEGORYFY19 (tCO
2
e)FY20 (tCO
2
e)FY21 (tCO
2
e)FY22 (tCO
2
e)FY23 (tCO
2
e)
SCOPE 1
Direct EmissionsFugitive emissions (refrigerants) 94.5116.876.861.341.2
Fuel Covered under
Category 6
Covered under
Category 6
0.24.55.6
SCOPE 2
Indirect EmissionsElectricity consumption (location based)
1
15.55.414.219.64.4
Total Scope 1 and Scope 2 Emissions110.0122.291.285.451.2
SCOPE 3
Other Indirect EmissionsCategory 1: Purchased goods and services
2
Not measured in
FY19
111.3117.4284.31,244.2
Category 2: Capital goods
3
Not measured in
FY19
2,564.72,615.02,122.416,733.7
Category 3: Energy and fuelNot measured in
FY19
0.51.21.80.5
Category 5: Waste generated in operations0.70.50.20.40.5
Category 6: Business travel 19.89.412.718.425.0
Category 7: Employee commutingNot measured in
FY19
15.113.612.617.7
Category 13: Downstream leased assets
4
Not measured in
FY19
Not measured in
FY20
Not measured in
FY21
Not measured in
FY22
Not measured in
FY23
Total Scope 3 Emissions20.52,701.52,760.32,439.918,021.7
TOTAL Scope 1, 2 and 3 Emissions130.52,823.72,851.32,525.418,072.9
upstream emissions
scope 3
corporate emissions
scope 1 and 2
downstream emissions
scope 3
Goods and services
Capital expenditure
Electricity transmission and
distribution losses
Employee commuting
Fugitive emissions from
HVAC systems
Electricity consumption
Diesel emissions from sprinkler
systems
Operational waste
Business travel
18,072.9
tonnes of C0
2
e
% TOTAL FOOTPRINT
EMISSIONS SOURCE
99.6%
17,996.2 TONNES
0.3%
51.2 TONNES
0.1%
25.5 TONNES
Offset
Our carbon footprint
21
GREENHOUSE GAS EMISSIONS
PFI’s total emissions increased significantly in FY23, primarily
due to the increase in construction activity compared to
previous years.
PFI’s most material emissions impacts are considered to be:
§
emissions relating to developments and refurbishments
(known as ‘embodied carbon’). These are our Scope 3,
Category 2 emissions.
§
emissions relating to the operational performance of our
buildings (for example, electricity use). We do not currently
report these emissions (Scope 3, Category 13) due to
insufficient data.
Our ambition is to minimise both the embodied and
operational carbon emissions of our buildings. We have
therefore committed to:
§
building and refurbishing in a way that reduces both
embodied and operational greenhouse gas emissions where
practicable; and
§
measuring and over time improving the operational
performance of our buildings.
Embodied carbon will be a particular challenge for PFI in the
coming decades. These emissions largely arise from the use of
concrete and steel when constructing our buildings. There are
lower-carbon products becoming available, which PFI is using
where practicable. However, zero or near-zero carbon concrete
and steel are not available, and it is unknown when these will
become available. PFI is continuing to closely monitor progress in
this space and highlights the re-use of existing buildings as an
opportunity to reduce these impacts.
Emissions associated with property maintenance are also
significant (falling under Scope 3, Category 1). Bringing PFI’s
facilities management in-house has been an important first step
in positioning the business to address these emissions in the
future. However, our primary focus remains on developments,
refurbishments and energy use of our buildings.
New buildings and brownfields redevelopments
When we develop significant new buildings, we will ensure they
are built to a high sustainability standard by targeting a 5 Green
Star rating. The Green Star tool is holistic and ensures the
building performs to a range of sustainability standards including
materials, water and indoor environment quality. In particular,
Green Star seeks to:
§
minimise the impact of building materials and practices on
the environment, including greenhouse gas emissions; and
§
ensure the building is designed efficiently to minimise
greenhouse gas emissions arising from the operation of the
building (for example, electricity usage).
PFI is targeting 5 Green Star certification
5
for our upcoming
developments at 30-32 Bowden Road and 78 Springs Road.
See our case study on pages 23-24 for more information.
(1) PFI’s Scope 2 emissions are comprised of electricity consumption at PFI’s head office, vacant properties, and common areas. The reduction in Scope 2 emissions in FY23
reflects a combination of lower vacancy in the portfolio and a change in measurement approach.
(2) For FY23, Scope 3 Category 1 emissions per $ spend was calculated using an input output (IO) consumption-based model. An IO model estimates emissions based on
category spend using data from allocating national GHG emissions to final products based on economic flows between sectors. The IO model is accepted by the GHG
protocol and is considered comprehensive, but varies in its granularity. The increase in Scope 3 Category 1 emissions in FY23 primarily reflects a change in the IO
consumption-based model used by PFI, rather than a material change in underlying activity. We will continue to improve our approach to emissions assessment over
time as we mature.
(3) For FY23, Scope 3 Category 2 emissions were calculated using lifecycle assessment data for major developments, with IO consumption-based models (see footnote 2)
used for the balance of emissions in this category. The lifecycle assessments used are an early estimate of the emissions associated with our major development
projects. As these projects span multiple financial years, the emissions have been allocated to financial years based on spend. There may be adjustments made to
emissions allocated to future periods to account for any variances from these initial estimates. The increase in Scope 3 Category 2 emissions in FY23 is primarily
attributable to increased development and refurbishment activity.
(4) Downstream leased assets would include emissions relating to electricity use by PFI’s buildings. PFI has extremely limited visibility of the electricity consumption from
its tenanted properties and has excluded this emissions source from reporting for FY23 due to insufficient data. During 2023, PFI began investing in power metering and
monitoring for its properties, which is expected to help to develop emission models for downstream leased assets by the end of FY24.
(5) Green Star ratings are administered by the New Zealand Green Building Council (NZGBC), a network of property and building businesses aiming to normalise
market-based green practices. PFI is a member of the NZGBC.
_ Solar
installation
at 3-5 Niall
Burgess Road.
22
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
SUSTAINABILITY
* A reference building is a typical building that would get built today without considering any
implications on carbon emissions, with the design being driven mostly by cost and programme.
Total site area:
10.4ha
SPRINGS ROAD,
EAST TAMAKI
—
78
ESTIMATED TOTAL PROJECT
COST (EXCLUDING LAND):
~$76m
1
8
8
1
OTARAOTARA
PAPATOETOEPAPATOETOE
EAST
EAST
TAMAKITAMAKI
GREENMOUNT
LocationLocation
PFI has three new buildings under
development that are targeting 5 Green
Star ratings. These buildings will deliver
benefits for both PFI and our tenants
across the five focus areas of our
strategy. This is illustrated by our new
building being constructed at 78 Springs
Road, which will be leased to Fisher &
Paykel Appliances:
Greenhouse gas emissions
We have reduced the upfront embodied carbon emissions of the building by
approximately 7% (when compared to a reference building*) because we have
designed the warehouse floor and yard slab in a way that reduces carbon
emissions from concrete and reinforcing steel compared to a traditional design.
The building is also expected to produce fewer greenhouse gas emissions
when in use than a reference building, because we will install solar panels and
have incorporated energy efficient design.
Resources and waste
Our contractors report that 98% of demolition waste has been diverted from
landfill, and we are targeting a minimum of 70% of all demolition and
construction waste from the overall project being diverted from landfill. 100%
of the existing concrete on site was recycled and re-used on site. Our
contractors used a concrete crusher to break down the existing concrete, and
this was then used as fill, saving 3,305m
3
of imported fill onto the site.
We are using sustainable materials such as FSC timber and water-efficient
plumbing fixtures, and the building is designed to consume less water than a
reference building.
GREEN STAR DEVELOPMENTS
CASE STUDY
23
Disaster and climate resilience
We have assessed the possible physical impacts of climate change (such as increased rainfall
and extreme temperatures) and designed the building to make it more resilient to these
impacts. For example, we have increased the building ’s capacity to cope with increased and
extreme rainfall by increasing the number of downpipes, and installing a stormwater siphonic
system that allows the roof to be drained more efficiently in a heavy rainfall event. We have
also designed the building to the latest earthquake resilience standards.
A deep commitment to
sustainability is embedded
in Fisher & Paykel’s DNA,
reflected not only in the
appliances we create, but also
across our end-to-end supply
chain, in the partners we
choose, the ways we work and
interact, and the buildings we
operate from.
We deeply value our enduring
partnership with Property
For Industry, as a company
that shares our values,
particularly in the realm of
sustainability. We are excited
to be part of this new targeted
5 Green Star development
which incorporates Fisher &
Paykel’s own technologies
and contributes to our carbon
reduction commitments.”
ELIZA HUMPHREYS
GM Operations - NZ,
Fisher & Paykel Appliances Limited
People and wellbeing
PFI is working closely with the head contractor for the project to ensure the construction
team meets best-in-class health and safety management practices.
The building is designed to provide acoustic, thermal and lighting comfort for
its occupants.
Economic value
The project has a targeted project yield on cost of more than 5.3%, delivering returns for our
shareholders while providing a best-in-class facility with lower operating expenses for Fisher
& Paykel Appliances to run their business from. By signing up to this Green Star building, our
tenants will receive the cost and resilience benefits of using power generated from the solar
array on the roof. We have also future-proofed the building to allow up to 50% roof coverage by
solar in the future.
_ Strengthening
our buildings
for climate
resilience.
_ Concrete
laying at
Springs
Road.
SPRINGS ROAD,
EAST TAMAKI
—
78
CASE STUDY
24
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
SUSTAINABILITY
25
Sustainable refurbishments
In some cases, we are able to extend the useful life of a dated
building by undertaking a refurbishment. This avoids the
generation of embodied carbon and waste by reusing materials
(such as walls and foundations) that were already in place in an
original building, while presenting an opportunity to upgrade or
add sustainable features (such as LED lighting). PFI has created
an internal sustainable refurbishment framework, providing
a way for us to minimise our environmental impacts when
we undertake refurbishment projects through a preference for
lower-carbon materials and resource efficient design features.
As each refurbishment is unique, this framework ensures we
have a range of sustainable design options to consider for each
refurbishment. A sustainable refurbishment might include
improving energy efficiency and water consumption, reducing
waste, using lower-impact building materials, and moving to
renewable energy sources.
Measuring and improving operational performance
Greenhouse gas emissions arise from the operations of a building,
for example through electricity use. Due to the structure of
industrial leases, we do not typically have data on the electricity
use of our buildings as this is outside of our operational control
(with power organised by the tenants).
Following the transition of PFI’s facilities management to an
in-house team during 2023, we are seeing the benefits of being
able to work more closely with engaged tenants to measure the
operating performance of the buildings they occupy. As a result of
this change, we have installed power metering at 21.7% of
properties during the year, representing great progress toward
our target to implement power metering and monitoring for 50%
of properties by the end of 2025.
Measuring operational performance will remain challenging
as, even with in-sourced facilities management:
§
industrial property leases typically put the building
operations in the control of the tenant; and
§
it is often difficult to differentiate between emissions from
the operation of an industrial building and emissions
associated with tenant operations within that building.
However, we will work with our tenants on this over time and are
also progressively introducing lease clauses enabling us to
request data from tenants.
While we are not yet in a position to disclose the greenhouse
gas emissions associated with the use of our buildings, we
anticipate being able to do so in future when further data is
gathered. Based on the limited information collected to date,
we expect that this will be a material part of our greenhouse
gas footprint.
In time, as we build up data, we expect that we may be able
to identify opportunities to improve the efficiency of lower-
performing buildings. This should create value for our tenants
and help to retain the value of our buildings in the long term. The
power use of buildings forms part of a tenant’s ‘carbon footprint’
so we are in a position to help them with their own emissions
reduction plans. Buildings with better operational performance
also typically cost the tenant less in power and water.
Finally, the collection of data is the first step toward being
able to explore options for operational performance certification
for our existing properties. This represents an exciting
opportunity for some buildings in PFI’s core portfolio. Due to
the wide range of occupancies of industrial buildings, this will
be a complex journey. We will share progress in this area as
it develops.
Solar
New Zealand has a higher supply of renewable electricity than
many other countries. However, electrification of activities that
we currently rely on fossil fuels for (such as driving) is key for
decarbonising many aspects of our economy, meaning there will
be higher demands for electricity in the future. Installing solar
panel arrays at our properties makes renewable electricity
available for our tenants to use, reducing their demands on
New Zealand’s electricity grid, and their energy bills. Tenants may
also be able to feed any electricity they don’t use from the solar
panels back to the national grid, increasing the supply of
renewable electricity for others to use. Solar installations can
help PFI to strengthen our relationships with our tenants, and in
some cases, presents an opportunity to extend lease terms.
During 2023, we completed PFI’s first solar installation at
3-5 Niall Burgess Road in Mount Wellington and agreed terms
with another tenant to commence a solar installation in 2024.
Solar arrays will also be installed on all of our new buildings that
are targeting Green Star ratings. This puts PFI on track to meet
its target to install solar systems at five buildings by 2025.
Scope 1 and 2 emissions
PFI’s Scope 1 and 2 emissions are very small, in particular when
compared to the scale of emissions from developments and
building electricity use. While our sustainability strategy focuses
on managing these more material impacts, we acknowledge that
we need to be mindful of our direct footprint, and we have
successfully taken steps to reduce it.
During 2021 and 2022, PFI upgraded a significant number of
HVAC systems across our portfolio that required R22 refrigerant
gas, which contributed to a reduction in our Scope 1 fugitive
emissions by 56% in 2023 (or 53tCO
2
e) against a 2019 base.
We note that four further systems within PFI’s operational
control containing R22 gas were identified during 2023, and they
have either been replaced or re-gassed with a non-ozone
depleting gas.
We will continue to work on initiatives to further reduce
our gross Scope 1 and 2 emissions going forward, particularly
26
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
SUSTAINABILITY
and pricing). Preparing the business and portfolio for the physical
and transition impacts from climate change has been an ongoing
focus for PFI, and PFI’s sustainability strategy is designed with
this in mind. PFI’s approach includes:
§
Ensuring that climate change risks are a factor in our
decision-making with regards to portfolio management,
including refurbishments, acquisitions and divestments;
§
Deployment of capital toward solar, metering and
development projects targeting Green Star ratings;
§
Increasing preventative maintenance through the
establishment of an in-house facilities management team to
increase the resilience of our properties to storms and
floods; and
§
Maturing PFI’s insurance strategies to respond to the risk of
insurance retreat.
PFI has previously provided three voluntary Climate-Related
Disclosures reports. PFI will publish its first mandatory Climate-
Related Disclosures in accordance with the Aotearoa
New Zealand Climate Standards at https://www.
propertyforindustry.co.nz/sustainability/ by 30 April 2024.
PEOPLE AND WELLBEING
PFI strives to ensure our people are safe and engaged, and we aim
to promote positive social impacts through our operations. PFI
also interacts with a wide range of stakeholders, for whom we
want to contribute to a safe and positive working environment.
Team engagement
PFI focuses on maintaining strong staff engagement, which
enables us to deliver great service to our tenants, achieve our
sustainability objectives, and ultimately provide stable returns
(6) Including waste, business travel, employee commuting, and energy and fuel;
but excluding goods and services, and capital expenditure.
(7) Carbon credits are retired on the NZETS registry.
as new technologies become available that enable us to make
further advances.
We have offset our 2023 Scope 1, 2 and selected Scope 3
emissions
6
with certified carbon credits. These certified carbon
credits are sourced from projects that grow and protect forests in
Aotearoa and help to deliver climate resilience, waterways
protection, erosion control, biodiversity conservation and
community economic development
7
.
RESOURCES AND WASTE
When PFI undertakes property developments and
refurbishments, building materials such as steel and concrete
are procured by PFI’s contractors. Extracting, producing, and
shipping these materials have upstream impacts such as
greenhouse gas emissions and potential impacts on local
communities or biodiversity if not produced responsibly.
Waste is also generated by PFI’s contractors, for example from
demolition and packaging of materials that are delivered to the
site. We aspire to minimise the impacts from the materials that
PFI uses and the waste that PFI produces during developments
and refurbishments.
Our transition to an in-house facilities management model
during 2023 positions us to make smarter decisions about capital
expenditure on our buildings, reducing the unnecessary use of
materials while providing financial benefits for our investors.
We are also collaborating with suppliers to improve waste
measurement and reduction, and use of lower-impact materials.
Our commitment to 5 Green Star encourages us to use lower-
impact materials and reduce the waste impacts from our
developments. PFI is also working with suppliers to move toward
more consistent waste measurement and reduction when
undertaking refurbishments. When PFI refurbishes buildings
instead of building new ones, we can reduce the impacts caused
by building materials by reusing what is already in place where
possible, and aiming to use lower-impact materials.
DISASTER AND CLIMATE RESILIENCE
PFI aims to ensure its buildings are resilient and we are well
placed to respond to disasters. The devastating Auckland floods
and Cyclone Gabrielle in early 2023 have been a reminder of the
importance of having a sustainability strategy that is focussed on
responding to climate change. Our thoughts remain with those
affected by these disasters.
PFI faces a range of risks arising from climate change
including regulatory change, increasing demand for sustainable
buildings, changing investor and funder preferences, and the
effects of extreme weather (including on insurance availability
_ Looking
after the
health and
safety of
contractors.
27
for our shareholders. We achieved an 86% staff engagement
score and a 100% participation rate in our 2023 annual staff
engagement survey. We also achieved low employee turnover
of 4% during 2023.
Health, safety and wellbeing
The health, safety and wellbeing of our team and others that we
deal with remains a critical focus for PFI.
We provide a wide variety of offerings for our team including:
§
An annual wellness week for our team including wellness
education sessions
§
A flexible working policy
§
Staff induction and ongoing training
§
Provision of ergonomically-designed workstations
§
Periodic health checks, staff insurances and access to a
clinical psychologist
§
Safety protocols for site visits
§
Governance and incident management through our health
and safety committee
PFI has implemented a formal health, safety and wellbeing
framework that provides a practical and enduring system to
ensure our approach to health, safety and wellbeing goes beyond
adherence to the Health and Safety at Work Act. The framework
sets out our objectives, policies, risk management controls and
responsibilities across our team.
The development, maintenance and ongoing management of
our properties presents a range of risks to our tenants, contractors
and other visitors to those properties, such as those arising from
electrical hazards, roof access and fire risks. Risk management
initiatives for our properties include:
§
Prequalification requirements and induction for contractors
§
Periodic and independent property risk assessments
§
Asbestos management protocols
§
Requirements for safety plans and site inspections for
development projects
§
Governance and incident review through our health and
safety committee
The health and safety incidents in the following table reflect
incidents that were reported to us across our operations. The
increase in near misses in 2023 is attributable to increased
construction activity during the year, and the diligent approach to
health and safety reporting by our contractors:
HEALTH AND SAFETY INCIDENTS
AND NEAR MISSES
20222023
Injuries1213
Incidents that did not result in injury/near misses1020
Total recorded incidents and near misses2233
Modern slavery
PFI is committed to respecting and supporting the wellbeing and
human rights of our employees, contractors, suppliers, and all
those who we engage with in our day-to-day operations.
PFI has begun working with suppliers to prepare to respond
to possible incoming modern slavery regulations.
Community engagement
Engaging with our community is important to PFI and to our
team. During 2023 we participated in a team volunteering day at
LIFE Community’s Christmas Box campaign, preparing
Christmas food parcels. We also continued our sponsorship of
Keystone New Zealand Property Education Trust which supports
students to get a tertiary education and set themselves up for a
successful property or construction career.
PFI team members also participated in a Longest Day golfing
fundraiser with our close business partner Haydn & Rollett, to
raise funds for Cancer Society of New Zealand. Representatives
from the two companies jointly raised over $43,000 through
this event to go towards cancer research, prevention and
support services.
PFI also made donations to support victims of the Auckland
Floods and Cyclone Gabrielle, the Cancer Society, Gut
Foundation NZ and LIFE Community’s Christmas Box campaign.
ECONOMIC VALUE
PFI is proud to help our tenants to generate economic value
through the provision of fit-for-purpose properties from which
they can operate their businesses, while generating direct
economic value for our investors and other capital providers.
We see our sustainability strategy (along with our proven
business model, prudent capital management, strategy, and team)
as critical to continuing to deliver strong economic performance
as our context continues to evolve with regulatory change,
changing market demands and increasing expectations from our
business partners and investors.
This year, PFI launched its Green Finance Framework
(available at https://www.propertyforindustry.co.nz/
sustainability/) and established its inaugural $150 million Green
Loan tranches in accordance with that Framework. The proceeds
of these Green Loan tranches are being used to fund PFI’s
development opportunities at 30-32 Bowden Road and 78 Springs
Road which are targeting 5 Green Star Design and Built ratings,
demonstrating the benefits of sustainability being embedded
across the business. n
4
Financial statements / p30.
General information / p36.
Property / p39. Funding /
p52. Investor returns and
investment metrics / p55.
Other / p56.
IN THIS SECTION
FINANCIAL STATEMENTS
_ Tilt slab
installation
at Springs
Road.
28
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
BALANCING
OUR
PRIORITIES
29
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
The Group has rearranged the presentation of the information disclosed in the Consolidated Statement of Comprehensive Income in the
reporting period ended 31 December 2023 and to the comparative figures for the 12 months ended 31 December 2022. The rearrangements
have been made to align with the reporting of other entities in the same industry as the Group and to provide more relevant and comparable
information to the users of the financial statements.
ALL VALUES IN $000SNOTE20232022
INCOME
Rental and management fee income2.3 114,787 110,909
Business interruption insurance income2.6 685 -
Property costs2.4 (22,695) (17,598)
Net property income 92,777 93,311
Administrative expenses5.1 (10,336) (8,508)
Profit before finance income/(expenses), other gains/(losses) and income tax 82,441 84,803
Finance income/(expenses)
Interest expense and bank fees (29,160) (24,638)
Fair value (loss)/gain on derivative financial instruments3.2 (10,151) 18,536
Interest income 114 12
(39,197) (6,090)
Other gains/(losses)
Fair value loss on investment properties and non-current assets classified as held for sale2.1, 2.2 (140,830) (56,735)
(Loss)/gain on disposal of investment properties and non-current assets classified as held for sale (789) 575
Increase in costs relating to post settlement obligation of disposed property5.11 (1,070) -
Material damage insurance income2.6 689 -
Goodwill impairment5.5 - (29,086)
(142,000) (85,246)
(Loss)/profit before income tax (98,756) (6,533)
Income tax benefit/(expense)5.2 964 (7,411)
(Loss) / profit and total comprehensive income after income tax attributable
to the shareholders of the Company4.1 (97,792) (13,944)
Basic earnings per share (cents)4.1 (19.48) (2.76)
Diluted earnings per share (cents)4.1 (19.48) (2.76)
FINANCIALS 2023
30
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
The accompanying notes form part of these financial statements.
NOTE
Cents
per Share
(cents)
No. of
Shares
(#)
Ordinary
Shares
($000s)
Share-Based
Payments
Reserve
($000s)
Retained
Earnings
($000s)
Total
Equity
($000s)
Balance as at 1 January 2022– 505,493,668 580,995 751 980,916 1,562,662
Total comprehensive (loss)/income– – – – (13,944) (13,944)
Dividends
Q4 2021 final dividend - 9/3/2022 2.45 – – – (12,388) (12,388)
Q1 2022 interim dividend - 24/5/2022 1.80 – – – (9,100) (9,100)
Q2 2022 interim dividend - 7/9/2022 1.80 – – – (9,087) (9,087)
Q3 2022 interim dividend - 22/11/2022 1.85 – – – (9,311) (9,311)
Share buyback (3,554,708) (8,658) (8,658)
Long-term incentive plan5.9 111,564 300 (136) - 164
Balance as at 31 December 2022– 502,050,524 572,637 615 927,086 1,500,338
Total comprehensive (loss)/income – - – – (97,792) (97,792)
Dividends
Q4 2022 final dividend - 8/3/2023 2.65 – – – (13,306) (13,306)
Q1 2023 interim dividend - 23/5/2023 1.95 – – – (9,790) (9,790)
Q2 2023 interim dividend - 7/9/2023 1.95 – – – (9,792) (9,792)
Q3 2023 interim dividend - 22/11/2023 1.95 – – – (9,792) (9,792)
Long-term incentive plan5.9 78,789 264 139 - 403
Balance as at 31 December 2023- 502,129,313 572,901 754 786,614 1,360,269
31
ALL VALUES IN $000SNOTE20232022
CURRENT ASSETS
Cash at bank 1,187 1,332
Accounts receivable, prepayments and other assets5.3 9,806 4,918
Derivative financial instruments3.2 739 287
Total current assets 11,732 6,537
NON-CURRENT ASSETS
Investment properties2.1 1,998,325 2,096,200
Property, plant and equipment 3,449 3,695
Derivative financial instruments3.2 20,973 35,355
Total non-current assets 2,022,747 2,135,250
Non-current assets classified as held for sale2.2 29,400 21,000
Total assets 2,063,879 2,162,787
CURRENT LIABILITIES
Accounts payable, accruals and other liabilities5.4 22,301 13,727
Taxation payable 772 3,002
Borrowings3.1 100,000 -
Derivative financial instruments3.2 3,509 -
Total current liabilities 126,582 16,729
NON-CURRENT LIABILITIES
Borrowings3.1 547,049 601,523
Derivative financial instruments3.2 3,515 10,801
Lease liabilities5.10 1,909 2,112
Deferred tax liabilities5.2 24,555 31,284
Total non-current liabilities 577,028 645,720
Total liabilities 703,610 662,449
Net assets4.2 1,360,269 1,500,338
EQUITY
Share capital 572,901 572,637
Share-based payments reserve5.9 754 615
Retained earnings 786,614 927,086
Total equity 1,360,269 1,500,338
These Group financial statements are signed on behalf of Property for Industry Limited and were authorised for issue on 26 February 2024.
Anthony Beverley Carolyn Steele
Chair, Board of Directors Chair, Audit and Risk Committee
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
The accompanying notes form part of these financial statements.
FINANCIALS 2023
32
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
The accompanying notes form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
ALL VALUES IN $000SNOTE20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Property and management fee income received 111,031 111,867
Business interruption insurance income received2.6 680 -
Net goods and services tax paid (3,990) 273
Interest received 114 12
Interest and other finance costs paid (27,817) (23,583)
Payments to suppliers and employees (25,138) (25,409)
Income tax paid (7,831) (11,080)
Net cash flows from operating activities 47,049 52,080
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment properties and non-current assets classified as held for sale 27,899 21,700
Acquisition of investment properties2.1 - (6,843)
Acquisition of property, plant and equipment (254) (1,348)
Expenditure on investment properties (73,532) (19,157)
Capitalisation of interest on development properties2.1 (3,246) (13)
Material damage insurance income received2.6 689 -
Expenditure on post settlement obligation of disposed property5.11 (1,070) -
Net cash flows from investing activities (49,514) (5,661)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayment of)/proceeds from syndicated bank facility (105,305) 2,468
Net proceeds from green loan facilities 125,501 -
Net proceeds from Pricoa facility 25,000 -
Principal elements of finance lease payments (196) (114)
Dividends paid to shareholders (42,680) (39,886)
Share buyback costs - (8,658)
Net cash flows from financing activities 2,320 (46,190)
Net (decrease)/increase in cash and cash equivalents (145) 229
Cash and cash equivalents at beginning of year 1,332 1,103
Cash and cash equivalents at end of year 1,187 1,332
Cash and cash equivalents at end of year comprises:
ALL VALUES IN $000S20232022
Cash at bank 1,187 1,332
Cash and cash equivalents at end of year 1,187 1,332
33
CONSOLIDATED STATEMENT OF CASH FLOWS
(
continued
)
FOR THE YEAR ENDED 31 DECEMBER 2023
RECONCILIATION OF (LOSS)/PROFIT AFTER INCOME TAX TO NET CASH FLOWS FROM
OPERATING ACTIVITIES
ALL VALUES IN $000SNOTE20232022
Loss for the year after income tax (97,792) (13,944)
Non-cash items:
Fair value loss on investment properties and non-current assets classified as held for sale2.1, 2.2 140,830 56,735
Loss/(gain) on disposal of investment properties and non-current assets classified as
held for sale 789 (575)
Fair value loss/(gain) on derivative financial instruments 10,151 (18,536)
Decrease in deferred taxation 5.2 (6,565) (3,114)
Goodwill impairment5.5 - 29,086
Depreciation5.1 569 190
Provision for doubtful debts 28 -
Lease liability interest expense5.10 116 12
Employee benefits expense – share-based payments 349 356
Movements in working capital items:
(Increase)/decrease in accounts receivable, prepayments and other assets (4,586) 1,326
Increase in accounts payable, accruals and other liabilities 5,009 1,099
Decrease in taxation payable (2,230) (555)
Other: material damage insurance income (classified as cash flows from investing activities)2.6 (689) -
Other: post settlement obligation of disposed property (classified as cash flows from
investing activities)5.11 1,070 -
Net cash flows from operating activities 47,049 52,080
The accompanying notes form part of these financial statements.
FINANCIALS 2023
34
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
1. GENERAL INFORMATION36
1.1. Reporting entity36
1.2. Basis of preparation36
1.3. Group companies36
1.4. Basis of consolidation36
1.5. Critical judgements, estimates and assumptions36
1.6. Accounting policies37
1.7. Significant events and transactions38
2. PROPERTY39
2.1. Investment properties39
2.2. Non-current assets classified as held for sale50
2.3. Rental and management fee income50
2.4. Property costs51
2.5. Net rental income51
2.6. Insurance income51
3. FUNDING52
3.1. Borrowings52
3.2. Derivative financial instruments53
4. INVESTOR RETURNS AND INVESTMENT METRICS55
4.1. Earnings per share55
4.2. Net tangible assets per share55
5. OTHER56
5.1. Administrative expenses56
5.2. Taxation56
5.3. Accounts receivable, prepayments and other assets59
5.4. Accounts payable, accruals and other liabilities59
5.5. Goodwill59
5.6. Financial instruments60
5.7. Financial risk management60
5.8. Related party transactions 63
5.9. Share-based payments63
5.10. Leases65
5.11. Post settlement obligation of disposed property66
5.12. Operating segments66
5.13. Capital commitments66
5.14. Subsequent events67
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
NOTES 2023
1. GENERAL INFORMATION
IN THIS SECTION
This section sets out the basis upon which the Group’s financial statements are prepared. Material accounting policy information is
described in the note to which it relates.
1.1. Reporting entity
These audited consolidated financial statements (the financial statements) are for Property for Industry Limited (the Company) and its
subsidiary P.F.I. Property No. 1 Limited (PFI No. 1) (together, the Group). The Company is a limited liability company incorporated in
New Zealand and is registered under the New Zealand Companies Act 1993. The Company is a FMC reporting entity under Part 7 of the
Financial Markets Conduct Act 2013 and the Financial Reporting Act 2013 and these financial statements have been prepared in
accordance with the requirements of the NZX Listing Rules. The Company is listed on the NZX Main Board (NZX: PFI).
The Group’s principal activity is property investment and management in New Zealand.
1.2. Basis of preparation
The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP).
They comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial
Reporting Standards as appropriate to for-profit entities. The financial statements also comply with International Financial Reporting
Standards (IFRS Accounting Standards) and interpretations developed by the IFRS Interpretations Committee.
The financial statements have been prepared on the historical cost basis except where otherwise identified. All financial information is
presented in New Zealand dollars and has been rounded to the nearest thousand.
1.3. Group companies
As at 31 December 2023 and 31 December 2022, PFI No. 1 is the only controlled entity and is wholly owned.
1.4. Basis of consolidation
The consolidated financial statements comprise the Company and the entity it controls. All intercompany transactions are eliminated
on consolidation.
1.5. Critical judgements, estimates and assumptions
In applying the Group’s accounting policies, the Board and Management regularly evaluate judgements, estimates and assumptions that
may have an impact on the Group. The significant judgements, estimates and assumptions made in the preparation of these financial
statements are as follows:
2.1. Investment properties Page 39
3.2. Derivative financial instruments Page 53
5.2. Taxation Page 56
5.5. Goodwill Page 59
5.9. Share-based payments Page 63
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
36
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
1.6. Accounting policies
No changes to accounting policies have been made during the year and policies have been consistently applied to all years presented.
Material accounting policies have been included throughout the notes to the financial statements.
Other relevant policies are provided as follows:
Share capital
All shares on issue are fully paid, carry equal voting rights, share equally in dividends and any surplus on wind up and have no par value. All
shares are recognised at the fair value of the consideration received by the Company. Incremental costs directly attributable to the issue of
new shares are shown in equity as a deduction from the proceeds.
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values. The Board and Management have
overall responsibility for overseeing all significant fair value measurements and transfers between levels of the fair value hierarchy.
The fair value hierarchy has the following levels:
– Level 1: Fair value is based on observable quoted prices in active markets.
– Level 2: Fair value is based on observable market data where Level 1 quoted prices are not available.
– Level 3: Fair value is not based on observable market data (unobservable inputs).
The carrying values of all balance sheet financial assets and liabilities approximate their estimated fair values, apart from the fixed rate
bonds (refer Note 3.1 (ii) for further details).
The Board and Management review significant unobservable inputs and valuation adjustments. If third party information is used to measure
fair values, then the Board and Management assess the evidence obtained from the third parties to support the conclusion that such
valuations meet the requirements of NZ IFRS, including the level of the fair value hierarchy in which such valuations should be classified.
Goods and services tax
These financial statements have been prepared on a goods and services tax (GST) exclusive basis except for the accounts receivable
balance, accounts payable balance and other items where GST incurred is not recoverable. These balances are stated inclusive of GST.
New standards, amendments and interpretations
No new or amended standards and interpretations have been adopted in the 2023 financial year that have a material impact on the Group.
New accounting standards and interpretations that have been published, but are not mandatory for the 31 December 2023 reporting year
have not been early adopted by the Group. These standards are not expected to have a material impact on the Group in the current or future
reporting years, or on foreseeable future transactions.
1. GENERAL INFORMATION (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
37
NOTES 2023
1.7. Significant events and transactions
The financial position and performance of the Group was affected by the following events and transactions that occurred during the
reporting period:
Investment property acquisitions and disposals
On 31 March 2023, the Group settled the disposal of a non-current asset classified as held for sale located at 8a & 8b Canada Crescent,
Christchurch for a gross sale price of $21.00 milion.
On 9 October 2023, the Group announced that it had entered into a conditional contract to purchase two lots (approximately 5.8 hectares of
land) within the proposed industrial subdivision at Spedding Road, located at the end of the Northwestern motorway, for a purchase price of
$40.57 million. The Group expects to pay a 5% deposit once subdivision consent has been obtained (expected in mid-2024), and an initial
settlement of 45% of the purchase price on titles being received and works being complete (expected in mid-2025). The remaining two
deferred settlement sums of 25% each are due 12 and 24 months following the initial settlement date.
On 16 October 2023, the Group announced the divestment of 10c Stonedon Drive, East Tamaki for a contracted gross sales price of $20.90
million. This property is classified as a held for sale, non-current asset in these financial statements. Settlement of the divestment is
expected to take place late-June 2024.
On 18 October 2023, the Group announced the divestment of 15 Artillery Place, Nelson for a contracted gross sales price of $8.50 million.
This property is classified as a held for sale, non-current asset in these financial statements. Settlement of the divestment is expected to
take place mid-March 2024.
On 4 December 2023, the Group announced the divestment of 11 Sheffield Street, Blenheim for a contracted gross sales price of $7.45
million. Settlement of this divestment took place on 20 December 2023.
On 20 December 2023, the Group announced an agreement to purchase the property at 45 Cryers Road, East Tamaki, for a net purchase
price of $6.70 million. Settlement of this acquisition took place on 16 February 2024.
BNZ facility
On 28 March 2023, the Group announced that it had extended and increased its loan facility (also known as Syndicated Bank Facility C) with
the Bank of New Zealand. The facility expiry was extended for a further 2 years to 31 March 2025 and the facility was increased from $100
million to $175 million. Further changes were made to the facility on the establishment of the Green loan facilities and the Pricoa facility as
noted below.
Green loan facilities
On 20 July 2023, the Group announced the launch of its Green Finance Framework and the establishment of its $150 million Green Loan
facilities provided by ANZ Bank New Zealand Limited (ANZ), Bank of New Zealand (BNZ), Commonwealth Bank of Australia (CBA) and
Westpac New Zealand Limited (Westpac) to fund the Group’s committed brownfield developments at 30-32 Bowden Road and 78 Springs
Road, both targeting a 5 Green Star Design and Built rating. Following the establishment of the Green Loan facilities, the BNZ facility (also
known as Syndicated Bank Facility C) expiring on 31 March 2025, was reduced by $50 million to $125 million. A General Security Deed in
relation to the Group’s bank facilities and fixed rate bonds was also entered into on that same day.
Pricoa facility
On 15 December 2023, the Group made an initial NZ$25 million drawdown on the Group’s Note Purchase and Private Shelf Agreement with
PGIM, Inc (also known as Pricoa). The drawdown is for six years and is on a float-rate basis, with the margin fixed for the duration of the
drawdown. The proceeds have been used to repay and cancel $25 million of the Group’s BNZ facility (also known as Syndicated Bank
Facility C), reducing the facility to $100 million.
Balance date change
On 20 December 2023, the Group announced that, subject to customary approvals, it intends to change the balance date for the Group and
its subsidiary from 31 December to 30 June. Once approvals have been granted, following the annual report for the 12-month period to 31
December 2023, the Group’s next annual report will reflect a six-month period to 30 June 2024. Thereafter, the Group will report interim
financial statements as at 31 December and an annual report as at 30 June.
1. GENERAL INFORMATION (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
38
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
2. PROPERTY
IN THIS SECTION
This section shows the real estate assets used to generate the Group’s trading performance which are considered to be the most
relevant to the operations of the Group.
2.1. Investment properties
ALL VALUES IN $000S20232022
Opening balance 2,096,200 2,158,940
Capital movements:
Additions - 6,843
Disposals (7,688) (11,125)
Transfer to non-current assets classified as held for sale (29,400) (21,000)
Capital expenditure 78,831 18,014
Capitalised interest
1
3,246 13
Movement in lease incentives, fees and fixed rental income (2,034) 1,250
42,955 (6,005)
Unrealised fair value loss (140,830) (56,735)
As at 31 December 1,998,325 2,096,200
1 The effective interest rate applied to capitalised interest was 5.56% (2022: 4.34%).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
39
NOTES 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
Avondale:
15 Copsey Place Canterbury 100%100%5.4%5.0% 1,018 986 7,907 CBRE 19,600 (16) (634) 18,950
32 Honan Place Solo Plastics 100%100%5.4%4.6% 149 145 795 JLL 3,125 74 (449) 2,750
15 Jomac Place Southern Spars 100%100%6.1%5.1% 1,746 1,695 9,534 Savills 33,000 214 (4,464) 28,750
61-69 Patiki Road Bidfood 100%100%5.6%4.5% 1,344 1,292 9,776 Savills 28,750 351 (4,901) 24,200
320 Rosebank Road Doyle Sails 100%100%4.4%4.0% 822 802 6,625 JLL 20,000 (115) (1,135) 18,750
520 Rosebank Road Kenderdine Electrical 100%100%4.7%4.1% 191 187 1,995 Savills 4,600 23 (523) 4,100
528-558 Rosebank Road ETEL 100%100%5.9%5.2% 3,703 3,472 26,852 CBRE 67,000 1,238 (5,738)62,500
670-680 Rosebank Road New Zealand Comfort 100%100%5.7%4.3% 2,297 1,764 17,295 Savills 41,500 90 (1,090) 40,500
686 Rosebank Road Brand Developers 100%100%5.6%4.8% 3,214 3,019 23,885 Savills 63,500 48 (6,298) 57,250
100%100%5.6%4.8% 14,484 13,362 104,664 281,075 1,907 (25,232)257,750
East Tamaki:
17 Allens Road Contract Warehousing 100%100%4.9%4.2% 1,443 1,328 11,904 JLL 31,750 412 (2,412) 29,750
43 Cryers Road Astron Plastics 100%100%5.1%4.6% 880 856 6,068 Colliers 18,500 120 (1,420) 17,200
6-8 Greenmount Drive Bridon 100%100%4.2%4.0% 758 739 6,590 Colliers 18,500 475 (1,075) 17,900
92-98 Harris Road GrainCorp 100%100%5.4%6.1% 1,458 1,423 10,687 Colliers 23,500 (27) 3,527 27,000
36 Neales Road Mainfreight 100%100%4.4%4.2% 1,623 1,583 18,942 JLL 37,750 288 (1,288) 36,750
1 Ron Driver Place Glen Dimplex 100%100%4.3%4.6% 553 540 5,393 CBRE 11,750 (51) 1,101 12,800
78 Springs Road
1
Fisher & Paykel Appliances 100%100%3.7%6.8% 4,070 6,672 24,510 JLL 98,000 27,163 (14,113) 111,050
10c Stonedon Drive Chemical Freight Services 100%100%4.9%4.8% 1,033 1,005 8,711 CBRE 20,900 (20,911) 11 -
11 Turin Place Thermakraft Industries 100%100%5.0%4.1% 1,069 1,023 9,981 Savills 24,800 47 (3,347) 21,500
12 Zelanian Drive Central Joinery 100%100%3.9%4.2% 778 754 6,098 Colliers 18,100 213 1,687 20,000
23 Zelanian Drive Exclusive Tyre Distributors 100%100%4.5%4.2% 498 488 3,811 Colliers 11,700 (57) (543) 11,100
100%100%4.6%5.2% 14,163 16,411 112,695 315,250 7,672 (17,872) 305,050
Manukau:
212 Cavendish Drive Mainfreight 100%100%4.2%4.2% 2,209 2,182 25,898 Savills 52,000 895 (395) 52,500
232 Cavendish Drive
2
Fletcher Building Products 100%100%4.5%3.9% 1,432 1,332 16,832 Savills 34,500 681 (3,181) 32,000
47 Dalgety Drive Peter Hay Kitchens 100%100%4.9%4.3% 999 952 10,155 Savills 22,100 (40) (1,860) 20,200
47a Dalgety Drive Shaw 100%100%4.6%3.9% 606 592 4,832 Savills 15,000 (46) (1,704) 13,250
59 Dalgety Drive Store Rite Logistics 100%100%4.7%4.2% 1,299 1,267 11,844 Savills 30,000 (163) (2,337) 27,500
12 Hautu Drive Kiwi Steel 100%100%4.8%4.5% 748 727 6,492 CBRE 16,150 164 (864) 15,450
25 Langley Road Grayson Engineering 100%100%4.5%4.2% 2,245 2,190 21,248 Colliers 51,600 401 (2,601) 49,400
1 Mayo Road TDX 100%100%5.2%4.6% 743 705 6,361 Colliers 15,200 67 (967) 14,300
61 McLaughlins Road MOVe Logistics 100%100%4.7%4.1% 1,314 1,257 13,347 Colliers 30,700 92 (2,992) 27,800
9 Narek Place Z Energy 100%100%5.0%4.7% 684 650 3,577 Savills 13,750 (3) (197) 13,550
9 Nesdale Avenue Brambles 100%100%4.4%4.0% 889 863 14,163 JLL 21,500 47 (1,547) 20,000
44 Noel Burnside Road Cottonsoft 100%100%4.5%3.9% 3,488 3,403 32,807 Bayleys 86,500 134 (9,634) 77,000
100%100%4.6%4.1% 16,656 16,120 167,556 389,000 2,229 (28,279) 362,950
1. Partially under development. 2. Excludes development land shown separately on page 46.
2. PROPERTY (continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
40
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
Avondale:
15 Copsey Place Canterbury 100%100%5.4%5.0% 1,018 986 7,907 CBRE 19,600 (16) (634) 18,950
32 Honan Place Solo Plastics 100%100%5.4%4.6% 149 145 795 JLL 3,125 74 (449) 2,750
15 Jomac Place Southern Spars 100%100%6.1%5.1% 1,746 1,695 9,534 Savills 33,000 214 (4,464) 28,750
61-69 Patiki Road Bidfood 100%100%5.6%4.5% 1,344 1,292 9,776 Savills 28,750 351 (4,901) 24,200
320 Rosebank Road Doyle Sails 100%100%4.4%4.0% 822 802 6,625 JLL 20,000 (115) (1,135) 18,750
520 Rosebank Road Kenderdine Electrical 100%100%4.7%4.1% 191 187 1,995 Savills 4,600 23 (523) 4,100
528-558 Rosebank Road ETEL 100%100%5.9%5.2% 3,703 3,472 26,852 CBRE 67,000 1,238 (5,738)62,500
670-680 Rosebank Road New Zealand Comfort 100%100%5.7%4.3% 2,297 1,764 17,295 Savills 41,500 90 (1,090) 40,500
686 Rosebank Road Brand Developers 100%100%5.6%4.8% 3,214 3,019 23,885 Savills 63,500 48 (6,298) 57,250
100%100%5.6%4.8% 14,484 13,362 104,664 281,075 1,907 (25,232)257,750
East Tamaki:
17 Allens Road Contract Warehousing 100%100%4.9%4.2% 1,443 1,328 11,904 JLL 31,750 412 (2,412) 29,750
43 Cryers Road Astron Plastics 100%100%5.1%4.6% 880 856 6,068 Colliers 18,500 120 (1,420) 17,200
6-8 Greenmount Drive Bridon 100%100%4.2%4.0% 758 739 6,590 Colliers 18,500 475 (1,075) 17,900
92-98 Harris Road GrainCorp 100%100%5.4%6.1% 1,458 1,423 10,687 Colliers 23,500 (27) 3,527 27,000
36 Neales Road Mainfreight 100%100%4.4%4.2% 1,623 1,583 18,942 JLL 37,750 288 (1,288) 36,750
1 Ron Driver Place Glen Dimplex 100%100%4.3%4.6% 553 540 5,393 CBRE 11,750 (51) 1,101 12,800
78 Springs Road
1
Fisher & Paykel Appliances 100%100%3.7%6.8% 4,070 6,672 24,510 JLL 98,000 27,163 (14,113) 111,050
10c Stonedon Drive Chemical Freight Services 100%100%4.9%4.8% 1,033 1,005 8,711 CBRE 20,900 (20,911) 11 -
11 Turin Place Thermakraft Industries 100%100%5.0%4.1% 1,069 1,023 9,981 Savills 24,800 47 (3,347) 21,500
12 Zelanian Drive Central Joinery 100%100%3.9%4.2% 778 754 6,098 Colliers 18,100 213 1,687 20,000
23 Zelanian Drive Exclusive Tyre Distributors 100%100%4.5%4.2% 498 488 3,811 Colliers 11,700 (57) (543) 11,100
100%100%4.6%5.2% 14,163 16,411 112,695 315,250 7,672 (17,872) 305,050
Manukau:
212 Cavendish Drive Mainfreight 100%100%4.2%4.2% 2,209 2,182 25,898 Savills 52,000 895 (395) 52,500
232 Cavendish Drive
2
Fletcher Building Products 100%100%4.5%3.9% 1,432 1,332 16,832 Savills 34,500 681 (3,181) 32,000
47 Dalgety Drive Peter Hay Kitchens 100%100%4.9%4.3% 999 952 10,155 Savills 22,100 (40) (1,860) 20,200
47a Dalgety Drive Shaw 100%100%4.6%3.9% 606 592 4,832 Savills 15,000 (46) (1,704) 13,250
59 Dalgety Drive Store Rite Logistics 100%100%4.7%4.2% 1,299 1,267 11,844 Savills 30,000 (163) (2,337) 27,500
12 Hautu Drive Kiwi Steel 100%100%4.8%4.5% 748 727 6,492 CBRE 16,150 164 (864) 15,450
25 Langley Road Grayson Engineering 100%100%4.5%4.2% 2,245 2,190 21,248 Colliers 51,600 401 (2,601) 49,400
1 Mayo Road TDX 100%100%5.2%4.6% 743 705 6,361 Colliers 15,200 67 (967) 14,300
61 McLaughlins Road MOVe Logistics 100%100%4.7%4.1% 1,314 1,257 13,347 Colliers 30,700 92 (2,992) 27,800
9 Narek Place Z Energy 100%100%5.0%4.7% 684 650 3,577 Savills 13,750 (3) (197) 13,550
9 Nesdale Avenue Brambles 100%100%4.4%4.0% 889 863 14,163 JLL 21,500 47 (1,547) 20,000
44 Noel Burnside Road Cottonsoft 100%100%4.5%3.9% 3,488 3,403 32,807 Bayleys 86,500 134 (9,634) 77,000
100%100%4.6%4.1% 16,656 16,120 167,556 389,000 2,229 (28,279) 362,950
1. Partially under development. 2. Excludes development land shown separately on page 46.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
41
NOTES 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
Mt Wellington:
30-32 Bowden Road Under development -100%0.0%5.5% - 1,867 19,639 Savills 34,000 37,198 (498) 70,700
50 Carbine Road Fletcher Building Products 100%100%4.3%4.0% 239 239 2,592 Savills 6,000 17 (417) 5,600
54 Carbine Road & 6a Donnor Place Pharmacy Retailing 100%100%4.8%4.9% 2,299 2,270 17,065 Savills 46,750 1,203 (453) 47,500
76 Carbine Road Atlas Gentech 100%100%5.4%5.1% 646 646 5,080 CBRE 12,550 9 (509) 12,050
7 Carmont Place CMI 100%100%4.7%4.7% 759 751 5,776 CBRE 15,950 183 (83) 16,050
6 Donnor Place Coca-Cola 100%100%5.3%4.8% 1,640 1,593 16,686 Savills 33,500 (68) (2,432) 31,000
4-6 Mt Richmond Drive Iron Mountain 100%100%3.6%3.4% 918 918 7,946 JLL 26,750 130 (1,430) 25,450
509 Mt Wellington Highway Fletcher Building Products 100%100%4.8%4.3% 1,182 1,083 8,744 Colliers 25,000 (43) (257) 24,700
511 Mt Wellington Highway Stryker 100%100%4.7%4.3% 526 512 3,054 Colliers 11,900 (16) (684) 11,200
515 Mt Wellington Highway Kiwi Management Services 100%100%4.6%4.3% 333 326 2,324 Colliers 7,600 (7) (393) 7,200
523 Mt Wellington Highway Motion New Zealand 100%100%4.4%3.9% 285 285 1,677 Savills 7,300 12 (812) 6,500
1 Niall Burgess Road Bremca Industries 100%100%4.1%3.8% 272 265 1,742 Colliers 7,000 233 (533) 6,700
2-6 Niall Burgess Road McAlpine Hussmann 100%100%5.7%5.2% 1,263 1,081 6,874 CBRE 20,950 773 477 22,200
3-5 Niall Burgess Road Electrolux 100%100%4.4%4.2% 1,335 1,302 13,266 Colliers 31,200 1,044 (2,144) 30,100
7-9 Niall Burgess Road DHL Supply Chain 100%100%4.5%4.1% 2,655 2,573 23,565 Colliers 62,500 (77) (3,223) 59,200
10 Niall Burgess Road NEP Broadcast Services 100%100%4.6%4.4% 309 300 1,725 JLL 6,800 37 (187) 6,650
5 Vestey Drive PPG Industries 100%100%5.3%3.9% 300 236 1,270 Savills 6,100 57 (457) 5,700
7 Vestey Drive True North 100%100%4.9%3.7% 825 663 6,075 JLL 17,750 134 (1,134) 16,750
9 Vestey Drive Multispares 100%100%4.3%3.6% 232 217 1,600 Savills 6,000 39 (639) 5,400
11 Vestey Drive N & Z 100%100%4.7%4.1% 541 527 3,470 Savills 12,750 (6) (1,344) 11,400
15a Vestey Drive Pact Group Holdings 100%100%5.2%4.8% 611 597 3,261 Savills 12,400 (235) (465) 11,700
36 Vestey Drive Motion New Zealand 100%100%4.2%4.1% 187 182 1,120 CBRE 4,400 (10) 35 4,425
100%100%4.0%4.4% 17,357 18,433 154,551 415,150 40,607 (17,582) 438,175
North Shore:
2-4 Argus Place Pharmapac 100%100%4.5%4.1% 486 474 3,560 Colliers 11,600 226 (1,026) 10,800
47 Arrenway Drive Device Technologies 100%100%5.0%4.3% 258 251 1,245 Colliers 5,800 248 (848) 5,200
51 Arrenway Drive Pacific Hygiene 100%100%5.2%4.6% 469 456 2,680 CBRE 9,850 57 (857) 9,050
15 Omega Street Wesfarmers 100%100%5.4%4.9% 641 577 3,498 Colliers 11,800 452 (352) 11,900
322 Rosedale Road BSGi 100%100%5.2%4.8% 1,231 1,199 7,936 CBRE 25,200 13 (1,713) 23,500
41 William Pickering Drive Innopak Global 100%100%5.2%4.3% 541 503 3,027 JLL 11,600 95 (1,245) 10,450
100%100%5.1%4.6% 3,626 3,460 21,946 75,850 1,091 (6,041) 70,900
2. PROPERTY (continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
42
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
Mt Wellington:
30-32 Bowden Road Under development -100%0.0%5.5% - 1,867 19,639 Savills 34,000 37,198 (498) 70,700
50 Carbine Road Fletcher Building Products 100%100%4.3%4.0% 239 239 2,592 Savills 6,000 17 (417) 5,600
54 Carbine Road & 6a Donnor Place Pharmacy Retailing 100%100%4.8%4.9% 2,299 2,270 17,065 Savills 46,750 1,203 (453) 47,500
76 Carbine Road Atlas Gentech 100%100%5.4%5.1% 646 646 5,080 CBRE 12,550 9 (509) 12,050
7 Carmont Place CMI 100%100%4.7%4.7% 759 751 5,776 CBRE 15,950 183 (83) 16,050
6 Donnor Place Coca-Cola 100%100%5.3%4.8% 1,640 1,593 16,686 Savills 33,500 (68) (2,432) 31,000
4-6 Mt Richmond Drive Iron Mountain 100%100%3.6%3.4% 918 918 7,946 JLL 26,750 130 (1,430) 25,450
509 Mt Wellington Highway Fletcher Building Products 100%100%4.8%4.3% 1,182 1,083 8,744 Colliers 25,000 (43) (257) 24,700
511 Mt Wellington Highway Stryker 100%100%4.7%4.3% 526 512 3,054 Colliers 11,900 (16) (684) 11,200
515 Mt Wellington Highway Kiwi Management Services 100%100%4.6%4.3% 333 326 2,324 Colliers 7,600 (7) (393) 7,200
523 Mt Wellington Highway Motion New Zealand 100%100%4.4%3.9% 285 285 1,677 Savills 7,300 12 (812) 6,500
1 Niall Burgess Road Bremca Industries 100%100%4.1%3.8% 272 265 1,742 Colliers 7,000 233 (533) 6,700
2-6 Niall Burgess Road McAlpine Hussmann 100%100%5.7%5.2% 1,263 1,081 6,874 CBRE 20,950 773 477 22,200
3-5 Niall Burgess Road Electrolux 100%100%4.4%4.2% 1,335 1,302 13,266 Colliers 31,200 1,044 (2,144) 30,100
7-9 Niall Burgess Road DHL Supply Chain 100%100%4.5%4.1% 2,655 2,573 23,565 Colliers 62,500 (77) (3,223) 59,200
10 Niall Burgess Road NEP Broadcast Services 100%100%4.6%4.4% 309 300 1,725 JLL 6,800 37 (187) 6,650
5 Vestey Drive PPG Industries 100%100%5.3%3.9% 300 236 1,270 Savills 6,100 57 (457) 5,700
7 Vestey Drive True North 100%100%4.9%3.7% 825 663 6,075 JLL 17,750 134 (1,134) 16,750
9 Vestey Drive Multispares 100%100%4.3%3.6% 232 217 1,600 Savills 6,000 39 (639) 5,400
11 Vestey Drive N & Z 100%100%4.7%4.1% 541 527 3,470 Savills 12,750 (6) (1,344) 11,400
15a Vestey Drive Pact Group Holdings 100%100%5.2%4.8% 611 597 3,261 Savills 12,400 (235) (465) 11,700
36 Vestey Drive Motion New Zealand 100%100%4.2%4.1% 187 182 1,120 CBRE 4,400 (10) 35 4,425
100%100%4.0%4.4% 17,357 18,433 154,551 415,150 40,607 (17,582) 438,175
North Shore:
2-4 Argus Place Pharmapac 100%100%4.5%4.1% 486 474 3,560 Colliers 11,600 226 (1,026) 10,800
47 Arrenway Drive Device Technologies 100%100%5.0%4.3% 258 251 1,245 Colliers 5,800 248 (848) 5,200
51 Arrenway Drive Pacific Hygiene 100%100%5.2%4.6% 469 456 2,680 CBRE 9,850 57 (857) 9,050
15 Omega Street Wesfarmers 100%100%5.4%4.9% 641 577 3,498 Colliers 11,800 452 (352) 11,900
322 Rosedale Road BSGi 100%100%5.2%4.8% 1,231 1,199 7,936 CBRE 25,200 13 (1,713) 23,500
41 William Pickering Drive Innopak Global 100%100%5.2%4.3% 541 503 3,027 JLL 11,600 95 (1,245) 10,450
100%100%5.1%4.6% 3,626 3,460 21,946 75,850 1,091 (6,041) 70,900
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
43
NOTES 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
Penrose:
4 Autumn Place Ryco Hydraulics 100%100%5.4%3.7% 242 170 1,210 Colliers 4,550 22 (72) 4,500
6 Autumn Place MOTAT 100%100%3.8%3.5% 196 192 1,718 Colliers 5,500 6 (406) 5,100
10 Autumn Place MOTAT 100%100%3.8%3.6% 735 721 7,646 Colliers 19,900 (31) (269) 19,600
122 Captain Springs Road New Zealand Crane Group 100%100%4.6%4.6% 577 577 7,431 Colliers 12,500 1 99 12,600
8 Hugo Johnston Drive Mountcastle 100%100%7.2%6.0% 851 836 4,359 CBRE 14,000 106 (2,306) 11,800
12 Hugo Johnston Drive W H Worrall 100%100%5.5%5.1% 475 455 2,639 CBRE 8,850 37 (237) 8,650
16 Hugo Johnston Drive Newflor Industries 100%100%5.1%4.9% 434 424 2,619 CBRE 8,700 57 (207) 8,550
80 Hugo Johnston Drive Boxkraft 100%100%4.1%4.0% 530 517 3,872 Colliers 13,000 50 (150) 12,900
102 Mays Road 2 Cheap Cars 100%100%4.6%4.3% 679 659 6,596 CBRE 15,400 53 (603) 14,850
304 Neilson Street Fletcher Building Products 100%100%4.4%4.1% 849 829 13,438 JLL 20,250 63 (1,113) 19,200
306 Neilson Street Trade Depot 100%100%5.3%4.7% 988 964 6,301 JLL 20,400 41 (1,691) 18,750
312 Neilson Street Transport Trailer Services 100%100%5.1%4.3% 472 424 3,862 JLL 9,800 625 (1,175) 9,250
314 Neilson Street Wakefield Metals 100%100%4.6%3.9% 1,013 844 9,265 JLL 21,500 2,274 (1,824) 21,950
318 Neilson Street Hi-Tech Security Disposals 100% – 3.3%2.8% 187 182 4,977 JLL 6,600 2 (852) 5,750
12 Southpark Place QCD 100%100%4.6%3.6% 667 541 5,477 Colliers 15,100 288 (988) 14,400
100%100%4.7%4.3% 8,895 8,335 81,410 196,050 3,594 (11,794) 187,850
Other Auckland:
58 Richard Pearse Drive, Mangere Pharmacy Retailing 100%100%4.1%3.9% 1,255 1,255 12,708 JLL 32,500 51 (1,601) 30,950
51-61 Spartan Road, Takanini Action Manufacturing 100%100%4.8%4.7% 1,025 998 13,519 CBRE 21,300 59 (9) 21,350
170 Swanson Road, Swanson Transportation Auckland 100%100%3.5%3.4% 1,148 1,148 37,601 Savills 33,500 (66) (434) 33,000
100%100%4.0%3.9% 3,428 3,401 63,828 87,300 44 (2,044) 85,300
2. PROPERTY (continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
44
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
Penrose:
4 Autumn Place Ryco Hydraulics 100%100%5.4%3.7% 242 170 1,210 Colliers 4,550 22 (72) 4,500
6 Autumn Place MOTAT 100%100%3.8%3.5% 196 192 1,718 Colliers 5,500 6 (406) 5,100
10 Autumn Place MOTAT 100%100%3.8%3.6% 735 721 7,646 Colliers 19,900 (31) (269) 19,600
122 Captain Springs Road New Zealand Crane Group 100%100%4.6%4.6% 577 577 7,431 Colliers 12,500 1 99 12,600
8 Hugo Johnston Drive Mountcastle 100%100%7.2%6.0% 851 836 4,359 CBRE 14,000 106 (2,306) 11,800
12 Hugo Johnston Drive W H Worrall 100%100%5.5%5.1% 475 455 2,639 CBRE 8,850 37 (237) 8,650
16 Hugo Johnston Drive Newflor Industries 100%100%5.1%4.9% 434 424 2,619 CBRE 8,700 57 (207) 8,550
80 Hugo Johnston Drive Boxkraft 100%100%4.1%4.0% 530 517 3,872 Colliers 13,000 50 (150) 12,900
102 Mays Road 2 Cheap Cars 100%100%4.6%4.3% 679 659 6,596 CBRE 15,400 53 (603) 14,850
304 Neilson Street Fletcher Building Products 100%100%4.4%4.1% 849 829 13,438 JLL 20,250 63 (1,113) 19,200
306 Neilson Street Trade Depot 100%100%5.3%4.7% 988 964 6,301 JLL 20,400 41 (1,691) 18,750
312 Neilson Street Transport Trailer Services 100%100%5.1%4.3% 472 424 3,862 JLL 9,800 625 (1,175) 9,250
314 Neilson Street Wakefield Metals 100%100%4.6%3.9% 1,013 844 9,265 JLL 21,500 2,274 (1,824) 21,950
318 Neilson Street Hi-Tech Security Disposals 100% – 3.3%2.8% 187 182 4,977 JLL 6,600 2 (852) 5,750
12 Southpark Place QCD 100%100%4.6%3.6% 667 541 5,477 Colliers 15,100 288 (988) 14,400
100%100%4.7%4.3% 8,895 8,335 81,410 196,050 3,594 (11,794) 187,850
Other Auckland:
58 Richard Pearse Drive, Mangere Pharmacy Retailing 100%100%4.1%3.9% 1,255 1,255 12,708 JLL 32,500 51 (1,601) 30,950
51-61 Spartan Road, Takanini Action Manufacturing 100%100%4.8%4.7% 1,025 998 13,519 CBRE 21,300 59 (9) 21,350
170 Swanson Road, Swanson Transportation Auckland 100%100%3.5%3.4% 1,148 1,148 37,601 Savills 33,500 (66) (434) 33,000
100%100%4.0%3.9% 3,428 3,401 63,828 87,300 44 (2,044) 85,300
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
45
NOTES 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
North Island (outside Auckland):
124 Hewletts Road, Mt MaunganuiRMD Bulk Storage 100%100%5.6%4.7% 3,845 3,537 34,802 JLL 76,000 175 (6,975) 69,200
124a Hewletts Road, Mt MaunganuiBallance Agri-Nutrients 100%100%4.7%4.1% 1,157 1,107 10,497 JLL 27,100 9 (2,609) 24,500
124b Hewletts Road, Mt MaunganuiBallance Agri-Nutrients 100%100%5.3%4.5% 1,066 999 8,867 JLL 22,050 32 (2,082) 20,000
3 Hocking Street, Mt MaunganuiBR & SL Porter 100%100%5.4%4.2% 186 165 1,850 JLL 3,900 35 (485) 3,450
143 Hutt Park Road, WellingtonMasterpet 100%100%6.2%5.3% 1,477 1,256 11,372 Savills 23,750 40 (40) 23,750
8 McCormack Place, WellingtonFletcher Building Products 100%100%5.9%5.9% 805 795 6,686 JLL 13,550 4 196 13,750
28 Paraite Road, New PlymouthMOVe Logistics 100%100%7.9%7.9% 1,366 1,306 15,636 CBRE 16,600 2,481 (1,831) 17,250
Shed 22, 23 Cable Street, Wellington
3
Shed 22 Hospo 100%100%7.9%6.8% 951 940 2,809 JLL 13,900 84 (1,984) 12,000
2 Smart Road, New PlymouthNew Zealand Post 100%100%7.7%6.7% 370 334 2,359 CBRE 5,000 23 (223) 4,800
558 Te Rapa Road, HamiltonDEC Manufacturing 100%100%6.0%4.4% 550 480 5,026 Savills 10,800 32 (1,732) 9,100
22 Whakatu Road, HastingsEnzafruit New Zealand 100%100%5.5%4.6% 3,659 3,579 52,718 Bayleys 78,500 156 (11,906) 66,750
100%100%5.6%4.8% 15,432 14,498 152,622 291,150 3,071 (29,671) 264,550
South Island:
15 Artillery Place, NelsonMOVe Logistics 100%100%7.3%5.8% 617 590 18,052 CBRE 10,250 (8,467) (1,783) -
8a & 8b Canada Crescent, ChristchurchLineage Logistics100%100% - 6.5% - 1,357 9,500 - - - - -
41 & 55 Foremans Road, ChristchurchMOVe Logistics 100%100%6.2%5.9% 838 802 14,710 CBRE 13,700 40 (240) 13,500
44 Mandeville Street, ChristchurchFletcher Building Products 100%100%8.0%7.7% 984 969 11,154 JLL 12,600 (8) (292) 12,300
11 Sheffield Street, BlenheimMOVe Logistics 100%100% - 6.7% - 536 10,823 - 8,000 (8,000) - -
100%100%9.5%9.5% 2,439 4,254 64,239 44,550 (16,435) (2,315) 25,800
Investment properties – subtotal100%100%4.8%4.6% 96,480 98,274 923,511 2,095,375 43,780 (140,830) 1,998,325
Development land:
232 Cavendish Drive, Manukau Savills 825 (825) - -
Development land – subtotal 825 (825) - -
Investment properties – total 2,096,200 42,955 (140,830) 1,998,325
3 Included in the 2023 balance is a right-of-use asset of $4.13 million (2022: $4.13 million) primarily in relation to a ground lease, representing the value of the land,
with an associated immaterial lease liability.
2. PROPERTY (continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
46
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
ALL VALUES IN $000S UNLESS NOTEDKey tenant Occupancy (%)Yield on valuation (%)Contract rent
Lettable
area (sqm) Valuer
Carrying
value
Capital
movements
Fair value
adjustment
Carrying
value
2023202320222023202220232022202320232022202320232023
North Island (outside Auckland):
124 Hewletts Road, Mt MaunganuiRMD Bulk Storage 100%100%5.6%4.7% 3,845 3,537 34,802 JLL 76,000 175 (6,975) 69,200
124a Hewletts Road, Mt MaunganuiBallance Agri-Nutrients 100%100%4.7%4.1% 1,157 1,107 10,497 JLL 27,100 9 (2,609) 24,500
124b Hewletts Road, Mt MaunganuiBallance Agri-Nutrients 100%100%5.3%4.5% 1,066 999 8,867 JLL 22,050 32 (2,082) 20,000
3 Hocking Street, Mt MaunganuiBR & SL Porter 100%100%5.4%4.2% 186 165 1,850 JLL 3,900 35 (485) 3,450
143 Hutt Park Road, WellingtonMasterpet 100%100%6.2%5.3% 1,477 1,256 11,372 Savills 23,750 40 (40) 23,750
8 McCormack Place, WellingtonFletcher Building Products 100%100%5.9%5.9% 805 795 6,686 JLL 13,550 4 196 13,750
28 Paraite Road, New PlymouthMOVe Logistics 100%100%7.9%7.9% 1,366 1,306 15,636 CBRE 16,600 2,481 (1,831) 17,250
Shed 22, 23 Cable Street, Wellington
3
Shed 22 Hospo 100%100%7.9%6.8% 951 940 2,809 JLL 13,900 84 (1,984) 12,000
2 Smart Road, New PlymouthNew Zealand Post 100%100%7.7%6.7% 370 334 2,359 CBRE 5,000 23 (223) 4,800
558 Te Rapa Road, HamiltonDEC Manufacturing 100%100%6.0%4.4% 550 480 5,026 Savills 10,800 32 (1,732) 9,100
22 Whakatu Road, HastingsEnzafruit New Zealand 100%100%5.5%4.6% 3,659 3,579 52,718 Bayleys 78,500 156 (11,906) 66,750
100%100%5.6%4.8% 15,432 14,498 152,622 291,150 3,071 (29,671) 264,550
South Island:
15 Artillery Place, NelsonMOVe Logistics 100%100%7.3%5.8% 617 590 18,052 CBRE 10,250 (8,467) (1,783) -
8a & 8b Canada Crescent, ChristchurchLineage Logistics100%100% - 6.5% - 1,357 9,500 - - - - -
41 & 55 Foremans Road, ChristchurchMOVe Logistics 100%100%6.2%5.9% 838 802 14,710 CBRE 13,700 40 (240) 13,500
44 Mandeville Street, ChristchurchFletcher Building Products 100%100%8.0%7.7% 984 969 11,154 JLL 12,600 (8) (292) 12,300
11 Sheffield Street, BlenheimMOVe Logistics 100%100% - 6.7% - 536 10,823 - 8,000 (8,000) - -
100%100%9.5%9.5% 2,439 4,254 64,239 44,550 (16,435) (2,315) 25,800
Investment properties – subtotal100%100%4.8%4.6% 96,480 98,274 923,511 2,095,375 43,780 (140,830) 1,998,325
Development land:
232 Cavendish Drive, Manukau Savills 825 (825) - -
Development land – subtotal 825 (825) - -
Investment properties – total 2,096,200 42,955 (140,830) 1,998,325
3 Included in the 2023 balance is a right-of-use asset of $4.13 million (2022: $4.13 million) primarily in relation to a ground lease, representing the value of the land,
with an associated immaterial lease liability.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
47
NOTES 2023
2. PROPERTY (continued)
2.1. Investment properties (continued)
Recognition and Measurement
Investment properties are held to earn rental income and for long-term capital appreciation. After initial recognition on the settlement date at
cost, including directly attributable acquisition costs, investment properties are measured at fair value, on the basis of valuations made by
independent valuers on at least an annual basis. Gains or losses arising from changes in the fair value of investment properties are included in
the Consolidated Statement of Comprehensive Income in the year in which they arise. Subsequent expenditure is charged to the asset’s carrying
amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably.
The fair value of investment property reflects the Directors’ assessment of the highest and best use of each property and amongst other things,
rental income from current leases and assumptions about rental income from future leases in light of the current market conditions. The fair
value also reflects the cash outflows that could be expected in respect of the property.
No depreciation or amortisation is provided for on investment properties. However, for tax purposes, depreciation is claimed on building fit-out
and building structure. Deferred tax is recognised to the extent that tax depreciation recovery gain or loss on disposal is calculated on the fit-out
and building structure components separately. See section 5.2 for more details.
Investment properties under construction are carried at cost until it is possible to reliably determine their fair value, from which point they are
carried at fair value less costs to complete. Gains or losses on the disposal of investment properties are recognised in the Consolidated
Statement of Comprehensive Income in the period in which the investment properties are derecognised when they have been disposed.
Borrowing costs are capitalised if they are directly attributable to the acquisition or construction of a qualifying property. Capitalisation of
borrowing costs commences when the activities to prepare the asset are in progress and expenditures and borrowing costs are being incurred.
Capitalisation of borrowing costs will continue until the asset is substantially ready for its intended use. The rate at which borrowing costs are
capitalised is determined by reference to the weighted average borrowing costs of the Group and the average level of borrowings by the Group.
Key estimates and assumptions: Investment properties and the impact of climate change
The fair value of investment properties are determined from valuations prepared by independent valuers.
All investment properties were valued as at 31 December 2023 and 31 December 2022 by Bayleys Valuation Limited (Bayleys), CBRE
Limited (CBRE), CVAS (NZ) Limited (Colliers), Jones Lang LaSalle Limited (JLL) or Savills (NZ) Limited (Savills). Bayleys, CBRE, Colliers,
JLL and Savills are independent valuers and members of the New Zealand Institute of Valuers.
PFI’s investment property valuation policy notes that: PFI will not use the same independent valuer for a property for more than three
consecutive year end valuations, however in both 2023 and 2022, the Group made an exemption to this policy for four properties. This
exemption was made for two reasons: first, in order for certain properties adjacent to each other, for example, the Company’s Neilson
Street properties, to be valued by the same valuer, and second, to allocate the Company’s portfolio more evenly across the valuers.
As part of the valuation process, the Group’s management verifies all major inputs to the independent valuation reports, assesses
movements in individual property values and holds discussions with the independent valuers.
The fair value was determined using Level 3 valuation techniques via a combination of the following approaches:
• Direct Capitalisation: The subject property rental is divided by a market derived capitalisation rate to assess the market value of the
asset. Further adjustments are then made to the market value to reflect under or over renting, additional revenue and required
capital expenditure.
• Discounted Cash Flow: Discounted cash flow projections for the subject property are based on estimates of future cash flows, supported
by the terms of any existing lease and by external evidence such as market rents for similar properties in the same location and condition,
and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.
Below are the significant inputs used in the valuations, together with the impact on the fair value of a change in the inputs:
RANGE OF SIGNIFICANT
UNOBSERVABLE INPUTSMEASUREMENT SENSITIVITY
20232022Increase in inputDecrease in input
Market capitalisation rate (%)
1
4.25 - 8.13 3.25 - 7.75 Decrease Increase
Market rental ($ per sqm)
2
33 - 316 31 - 335 Increase Decrease
Discount rate (%)
3
6.25 - 9.25 5.50 - 9.00 Decrease Increase
Rental growth rate (%)
4
2.00 - 3.75 1.00 - 3.05 Increase Decrease
Terminal capitalisation rate (%)
5
4.50 - 8.38 3.50 - 8.25 Decrease Increase
1. The capitalisation rate applied to the market rental to assess a property’s value, determined through analysis of similar transactions taking into account location, weighted
average lease term, tenant covenant, size and quality of the property.
2. The valuers assessment of the net market income which a property is expected to achieve under a new arm’s length leasing transaction. Includes both leased and vacant
areas.
3. The rate applied to future cash flows reflecting transactional evidence from similar properties.
4. The rate applied to the market rental over the future cash flow projection.
5. The rate used to assess the terminal value of the property.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
48
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
The estimated sensitivity of the fair value of investment property to changes in the market capitalisation rate (under the Direct
Capitalisation valuation approach) and discount rate (under the Discounted Cash Flows valuation approach) is set out in the table below:
ALL VALUES IN $000S
Fair valueMarket capitalisation rate Discount rate
2023+ 0.25% – 0.25%+ 0.25% – 0.25%
Valuation 1,998,325
Change (85,000) 93,000 (64,000) 68,000
Change (%)(4%)5%(3%)3%
ALL VALUES IN $000S
Fair valueMarket capitalisation rateDiscount rate
2022 + 0.25% – 0.25%+ 0.25% – 0.25%
Valuation 2,096,200
Change (99,000) 109,000 (74,000) 80,000
Change (%)(5%)5%(4%)4%
Generally, a change in the assumption made for the adopted market capitalisation rate is accompanied by a directionally similar change in
the adopted terminal capitalisation rate. The adopted market capitalisation rate forms part of the direct capitalisation approach and the
adopted terminal capitalisation rate forms part of the discounted cash flow approach. Both valuation methodologies are considered when
determining an investment property’s fair value.
When calculating the direct capitalisation approach, the market rental has a strong interrelationship with the adopted market
capitalisation rate given the methodology involves assessing the total market rental income receivable from the property and capitalising
this in perpetuity to derive a capital value. In theory, an increase in the market rent and an increase in the adopted market capitalisation
rate could potentially offset the impact to the fair value. The same can be said for a decrease in the market rent and a decrease in the
adopted market capitalisation rate. A directionally opposite change in the market rent and the adopted market capitalisation rate could
potentially magnify the impact to the fair value.
When assessing a discounted cash flow, the adopted discount rate and adopted terminal capitalisation rate have a strong
interrelationship in deriving a fair value given the discount rate will determine the rate at which the terminal value is discounted to the
present value. In theory, an increase in the adopted discount rate and a decrease in the adopted terminal capitalisation rate could
potentially offset the impact to the fair value. The same can be said for a decrease in the discount rate and an increase in the adopted
terminal capitalisation rate. A directionally similar change in the adopted discount rate and the adopted terminal capitalisation rate could
potentially magnify the impact to the fair value.
The impact of climate change
The Group continues to assess the impact of climate change on the business and portfolio regularly and is taking steps to manage and
address climate-related risks and opportunities.
During the year, the Group had committed to and invested in various sustainability initiatives which includes solar installation, power
metering to help the Group to understand the energy use of its buildings, preventative maintenance measures, and the Green Star
development projects. All these projects and works are included in the capital expenditure for the year ended 31 December 2023.
As of 1 January 2023, the Group is a Climate Reporting Entity for the purpose of the Financial Markets Conduct Act 2013. Further
information on the Group’s response to climate-related risks and opportunities will be available in the Group’s first mandatory Climate-
Related Disclosures report to be released by 30 April 2024 at https://www.propertyforindustry.co.nz/sustainability/.
The valuers have considered the impact of climate change on investment property values but have made no explicit adjustments in
respect of climate change matters. However, the Group and valuers anticipate that climate change could have a greater influence on
valuations in the future as investment markets place a greater emphasis on this topic.
2. PROPERTY (continued)
2.1. Investment properties (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
49
NOTES 2023
2. PROPERTY (continued)
2.2. Non-current assets classified as held for sale
Key estimates and assumptions: Non-current assets classified as held for sale
Non-current assets classified as held for sale comprises investment properties actively marketed for sale. The carrying value of the
property is the contracted sale price or the most recent valuation if the investment property is not contracted for sale.
ALL VALUES IN $000S20232022
8a & 8b Canada Crescent, Christchurch - 21,000
10c Stonedon Drive, East Tamaki
1
20,900 -
15 Artillery Place, Nelson
1
8,500 -
Total non-current assets classified as held for sale 29,400 21,000
1. A revaluation gain of $10,546 was recorded for 10c Stonedon Drive and a revaluation loss of $1,164,101 for 15 Artillery Place when revaluing the properties based on
their actual contracted sales prices of $20,900,000 and $8,500,000 respectively (2022: A revaluation gain of $1,211,767 was recorded for 8a & 8b Canada Crescent
based on the revaluation to the actual contracted sales price of $21,000,000).
2.3. Rental and management fee income
ALL VALUES IN $000S20232022
Gross rental receipts 95,911 95,208
Service charge income recovered from tenants 19,118 14,520
Fixed rental income adjustments 577 942
Capitalised lease incentive adjustments (1,438) (580)
Impact of rental income deferred and abated due to the COVID-19 pandemic (168) 77
Management fee income 787 742
Total rental and management fee income 114,787 110,909
Recognition and Measurement
Rental income from investment properties is recognised in the Consolidated Statement of Comprehensive Income on a straight line basis
over the term of the lease. Fixed rental income adjustments are accounted for to achieve straight-line income recognition. Lease incentives
are capitalised to investment properties in the Consolidated Statement of Financial Position and amortised on a straight line basis in the
Consolidated Statement of Comprehensive Income over the length of the lease to which they relate, as a reduction to rental income.
Rental abatements are usually offered by a landlord as an incentive for tenants to sign longer lease terms. In the prior period, rental
abatements were offered to assist tenants that were struggling from the impact of the COVID-19 pandemic. Rental abatements are
accounted for as a lease modification under NZ IFRS 16 ‘Leases’ and the expense is spread over the remaining life of the lease, effectively
accounted for as a lease incentive.
Management fee income is recognised in the Consolidated Statement of Comprehensive Income in the period in which the services
are rendered.
Income generated from service charges recovered from tenants are included in the gross rental income with the service charge expenses to
tenants shown in Property costs. Such revenue is recognised in the accounting period the underlying expenses are incurred in accordance
with the contractual terms.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
50
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
2. PROPERTY (continued)
2.3. Rental and management fee income (continued)
Future minimum rentals receivable under non-cancellable operating leases are as follows:
ALL VALUES IN $000S20232022
Within one year 87,012 85,961
After one year but not more than five years 247,856 229,997
More than five years 120,224 104,476
Total 455,092 420,434
2.4. Property costs
ALL VALUES IN $000S20232022
Service charge expenses (19,598) (14,893)
Bad and doubtful debts expense (28) -
Other non-recoverable property costs (3,069) (2,705)
Total property costs (22,695) (17,598)
Other non-recoverable costs represents property maintenance not recoverable from tenants, property valuation fees and property leasing costs.
2.5. Net rental income
ALL VALUES IN $000S20232022
Gross rental receipts 95,911 95,208
Service charge income recovered from tenants 19,118 14,520
Fixed rental income adjustments 577 942
Capitalised lease incentive adjustments (1,438) (580)
Impact of rental income deferred and abated due to the COVID-19 pandemic (168) 77
less: Service charge expenses (19,598) (14,893)
Net rental income 94,402 95,274
2.6. Insurance income
A small number of the Group’s properties suffered damage in the extreme weather events during the year. As a result, the Group made insurance
claims for business interruption (loss of rent claims) and material damage on affected properties. The insurance income relating to business
interruption and to material damage is presented in the Consolidated Statement of Comprehensive Income.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
51
NOTES 2023
IN THIS SECTION
This section outlines how the Group manages its capital structure, financing costs and exposure to interest rate risk.
3.1. Borrowings
(i) Borrowings
ALL VALUES IN $000S20232022
Current
Fixed rate bonds
1
100,000 -
Total current borrowings 100,000 -
Non-current
Bilateral CBA bank facility 125,000 125,000
Syndicated bank facilities 173,400 278,704
Green loan facilities 125,501 -
Pricoa facility 25,000 -
Fixed rate bonds 100,000 200,000
Unamortised borrowings establishment costs (1,852) (2,181)
Total non-current borrowings 547,049 601,523
Total borrowings 647,049 601,523
Weighted average interest rate for drawn debt (inclusive of current interest rate swaps,
margins and line fees)5.70%4.77%
Weighted average term to maturity (years) 2.40 3.01
1. The Group expects to repay the PFI010 fixed rate bond maturing in November 2024.
Recognition and Measurement
All borrowings are initially measured at fair value, plus directly attributable transaction costs, and subsequently measured at amortised
cost using the effective interest rate method. Under this method, directly attributable fees and costs are capitalised and spread over the
expected life of the facility. All other interest costs and bank fees are expensed in the period they are incurred.
(ii) Composition of borrowings
ALL VALUES IN $000S
As at 31 December 2023Issue DateMaturity DateInterest Rate
Facility drawn /
amount
Undrawn
facilityFair Value
PFI01028-Nov-1728-Nov-244.59% 100,000 - 98,648
Syndicated Bank Facility C-31-Mar-25Floating 100,000 - 100,000
Syndicated Bank Facility A-2-Jul-25Floating 73,400 76,600 73,400
PFI0201-Oct-181-Oct-254.25% 100,000 - 97,561
Syndicated Bank Facility B-2-Jul-26Floating - 150,000 -
ANZ & CBA Green Facility D1-18-Jul-26Floating 40,200 9,800 40,200
BNZ Green Facility D2-18-Jul-27Floating 25,000 - 25,000
Westpac Green Facility D3-18-Jul-27Floating 60,301 14,699 60,301
Bilateral CBA Bank Facility-16-Apr-28Floating 125,000 - 125,000
Pricoa Facility-15-Dec-29Floating 25,000 - 25,420
Total borrowings 648,901 251,099 645,530
3. FUNDING
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
52
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
ALL VALUES IN $000S
AS AT 31 DECEMBER 2022Issue DateMaturity DateInterest Rate
Facility drawn /
amount
Undrawn
facilityFair Value
Syndicated Bank Facility C-2-Jul-24Floating 100,000 - 100,000
PFI01028-Nov-1728-Nov-244.59% 100,000 - 97,354
Syndicated Bank Facility A-2-Jul-25Floating 150,000 - 150,000
PFI0201-Oct-181-Oct-254.25% 100,000 - 96,395
Syndicated Bank Facility B-2-Jul-26Floating 28,705 121,295 28,705
Bilateral CBA Bank Facility-16-Apr-28Floating 125,000 - 125,000
Total borrowings 603,705 121,295 597,454
The Group has long-term revolving facilities (A and B) with a banking syndicate comprising ANZ, BNZ, CBA and Westpac (each providing $75
million), for $300 million. BNZ provides the Group with a further $100 million facility (C) and CBA, a long-term bilateral facility providing
$125 million.
In accordance with the Group’s Green Finance Framework, the Group has also established $150 million of Green Loan facilities during the
year to fund its committed development projects. The Green Loan facilities consists of ANZ & CBA green facility (D1) providing $50 million,
BNZ green facility (D2) providing $25 million and Westpac green facility (D3) providing $75 million.
The carrying values of the bank facilities approximate the fair value of the facilities because the loans have floating rates of interest that
reset every 30-90 days.
The fair value of the fixed rate bonds is based on their listed market prices at the balance date and is classified as Level 1 in the fair value
hierarchy (2022: Level 1). Interest on the PFI010 Bonds is payable quarterly in February, May, August and November in equal instalments,
while interest on the PFI020 Bonds is payable quarterly in January, April, July and October; also in equal instalments. Both bonds are listed
on the NZDX.
The fair value of the Pricoa facility is classified as Level 2 and is measured using a present value calculation of the future cash flows using
the relevant term swap rate as the discount factor. The discount curve will incorporate both the credit spreads and risk free rate.
(iii) Security
The bank facilities, fixed rate bonds and the Pricoa facility are secured by way of a security trust deed and registered mortgage
security which is required to be provided over Group properties with current valuations of at least $1,800,000,000 (31 December 2022:
$1,450,000,000). In addition to this, the bank facility agreements, fixed rate bond terms and Pricoa facility agreement also contain
a negative pledge. The Company and PFI No. 1 are guarantors to the facility, fixed rate bonds, and Pricoa facility. As at 31 December
2023, investment properties totalling $2,027,725,000 (31 December 2022: $2,115,950,000) were mortgaged as security for the
Group’s borrowings.
3.2. Derivative financial instruments
(i) Fair values
ALL VALUES IN $000S20232022
Current assets 739 287
Non-current assets 20,973 35,355
Current liabilities (3,509) -
Non-current liabilities (3,515) (10,801)
Total 14,688 24,841
3. FUNDING (continued)
3.1. Borrowings (continued)
(ii) Composition of borrowings (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
53
NOTES 2023
(ii) Notional values, maturities and interest rates
20232022
Notional value of interest rate swaps - fixed rate payer - start dates commenced ($000s) 370,000 390,000
Notional value of interest rate swaps - fixed rate receiver
1
- start dates commenced ($000s) 200,000 200,000
Notional value of interest rate swaps - fixed rate payer - forward starting ($000s) 165,000 60,000
Total ($000s) 735,000 650,000
Percentage of borrowings fixed (%)67%65%
Fixed rate payer swaps:
Average period to expiry - start dates commenced (years) 2.69 3.06
Average period to expiry - forward starting (years from commencement) 3.79 4.33
Average (years) 3.03 3.40
Fixed rate payer swaps:
Average interest rate
2
- start dates commenced (%)2.35%2.44%
Average interest rate
2
- forward starting (% during effective period)3.89%2.75%
Average (%)2.82%2.48%
1. The Group has $200 million fixed rate receiver swaps for the duration of the two $100 million fixed rate bonds, the effect of the fixed rate receiver swaps is to convert
the two $100 million fixed rate bonds to floating interest rates.
2. Excluding margin and fees.
(iii) Movement in fair value of derivative financial instruments
ALL VALUES IN $000S20232022
Interest rate swaps (10,151) 18,536
Total movement in fair value of derivative financial instruments (10,151) 18,536
Recognition and Measurement
The Group is exposed to changes in interest rates and uses derivative financial instruments, principally interest rate swaps, to mitigate this
risk. The Group does not apply hedge accounting. Derivative financial instruments are entered into to economically hedge the risk exposure.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are
subsequently re-measured to fair value at each reporting date. Transaction costs are expensed on initial recognition and recognised in the
Consolidated Statement of Comprehensive Income. The fair value of derivative financial instruments is based on valuations prepared by
independent treasury advisers and is the estimated amount that the Group would receive or pay to terminate the derivative contract at
reporting date, taking into account current interest rates and creditworthiness of the derivative contract counterparties.
Key estimates and assumptions: Derivatives
The fair values of derivative financial instruments are determined from valuations prepared by independent treasury advisers using Level
2 valuation techniques (2022: Level 2). These are based on the present value of estimated future cash flows accounting for the terms and
maturity of each contract and the current market interest rates at reporting date. Fair values also reflect the current creditworthiness of
the derivative counterparty. These values are verified against valuations prepared by the respective counterparties. The valuations were
based on market rates at 31 December 2023 of between 5.64% for the 90 day BKBM (31 December 2022: 4.65%) and 4.14% for the 10
year swap rate (31 December 2022: 4.80%). There were no changes to these valuation techniques during the reporting period.
3. FUNDING (continued)
3.2. Derivative financial instruments (continued)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
54
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
4. INVESTOR RETURNS AND INVESTMENT METRICS
IN THIS SECTION
This section summarises the earnings per share and net tangible assets per share which are common investment metrics.
4.1. Earnings per share
(i) Basic earnings per share
20232022
Total comprehensive (loss)/income for the year attributable to the shareholders
of the Company ($000s) (97,792) (13,944)
Weighted average number of ordinary shares (shares) 502,118,817 504,719,213
Basic earnings per share (cents) (19.48) (2.76)
(ii) Diluted earnings per share
The calculation of diluted earnings per share has been based on the profit attributable to ordinary shareholders and weighted-average number of
ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Weighted average number of shares for the
purpose of diluted earnings per share has been adjusted for 71,070 (2022: 44,503) rights issued under the Group’s LTI Plan as at 31 December
2023. This adjustment has been calculated using the treasury share method. Refer to note 5.9 “Share-based payments” for further details.
20232022
Total comprehensive (loss)/income for the year attributable to the shareholders
of the Company ($000s) (97,792) (13,944)
Weighted average number of shares for purpose of diluted earnings per share (shares) 502,189,887 504,748,288
Diluted earnings per share (cents)
1
(19.47) (2.76)
1. As the Group has recorded a total comprehensive loss for the current year and prior year, diluted earnings per share is deemed to be equal to basic earnings per share
(2023: (19.48) cents, 2022: (2.76) cents).
4.2. Net tangible assets per share
20232022
Net assets ($000s) 1,360,269 1,500,338
Net tangible assets ($000s) 1,360,269 1,500,338
Closing shares on issue (shares) 502,129,313 502,050,524
Net tangible assets per share (cents) 271 299
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
55
NOTES 2023
5. OTHER
IN THIS SECTION
This section includes additional information that is considered less significant in understanding of the financial performance and position
of the Group, but is disclosed to comply with New Zealand Equivalents to International Financial Reporting Standards.
5.1. Administrative expenses
ALL VALUES IN $000SNOTE20232022
Auditors remuneration
1
Audit and review of financial statements (263) (255)
Provide market remuneration data and other services (5) (9)
Depreciation (569) (190)
Directors' fees5.8 (665) (596)
Employee benefits (5,369) (4,574)
Facilities management project (456) (268)
IT - licence fees and support (474) (189)
IT - implementation costs (97) (129)
Office expenses (1,076) (947)
Other expenses (1,275) (1,278)
Sustainability (87) (73)
Total administrative expenses (10,336) (8,508)
1. In December 2022, PwC were engaged to provide market remuneration data relating to executive levels for a fee of $4,000. This engagement was delivered in the FY2023
financial year. The other services of $1,000 relate to the purchase of PwC’s 2023 Property Supplement Report.
5.2. Taxation
(i) Reconciliation of accounting (loss)/profit before income tax to income tax expense
ALL VALUES IN $000S20232022
(Loss)/profit before income tax (98,756) (6,533)
Prima facie income tax calculated at 28% 27,652 1,829
Adjusted for:
Non-tax deductible revenue and expenses (18) (30)
Fair value loss on investment properties (39,432) (15,886)
Gain / (loss) on disposal of investment properties (521) 161
Goodwill impairment - (8,144)
Depreciation 5,560 5,834
Disposal of depreciable assets 1,153 (434)
Deductible capital expenditure 2,972 1,030
Lease incentives, fees and fixed rental income (4) 212
Gain on derivative financial instruments (2,835) 5,148
Impairment gain (8) -
Current tax prior period adjustment 151 (246)
Other (271) 1
Current taxation expense (5,601) (10,525)
Depreciation 3,610 8,585
Lease incentives, fees and fixed rental income 4 (212)
Gain on derivative financial instruments 2,835 (5,148)
Impairment allowance 8 -
Other 108 (111)
Deferred taxation benefit 6,565 3,114
Total taxation reported in Consolidated Statement of Comprehensive Income 964 (7,411)
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
56
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
5. OTHER (continued)
5.2. Taxation (continued)
(ii) Deferred tax
20212022202220232023
ALL VALUES IN $000SAs at
Recognised
in profit As at
Recognised
in profit As at
Deferred tax assets
Impairment allowance - - - (8) (8)
Other (263) 90 (172) (272) (444)
Gross deferred tax assets (263) 90 (172) (280) (452)
Deferred tax liabilities
Investment properties 32,917 (8,373) 24,543 (3,614) 20,929
Derivative financial instruments 1,765 5,148 6,913 (2,835) 4,078
Gross deferred tax liabilities 34,682 (3,225) 31,456 (6,449) 25,007
Share-based payment reserve - 21 - 164 -
Net deferred tax liability 34,419 (3,114) 31,284 (6,565) 24,555
(iii) Imputation credit account
The amounts below represent the balance of the imputation credit account as at the end of the reporting period, adjusted for imputation
credits that will arise from the payment of taxation payable represented in the Consolidated Statement of Financial Position.
ALL VALUES IN $000S20232022
Opening balance 2,299 1,264
Taxation paid / payable 5,490 10,379
Imputation credits attached to dividends paid (7,356) (9,344)
Closing balance available to shareholders for use in subsequent periods 433 2,299
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
57
NOTES 2023
5. OTHER (continued)
5.2. Taxation (continued)
(iii) Imputation credit account (continued)
Recognition and Measurement
The Company and Group are a listed Portfolio Investment Entity (PIE) for the purposes of the Income Tax Act 2007. Tax is accounted for
on a consolidated Group basis and the Group is required to pay tax to the IRD as required by the Income Tax Act 2007. Income tax
expense comprises current and deferred tax and is recognised in the Consolidated Statement of Comprehensive Income for the year.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided for temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is recognised on all temporary differences, including:
• The tax liability arising from accumulated depreciation claimed on investment properties, where applicable;
• The tax asset arising from the allowance for impairment;
• The tax liability arising from certain prepayments and other assets; and
• The tax asset / liability arising from the unrealised gains / losses on the revaluation of interest rate swaps.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the reporting date. Deferred tax is not recognised for:
• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
• Temporary differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the
foreseeable future; and
• Taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable entity, or on different entities, but they intend to settle
current tax assets and liabilities on a net basis.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary
differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Additional income tax arising from distribution of dividends is recognised at the same time as the liability to pay the dividend
is recognised.
Key estimates and assumptions: Deferred tax
Investment properties are valued each year by independent valuers (as outlined in note 2.1). These values include an allocation of the
valuation between the land and building components. The calculation of deferred tax on depreciation recovered places reliance on the
land and building split in the valuation provided by the valuers. The building value is then split between fit-out and structure based on the
proportion of the tax book values of each.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
58
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
5. OTHER (continued)
5.3. Accounts receivable, prepayments and other assets
ALL VALUES IN $000S20232022
Accounts receivable 4,702 1,972
Provision for doubtful debts (28) -
Prepayments and other assets 5,132 2,946
Total accounts receivable, prepayments and other assets 9,806 4,918
Recognition and Measurement
Accounts receivable are recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.
Receivables are assessed on an ongoing basis for impairment. The group applies the simplified approach to providing for expected credit
losses prescribed by NZ IFRS 9 ‘Financial Instruments’, which permits the use of lifetime expected loss provision for all trade receivables.
5.4. Accounts payable, accruals and other liabilities
ALL VALUES IN $000S20232022
Accounts payable 10,887 3,348
Accrued interest expense and bank fees 4,365 3,468
Accruals and other liabilities in respect of investment properties 5,614 2,349
Accruals and other liabilities 1,435 4,562
Total accounts payable, accruals and other liabilities 22,301 13,727
Recognition and Measurement
Expenses are recognised on an accruals basis and, if not paid at the end of the reporting period, are reflected as a payable in the
Consolidated Statement of Financial Position.
5.5. Goodwill
ALL VALUES IN $000S20232022
Opening balance - 29,086
Impairment loss - (29,086)
Closing balance - -
On 30 June 2022, the market value of the Group, based on the quoted market price, was below the value of the net assets of the Group. PFI,
with the assistance of an independent expert, assessed whether objective evidence of impairment of goodwill exists, the outcome of which
was that an impairment test was performed. PFI estimated the recoverable amount by performing fair value less costs of disposal
(FVLCOD) and value in use valuation approaches. PFI estimated the recoverable amount of the Property for Industry Limited CGU using
FVLCOD (as the higher of the two valuation approaches), resulting in an impairment loss of $29.086 million against the carrying amount of
goodwill. Once goodwill is impaired, it cannot be reversed.
As at 31 December 2022, the market value of the Group had further declined with the market price reported at $2.30 per share.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
59
NOTES 2023
5. OTHER (continued)
5.6. Financial instruments
The following financial assets and liabilities, that potentially subject the Group to financial risk, have been recognised in the
financial statements:
ALL VALUES IN $000S20232022
Financial assets
Financial assets at amortised cost:
Cash at bank 1,187 1,332
Accounts receivable and other assets 4,674 1,972
Total – Financial assets at amortised cost 5,861 3,304
Financial assets at fair value through profit or loss:
Derivative financial instruments 21,712 35,642
Total – Financial assets at fair value through profit or loss 21,712 35,642
Total Financial Assets 27,573 38,946
Financial Liabilities
Financial liabilities at amortised cost:
Accounts payable, accruals and other liabilities 21,875 13,450
Lease liabilities 2,153 2,112
Borrowings 647,049 601,523
Total – Financial liabilities at amortised cost 671,077 617,085
Financial liabilities at fair value through profit or loss:
Derivative financial instruments 7,024 10,801
Total – Financial liabilities at fair value through profit or loss 7,024 10,801
Total Financial Liabilities 678,101 627,886
5.7. Financial risk management
The Group’s activities expose it to a variety of financial risks, including interest rate risk, credit risk and liquidity risk. The Group’s overall financial
risk management strategy focuses on minimising the potential negative economic impact of unpredictable events on its financial performance.
(a) Interest rate risk
The Group’s exposure to the risk of changes in interest rates relates primarily to the Group’s borrowings with a floating interest rate. The
Group has an interest rate hedging policy which has been reviewed by an external firm with expertise in this area. The policy calls for a band
of the Group’s borrowings to be at fixed interest rates, with a greater proportion of the near term to be fixed and a lesser percentage of the
far dated to be fixed.
The Group uses derivative financial instruments, principally fixed rate payer interest rate swaps, to exchange its floating short-term interest
rate exposure for fixed long-term interest rate exposure in accordance with its policy bands. As the Group holds derivative financial
instruments, there is a risk that their fair value will fluctuate because of underlying changes in market interest rates. This is accepted as a
by-product of the Group’s interest rate hedging policy, however this risk is partially mitigated by the Group’s holding of fixed rate receiver
interest rate swaps. The fair value of derivative financial instruments is disclosed in the Consolidated Statement of Financial Position (refer
to note 3.2).
The following sensitivity analysis shows the effect on (loss) / profit before tax and equity if interest rates at balance date had been 50 basis
points (0.50%) higher or lower with all other variables held constant.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
60
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
5. OTHER (continued)
5.7. Financial risk management (continued)
20232022
ALL VALUES IN $000S
Gain/(loss) on
increase of
0.50%
Gain/(loss) on
decrease of
0.50%
Gain/(loss) on
increase of
0.50%
Gain/(loss) on
decrease of
0.50%
Impact on profit before tax 3,478 (3,370) 1,726 (1,679)
Impact on equity 2,504 (2,426) 1,243 (1,209)
(b) Credit risk
Credit risk represents the risk that the counterparty to a financial instrument will fail to discharge its obligations and the Group will suffer
financial loss as a result. Financial instruments which potentially subject the Group to credit risk consist of cash and cash equivalents,
accounts receivable and other assets and interest rate swap agreements.
With respect to the credit risk arising from cash and cash equivalents, there is limited credit risk as cash is deposited with ANZ Bank New
Zealand Limited, a registered bank in New Zealand with a credit rating of AA– (Standard & Poor’s). The Group considers both historical
analysis and forward-looking information in determining any expected credit loss, and infers from this strong credit rating that no loss
allowance is deemed necessary.
With respect to the credit risk arising from accounts receivable, the Group only enters into lease arrangements over its investment
properties with parties whom the Group assesses to be creditworthy. It is the Group’s policy to subject all potential tenants to credit
verification procedures and monitor accounts receivable balances. As the Group has a wide spread of tenants over many industry sectors, it
is not exposed to any significant concentration of credit risk. Credit risk does not arise on property sale proceeds to be settled as title will
not transfer until settlement.
With respect to the credit risk arising from interest rate swap agreements, there is limited credit risk as all counterparties are registered
banks in New Zealand. The credit ratings of these banks are all AA– (Standard & Poor’s).
The carrying amount of financial assets as per note 5.6 approximates the Groups maximum exposure to credit risk. For certain receivables
the Group holds bank guarantees, parent company guarantees or personal guarantees.
(c) Liquidity risk
Liquidity risk is the risk that the Group will experience difficulty in either realising assets or otherwise raising sufficient funds to meet its
obligations arising from its financial liabilities.
The Group manages its liquidity risk by ensuring that it has committed funding facilities at a minimum of 105% of the projected peak debt
level over the next twelve months (excluding business acquisitions).
The maturities of the Group’s borrowings based on the remaining period is 2.4 years (2022: 3.0 years). All borrowings are due later than one
year except for the PFI010 fixed rate bond, which the Group expects to repay on maturity on 28 November 2024 (2022: later than one year).
Further details of the Group’s borrowings, including the maturities of the Group’s borrowings, are disclosed in note 3.1.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
61
NOTES 2023
5. OTHER (continued)
5.7. Financial risk management (continued)
The table below analyses the contractual undiscounted cash flows of the Group’s financial liabilities (principal and interest) by the relevant
maturity groupings based on the remaining period as at 31 December 2023 and 31 December 2022.
ALL VALUES IN $000S
Carrying
amount
Contractual cash flows
Total 0 – 1 year1 – 2 years 2 – 5 years > 5 years
Financial liabilities
Accounts payable, accruals and other liabilities 21,875 21,875 - - - 21,875
Lease liabilities 2,153 244 265 1,291 353 2,153
Derivative financial instruments
1
(14,688) (5,538) (4,090) (6,658) (241) (16,527)
Borrowings 647,049 148,044 305,081 286,739 26,857 766,721
Total as at 31 December 2023 656,389 164,625 301,256 281,372 26,969 774,222
Accounts payable, accruals and other liabilities 13,450 13,450 - - - 13,450
Lease liabilities 2,112 79 236 1,158 692 2,165
Derivative financial instruments
1
(24,841) (5,978) (5,045) (14,386) (3,833) (29,242)
Borrowings 601,523 35,231 231,983 298,008 127,130 692,352
Total as at 31 December 2022 592,244 42,782 227,174 284,780 123,989 678,725
1. The carrying amount of derivative financial instruments shown is the net position of both derivative financial instrument assets and derivative financial instrument
liabilities.
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern whilst maximising the
return to shareholders through maintaining an optimal balance of debt and equity to optimise the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares, buy back shares, or sell assets to reduce debt.
The Group’s capital structure includes borrowings and shareholders’ equity. The Group monitors capital on the basis of the loan to value
ratio and borrowing covenant compliance. The loan to value ratio is calculated as borrowings divided by investment properties. The Group’s
strategy is to maintain a loan to value ratio of no more than 40%. The covenants on all borrowings require a loan to value ratio of no more
than 50%, and this was complied with during the year.
The Group operates a Dividend Reinvestment Scheme (DRS) which allows eligible shareholders to reinvest dividends in shares. The Board,
at its sole discretion, may suspend the DRS at any time and/or apply a discount to which shares are issued under the DRS.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
62
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
5. OTHER (continued)
5.8. Related party transactions
(i) Key management personnel
ALL VALUES IN $000S20232022
Directors’ fees – annual fees
1
665 596
Leadership Team remuneration 2,615 2,502
Key management personnel 3,280 3,098
1. In 2023, there was a change to the composition of the Board of Directors of the Group with the appointment of Angela Bull as an independent director effective from
20 February 2023, and as a new member of the People Committee effective from 5 May 2023 following Anthony Beverley’s retirement from the People Committee
role. (2022: Carolyn Steele was appointed as an independent director and a member of the Audit and Risk Committee effective from 22 August 2022 and Susan
Peterson retired from the Board on 15 December 2022).
(ii) Other related party transactions
The Group also has related party relationships with the following parties:
Related partyAbbreviationNature of relationship(s)
The Board of DirectorsDirectorsThe Board of Directors
Bayleys Valuation LimitedBayleysAngela Bull, appointed as a member of the Board of Directors on 20 February
2023, is also a Non-executive Director of Bayley Corporation Limited. Bayleys
Valuation Limited is a wholly owned subsidiary of Bayley Corporation Limited and
an independent valuer used by the Group for investment property valuations.
The following transactions with related parties took place:
ALL VALUES IN $000SRelated party20232022
Valuation fees paid Bayleys 18 -
Valuation fees owing
2
Bayleys 11 -
2. Amount owing as at 31 December 2023 is included in the line item ‘Accounts payable, accruals and other liabilities’ in the Consolidated Statement of Financial Position.
NUMBERRelated party31 Dec 202331 Dec 2022
Shares held beneficially in the companyDirectors 195,708 214,367
Shares held non-beneficially in the companyDirectors – –
No related party debts have been written off or forgiven during the year (2022: NIL).
5.9. Share-based payments
Long-term incentive plan (Equity settled)
PFI operates a long-term incentive plan (LTI Plan) for all members of the Senior Leadership Team in the Group. Under the LTI plan,
Performance Share Rights (PSRs) are issued to members of the Senior Leadership Team which give them the right to receive ordinary
shares in the Group after a 1-3 year period, subject to achieving the performance hurdles outlined below. These are at-risk payments
designed to align the reward of the Senior Leadership Team with the enhancement of shareholder value over a multi-year period. Grants of
PSRs were made on 17 February 2020 (2020 Grant), on 22 February 2021 (2021 Grant), on 21 February 2022 (2022 Grant), and on 22 August
2023 (2023 Grant).
The key terms and conditions related to the PSRs under the LTI Plan are as follows:
• The PSRs are granted for nil consideration and have a nil exercise price.
• The participant must remain an employee of the Group as at the relevant vesting date for each tranche of PSRs.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
63
NOTES 2023
5. OTHER (continued)
5.9. Share-based payments (continued)
• The 2020 Grant, 2021 Grant and 2022 Grant under the LTI Plan have three tranches with two separate performance hurdles applying to
each tranche. The three tranches enable a third of the PSRs to vest after one year, two years and three years from the commencement
dates of 1 January 2020, 1 January 2021 and 1 January 2022. For each tranche:
• 50% of the PSRs are subject to a performance hurdle of the Company’s rolling three year Funds From Operations (FFO) growth
equalling or exceeding the three year CPI growth to September immediately prior to the vesting date (Part A); and
• 50% of the PSRs are subject to a performance hurdle of the Company’s Total Shareholder Returns (TSR) outperforming the TSR of a
property peer group (comprising other listed property issuers) over the period from the commencement date to the vesting date for
the relevant tranche (Part B).
• For the 2023 Grant under the LTI Plan, there are three tranches with one performance hurdle applying to each tranche. The three
tranches enable a third of the PSRs to vest after one year, two years and three years from the commencement date of 1 January 2023.
100% of the PSRs are subject to a performance hurdle of the Company’s Total Shareholder Returns (TSR) outperforming the TSR of a
property peer group (comprising other listed property issuers) over the period from the commencement date to the vesting date for the
relevant tranche (Part B).
• At vesting, subject to meeting performance hurdles, each PSR is converted to one ordinary share. The LTI Plan is a dividend protected
LTI Plan and the participants will receive additional shares representing the value of dividends paid over the vesting period. The
participants are liable for tax on the shares received at this point but may elect to receive a net number of shares on exercise of the
PSRs to account for the tax which is then paid by PFI on the participant’s behalf.
The following table reconciles the opening PSR balance as at 1 January 2023 to the closing PSR balance as at 31 December 2023.
GRANT
YEAR
2022 Opening
(PSRs)
2022 Granted
(PSRs)
2022 Vested
(PSRs)
2022 Lapsed
(PSRs)
2022
Closing /
2023
Opening
(PSRs)
2023 Granted
(PSRs)
2023 Vested
(PSRs)
2023 Lapsed
(PSRs)
2023
Closing
(PSRs)
2023 - - - - - 246,840 (61,713) (20,570) 164,557
2022 - 166,910 (41,728) (13,909) 111,273 - (20,862) (34,773) 55,638
2021 103,449 - (38,794) (12,931) 51,724 - (25,862) (25,862) -
2020 55,093 - (41,319) (13,774) - - - - -
Total 158,542 166,910 (121,841) (40,614) 162,997 246,840 (108,437) (81,205) 220,195
The PSRs outstanding at 31 December 2023 had a weighted - average contractual life of 1.37 years (31 December 2022: 1.34 years).
The LTI Plan has resulted in a share-based payment reserve totalling $754,000 as at 31 December 2023 (2022: $615,000).
Fair value measurement of LTI Plan
The fair value of the PSRs have been measured using a Monte Carlo simulation model. Service and non-market performance conditions were
not taken into account in measuring fair value. The TSR performance metric is a market condition and has been factored into the fair value of
the PSRs at the grant date. However, the FFO performance metric is a non-market condition and is not factored into the fair value of the PSRs.
The inputs used in the measurement of the fair values at the grant date were as follows.
Performance Share Rights
2023 Grant2022 Grant2021 Grant
Part BPart APart BPart APart B
Weighted average fair value at grant date$1.38$2.80$1.66$2.88$1.49
Share price at grant date$2.34$2.80$2.80$2.88$2.88
Expected volatility (weighted-average)15.3%N/A11.8%N/A21.9%
Expected life (weighted-average)16 months22 months22 months22 months22 months
Risk-free interest rate5.67%N/A2.23%N/A0.30%
The expected volatility and correlation measures are based on the standard deviation and correlation of weekly returns of the property peer
group, over a three year period. The risk-free rate was based on government bond yields over a period of 1.36 years.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
64
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
5. OTHER (continued)
5.9. Share-based payments (continued)
Recognition and Measurement
The PSRs are measured at fair value at the grant date and expensed over the period during which the participant becomes
unconditionally entitled to the shares, based on an estimate of shares that will eventually vest. The corresponding entry of the expense is
equity. The fair value of the PSRs which are vested - and the corresponding shares which are issued - are transferred from the share-
based payment reserve to share capital on issue of the shares.
Key estimates and assumptions: Long-term incentive plan
It has been assumed that the members of the Senior Leadership Team will remain employed with the Company on each of the vesting
dates and that the non-market performance conditions will be met.
5.10. Leases
(i) Amounts recognised in the Consolidated Statement of Financial Position
The Consolidated Statement of Financial Position shows the following amounts relating to leases:
ALL VALUES IN $000S20232022
Right-of-use assets
1
Properties 1,884 2,136
Total right-of-use assets 1,884 2,136
1. Included in the line item ‘Property, plant and equipment’ in the Consolidated Statement of Financial Position.
There were no additions to the right-of-use assets during the 2023 financial year (2022: $2,111,619).
ALL VALUES IN $000S20232022
Lease liabilities
Current
2
244 53
Non-current
3
1,909 2,112
Total lease liabilities 2,153 2,165
2. Included in the line item ‘Accounts payable, accruals and other liabilities’ in the Consolidated Statement of Financial Position.
3. Included in the line item ‘Lease liabilities’ in the Consolidated Statement of Financial Position.
(ii) Amounts recognised in the Consolidated Statement of Comprehensive Income
The Consolidated Statement of Comprehensive Income shows the following amounts relating to leases:
ALL VALUES IN $000S20232022
Depreciation charge of right-of-use assets
4
Properties (320) (115)
Total depreciation charge of right-of-use assets (320) (115)
4. Included in the line item ‘Administrative expenses’ in the Consolidated Statement of Comprehensive Income.
ALL VALUES IN $000S20232022
Interest cost
5
(116) (12)
5. Included in the line item ‘Interest expense and bank fees’ in the Consolidated Statement of Comprehensive Income.
The total cash outflow for leases in 2023 was $196,000 (2022: $114,000).
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
65
NOTES 2023
5. OTHER (continued)
5.11. Post settlement obligation of disposed property
The Group settled on the sale of the Carlaw Park properties in November 2021 with a post settlement obligation to carry out the seismic
works on the carpark building at the site. A reassessment of the seismic works was carried out during the year which resulted in an increase
of $1,070,000 for the works, over and above the inital costings estimated at the date of sale. Following the reassessment, an agreed lump
sum payment for the total seismic works was made to the purchaser in lieu of the Group undertaking the seismic works and any further
obligations. The additional seismic costs of $1,070,000 from the reassessment is presented in the Consolidated Statement of
Comprehensive Income.
5.12. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The
chief operating decision-maker has been identified as the Board of Directors. The Group is internally reported as a single operating segment
to the chief operating decision-maker.
5.13. Capital commitments
As at 31 December 2023, the Group had capital commitments totalling $80,358,000 (31 December 2022: $145,581,000) as follows:
ALL VALUES IN $000S20232022
Development capital commitments 72,990 143,694
Other capital commitments 7,368 1,887
Total capital commitments 80,358 145,581
Development capital commitments
ALL VALUES IN $000S20232022
AddressProject
30-32 Bowden RoadDesign and build (Green Star development)
Land value on commencement 32,500 32,500
Development cost
1
64,114 69,222
Less: spend to date(39,190) (1,338)
Committed costs to complete 24,924 67,884
ALL VALUES IN $000S20232022
AddressProject
78 Springs RoadDesign and build (Green Star development)
Land value on commencement 37,817 37,817
Development cost
1
76,562 76,552
Less: spend to date (28,496) (742)
Committed costs to complete 48,066 75,810
Total development capital commitments 72,990 143,694
1. Excluding land value.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
66
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
5. OTHER (continued)
5.13. Capital commitments (continued)
Other capital commitments
ALL VALUES IN $000S20232022
AddressProject
3-5 Niall Burgess RoadRefurbishment - 504
314 Neilson StreetWarehouse extension - 1,383
12 Zelanian DriveCanopy extension & installation of solar panels 1,338
45 Cryers RoadAcquisition (net of deposit paid) 6,030
Total other capital commitments 7,368 1,887
On 9 October 2023, the Group had entered into a conditional contract to purchase two lots (approximately 5.8 hectares of land) within the
proposed industrial subdivision at Spedding Road, located at the end of the Northwestern motorway, for $40.57 million. The Group expects
to pay a 5% deposit once subdivision consent has been obtained (expected in mid-2024), and an initial settlement of 45% of the purchase
price on titles being received and works being complete (expected in mid-2025). The remaining two deferred settlement sums of 25% each
are due 12 and 24 months following the initial settlement date. Based on the nature of this transaction and the number of conditions and
sunset dates included in the contract, no commitment value has been recorded as at 31 December 2023.
5.14. Subsequent events
Following the Group's announcement on 20 December 2023 of an agreement to purchase the property at 45 Cryers Road, East Tamaki, for
a net purchase price of $6.70 million, settlement of this acquisition took place on 16 February 2024.
On 26 February 2024, the Board of Directors of the Company approved the payment of a net dividend of 2.450000 cents per share to be
paid on 13 March 2024. The gross dividend (2.789904 cents per share) carries imputation credits of 0.339904 cents per share. The payment
of this dividend will not have any tax consequences for the Group and no liability has been recognised in the Consolidated Statement of
Financial Position as at 31 December 2023 in respect of this dividend.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FOR THE YEAR ENDED 31 DECEMBER 2023
67
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Description of the key audit matterHow our audit addressed the key audit matter
Valuation of investment properties
The valuations were carried out by independent
third-party valuers who performed their work in
accordance with New Zealand International
Accounting Standard 40 Investment Property and
relevant property valuation standards. The valuers
are rotated across the portfolio on a three-yearly
cycle, with the exception of certain properties as
disclosed in note 2.1. The Group has adopted the
assessed values determined by the valuers.
In assessing the valuation of the investment properties, our procedures
included the following:
We held discussions with management to understand:
• movements in the Group’s investment property portfolio;
• significant changes in the condition of properties; and
• the controls in place over the valuation process.
Independent auditor’s report
To the shareholders of Property for Industry Limited
Our opinion
In our opinion, the accompanying financial statements of Property for Industry Limited (the Company), including its subsidiary (the
Group), present fairly, in all material respects, the financial position of the Group as at 31 December 2023, its financial performance and
its cash flows for the year then ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ
IFRS) and International Financial Reporting Standards Accounting Standards (IFRS Accounting Standards).
What we have audited
The Group’s financial statements comprise:
• the consolidated statement of financial position as at 31 December 2023;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the financial statements, comprising material accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) and International Standards
on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the
financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance
Practitioners (including International Independence Standards) (New Zealand) (PES 1) issued by the New Zealand Auditing and
Assurance Standards Board and the International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Our firm carries out other services for the Group in the areas of providing market remuneration data relating to executive levels and
providing a copy of the 2023 Property Supplement Report. The provision of these other services have not impaired our independence as
auditor of the Group.
AUDITORS 2023
Key audit matters–continued
Description of the key audit matterHow our audit addressed the key audit matter
In determining a property’s valuation, two
approaches are generally used to determine the
fair value of an investment property: the direct
capitalisation approach and the discounted cash
flow approach, to arrive at a range of valuation
outcomes from which the valuers derive a
point estimate.
The valuers take into account property specific
information such as the contracted tenancy
agreements and rental income earned by the
asset. They apply assumptions in relation to
market capitalisation rates, discount rates and
market rental and the rental growth rate, based on
current market assessments. The valuers have
also considered but made no explicit adjustments
in respect of climate change matters.
The existence of significant estimation uncertainty,
coupled with the fact that only a small percentage
difference in individual property valuation
assumptions, when aggregated, could result in
material misstatement, is why we have given
specific audit focus and attention to this area.
We held discussions with the valuers and for a selection of properties, the
carrying value was agreed to the external valuation reports.
The valuers confirmed that the valuation approach for the properties was in
accordance with accounting and valuation standards, and that climate change
matters were considered as part of their valuation process.
We assessed the valuers’ qualifications, expertise and their objectivity and we
found no evidence to suggest that their objectivity was compromised in their
performance of the valuations.
We carried out procedures, on a sample basis, to test whether the property
specific information supplied to the valuers by the Group reflected the
underlying property records held by the Group.
Assumptions
Our work over the assumptions used in the valuations focused on a sample of
properties where the assumptions used and/or year-on-year fair value movement
suggested a possible outlier. We engaged our in-house valuation expert to
critique and challenge the methodologies used, work performed and key
assumptions used by the valuers on a sample basis.
Our audit approach
Overview
Materiality
Audit scope
Key audit
matters
Overall Group materiality: $2.6 million, which represents approximately 5% of profit before tax excluding
valuation movements relating to investment properties and interest rate derivatives.
We chose this benchmark because, in our view, it presents a more stable basis against which the performance
of the Group is most likely to be measured by users.
Following our assessment of the risk of material misstatement, a full scope audit was performed over the
consolidated Group balances.
As reported above, we have one key audit matter, being valuation of investment properties.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In
particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed
the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of
bias that represented a risk of material misstatement due to fraud.
INDEPENDENT AUDITOR’S REPORT (continued)
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance about
whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are
considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group
materiality for the financial statements as a whole as set out above. These, together with qualitative considerations, helped us to
determine the scope of our audit, the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate, on the financial statements as a whole.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements
as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the
Group operates.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report,
but does not include the financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of audit opinion or
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We
have nothing to report in this regard.
Responsibilities of the Directors for the financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the financial statements in
accordance with NZ IFRS and IFRS Accounting Standards, and for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole, are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those
matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit
work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Indumin Senaratne (Indy Sena).
For and on behalf of:
Chartered Accountants Auckland
26 February 2024
INDEPENDENT AUDITOR’S REPORT (continued)
AUDITORS 2023
YEAR ENDED 31 DECEMBER 20232022202120202019
ALL VALUES IN $M UNLESS OTHERWISE NOTED
FINANCIAL PERFORMANCE
Net property income92.893.392.181.481.4
Profit before finance income/(expenses), other gains/(losses) and
income tax82.484.884.675.576.4
Fair value (loss)/gain on investment properties and non-current
assets classified as held for sale(140.8)(56.7)392.572.5125.2
(Loss)/profit before income tax(98.8)(6.5)472.8135.7190.4
Income tax benefit/(expense)1.0(7.4)(20.0)(22.2)(14.1)
(Loss)/profit and total comprehensive income after income tax(97.8)(13.9)452.8113.5176.3
Weighted average number of ordinary shares ('000 shares)502,119504,719503,302499,650498,723
IFRS basic earnings per share (cents per share) (19.48) (2.76)89.9722.7135.35
DISTRIBUTIONS
Total comprehensive income after tax(97.8)(13.9)452.8113.5176.3
Distribution adjustments142.658.5(406.1)(73.4)(137.5)
Adjusted Funds From Operations (AFFO)44.844.646.740.138.8
AFFO per share (cents per share)8.928.839.298.037.79
Gross dividends paid relating to the year reported (cents per share)9.6710.199.999.7310.20
Net dividends paid relating to the year reported (cents per share)8.308.107.907.707.60
AFFO pay-out ratio (%)93.1%91.7%85.1%95.9%97.6%
FINANCIAL POSITION
Investment properties1,998.32,096.22,158.91,524.81,469.3
Goodwill--29.129.129.1
Other assets65.666.629.0133.524.3
Total assets2,063.92,162.82,217.01,687.41,522.7
Borrowings647.0601.5598.7487.6412.9
Other liabilities56.660.955.663.255.8
Total liabilities703.6662.4654.3550.8468.7
Total equity1,360.31,500.31,562.71,136.61,054.0
Closing shares on issue ('000 shares)502,129502,051505,494501,303498,723
Net tangible (excluding goodwill) assets (cents per share)270.9298.8303.4220.9205.5
Gearing (%)32.0%28.5%27.7%30.0%28.2%
PROPERTY PORTFOLIO METRICS
Number of properties (#)9294979494
Number of tenants (#)126132136148144
Contract rent96.498.295.689.884.9
Occupancy (%)100.0%100.0%100.0%99.4%99.0%
Net lettable area including yard (sqm) 923,511 930,453 940,204 838,403 809,183
Weighted average lease term (years)5.065.085.405.285.38
Portfolio market capitalisation rate (%, all properties)5.6%5.0%4.4%5.5%5.7%
71
PERFORMANCE
FIVE-YEAR PERFORMANCE SUMMARY
72
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
73
OTHER
DISCLOSURES
Annual
Report
31
December
PROPERTY FOR INDUSTRY LIMITED GROUP
20
23
OTHER DISCLOSURES
Property for Industry Limited (the Company, PFI) is a publicly listed company
established in 1994. As at 31 December 2023, the Board had six Directors, all
of whom are independent.
More information on the PFI Board and Management Team is available on the
PFI website at https://www.propertyforindustry.co.nz/about-pfi/our-people/.
PRINCIPAL ACTIVITY
PFI is a listed industrial property investment company. PFI and its subsidiary,
P.F.I. Property No. 1 Limited (together, the Group), invest solely in
New Zealand. There has not been any change in the nature of the Company’s
or Group’s business in the year ended 31 December 2023, nor in the classes
of business in which the Company has an interest.
GOVERNANCE
The Board of PFI is committed to the highest standards of business behaviour
and accountability. The Board regularly reviews and assesses the Group’s
governance structures and processes to ensure they are consistent with best
practice standards.
As part of the Board’s ongoing monitoring and review of the Group’s
governance framework, the Board has developed a Corporate Governance
Manual (the Manual) that forms the Group’s corporate governance
framework. It incorporates the NZX Listing Rules relating to corporate
governance and the recommendations of the NZX Corporate Governance
Code (the NZX Code), and was last updated in November 2023. The Audit
and Risk Committee Charter was further updated in December 2023 to
incorporate climate-related responsibilities.
A copy of the Manual is available on the PFI website at
https://www.propertyforindustry.co.nz/about-pfi/governance/ and includes:
1. Code of Ethics;
2. Board Charter;
3. Audit and Risk Committee Charter;
4. People Committee Charter, which includes the
Company’s Remuneration Policy;
5. Continuous Disclosure Policy;
6. Financial Product Trading Policy; and
7. Diversity and Inclusion Policy.
COMPLIANCE WITH NZX REQUIREMENTS
PFI considers that it complied with the NZX Code (17 June 2022 version) in
the year ended 31 December 2023.
NZX CODE: KEY PRINCIPLES
This section sets out PFI’s corporate governance policies, practices and
processes by reference to the NZX Code’s eight key principles and
supporting recommendations.
COMPANY STRUCTURE AND
STATUTORY INFORMATION
CAROLYN STEELE
Independent Director
SIMON WOODHAMS
Chief Executive Officer
CRAIG PEIRCE
Chief Finance and
Operating Officer
SARAH BEALE
Head of Sustainability
and Operations
EWAN CAMERON
Portfolio Manager
DAVID THOMSON
Independent Director
DEAN BRACEWELL
Independent Director
GREG REIDY
Independent Director
ANTHONY BEVERLEY
Board Chair and
Independent Director
Profiles of our team members can be found
on our website at propertyforindustry.co.nz/
about-pfi/our-people/
LEADERSHIP
ANGELA BULL
Independent Director
74
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
Principle One: Code of Ethical Behaviour
Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for these
standards being followed throughout the organisation.
Code of Ethics
The Board has developed a Code of Ethics that forms part of the Manual. The Code of Ethics provides a set of expectations for PFI’s
Directors, employees and contractors surrounding their business conduct when representing PFI. The Code of Ethics intends to
facilitate behaviour that is consistent with PFI’s business standards.
PFI monitors compliance with the Code of Ethics through its management processes as well as through the whistleblowing
procedures set out in the Code of Ethics itself. PFI provides access to a confidential third-party agency for whistleblowing purposes.
All Directors and employees are informed of the content of the Code of Ethics prior to commencing such roles and undertake
training on the Code of Ethics and other related policies at least every three years or in the year after it is materially amended.
Training on ethical conduct was last provided to employees in 2022, following the August 2022 review of the Code of Ethics and
related internal policies. No material amendments were made to the Code of Ethics following its latest review in November 2023.
Financial Product Trading Policy
PFI is committed to transparency and fairness in financial product dealing. The rules for dealing in PFI’s listed securities are
contained in its Financial Product Trading Policy. The policy’s main purpose is to ensure no Director, employee or internal contractor
uses their position or knowledge of PFI or its business to engage in financial product dealing for personal benefit, or to provide a
benefit to any third party.
The Financial Product Trading Policy applies to Directors, employees and internal contractors of PFI and its subsidiary, and trusts
and companies controlled by those persons (Restricted Persons).
The key points of the policy are:
§
a prohibition on “insider trading”, meaning persons who hold non-publicly available price-sensitive information must not pass on
that information, nor acquire or dispose of PFI’s listed securities at any time;
§
Restricted Persons must obtain consent to trade PFI listed securities at any time; and
§
no trading is permitted by Restricted Persons during “blackout periods” from the balance date and the half-year balance date
until the day following the release of the relevant results to NZX.
75
OTHER DISCLOSURES
Principle Two: Board Composition & Performance
To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and perspectives.
Board Charter
The Board has developed a charter that sets out its authority, duties and responsibilities. The Board, through a set of formal policies
and procedures:
§
establishes a clear framework for oversight and management of PFI’s operations and for defining the respective roles and
responsibilities of the Board and Management;
§
structures itself to be effective in discharging its responsibilities and duties;
§
sets standards of behaviour expected of the Company’s employees and representatives;
§
safeguards the integrity of the Company’s financial reporting;
§
ensures timely and balanced disclosure;
§
respects and facilitates the rights of shareholders;
§
recognises and manages risk;
§
encourages Board and management effectiveness;
§
ensures remuneration of Directors, employees and contractors is fair and reasonable;
§
recognises the legitimate interests of all stakeholders including stakeholder expectations around Environmental, Social and
Governance (ESG) matters; and
§
promotes a corporate culture which embraces inclusion and diversity.
The Board’s primary focus is on the creation of long-term shareholder wealth and ensuring PFI is run in accordance with
appropriate management and corporate governance practices. The Board has an obligation to protect and enhance the value of the
assets of PFI for the benefit of PFI and its shareholders. It achieves this through approval of appropriate corporate strategies,
business plans and budgets, and monitoring actual results against the Company’s strategic objectives. PFI’s Board pays particular
attention to capital structure, capital expenditure, acquisition and divestment proposals, performance against PFI’s sustainability
strategy (including climate-related issues), and ensuring effective audit, risk and compliance procedures are in place to protect
PFI’s assets and ensure integrity of reporting. The Board is also responsible for approving PFI’s Corporate Governance Manual and
maintaining corporate and Board values to ensure PFI acts to the highest ethical standards and integrity.
The Board delegates implementation of the adopted corporate strategies to the Management Team and reviews the performance
of the Management Team on a regular basis.
76
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
Board Composition
The Company’s constitution requires the Company to comply with the minimum board composition requirements under the NZX
Listing Rules (being at least three directors). As at 31 December 2023, there were six Directors, all of whom are independent. The
NZX Listing Rules require at least two Independent Directors, and it is the Company’s policy that there should always be a majority
of Independent Directors.
The Directors of the Company who held the office during the 12 months to 31 December 2023, their status, date of appointment and
meeting attendances follows:
DIRECTOR STATUS
DATE OF
APPOINTMENT
LAST
RE-ELECTED
DATE CEASED
TO BE A DIRECTOR
MEETINGS
ATTENDED
(EIGHT
MEETINGS
HELD)
Anthony BeverleyIndependent Director
Board Chair
2 July 200129 March 2023N/A8
Angela Bull (1)Independent Director20 February 202329 March 2023N/A7
Carolyn SteeleIndependent Director
Audit and Risk Committee
Chair
22 August 202229 March 2023N/A8
David ThomsonIndependent Director12 February 201819 May 2021N/A8
Dean BracewellIndependent Director
People Committee
Chair
29 November 201929 March 2023N/A8
Gregory ReidyIndependent Director20 January
2012
19 May 2021N/A8
All current Directors are also Directors of the Company’s subsidiary, P.F.I. Property No. 1 Limited.
The Board reviews its performance as a whole as well as the performance of individual members and each committee.
Director Skills and Experience
A profile of each Director outlining their skills, experience and length of service can be found on the PFI website. The Board strives
to ensure that PFI has the right mix of skills and experience for PFI to achieve its strategic goals. The skills and experience
represented on the Board as at 31 December 2023 are summarised in the diagram below:
Skill
Property
Capital Markets
Financial
Governance
Executive Leadership
Legal
Health and Safety
Sustainability, ESG and Climate Change
Technology
Key:
Strong skills or experience
Some skills or experience
Limited skills or experience
(1) Angela Bull joined the PFI Board effective 20 February 2023 and attended all meetings held by the Board in 2023 thereafter.
77
OTHER DISCLOSURES
Directors are encouraged to undertake continuing education to develop and maintain their skills and knowledge. In December 2023,
PFI’s Directors undertook training on climate-related disclosures, which was facilitated by Chapman Tripp’s climate, sustainability
and ESG expert.
Carolyn Steele, who joined PFI’s Board in August 2022 and is Chair of the Audit and Risk Committee, is considered to be the
financial expert on the Committee. Carolyn has a background in investment management, capital markets and mergers and
acquisitions, having spent six years as a portfolio manager at the Guardians of New Zealand Superannuation, and a further ten
years prior to that in investment banking at Forsyth Barr and First NZ Capital / Credit Suisse. Carolyn is also Audit and Risk
Committee Chair for Green Cross Health, WEL Networks and Vulcan Steel and an Investment Committee member at Oriens Capital.
PFI’s Board and Management consider that Carolyn has a strong financial background for the purposes of Listing Rule 2.13.2.
Director Independence
Director independence is determined in accordance with the requirements of the NZX Listing Rules. The Board has determined
that, as at 31 December 2023, all Directors of the Company were independent: Anthony Beverley, Angela Bull, Carolyn Steele,
David Thomson, Dean Bracewell, and Gregory Reidy. This assessment is based on the fact that these Directors all share the
following characteristics:
§
They are all Non-Executive Directors.
§
They are not currently, or within the last three years have not been, employed in an executive role by the Company, or any of
its subsidiaries, and / or there has been a period of at least three years between ceasing such employment and serving on
the Board.
§
They are not currently holding, or within the last 12 months they have not held, a senior role in a provider of material
professional services to the Company or any of its subsidiaries.
§
They do not currently have, or within the last three years they have not had, a material business relationship (e.g. as a supplier
or customer) with the Company or any of its subsidiaries.
§
They are not a substantial product holder of the Company, or a senior manager of, or a person otherwise associated with,
a substantial product holder of the Company.
§
They do not currently have, or within the last three years they have not had a material contractual relationship with the
Company or any of its subsidiaries, other than as a director.
§
They do not currently have close family ties with anyone in the categories listed above.
§
No director has been a Director with the Company for a length of time that may compromise independence.
The Board considers Gregory Reidy to be independent as more than three years have passed since his role as Managing Director.
Anthony Beverley has served on the Board of PFI for 22 years and has been Chair of the Board for five years. When assessing
independence, the Board considered the effect of Anthony Beverley’s length of tenure, and has concluded that Anthony Beverley’s
length of tenure has not in practice impacted Anthony Beverley’s ability to bring an independent view to decisions in relation to the
Company, act in the best interests of the Company, and represent the interests of the Company’s financial product holders
generally, having regard to the factors described in both the 17 June 2022 version and the 1 April 2023 version of the NZX Code that
may impact Director independence.
On 19 February 2024 the Company announced that Anthony Beverley will step down from his role as Board Chair at the close of
PFI’s Annual Meeting on 3 April 2024, but will remain on the PFI Board as Independent Director. Following this change, Independent
Director Dean Bracewell will take on the role of Board Chair to take effect from the close of the Annual Meeting. The Company also
announced that Gregory Reidy will retire from PFI’s Board of Directors with effect from the close of the Annual Meeting.
On 19 February 2024, the Company also announced the appointment of Jeremy Simpson to the PFI Board, to take effect from 27
February 2024. In accordance with NZX Listing Rule 2.6.1, the PFI Board has determined that Jeremy Simpson is an Independent
Director. PFI’s constitution and the NZX Listing Rules require that any person appointed as a Director by the Board must retire at the
next Annual Meeting but shall be eligible for election at that meeting. Accordingly, Jeremy Simpson will retire and seek election by
shareholders at PFI’s Annual Meeting on 3 April 2024.
These changes in Board composition form part of the PFI Board’s ongoing succession plans, which seeks to balance technical and
specialist governance skills, whilst at the same time maintaining a Board with strong, practical, commercial capability and diversity
of experience.
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PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
Details of Directors’ relevant interests in the Company’s financial products as at 31 December 2023 can be found in the section
entitled Principle Four: Reporting and Disclosure.
Under the Board Charter (described in further detail above) any Chief Executive Officer of PFI is not eligible to be appointed as the
Chair of the Board.
Director Appointments
In compliance with Listing Rule 2.7.1, each Director must not hold office without re-election past the third annual meeting following
the Director’s appointment or three years, whichever is longer. Any Director appointed by the Board must not hold office (without
re-election) past the next annual meeting following the Director’s appointment.
Where a Board vacancy arises or the Board otherwise determines a need to appoint a new Director, it is the responsibility of the
People Committee to identify and nominate external candidates to fill Board vacancies as and when they arise (see Principle Three
below for further information). PFI enters into a formal written agreement with all new Directors, which establishes the terms of
their appointment.
Diversity and Inclusion
The breakdown of the gender composition of PFI’s Directors, Officers and Senior Leadership Team as at the end of the previous two
financial years is as follows:
FINANCIAL YEAR MALEFEMALEGENDER DIVERSE
DIRECTORS
OFFICERS
SENIOR
LEADERS
(1)
DIRECTORS
OFFICERS
SENIOR
LEADERS
DIRECTORS
OFFICERS
SENIOR
LEADERS
Year ending 31 December 2022433101000
Year ending 31 December 2023433201000
The Board believes that a diverse and inclusive work environment is critical to the sustainability of PFI. At PFI diversity means
recognising and valuing the many ways that we are different. This includes differences that relate to gender, age, culture, ethnicity,
disability, religion, and sexual orientation, as well as differences in background, skills, perspective, and experiences.
The Board has established a Diversity and Inclusion Policy in accordance with the NZX Code. The PFI Board believes that an
inclusive work environment where everyone is treated equitably and fairly and is supported to be successful in their roles is
essential for it to be able to deliver its strategic objectives and continue to meet its responsibilities to its customers, its employees,
the communities in which it works, and its shareholders.
The Board has evaluated PFI’s performance against the Company’s Diversity and Inclusion Policy through regular employee
engagement surveys to ensure that our overall work culture remains inclusive. The Board also sets Diversity and Inclusion targets
annually. The Board considers that it, in conjunction with the Management Team, has fostered a work environment where diversity
and inclusion, together with different skills, abilities and experiences, is recognised and valued, and employees are treated equitably
and fairly in order that talented people who will contribute to the achievement of our strategic objectives are attracted to work for
PFI and are able to be retained.
The Board is committed to taking steps that will see diversity in the composition of both the Board and leadership team move
progressively over time. It is important to note that PFI has a small team comprising 22 permanent and dedicated team members
and that 11 of these team members are female (2022: 10 out of 20).
(1) Includes officers.
79
OTHER DISCLOSURES
Principle Three: Board Committees
The Board should use committees where this will enhance its effectiveness in key areas, while still retaining Board responsibility.
Audit and Risk Committee
The Board has established an Audit and Risk Committee in accordance with the NZX Code. The Board has approved a written
charter that outlines the committee’s authority, duties, responsibilities, relationship with the Board and a policy on audit
independence. The committee develops and monitors procedures to ensure the Board is properly and regularly informed and
updated on corporate financial matters. The committee also oversees the preparation of PFI’s climate-related disclosures. The
Board is required to regularly review the performance of the Audit and Risk Committee.
The Audit and Risk Committee’s functions include:
§
recommending the appointment and removal of external auditors (see Principle Seven: Auditors for further detail), and the
engagement of climate-related disclosure assurance professionals (once applicable);
§
reviewing PFI’s financial reporting documents with the view to ensuring PFI maintains accurate financial and accounting records;
§
reviewing PFI’s climate-related disclosures with the view to ensuring PFI maintains appropriate climate-related disclosure
records; and
§
reviewing earnings releases and financial reports.
In addition to the committee’s audit and financial reporting related functions, it is also responsible for providing a view on PFI’s
business, financial and climate-related risk management processes, including the adequacy of the overall control environment,
independence from management and controls in selected areas representing significant risk. The committee is responsible for
monitoring climate-related risks and ensuring these are integrated into PFI’s risk management processes.
The Audit and Risk Committee generally meets four times a year, and at least twice a year (or more frequently if required) with the
Group’s auditor to review the outcome of the interim review (30 June) and annual audit (31 December). Employees only attend
Audit and Risk Committee meetings at the invitation of the committee.
The Audit and Risk Committee must have a minimum of three Directors as members and the majority must be Independent
Directors. No executive may be a member of the Audit and Risk Committee. The Chair of the Board is not eligible to be chair of the
Audit and Risk Committee.
At 31 December 2023, the members of the Audit and Risk Committee were Carolyn Steele (Chair of the Audit and Risk Committee),
Anthony Beverley and David Thomson. Carolyn Steele, Anthony Beverley and David Thomson were members of the Committee at
all times during 2023. All members of the Committee attended the four meetings of the Committee held during 2023.
People Committee
The Board has also established a People Committee (previously known as the Nomination and Remuneration Committee) in
accordance with the NZX Code. The Board has approved a written charter to assist the committee to fulfil this purpose, which
outlines the Committee’s authority, duties, responsibilities and relationship with the Board. The Board is required to regularly review
the performance of the People Committee and undertakes a review annually of its objectives and activities.
The People Committee’s role includes identifying and recommending individuals for nomination to be members of the Board and
its committees, regularly reviewing composition and successions plans and, where appropriate, recommending changes to the
composition of the Board to ensure PFI maintains the right composition of Directors to effectively govern and provide guidance
to the business. The Committee is also responsible for assisting the Board with performance reviews, assessing independence
of PFI’s Directors, and regularly reviewing the remuneration policy (for further information on remuneration, see Principle
Five: Remuneration).
When nominating candidates, the Committee considers a range of factors as well as perceived needs of the Board at the time.
Some of these factors include qualifications, experience, diversity, and the ability to exercise an independent perspective and
informed judgment on matters that come before the Board. While the Committee has the authority to obtain legal or other
independent professional advice, it may only nominate a person to be a Director of PFI with approval of the Board.
The People Committee must have at least two members, all of whom must be Independent Directors. Employees only attend
People Committee meetings at the invitation of the committee.
80
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
At 31 December 2023, the members of the People Committee were Dean Bracewell (Chair of the People Committee), Angela
Bull and David Thomson. Dean Bracewell and David Thomson were members of the committee at all times during 2023 and
attended the five meetings of the committee held during 2023. Anthony Beverley was a member of the People Committee until
stepping down from his role on the Committee on 4 May 2023. Anthony Beverley attended three meetings of the Committee
held during 2023. Angela Bull was appointed as a People Committee member on 4 May 2023 and attended two meetings of the
Committee thereafter.
Other Committees
The Board does not consider that any additional Board committees as standing Board committees need to be established at
this stage.
Principle Four: Reporting & Disclosure
The Board should demand integrity in non-financial reporting, and in the timeliness and balance of corporate disclosures.
Continuous Disclosure Policy
PFI is committed to its obligation to inform shareholders and market participants of all material information that might affect the
price of its listed securities in accordance with the NZX Listing Rules and the Financial Markets Conduct Act 2013 (FMC Act).
Accordingly, the Board has adopted a Continuous Disclosure Policy which applies to the Group, and the Directors and all relevant
employees of PFI. The Board has also appointed the Chief Finance and Operating Officer to act as the Group Disclosure Officer.
The Group Disclosure Officer is responsible for ensuring policy compliance and for investigating any alleged breaches.
Corporate Governance Documents
PFI’s Board and committee charters, annual and interim reports, company announcements, policies (as recommended in the
NZX Code) and other investor-related material are available on PFI’s website.
Financial Reporting
PFI is committed to appropriate financial reporting. Oversight of the Company’s financial reporting is applied through the Audit and
Risk Committee.
Non-Financial Disclosure
PFI is committed to non-financial disclosure, including reporting on environmental, social sustainability and governance factors
and practices.
You can find more information on PFI’s approach to sustainability on pages 19-27.
You can find more information about PFI’s approach to risk management, including health and safety risks, in the section entitled
Principle Six: Risk Management.
Climate-related Disclosures
PFI is a climate-reporting entity under the FMC Act. The Group will publish its first Climate-related Disclosures for the year ended
31 December 2023 in compliance with the Aotearoa New Zealand Climate Standards issued by the External Reporting Board (XRB)
as is required by the FMC Act. The Group’s Climate-related Disclosures for the year ended 31 December 2023 will be accessible on
PFI’s website by 30 April 2024 via https://www.propertyforindustry.co.nz/sustainability/.
1
Directors’ Relevant Interests
Directors had no dealings in the Company’s financial products in the year ended 31 December 2023.
Details of Directors’ relevant interests in the Company’s financial products as at 31 December 2023 are as follows:
DIRECTOR NATURE OF RELEVANT INTEREST NUMBER OF SHARES
Gregory ReidyBeneficial holder155,708
Dean BracewellBeneficial holder40,000
No Director had a relevant interest in the Company’s bonds.
(1) As per clause 7 of the Financial Markets Conduct (Requirement to Include Climate Statements in Annual Report) Exemption Notice 2023.
81
OTHER DISCLOSURES
Principle Five: Remuneration
The remuneration of Directors and executives should be transparent, fair and reasonable.
PFI is pleased to present its remuneration report for the year ended 31 December 2023 (FY23). This report addresses the
remuneration of PFI’s Directors and Senior Leadership Team, with a particular focus on the remuneration outcomes for PFI’s Chief
Executive Officer in respect of FY23.
The members of PFI’s Senior Leadership Team are Simon Woodhams (Chief Executive Officer), Craig Peirce (Chief Finance and
Operating Officer), Ewan Cameron (Portfolio Manager) and Sarah Beale (Head of Sustainability and Operations).
The Directors of the Company who held office during FY23 are as follows: Anthony Beverley (Independent Director, Board Chair),
Angela Bull (Independent Director), Carolyn Steele (Independent Director), David Thomson (Independent Director), Dean Bracewell
(Independent Director) and Gregory Reidy (Independent Director). All Directors held office for the full financial year, other than
Angela Bull who was appointed to the Board on 20 February 2023.
REMUNERATION GOVERNANCE
Remuneration governance framework
PFI’s remuneration governance framework is overseen by the People Committee on behalf of the Board. The purpose of the People
Committee is to assist the Board to oversee Director and Senior Leadership Team appointment and remuneration policies and
practices, Senior Leadership Team performance and development, and succession planning.
Notwithstanding the high levels of reported employee engagement at PFI, in 2023 the Group employed a People and Capability
Manager on a part-time fixed-term basis, to mature a number of the Group’s people processes, including employee remuneration.
Throughout the later stages of 2023 and early 2024, a review of the Group’s employee remuneration framework was undertaken to
ensure it remains appropriate and supports the delivery of our strategy, whilst rewarding employees fairly and in line with investor
expectations. A revised framework was put in place in early 2024, and the People Committee is of the view that the revised
framework supports the strategic priorities of the business and creation of sustained long-term value for shareholders.
During FY23, PFI also reviewed its remuneration policy, a copy of which is available on the Company’s website, together with the
People Committee’s Charter, at: https://www.propertyforindustry.co.nz/about-pfi/governance/.
PFI’s People Committee
The People Committee’s role is set out in the People Committee’s Charter. With regards to PFI’s remuneration governance, the
People Committee is responsible for establishing remuneration policies and practices, reviewing and recommending to the Board
the remuneration of PFI’s Chief Executive Officer, Chief Finance and Operating Officer and Directors and providing oversight of the
remuneration of PFI’s wider team of employees.
The People Committee must comprise at least two members, all of whom must be Independent Directors.
At 31 December 2023, the members of the People Committee were Dean Bracewell (Chair of the People Committee), Angela Bull
and David Thomson. Dean Bracewell and David Thomson were members of the People Committee at all times during FY23, having
joined the People Committee in March 2020 and December 2022 respectively. Anthony Beverley was a member of the People
Committee from 2013 until stepping down from his role on the People Committee on 4 May 2023. Angela Bull was appointed as a
People Committee member on 4 May 2023. All members of the People Committee during FY23 were Independent Directors.
As announced on 19 February 2024, immediately following PFI’s Annual Meeting on 3 April 2024, Dean Bracewell will retire from
his role as People Committee Chair to take up the role of Board Chair. David Thomson, who has served on the People Committee
since December 2022, will take up the role of People Committee Chair.
Further information on the People Committee, including the broader responsibilities of the People Committee and meeting
attendance during FY23, can be found on pages 80-81 of the Annual Report.
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PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
EXECUTIVE REMUNERATION POLICY
Remuneration principles
The People Committee and Board support a remuneration strategy that is aligned to our investors’ interests and encourages the
achievement of our strategic objectives and demonstration of our purpose. The remuneration of the Senior Leadership Team is
designed to attract and retain the most talented and effective individuals whilst ensuring appropriate alignment with employee and
shareholder interests.
Packages include fixed remuneration, together with a short-term incentive (STI) and a long-term incentive (LTI) (together, Total
Target Remuneration). Both the STI and LTI are at risk remuneration because the outcome is determined by performance against a
combination of pre-determined financial and non-financial objectives.
Fixed remuneration
Fixed remuneration consists of a package of base salary and standard employment-associated benefits. This is benchmarked
annually against a group of companies that are comparable to PFI in terms of activity, portfolio size, market capitalisation and other
relevant entity characteristics. This enables us to track actual market remuneration levels for entities that offer a similar risk profile
and investment portfolio performance opportunities.
Short Term Incentive (STI)
STI awards are set as a fixed amount which reflects between 18% and 24% of Total Target Remuneration. The STI earned may be
between 0% and 100% of the amount awarded based on the People Committee’s assessment of performance and subject to the
Board’s approval. Any STI earned is paid in cash.
For the STI, participants’ performance against an agreed set of financial and non-financial metrics is monitored on an ongoing basis
throughout the financial year by the People Committee.
Long Term Incentive (LTI)
LTIs are at-risk payments designed to align the reward of members of the Senior Leadership Team with changes in shareholder
value over a multi-year period.
The current LTI plan commenced in the year ended 31 December 2019, and is a dividend protected Performance Share Rights (PSR)
plan (LTI Plan). Under the LTI Plan, PSRs are issued to members of the Senior Leadership Team which gives them the right to
receive ordinary shares in the Company after a 1-3 year period, subject to achieving certain performance hurdles. The current
performance hurdles used for the LTI Plan are a relative TSR hurdle and a rolling three year Funds From Operations (FFO) hurdle.
A detailed description of the performance hurdles applied under the LTI Plan can be found on page 85. The value of PSRs awarded
to participants in the LTI Plan is set at a fixed amount which reflects between 14% and 21% of Total Target Remuneration. The
number of PSRs issued under each grant is then determined based on the market value of PFI’s shares using a volume weighted
average price over the 20 trading days up to and including the commencement date of the grant.
As at the date of this report, all members of the Senior Leadership Team are participants in the LTI Plan, and these are the only
individuals participating in the LTI Plan.
FY23 Remuneration Outcomes
Senior Leadership Team
The People Committee recommended, and the Board approved, the Senior Leadership Team’s FY23 remuneration.
Following the preparation of the results for the 12 months to 31 December 2023, the People Committee reviewed the Senior
Leadership Team’s performance for the year against the STI and LTI Plans’ terms and conditions. Disclosure of the STI and LTI
targets set for the Chief Executive Officer, as well as the actual performance against them, is included in this remuneration report.
Payments for FY22 were made in February 2023 after the release of the FY22 annual results.
Payments for FY23 will be made in February 2024 after release of the FY23 annual results.
While the STI and LTI Plans offer the People Committee discretion with regard to outcomes, the People Committee considered that
remuneration outcomes were appropriate and as such determined that no discretion would be applied.
Team members excluding the Senior Leadership Team
The Senior Leadership Team set team members’ (excluding the Senior Leadership Team) FY23 remuneration, and this was
approved by the People Committee and Board via the annual budgeting process.
83
OTHER DISCLOSURES
External advice
PFI engages external consultants to provide market data and benchmarks in regard to employment packages and pay practices.
In respect of FY23 remuneration, the following external consultants were engaged:
§
PricewaterhouseCoopers were engaged to provide benchmarking on remuneration for the Senior Leadership Team;
§
Ernst & Young were engaged to provide consulting advice on the LTI Plan; and
§
Strategic Pay were engaged to provide benchmarking on remuneration for team members (excluding the Senior Leadership
Team), as well as advice on an employee remuneration framework.
KEY PERFORMANCE SUMMARY
PFI’s key performance indicators relevant to the Senior Leadership Team’s STI and LTI Plans over the past five years are as follows:
20232022202120202019
Occupancy100.0%100.0%100.0%99.4%99.0%
Weighted Average
Lease Term
5.06 years5.08 years5.40 years 5.28 years5.38 years
FFO
1
10.03 cps10.21 cps11.07 cps9.67 cps9.07 cps
One year TSR
2
(%)-2%-17%4%27%41%
Two year TSR
2
(%)-19%-14%30%78%N/A
Three year TSR
2
(%)-15%7%83%N/AN/A
CEO REMUNERATION ARRANGEMENTS & OUTCOMES
CEO Remuneration Arrangements
Alignment between the interests of shareholders, delivery on PFI’s strategy, and performance is at the heart of the Company’s
remuneration framework for the Chief Executive Officer. The Chief Executive Officer’s Total Target Remuneration includes 45% at
risk remuneration comprising STI and LTI awards. The STI awards take account of performance against annual targets and the LTI
against performance-based metrics across multiple years.
The Chief Executive Officer’s remuneration is benchmarked and reviewed annually by the People Committee and approved by the
Board. In summary, the components of Chief Executive Officer’s remuneration are as follows:
(1) Funds From Operations (FFO) is non-GAAP financial information and is a common property investor metric, which has been calculated in accordance with the guidelines
issued by the Property Council of Australia. Please refer to the relevant period’s annual results announcement, released to the NZX, for more detail as to how this
measure was calculated.
(2) Total Shareholder Return (TSR) is calculated as the total return received by investors from the change in the market value of a PFI share (using a volume weighted
average price over the 20 trading days prior to the beginning and end of the financial year) and the receipt of cash dividends and other distributions paid in respect of a
PFI share over the financial year or the two or three financial year period as applicable. TSR is only shown for those periods where the LTI Plan was in operation, where it
was not in operation, N/A has been entered.
CASHEQUITY
Long Term IncentiveShort Term IncentiveFixed remuneration
Grants made annually covering
1, 2 and 3 years period
Set annuallyReviewed annually
Fixed remuneration
The fixed remuneration paid to the Chief Executive Officer (including any standard employment-associated benefits) in FY23
was $679,067.
There is no commitment to making a severance payment in the Chief Executive Officer’s contract.
84
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
Short Term Incentive (STI)
The Chief Executive Officer’s STI award is set as a fixed amount which generally reflects approximately 24% of Total Target
remuneration. The STI earned may be between 0% and 100% of the amount awarded based on the People Committee’s assessment
of performance and subject to the Board’s approval.
For the STI, the Chief Executive Officer’s performance against an agreed set of financial and non-financial metrics is monitored on
an ongoing basis throughout the financial year by the People Committee. The Chief Executive Officer’s STI is assessed against
achievement of these annual targets which are aligned to the delivery of PFI’s key strategic and operational objectives.
The STI payments are at risk payments and subject to assessment of performance. STI payments are reviewed by the People
Committee and recommended for approval by the Board. In FY23 and FY22, the People Committee recommended, and the Board
approved, the payment of 100% of the potential STI payable to the Chief Executive Officer. The Chief Executive Officer’s FY23 STI
was assessed as earned in FY23 but will be paid after release of the FY23 annual results (i.e. it will be paid in FY24).
The Chief Executive Officer’s key performance indicators for the FY23 STI award are outlined below:
MEASUREWEIGHTINGDESCRIPTION
Leadership15%Succession, Engagement and Health and Safety related targets.
Strategy20%Strategy Development, Strategy Implementation and Divestment related targets.
Portfolio15%Maintenance of key portfolio statistics, including Occupancy and Weighted
Averaged Lease Term (WALT), and Sustainability related targets.
Operations15%Adherence to delivery targets for key projects.
Earnings25%Achievement of budgeted earnings outcome.
Financial10%Liquidity and Debtor Days related targets.
Long Term Incentive (LTI)
The value of the PSRs awarded to the Chief Executive Officer under each LTI Plan grant is set at a fixed amount which since
inception has represented between 18% and 21% of the Chief Executive Officer’s Total Target Remuneration.
Grants of PSRs under PFI’s LTI Plan with vesting dates on or after 31 December 2023 were made on 22 February 2021 (2021 Grant),
on 21 February 2022 (2022 Grant), and on 22 August 2023 (2023 Grant).
The key terms and conditions related to the PSRs under the LTI Plan are as follows:
§
The PSRs are granted for nil consideration and have a nil exercise price.
§
The participant must remain an employee of the Group as at the relevant vesting date for each tranche of PSRs.
§
The 2021 Grant and the 2022 Grant have three tranches with two separate performance hurdles applying to each tranche. The
three tranches enable a third of the PSRs to vest after one year, two years and three years from the respective commencement
dates for those grants of 1 January 2021 and 1 January 2022. For each tranche:
§
50% of the PSRs are subject to a performance hurdle of the Company’s rolling three year FFO growth equalling or
exceeding the three year CPI growth to September immediately prior to the vesting date; and
§
50% of the PSRs are subject to a performance hurdle of the Company’s TSR outperforming the TSR of a property peer
group (comprising other listed property issuers) over the period from the commencement date to the vesting date for the
relevant tranche.
§
For the 2023 Grant, there are three tranches with one performance hurdle applying to each tranche. The three tranches enable a
third of the PSRs to vest after one year, two years and three years from the commencement date of 1 January 2023 for the
grant. 100% of the PSRs are subject to a performance hurdle of the Company’s TSR outperforming the TSR of a property peer
group (comprising other listed property issuers) over the period from the commencement date to the vesting date for the
relevant tranche.
§
TSR is measured as the change in the value of an ordinary share from the commencement date to the vesting date for the
relevant tranche of a grant (using a volume weighted average price over the 20 trading days prior to the commencement date
and the vesting date) together with dividends or other distributions paid during the relevant measurement period.
§
The TSR performance hurdle requires that PFI’s TSR for the vesting period must rank equal or greater to 6th place against a
property peer group. The members of the property peer group are Asset Plus Limited, Argosy Property Limited, Goodman
Property Trust, Investore Property Limited, Kiwi Property Group Limited, Precinct Properties New Zealand Limited & Precinct
Properties Investments Limited (stapled), Property for Industry Limited, Stride Property Limited & Stride Investment
Management Limited (stapled) and Vital Healthcare Property Trust.
85
OTHER DISCLOSURES
§
The LTI Plan uses a progressive vesting scale for determining the percentage of PSRs that become eligible for vesting:
§
The percentage of PSRs under the 2021 Grant and 2022 Grant that become eligible for vesting is determined as follows:
% OF PSRS UNDER THE GRANT
ELIGIBLE FOR VESTING
THREE YEAR ROLLING FFO GROWTH
EQUALS OR EXCEEDS THE
PFI’S TSR PLACING EQUALS OR
EXCEEDS THE TSR IN THE PROPERTY
PEER GROUP PLACED
12.5%-6th
25%Three year rolling CPI growth5th
37.5%Three year rolling CPI growth
by 12.5 basis points
4th
50%Three year rolling CPI growth
by 25 basis points
3rd
§
The percentage of PSRs under the 2023 Grant that become eligible for vesting is determined as follows:
% OF PSRS UNDER THE GRANT
ELIGIBLE FOR VESTING
PFI’S TSR PLACING EQUALS OR EXCEEDS THE
TSR IN THE PROPERTY PEER GROUP PLACED
25%6th
50%5th
75%4th
100%3rd
§
On the vesting date, subject to achieving performance hurdles, each PSR entitles the Chief Executive Officer to one ordinary
share. The LTI Plan is a dividend protected LTI Plan and the Chief Executive Officer will receive additional shares representing
the value of dividends paid over the vesting period. The Chief Executive Officer is liable for tax on the shares received at this point
but may elect to receive a net number of shares on exercise of the PSRs to account for the tax which is then paid by PFI on the
Chief Executive Officer’s behalf.
CEO REMUNERATION OUTCOMES
The following section sets out how the components of the Chief Executive Officer’s remuneration applied in FY23.
Remuneration mix
The chart below illustrates the elements of the Chief Executive Officer’s remuneration design for the year ended 31 December 2023:
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
FIXED
100%
37%
63%58%
42%
FixedVariable
EARNEDMAXIMUM
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PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
Total FY23 CEO Remuneration
The Chief Executive Officer’s total remuneration for the year ended 31 December 2023, along with the Chief Executive Officer’s
historical total remuneration, is as follows:
YEAR ENDING
FIXED REMUNERATIONPAY FOR PERFORMANCE
TOTAL
REMUNERATION
SALARYBENEFITS
1
SUBTOTALSTILT I
2
SUBTOTAL
EARNED
AMOUNT
EARNED
AS A % OF
MAXIMUM
AWARDEARNED
AMOUNT
EARNED
AS A % OF
MAXIMUM
AWARD
31
December
2019
$450,000$31,711$481,711$200,000100%$71,810100%$271,810$753,521
31
December
2020
$500,000$30,824$530,824$225,000100%$162,391100%$387,391$918,215
31
December
2021
$550,000$40,199$590,199$250,000100%$238,164100%$488,164$1,078,363
31
December
2022
$576,640$44,939$621,579$263,250100%$134,20867%$397,458$1,019,037
31
December
2023
$628,538$50,529$679,067$286,943100%$115,13757%$402,079$1,081,146
FY23 STI Outcomes (Earned)
A breakdown of the amount earned by the Chief Executive Officer for achievement of the FY23 STI key performance indicators is
as follows:
STI AWARDEDEARNED
% EARNED OF
AWARDED
Leadership 15%$43,041$43,041100%
Strategy20%$57,389$57,389100%
Portfolio15%$43,041$43,041100%
Operations15%$43,041$43,041100%
Earnings25%$71,736$71,736100%
Financial 10%$28,695$28,695100%
(1) Benefits include KiwiSaver and insurance.
(2) The LTI amounts earned are based on the market value of the vested awards, being the number of PSRs vested multiplied by the closing PFI share price at the end of year.
87
OTHER DISCLOSURES
FY23 LTI Outcomes (Vested)
The following tables track the Company’s performance against the FFO and TSR performance hurdles in FY23 and show the
percentage and number of shares vested. In FY23, grants made under the LTI Plan were subject to a TSR performance hurdle only
(i.e. no grant of PSRs with an FFO performance hurdle).
The number of shares recorded as vested in each table are post-dividend protection but pre-tax.
Rolling three year FFO
The Company’s rolling three year FFO growth against the three year CPI growth for the September immediately prior to the
relevant vesting date, and the outcomes under the relevant tranches of the LTI Plan grants made to the CEO is as follows:
ROLLING 3 YEARS
YEAR ENDEDGRANT
FFO
GROWTH
CPI
GROWTH
CPI
GROWTH
+12.5BPS
CPI
GROWTH
+25BPS% VESTED
TOTAL
SHARES
VESTED
CEO
SHARES
VESTED
31 December 2023
2021 Grant1.6%5.9%6.1%6.2%0%--
2022 Grant1.6%5.9%6.1%6.2%0%--
2023 GrantN/AN/AN/AN/AN/AN/AN/A
TSR
The Company’s TSR and the TSR of the property peer group over the relevant period and the outcomes under the relevant tranches
of the LTI Plan grants made to the CEO is as follows:
YEAR ENDEDGRANTPFI TSRPFI RANKING % VESTED
TOTAL SHARES
VESTED
CEO SHARES
VESTED
31 December 2023
2021 Grant-15.4%2100%28,42712,318
2022 Grant-18.7%475%22,33510,688
2023 Grant-1.5%475%64,05528,166
Overall
Based on the achievement of the FFO and TSR performance hurdles outlined above, the outcomes at 31 December 2023 under the
2021 Grant, 2022 Grant and 2023 Grant were as follows:
PERFORMANCE HURDLESGRANTLTI WEIGHTINGWEIGHTED OUTCOME
Rolling three year FFO
202150%0%
202250%0%
TSR
202150%50%
202250%37.5%
2023100%75%
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PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
PSRs granted to the CEO as at 31 December 2023
A summary of the outstanding PSRs granted to the Chief Executive Officer under the 2021 Grant, 2022 Grant and 2023 Grant as at
31 December 2023 is as follows:
PSR AWARD DATE
VESTING DATE
BALANCE OF PSRS
AT 31 DECEMBER 2022
3
AWARDED DURING THE
REPORTING PERIOD
PSRs VESTED/LAPSED
IN RELATION TO THE
REPORTING PERIOD
SHARES ISSUED/TRANSFERRED
IN RELATION TO THE
REPORTING PERIOD
BALANCE OF PSRS AT
31 DECEMBER 2023
1
PSR
s
AWARDED
MARKET PRICE AT
AWARD
PSR
s
LAPSED
PSR
s
VESTED
SHARES TO BE
ISSUED/TRANSFERRED
BASED ON VESTING
OUTCOMES
2
MARKET PRICE AT THE
VESTING DATE
ISSUE / TRANSFER
DAT E
22 Feb
2021
31 Dec
2023
22,4140N/A11,20711,20712,318$27,71626 Feb
2024
0
21 Feb
2022
31 Dec
2023 &
2024
53,2480N/A16,6409,98410,688$24,04826 Feb
2024
26,624
22 Aug
2023
31 Dec
2023,
2024 &
2025
0108,537$255,0609,04527,13428,166$63,37326 Feb
2024
72,358
REMUNERATION BANDS
The following table notes the number of employees or former employees of the Company, not being directors of the Company, who,
during FY23, received remuneration and any other benefits in their capacity as employees, the value of which was or exceeded
$100,000 per annum, in brackets of $10,000:
REMUNERATION RANGEFY23
$100,001 - $110,0001
$110,001 - $120,0002
$120,001 - $130,0001
$140,001 - $150,0001
$150,001 - $160,0002
$180,001 - $190,0002
$190,001 - $200,0002
$210,001 - $220,0001
$270,001 - $280,0001
$460,001 - $470,0001
$890,001 - $900,0001
$1,080,001 - $1,090,0001
Note: the above figures include LTI awards vested during the year based on the market value of the vested awards, being the
number of PSRs vested multiplied by the closing PFI share price at the end of year.
(1) The balance of PSRs at 31 December 2022 and 31 December 2023 have been adjusted to reflect the lapse or eligibility for vesting of PSRs based on the achievement of
performance hurdles as at those dates.
(2) The number of shares recorded as to be issued/transferred are post-dividend protection but pre-tax.
89
OTHER DISCLOSURES
DIRECTOR REMUNERATION
Director remuneration arrangements
Director remuneration was approved by shareholders at the 2023 annual meeting on a role basis, and prior to that, Director fees
were last adjusted by PFI at the 2021 annual meeting. Director fees are reviewed every second year by the Board in advance of the
annual meeting with any adjustment put to shareholders for approval. No further increase is proposed to be sought at the 2024
annual meeting.
In setting the proposed Director remuneration put to shareholders at the 2023 annual meeting the Board considered the
performance of the Company and the need to attract and retain directors of a strong calibre and commissioned an independent
benchmarking review of the then current Directors’ fees by Ernst & Young (EY). A summary of EY’s report was made available prior
to the 2023 annual meeting at which shareholders were asked to approve the current Director remuneration.
The table below sets out the Director remuneration that was approved by shareholders at the 2023 annual meeting:
ROLE$ PLUS GST (IF ANY)
Board Chair175,000
Independent Director / Non-Executive Director92,500
Audit and Risk Committee Chair15,000
Audit and Risk Committee Member7,500
People Committee Chair13,500
People Committee Member6,750
Hourly rates for abnormal and particularly time intensive projects or transactions outside the scope
of typical Board work (note: use of this allowance will be capped at $50,000 per annum.)
350 per hour
Other than as noted in this Annual Report, neither the Company nor its subsidiary have provided any other benefits to a Director for
services as a Director or in any other capacity. Neither the Company nor its subsidiary have made loans to a Director or guaranteed
any debts incurred by a Director. Directors do not qualify for any performance-based compensation. All Director remuneration is
paid in cash and no PFI securities are issued to Directors as part of their remuneration.
Director remuneration outcomes
A breakdown of Board and Committee fees paid during FY23 are set out in the table below (exclusive of GST, if any). Please note
that these do not match the table above, as the fees paid changed part way during the year at the 2023 annual meeting.
DIRECTOR BASE FEE ($000)
FEE FOR AUDIT & RISK
COMMITTEE ($000)
FEE FOR PEOPLE
COMMITTEE ($000)
TOTAL REMUNERATION
RECEIVED ($000)
Anthony Beverley$174,000--$174,000
Angela Bull
1
$78,000-$4,000$82,000
Carolyn Steele
2
$92,000$15,000-$107,000
David Thomson$92,000$7,000$6,000$105,000
Dean Bracewell
3
$92,000-$13,000$105,000
Gregory Reidy$92,000--$92,000
Total$620,000$22,000$23,000$665,000
(1) Angela Bull was appointed to the Board on 20 February 2023 and was appointed as a People Committee member on 4 May 2023.
(2) Carolyn Steele served as the Chair of the Audit & Risk Committee during FY23.
(3) Dean Bracewell served as the Chair of the People Committee during FY23.
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PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
Principle Six: Risk Management
Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The Board
should regularly verify that the issuer has appropriate processes that identify and manage potential and material risks.
Risk Governance
PFI has established a Risk Management Framework to ensure that risks are managed within PFI’s Board-approved risk appetite.
The Risk Management Framework was last reviewed and approved by PFI’s Board in November 2023. PFI has established the
following responsibilities for risk governance:
ROLERESPONSIBILITY
BoardThe Board is responsible for recognising and managing risk, including ensuring that effective
audit, risk management and compliance systems are in place, and reviewing risk assessment
policies and controls. It oversees the assessment of, management and reporting of key business
risks, including climate-related risks.
Audit and Risk Committee
(A&RC)
The A&RC supports the Board by providing a specific focus on risk and compliance matters,
including providing risk oversight and ensuring an appropriate risk management framework is in
place, appointing the external auditor and overseeing the internal control environment.
Senior Leadership Team The Senior Leadership Team are responsible for promoting good risk practices by their teams
and escalating risks to the Board when appropriate.
StaffEvery staff member is responsible for the identification, management and escalation of risks as
part of their role.
Key Risks
The PFI Board considers that PFI has a robust risk assessment process. Risk assessments are carried out by the Management
Team at least annually in accordance with PFI’s Risk Management Framework. A risk assessment includes: identification of material
risks; assessment of the consequences and likelihood of the risk; and development of controls to achieve a level of residual risk that
is within PFI’s Board-approved risk appetite.
The table below outlines some of PFI’s key business risks following the latest refresh of its risk register, how these risks are
managed, and a commentary on these risks for 2023.
RISK DESCRIPTIONHOW PFI MANAGES THE RISK2023 COMMENTARY
Economic and market risk:
The risk of adverse changes in the
economic environment, political
environment or the broader
investment market, impacting
property values and income.
We monitor both wider economic
conditions and the industrial property
market through research and
relationships with market participants.
Quarterly reporting on market
conditions is provided to the Board.
PFI has continued to carefully monitor the
impacts of supply chain constraints,
inflation, interest rates, geopolitical risk and
other market challenges during 2023. PFI
has responded early to address changing
market conditions and has continued to
deliver FFO and AFFO results that are
broadly in line with the prior year.
Insurance risk:
The risk of inability to obtain
insurance cover, to failure to
maintain sufficient insurance cover,
leading to financial loss or a
potential breach of covenants.
Insurance cover is monitored by the
Management Team. Quarterly
reporting on insurance is provided to
the Board.
PFI has monitored difficult insurance
market conditions during 2023, aggravated
by inflation, heightened construction costs,
and increased severity and frequency of
climate-related weather events. PFI
commenced work during 2023 to review the
Company’s approach to its insurance
structure.
91
OTHER DISCLOSURES
RISK DESCRIPTIONHOW PFI MANAGES THE RISK2023 COMMENTARY
Strategic risk:
The risk of failing to appropriately
set, execute or adapt PFI’s strategy
(for example, failing to ensure
portfolio optimisation or adapt to
changing market preferences).
PFI’s strategy is reviewed regularly by
the Board and Management Team.
Quarterly reporting on strategy
implementation is provided to
the Board.
Good progress was made during 2023
on the implementation of PFI’s strategy
as set out on pages 12-18 of this report.
In particular, PFI commenced major
brownfields development projects at
30-32 Bowden Road and 78 Springs Road,
which are on track to achieve 5 Green
Star certification.
Health, safety and wellbeing
risk:
The risk of failing to manage health,
safety and wellbeing hazards at a
PFI property.
Health, safety and wellbeing risks are
actively managed by PFI’s health and
safety committees. A wide variety of
risk mitigants are in place, including
monitoring visits and proactive
responses to the identification of
potential hazards.
Continuous improvement of PFI’s health,
safety and wellbeing management has
been a key focus during 2023. PFI has
experienced an increase in near misses
attributable to increased construction
activity. However, incidents and near misses
continue to be well managed. Further
information on health, safety and wellbeing
can be found in the Sustainability section of
this Annual Report.
Financial performance risk:
The risk of financial performance
not being managed to expectations.
PFI has a wide suite of controls for this
risk, including a delegations policy,
analytical reviews, forecasting,
budgeting, and proactive management.
PFI continued to carefully and successfully
manage its financial performance risk as
outlined on pages 3-9.
PFI also completes annual climate-related risk assessments. The risks identified through this assessment are embedded in a range
of risks on PFI’s risk register, including economic and market risk, emerging regulation risk and physical damage risk.
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PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
Principle Seven: Auditors
The Board should ensure the quality and independence of the external audit process.
Together with the Audit and Risk Committee (see Principle Three), the Board is responsible for establishing the Company’s audit
framework and ensuring that communication is maintained with external auditors or accountants. Annexed to the Audit and Risk
Committee Charter is a separate Policy on Audit Independence, which covers the provision of services by external auditors.
Under the policy, it is the Audit and Risk Committee’s role to approve the appointment of PFI’s external auditors and assess PFI’s
internal controls and systems that support external financial reporting.
PFI’s external auditors are subject to a rotation system, which requires the external auditor or lead audit partner to change every
five years. There is also a mandatory stand down period before those partners can next be engaged by PFI. Neither will a former
Independent Contractor or employee of PFI be engaged in an external audit role within two years of ceasing to be employed by PFI.
The external auditor attends PFI’s Annual Meeting each year to answer any questions relating to the audit.
The Audit and Risk Committee must pre-approve all audit services, as well as all non-audit services provided by the auditor. The
Policy on Audit Independence sets out a number of principles to guide the committee in assessing whether the services could be
perceived as conflicting with the independent role of the auditor. To illustrate, approval will not be granted to produce financial
statements (such that they might be perceived as auditing their own work), implement financial systems, or perform any function of
management. This ensures that there is a clear separation between internal and external audit roles. The Audit and Risk Committee
monitors, and may limit, the amount of non-audit related work being undertaken by the firm holding office as auditor, if that work
may, in its opinion, impair the independence of the external auditor.
PFI does not have an internal audit function. The process it employs for evaluating and continually improving the effectiveness of its
risk management and internal processes can be found in the section entitled Principle Six: Risk Management.
Principle Eight: Shareholder Rights & Relations
The Board should respect the rights of shareholders and foster constructive relationships with shareholders that encourage
them to engage with the issuer.
PFI encourages an open dialogue with its shareholders and stakeholders. The Corporate Governance Manual, annual report,
financial information, and all NZX announcements are available on the Company’s website. PFI’s FY23 Climate-related Disclosures
report will be made available on the Company’s website by 30 April 2024. PFI shareholders are encouraged to receive shareholder
communications electronically.
In respect of voting rights, PFI shareholders have one vote per share they hold in PFI, and will have the right to vote on major
decisions which may change the nature of PFI in accordance with the NZX Listing Rules.
In order for shareholders to fully participate in meetings, the Board endeavours to post the annual shareholders’ notice of meeting
on PFI’s website as soon as possible and at least 20 working days prior to the meeting. In 2023, a hybrid annual meeting was held
(providing for both virtual and in-person attendance), allowing wider participation by shareholders.
93
OTHER DISCLOSURES
OTHER MATTERS
Directors’ Interests Register
During the year, the Board authorised the renewal of the Directors’ and Officers’ insurance cover as at 30 June 2023 for a period
of 12 months and has certified, in terms of section 162 of the Companies Act 1993, that this cover is fair to the Company.
As permitted by the Company’s constitution and the Companies Act 1993, the Company has also executed a deed indemnifying its
Directors against potential liabilities and costs they may incur for acts or omissions in their capacity as Directors of the Company
and its subsidiary.
Please refer to the Directors’ Relevant Interests section above for information regarding the acquisition and disposal of relevant
interests in the Company’s financial products by its Directors.
No Director has sought authorisation to use Company information.
Section 140(1) of the Companies Act 1993 requires a director of a company to disclose certain interests. Under subsection (2)
a director can make disclosure by giving a general notice in writing to the company of a position held by a director in another named
company or entity. The following are details of Directors’ general disclosures entered in the Interests Register for the Company
during the 12 months ending 31 December 2023. Any entry added by notices given by the Directors during the year ended
31 December 2023 is denoted with a *. Any entry removed by notices given by the Directors during the year ended 31 December
2023 is denoted with a ~.
DIRECTOR POSITION COMPANY
Angela BullDirectorVital Healthcare Property Trust*
DirectorNorthwest Healthcare Properties Management Limited*
DirectorFoodstuffs South Island Limited*
DirectorFoodstuffs (South Island) Properties Limited*
DirectorFoodstuffs (N.Z.) Limited*
DirectorRealestate.co.nz Limited*
DirectorBayley Corporation Limited*
Director Fulton Hogan Limited*
DirectorFulton Hogan Land Development Limited*
DirectorStevenson Concrete Limited*
DirectorStevenson Aggregates Limited*
DirectorMurdoch Manufacturing Limited*
Trust Board memberSt Cuthbert’s College*
Board memberProperty Council of New Zealand *~
DirectorReal Estate Institute of New Zealand *~
Chief ExecutiveTramco Group *~
Anthony BeverleyDirector; Chair of BoardArvida Group Limited
Director and ShareholderDC One H1 Limited*
Director and ShareholderDC One H2 Limited*
Director and ShareholderDryland Native Limited*
Director and ShareholderDryland Manuka Limited*
Director and ShareholderDryland Carbon Limited*
Director and ShareholderCarbon Systems (NZ) Limited*
Director and ShareholderGlazebrook Capital Limited*
94
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
DIRECTOR POSITION COMPANY
Carolyn SteeleDirector; Chair of Audit and Risk CommitteeGreen Cross Health Limited
Director; Chair of Audit and Risk CommitteeWEL Networks Limited
DirectorNewpower Energy Limited (subsidiary of WEL Networks
Limited)*
DirectorNewpower Energy Services Limited (subsidiary of WEL
Networks Limited)*
DirectorInfratec New Zealand Limited (subsidiary of WEL
Networks Limited)*
Director; Investment Committee MemberOriens Capital GP 2 Limited
Director; Chair of Audit and Risk CommitteeVulcan Steel Limited
Director; Chair of BoardHalberg Foundation
Dean BracewellDirectorTainui Group Holdings Limited
Executive Board MemberHalberg Foundation
Director and ShareholderAra Street Investments Limited
DirectorAir New Zealand Limited
DirectorPort of Tauranga Limited
Director and ShareholderDean Bracewell Limited*
Gregory ReidyDirector and ShareholderReidy & Co Limited
Director and ShareholderReidy & Co and Haydn & Rollett Limited*
Director and ShareholderResident Properties Limited
Director and ShareholderArea Management Limited
TrusteeGrammar Rugby Incorporated
DirectorMSR GP Limited (as General Partner of MSR Limited
Partnership)
Director and ShareholderArdea Properties Limited
Director and ShareholderRonwood Capital Limited*
DirectorRWP LP Limited*
ShareholderErgon Properties Limited*
Other than noted in this report, there were no other interest register entries recorded for the Company or its subsidiary for the year
ended 31 December 2023.
95
OTHER DISCLOSURES
Donations
The Company made the following donations during 2023:
§
$5,250 to Vodafone and Te Rourou, Vodafone Aotearoa Foundation fundraising campaign to assist the Auckland City Mission
flood relief.
§
$10,000 to New Zealand Red Cross to help emergency management agencies to deliver vital assistance in response to
Cyclone Gabrielle.
§
$1,500 to The Gut Foundation NZ to support their efforts to promote research and education of gut diseases and disorders.
§
$2,500 donation to LIFE Community’s Christmas Box campaign to help feed families in need over Christmas.
§
$5,000 donation to the Cancer Society to support their cause.
The Company is a sponsor of the Keystone New Zealand Property Education Trust and paid the Trust $10,000 by way of
sponsorship during the year.
The subsidiary did not make any donations during the year.
Substantial Product Holders as at 31 December 2023
As at 31 December 2023, the total number of ordinary shares on issue was 502,129,313. The Company has only ordinary shares
on issue.
The persons, who, for the purposes of section 293 of the Financial Markets Conduct Act 2013, were substantial product holders as
at 31 December 2023 are:
SECURITY HOLDER
NO. OF SHARES WHEN
NOTICE WAS FILED
% WHEN NOTICE
WAS FILED
ANZ New Zealand Investments Limited, ANZ Bank New Zealand Limited
and ANZ Custodial Services New Zealand Limited
41,932,2198.328%
Accident Compensation Corporation (ACC)37,489,726 7.425%
Details of Dividends Paid
The following dividends have been paid by the Company in the past two financial years:
DIVIDENDS
DATE PAID
CENTS PER
SHARE
TOTAL
PAID
2023
$000
TOTAL
PAID
2022
$000
Q4 2021 final dividend9 March 20222.4512,388
Q1 2022 interim dividend24 May 20221.809,100
Q2 2022 interim dividend7 September 20221.809,087
Q3 2022 interim dividend22 November 20221.859,311
Q4 2022 final dividend8 March 20232.6513,306
Q1 2023 interim dividend23 May 20231.959,790
Q2 2023 interim dividend7 September 20231.959,792
Q3 2023 interim dividend22 November 20231.959,792
Total dividends per statement of changes in equity 42,68039,886
NZX Waivers
The Company did not rely on any NZX waivers during 2023.
96
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
SHAREHOLDER STATISTICS
GEOGRAPHICAL SPREAD AS AT 31 JANUARY 2024
ORDINARY SHARES HOLDING
%
HOLDING
Auckland & Northern Region 269,659,274 53.71%
Hamilton & Surrounding
Districts
112,997,789 22.50%
Wellington & Central Districts 78,204,292 15.57%
Dunedin & Southland 25,782,239 5.13%
Nelson, Marlborough &
Christchurch
13,091,474 2.61%
Overseas 2,394,245 0.48%
Total 502,129,313 100.00%
SHAREHOLDER SPREAD AS AT 31 JANUARY 2024
ORDINARY SHARES
NUMBER
OF
HOLDERS HOLDING
%
HOLDING
Up to 4,999 1,258 3,139,730 0.63%
5,000 - 9,999 1,028 7,298,845 1.45%
10,000 - 49,999 2,032 42,828,191 8.53%
50,000 - 99,999 298 19,818,327 3.95%
100,000 - 499,999 257 51,754,856 10.31%
500,000 and above 80 377,289,364 75.13%
4,953 502,129,313 100.00%
20 LARGEST REGISTERED SHAREHOLDERS AS AT 31 JANUARY 2024
HOLDER HOLDING
%
HOLDING
Custodial Services Limited 65,173,669 12.98%
Accident Compensation Corporation - NZCSD 39,058,529 7.78%
FNZ Custodians Limited 27,546,904 5.49%
ANZ Wholesale Trans-Tasman Property Securities Fund - NZCSD 25,586,457 5.10%
BNP Paribas Nominees (NZ) Limited - NZCSD 23,192,595 4.62%
New Zealand Depository Nominee Limited 15,919,512 3.17%
Forsyth Barr Custodians Limited 15,777,841 3.14%
Citibank Nominees (New Zealand) Limited - NZCSD 12,819,774 2.55%
Tea Custodians Limited, Client Property Trust Account - NZCSD 11,999,847 2.39%
HSBC Nominees (New Zealand) Limited - NZCSD 11,116,643 2.21%
Investment Custodial Services Limited 7,861,065 1.57%
Messrs. Wildermoth and Young, Ms. Wildermoth and MGI Trustees WF Limited 6,948,605 1.38%
PT (Booster Investments) Nominees Limited 6,427,384 1.28%
ANZ Wholesale Property Securities - NZCSD 6,164,590 1.23%
MFL Mutual Fund Limited - NZCSD 6,024,885 1.20%
Admins Custodial Nominees Limited 5,578,474 1.11%
Mr. Mckee and Ms. Mckee 5,566,373 1.11%
JBWere (NZ) Nominees Limited 5,469,921 1.09%
Simplicity Nominees Limited 4,772,114 0.95%
Masfen Securities Limited 4,767,744 0.95%
Shares held by top 20 shareholders 307,772,926 61.29%
Balance of shares 194,356,387 38.71%
Total of issued shares 502,129,313 100.00%
97
OTHER DISCLOSURES
20 LARGEST REGISTERED BONDHOLDERS AS AT 31 JANUARY 2024
HOLDER
PFI 010
HOLDING
PFI010 %
HOLDING
PFI 020
HOLDING
PFI020 %
HOLDING
Custodial Services Limited 22,993,000 22.99% 34,211,000 34.21%
Forsyth Barr Custodians Limited 20,138,000 20.14% 16,310,000 16.31%
FNZ Custodians Limited 9,303,000 9.30% 11,352,000 11.35%
Citibank Nominees (New Zealand) Limited - NZCSD - 0.00% 10,037,000 10.04%
NZPT Custodians (Grosvenor) Limited - NZCSD 8,267,000 8.27% 780,000 0.78%
Tea Custodians Limited Client Property Trust Account - NZCSD 5,598,000 5.60% 3,210,000 3.21%
HSBC Nominees (New Zealand) Limited - NZCSD 4,075,000 4.08% 3,920,000 3.92%
Investment Custodial Services Limited 2,200,000 2.20% 1,198,000 1.20%
Generate Kiwisaver Public Trust Nominees Limited 2,000,000 2.00% 5,813,000 5.81%
Hobson Wealth Custodian Limited 1,731,000 1.73% 1,499,000 1.50%
Forsyth Barr Custodians Limited 1,216,000 1.22% 826,000 0.83%
Public Trust - NZCSD 1,130,000 1.13% - 0.00%
FNZ Custodians Limited 955,000 0.96% 567,000 0.57%
Westpac Banking Corporate NZ Financial Markets Group - NZCSD 892,000 0.89% 391,000 0.39%
Forsyth Barr Custodians Limited 842,000 0.84% 430,000 0.43%
JBWere (Nz) Nominees Limited 839,000 0.84% - 0.00%
JML Capital Limited - 0.00% 600,000 0.60%
Sandore Limited 500,000 0.50% - 0.00%
Mr. Werner and Ms. Werner 418,000 0.42% - 0.00%
NZX WT Nominees Limited 385,000 0.39% - 0.00%
Hobson Wealth Custodian Limited 375,000 0.38% - 0.00%
FNZ Custodians Limited 350,000 0.35% - 0.00%
Kiwigold.co.nz Limited - 0.00% 300,000 0.30%
Dunedin Diocesan Trust Board - 0.00% 250,000 0.25%
Custodial Services Limited - 0.00% 210,000 0.21%
Woolf Fisher Trust Incorporated - 0.00% 184,000 0.18%
Custodial Services Limited - 0.00% 178,000 0.18%
Bonds held by top 20 Bondholders 84,207,000 84.21% 92,266,000 92.27%
Total Remaining Holders Balance 15,793,000 15.79% 7,734,000 7.73%
Total of issued Bonds 100,000,000 100.00% 100,000,000 100.00%
BONDHOLDER SPREAD: PFI010 AS AT 31 JANUARY 2024
BONDS
NO. OF
HOLDERS HOLDING
%
HOLDING
5,000 - 9,999 66 357,000 0.36%
10,000 - 49,999 407 7,613,000 7.61%
50,000 - 99,999 46 2,758,000 2.76%
100,000 - 499,999 41 6,593,000 6.59%
500,000 - 999,999 5 4,028,000 4.03%
1,000,000 and above 11 78,651,000 78.65%
Total 576 100,000,000 100.00%
BONDHOLDER SPREAD: PFI020 AS AT 31 JANUARY 2024
BONDS
NO. OF
HOLDERS HOLDING
%
HOLDING
5,000 - 9,999 39 223,000 0.22%
10,000 - 49,999 199 4,100,000 4.10%
50,000 - 99,999 28 1,511,000 1.51%
100,000 - 499,999 24 3,843,000 3.84%
500,000 - 999,999 4 2,773,000 2.77%
1,000,000 and above 9 87,550,000 87.56%
Total 303 100,000,000 100.00%
BONDHOLDER STATISTICS
98
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
GRI INDEX
DISCLOSURE TITLEGRILOCATION / INFORMATION
General Disclosures
Organisational details2-1Property for Industry Limited (PFI);
https://www.propertyforindustry.co.nz/about-pfi/;
https://www.propertyforindustry.co.nz/contact-us/; New Zealand.
Entities included in the organisation’s
sustainability reporting
2-2PFI is comprised of a single holding parent company, Property for
Industry Limited (PFI) and a subsidiary company, P.F.I. Property No. 1.
For the purposes of reported information, there is no difference
between PFI and P.F.I. Property No. 1.
Reporting period, frequency and contact
point
2-31 January 2023 to 31 December 2023; annual reporting frequency
(both financial and sustainability reporting); Publication date is
26 February 2024.
PFI intends to change its balance date from 31 December to 30 June.
PFI’s next annual report will reflect a six-month period to 30 June
2024. Thereafter, PFI will report interim financial statements as at
31 December and an annual report as at 30 June. PFI does not intend
to release a full sustainability report for the six-month period to
30 June 2024. The next full sustainability report will be released in the
annual report for the period ending 30 June 2025.
Contact point: info@pfi.co.nz
Restatements of information2-4There have been no restatements of information made from previous
reporting periods.
External assurance2-5PwC Audit Report, pages 68-70; PFI’s sustainability reporting has not
been externally assured for 2023. We did, however, receive an external
quality review of our carbon footprint from Ekos.
Activities, value chain and other
business relationships
2-6PFI operates in the property sector.
Sustainability Report, pages 19-27.
PFI’s business relationships include a number of tenants, partners and
suppliers, most notably our construction partners.
There were a number of changes to PFI’s business relationships
during 2023 due to the transition to an in-house facilities management
model, whereby PFI now works with repairs and maintenance
contractors directly (rather than through a third-party facilities
management provider).
Employees2-7Company Structure and Statutory Information – Diversity and
Inclusion, page 79; Sustainability Report – People and Wellbeing,
pages 26-27; At 31 December 2023, we had a team of 22 permanent
staff (11 male and 11 female) based in Auckland, and 2 contractors.
This information is obtained in the recruitment process and maintained
in personnel records.
Workers who are not employees2-8PFI relies on a wide range of contractors (including construction and
repairs and maintenance contractors) and occasionally employs
temporary staff for a number of its activities.
Governance structure and composition2-9Company Structure and Statutory Information – Board Composition
and Performance, pages 76-79.
Nomination and selection of the
highest governance body
2-10Company Structure and Statutory Information – Board Composition
and Performance, pages 76-79.
99
OTHER DISCLOSURES
DISCLOSURE TITLEGRILOCATION / INFORMATION
Chair of the highest governance body2-11The Chair of the Board is not a senior executive in the organisation;
Company Structure and Statutory Information – Board Composition
and Performance, pages 76-79.
Role of the highest governance body in
overseeing the management of impacts
2-12PFI Board and Committee Charters:
https://www.propertyforindustry.co.nz/about-pfi/governance/
Delegation of responsibility for impacts2-13PFI’s senior leadership team is responsible for executing PFI’s
sustainability strategy (which is designed to address PFI’s impacts) and
reports progress to the Board on a quarterly basis.
Role of highest governance body in
sustainability reporting
2-14PFI Board and Committee Charters:
https://www.propertyforindustry.co.nz/about-pfi/governance/
Conflicts of interest2-15PFI Code of Ethics:
https://www.propertyforindustry.co.nz/about-pfi/governance/
Communication of critical concerns2-16PFI Code of Ethics:
https://www.propertyforindustry.co.nz/about-pfi/governance/;
There were no critical concerns communicated to the Board during the
reporting period ended 31 December 2023.
Collective knowledge of the highest
governance body
2-17Sustainability is an agenda item at quarterly Board meetings.
Evaluation of the performance of the
highest governance body
2-18Company Structure and Statutory Information - Board Composition
and Performance, pages 76-79; PFI People Committee Charter:
https://www.propertyforindustry.co.nz/about-pfi/governance/.
Remuneration policies2-19PFI People Committee Charter:
https://www.propertyforindustry.co.nz/about-pfi/governance/;
Company Structure and Statutory Information - Remuneration,
pages 82-90.
Process to determine remuneration2-20PFI People Committee Charter:
https://www.propertyforindustry.co.nz/about-pfi/governance/;
Company Structure and Statutory Information - Remuneration,
pages 82-90.
Annual total compensation ratio2-21PFI has not disclosed data on compensation ratios due to privacy
considerations. We will review this disclosure in FY25.
Statement on sustainable
development strategy
2-22Sustainability Report, pages 19-27.
Policy commitments2-23PFI Code of Ethics:
https://www.propertyforindustry.co.nz/about-pfi/governance/
Embedding policy commitments2-24Sustainability Report – People and Wellbeing, pages 26-27.
Processes to remediate negative impacts2-25Sustainability Report – 2030 Strategy, page 20.
Mechanisms for seeking advice and
raising concerns
2-26PFI Code of Ethics:
https://www.propertyforindustry.co.nz/about-pfi/governance/
Compliance with laws and regulations2-27PFI has had no significant instances of non-compliance during 2023.
Membership associations2-28New Zealand Green Building Council, Property Council of New Zealand.
Approach to stakeholder engagement2-29Sustainability Report, pages 19-27; Company Structure and Statutory
Information, pages 74-98.
Collective bargaining agreements2-30None of PFI’s employees are covered by collective bargaining
agreements, and all employee working conditions and terms of
employment are determined irrespective of the collective bargaining
agreements from other organisations.
100
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
DISCLOSURE TITLEGRILOCATION / INFORMATION
Material Topics
Process to determine material topics3-1During 2022, PFI worked with a range of stakeholders including
employees, suppliers, investors and funders to seek their views on our
organisation’s impacts and direction going forward. With the help of
sustainability specialists, Proxima, we conducted an impact
assessment to review PFI’s actual and potential impacts on people and
planet along the company’s value chain. Impacts were given a
numerical ranking based on their relative significance, which considers
severity and likelihood. Impacts falling in the bottom 30% were deemed
immaterial for reporting purposes. Material topics were determined
through engagement with stakeholders and internal workshops.
List of material topics3-2Greenhouse gas emissions; Resources and waste; Disaster and climate
resilience; People and wellbeing; Economic value.
Greenhouse Gas Emissions
Management of material topics3-3Sustainability Report – Greenhouse Gas Emissions, pages 21-26.
Direct (Scope 1) GHG emissions305-1Sustainability Report – Greenhouse Gas Emissions,
Our carbon footprint, page 21.
Energy indirect (Scope 2) GHG emissions305-2Sustainability Report – Greenhouse Gas Emissions,
Our carbon footprint, page 21.
Other indirect (Scope 3) GHG emissions305-3Sustainability Report – Greenhouse Gas Emissions,
Our carbon footprint, page 21.
Reduction of GHG emissions305-5Sustainability Report – Greenhouse Gas Emissions, pages 21-26.
Economic Value
Management of material topics3-3Sustainability Report – Economic Value, page 27.
Direct economic value generated
and distributed
201-1Financial Statements, pages 30-67.
Financial implications and other risks and
opportunities due to climate change
201-2Sustainability Report, pages 19-27; Notes to the Financial Statements
– The impact of climate change, page 49.
Significant indirect economic impacts203-2Sustainability Report – Economic Value, page 27.
Resources and Waste
Management of material topics3-3Sustainability Report – Resources and Waste, page 26.
Waste generation and significant
waste-related impacts
306-1Sustainability Report – Resources and Waste, page 26.
Management of significant
waste-related impacts
306-2Sustainability Report – Resources and Waste, page 26.
Waste generated306-3Omission: PFI is collaborating with suppliers to estimate total
generated waste from developments and refurbishments and its
composition. We expect to have initial estimates in the next two years.
People and Wellbeing
Management of material topics3-3Sustainability Report – People and Wellbeing, pages 26-27.
Occupational health and safety
management system
403-1Sustainability Report – People and Wellbeing, pages 26-27.
Promotion of worker health403-6Sustainability Report – People and Wellbeing, pages 26-27.
101
OTHER DISCLOSURES
DISCLOSURE TITLEGRILOCATION / INFORMATION
Prevention and mitigation of occupational
health and safety impacts directly linked
by business relationships
403-7Sustainability Report – People and Wellbeing, pages 26-27.
Work-related injuries403-9Sustainability Report – People and Wellbeing, pages 26-27.
Diversity of governance bodies
and employees
405-1Company Structure and Statutory Information – Diversity and Inclusion,
page 79. PFI does not collect data on age and other diversity indicators
due to the small team size.
Disaster and Climate Resilience
N/AN/ASustainability Report – Disaster and Climate Resilience, page 26.
Disaster and Climate Resilience is a topic of strategic importance to
PFI. However, Disaster and Climate Resilience does not trigger specific
topic disclosures under the GRI Standards.
102
PROPERTY FOR INDUSTRY LIMITED ANNUAL REPORT — 2023
2024
FEBRUARY
§
FY23 Full-year announcement
§
FY23 Annual report released
MARCH
§
FY23 Final dividend payment
APRIL
§
Annual meeting
§
FY23 Climate-related Disclosures
released
MAY
§
FY24 First-quarter announcement
§
FY24 First-quarter dividend payment
AUGUST
§
FY24 Full-year announcement
§
FY24 Annual report released
SEPTEMBER
§
FY24 Final dividend payment
§
FY24 Climate-related Disclosures
released
OCTOBER
§
Annual meeting
NOVEMBER
§
FY25 First-quarter announcement
§
FY25 First-quarter dividend payment
2025
FEBRUARY
§
FY25 Half-year announcement
§
FY25 Interim financial statements
released
MARCH
§
FY25 Half-year dividend payment
ISSUER OF SHARES AND BONDS
Property for Industry Limited
Level 4, Hayman Kronfeld Building
15 Galway Street
PO Box 1147
Auckland 1140
Tel: +64 9 303 9450
propertyforindustry.co.nz
info@propertyforindustry.co.nz
DIRECTORS
Anthony Beverley (Board Chair)
Angela Bull
Carolyn Steele
David Thomson
Dean Bracewell
Gregory Reidy
CHIEF EXECUTIVE OFFICER
Simon Woodhams
Tel: +64 9 303 9652
woodhams@propertyforindustry.co.nz
CHIEF FINANCE AND
OPERATING OFFICER
Craig Peirce
Tel: +64 9 303 9651
peirce@propertyforindustry.co.nz
AUDITOR
PricewaterhouseCoopers
Level 27, PwC Tower
15 Customs Street West
Private Bag 92162
Auckland 1142
Tel: +64 9 355 8000
Fax: +64 9 355 8001
CORPORATE LEGAL ADVISOR
Chapman Tripp
Level 34, PwC Tower
15 Customs Street West
PO Box 2206
Auckland 1140
Tel: +64 9 357 9000
VALUATION PANEL
Bayleys Valuation Limited
CBRE Limited
Colliers International New Zealand
Limited
Jones Lang LaSalle Limited
Savills (NZ) Limited
LENDERS
ANZ Bank New Zealand Limited
Bank of New Zealand
Commonwealth Bank of Australia
Westpac New Zealand Limited
PGIM, Inc (Pricoa)
SECURITY TRUSTEE
New Zealand Permanent
Trustees Limited
SAP Tower, Level 16,
151, Queen Street, Auckland 1010
PO Box 1598
Auckland 1140
Tel: 0800 371 471
BOND SUPERVISOR
Public Trust
SAP Tower, Level 16,
151, Queen Street, Auckland 1010
PO Box 1598
Auckland 1140
Tel: +64 9 985 5300
REGISTRAR
Computershare Investor Services
159 Hurstmere Road
Private Bag 92119
Auckland 1142
Tel: +64 9 488 8700
Fax: +64 9 488 8787
investorcentre.com/nz
This Annual Report is dated 26 February 2024 and signed on behalf of the
Board by:
Anthony Beverley Carolyn Steele
Chair, Board of Directors Chair, Audit and Risk Committee
DIRECTORY
CALENDAR
insight
creative.co.nz
PFI229
103
www.propertyforindustry.co.nz
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