PFI Announces FP24 Results
NZX and media
announcement
—
26 August 2024
Page 1
PFI ANNOUNCES FP24 RESULTS
Property for Industry Limited (PFI, the Company) today announced the Company’s result for the six
months ended 30 June 2024 (referred to as Financial Period 24, or FP24).
FP24 is a six-month “full year” financial period, as opposed to the usual 12-month “full year” financial
period presented in an annual report, due to the change in PFI and its subsidiaries’ balance date from
31 December to 30 June. In order to provide a useful basis for comparison, throughout this document
the results for FP24 have been compared to the unaudited interim six-month results from 1 January to
30 June 2023 (the prior comparable period, or ‘pcp’), unless otherwise noted.
PFI has delivered a sound operating result evidencing the positive attributes of the Company’s strategic
positioning within NZ’s industrial property market. Profit after tax of $21.2m is up $51.7m on the pcp and
incorporates a fair value loss of $4.2m on the Company’s $2.1bn industrial property portfolio. Strong
leasing outcomes and stable operating cash flows have supported a consistent dividend.
With PFI’s property valuations stabilising, and funding lines that have been renewed and extended, the
outlook for the Company’s earnings and cash flows will be supported by capturing embedded growth
within the portfolio as rents are reviewed and an interest rate environment that is forecast to improve
1
.
Highlights
▪ FP24 result: Profit after tax of $21.2m, up $51.7m on the pcp, incorporating fair value losses on
properties of $4.2m, as compared to losses of $55.0m in the pcp, Funds From Operations (FFO)
2
up 2.2% on the pcp to 5.03 cents per share (cps), Adjusted Funds From Operations (AFFO) down
0.9% on the pcp to 4.58 cps, FP24 cash dividends of 4.15 cps, consistent with FY23 dividends on
an annualised basis, fully covered by AFFO and strong cash flows from operations.
▪ Portfolio under-renting
3
provides embedded growth: Industrial property portfolio valuation of
~$2.1bn has stabilised and is ~16% under-rented, $36.3m of contract rent reviewed during FP24
delivering an average annualised uplift of 5.7%, $5.9m of contract rent leased during FP24 at an
average of 25.3% above previous contract rents.
▪ Green Star development pipeline advanced: Tenant commitment secured for Stage 2 of the
redevelopment of 78 Springs Road, balance of 30-32 Bowden Road leased for a term of 12-years,
active Green Star projects on track with ~$33m of committed spend remaining, opportunity to deploy
~$350m on Green Star development over the medium-term.
▪ Liquidity profile extended: $600m of facilities refinanced or established since December 2023,
~$300m of facility headroom following post-balance date refinancing, gearing comfortable at
32.9%, interest rate environment forecast to improve.
FP24 result
PFI reported a profit after tax for FP24 of $21.2m (profit of 4.22 cps), as compared to a loss of $30.5m
(loss of 6.08 cps) in the pcp. A $4.2m fair value loss on the independent valuation of the Company’s
property portfolio, as compared to a $55.0m fair value loss in the pcp, was the main contributor to this
increase.
--------
1
Reserve Bank of New Zealand (RBNZ), Bloomberg, ANZ Research, ASB Economics, BNZ Research, Westpac Economics as
at 22 August 2024.
2
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.
3
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.
NZX and media
announcement
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26 August 2024
Page 2
FP24 net rental income
4
of $48.3m was up $0.9m (2.1%) on the pcp ($47.4m), due to the impacts of
positive leasing activity (+$3.4m) and acquisitions (+$0.1m), partly offset by active brownfield
development projects (-$1.6m), divestment activity (-$0.8m), and vacancy (-$0.1m).
Interest expense and bank fees were largely unchanged, while current taxation of $2.6m decreased by
$0.7m on the pcp, largely due to an increase in deductible capital expenditure and tax deductions
associated with redevelopment projects.
As a result, FFO earnings were up +2.2% on the pcp to 5.03 cps, whilst AFFO earnings of 4.58 cps were
down 0.9% on the pcp.
In line with PFI’s dividend policy, the PFI Board resolved to pay a second quarter final cash dividend of
2.20 cps. The dividend will have no imputation credits attached and no supplementary dividend will be
paid to non-resident shareholders. The record date for the dividend is 2 September 2024, and the
payment date is 11 September 2024. The dividend reinvestment scheme will not operate for this
dividend.
The second quarter dividend will take cash dividends for FP24 to 4.15 cps, consistent with 2023
dividends
5
.
Portfolio under-renting provides embedded growth
PFI’s portfolio has continued to benefit from strong re-leasing outcomes and structured rental growth, a
continuation of the themes witnessed in recent years, resulting in portfolio occupancy of 98.6% and a
weighted average lease term of 5.07 years at the end of FP24.
Rent reviews were completed on 63 leases during FP24, resulting in an average uplift of 8.3% (5.7%
annualised) on ~$36.3m of contract rent. CBRE forecast
6
Auckland industrial rental growth over the next
five years to average 1.2% per annum for prime properties and 0.9% per annum for secondary
properties, following growth of 42% and 31% over the past five-years to 30 June 2024, respectively.
Around 80,033 square metres (sqm), or $11.6m (11.6%) of PFI’s portfolio by rent, was leased during
FP24 to five new and 15 existing tenants for an average increase in term of 6.2 years. Negligible
incentives were required to secure these leasing transactions, and a positive re-leasing spread
7
in
excess of 25% on annual passing rents was observed where rents were agreed on stabilised properties.
Combined, over 44% of contract rent was reviewed, varied, or leased during FP24.
At the end of FP24 just 1.6% of contract rent was due to expire in FY25 (excluding brownfield
opportunities), with the largest single expiry just $364k or 0.4% of contract rent. FY25 fixed reviews
($57.7m, 57.0% of contract rent) are contracted to deliver an average increase of 5.8%, supported by
renewal rents being agreed in prior periods. FY25 expiries and market reviews ($16.6m, 16.4% of
contract rent) are ~24% under-rented at the end of FP24 after factoring in review caps. These FY25
reviews, combined with the fact that the next leasing event for 17.4% of PFI’s portfolio by rent is an
expiry or market rent review, provides an embedded pathway for near-to-medium-term rental growth.
--------
4
Refer note 2.5 of the financial statements. Excludes service charge income recovered from tenants and management fee income.
5
Annualised, refer Appendices 2 and 3 for all pay-out ratio calculations.
6
CBRE “Auckland Property Market Outlook”, June 2024.
7
A re-leasing spread is the difference between what a landlord charges on an expiring lease, and what they get on a renewed or
new lease for the same asset.
NZX and media
announcement
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26 August 2024
Page 3
Further progress has also been made across a variety of areas in the Company’s sustainability
programme, including installing 1,180 solar panels across five buildings and power metering at 57
properties by the end of FP24.
The Company ended FP24 with a property portfolio valued at $2,050.5m including a decrease from
independent valuations of $4.2m or -0.2%. Realised rental growth was estimated to have added around
~7% to the value of the portfolio, with the balance of the valuation outcome due to a softening in yields
or cap rates in response to sustained interest rate pressures. As a result of portfolio and valuation
activity, and excluding the Company’s active brownfield development sites
8
, PFI’s passing yield softened
by 0.13% to 5.14%, while the portfolio market cap rate softened by 0.15% to 5.89%. 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 FP24 of $2.71 per share is in line with December 2023 values,
reflecting the stabilisation of PFI’s investment property valuations, which looking forward, are supported
by a large portfolio under-renting gap along with an interest rate environment that is forecast to improve,
which is expected to support investor sentiment and drive an increase in transactional activity.
Green Star development pipeline advanced
PFI currently has around $313m (15%) of the portfolio held in brownfield opportunities, and progress at
the Company’s active brownfield development sites (30-32 Bowden Road and 78 Springs Road) has
continued apace. Consistent with PFI’s climate commitments, all significant new developments will target
a 5 Green Star rating, a key part of PFI’s transition to a low-carbon, climate-resilient portfolio.
At 30-32 Bowden Road, the Tokyo Food building achieved practical completion in June 2024 and was
awarded a 5 Green Star rating
9
. The speculative element of this project was leased to Daikin Air
Conditioning New Zealand Limited (Daikin) for a term of 12-years,and is expected to complete in October
2024 following additional design changes associated with the Daikin lease. The redevelopment of 30-
32 Bowden Road is now fully-leased for an average lease term of 12 years, and once complete, will
combine to create PFI’s first 5 Green Star rated industrial estate, with close to 24,000 sqm of covered
workable area.
At 78 Springs Road, the Company is continuing to develop a 25,500 sqm warehouse for existing tenant
Fisher & Paykel Appliances (Stage 1), with an option to expand the warehouse to 30,000 sqm. The
programme of works for Stage 1 is ahead of schedule and on budget, with completion now expected in
November 2024.
PFI is also pleased to announce that, subsequent to the end of FP24, it has entered into a Design and
Build Agreement to Lease with MiTek New Zealand Limited (MiTek), who have pre-committed to a 12-
year lease over a ~6,500 sqm warehouse facility. As a result of this pre-commitment, the PFI Board has
approved Stage 2 of the redevelopment of 78 Springs Road. Stage 2 will deliver a dual-unit warehouse
facility, with the balance of the development (4,800 sqm of warehouse) to be completed on a speculative
basis. Early works are expected to begin in late 2024 / early 2025, with the project expected to complete
in mid / late 2026. Stage 2 of the redevelopment of 78 Springs Road has an estimated total incremental
cost of around $42m, with a targeted yield on incremental cost, including land, in excess of 6%.
PFI has the opportunity to invest ~$350m into Green Star development opportunities over the coming
years, including the completion of the active projects at 30-32 Bowden Road and Stage 1 of 78 Springs
Road, as well as beginning Stage 2 of 78 Springs Road. Looking forward, the final Stage of 78 Springs
Road, along with the contracted settlement and development of land at the Spedding Road industrial
--------
8
Active brownfield development sites being 30-32 Bowden Road, Mt Wellington and 78 Springs Road, East Tamaki.
9
Being a 5 Star Green Star Design & As Built NZv1.0 Design rating.
NZX and media
announcement
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26 August 2024
Page 4
estate in North-West Auckland, are expected to anchor the next phase of PFI’s development pipeline,
before the Company looks to commence the redevelopment of its remaining brownfield sites from 2027
and beyond.
Liquidity profile extended
“Capital management efforts at PFI have intensified this year,” says PFI Chief Finance and Operating
Officer, Craig Peirce. “We’ve proactively increased and extended our liquidity profile, allowing the
Company to execute on our near-term development pipeline and repay upcoming bond maturities using
our existing funding envelope, given domestic bond markets remain unattractive to PFI at present.”
Following all FP24 and post-balance date activity, the weighted average term to expiry of PFI’s bonds
and bank facilities has increased by 1.5 years to 3.6 years
10
, and the Company has ~$300m of available
bank liquidity.
PFI’s gearing as at the end of FP24 was 32.9% (covenant: 50%) and the interest cover ratio for the year
then ended was 2.5 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 ~2.74% for FY25, offering some protection
from higher floating interest rates.
Closing and outlook
“Positive leasing outcomes have continued to deliver a growing income stream in the face of a high
interest rate environment” says PFI Chief Executive Officer, Simon Woodhams. “With 100% of PFI’s
active brownfield development pipeline now leased, our attention shifts to capturing value from the next
stages of the redevelopment of Springs Road and the development of land at Spedding Road, supported
by an interest rate environment that is forecast to improve in the next 24 months.”
Throughout the RBNZ’s tightening cycle, PFI’s portfolio has delivered significant re-leasing spreads (an
average of ~18% over the last 2.5 years) following a period of elevated market rental growth (over 30%
cumulative growth in last three years), helping to offset increased borrowing costs. Looking forward,
PFI’s ~16% portfolio under-renting provides an embedded pathway for near-to-medium-term rental
growth. In addition, PFI’s resilient and well-diversified leasing profile has limited vacancy and low levels
of expiries in the next 24 months (~10% of contract rent
11
).
Notwithstanding these positive factors, changes to depreciation rules will impact PFI from 1 July 2024,
and will see the Company’s tax bill rise by approximately ~$2m a year from FY25.
Looking to the financial year ahead, the PFI Board is guiding to FY25 cash dividends of 8.30 to 8.50 cps,
an increase of up to 0.20 cps or 2.4% on annualised FP24 dividends. While forecast to decline, the
uncertainty around the pace and size of changes in the Official Cash Rate have the potential to impact
forecast earnings. This guidance is also subject to additional downside risk from matters that are outside
the Company’s control. Cash dividends of 8.30 to 8.50 cps are anticipated to result in a dividend pay-
out towards the lower end of PFI’s dividend policy range.
“Despite the challenging operating environment, we are close to completing our active development
projects on time and within budget, while at the same time delivering strong returns from the core
portfolio and investing in our people, systems and sustainability initiatives,” says Simon Woodhams. “PFI
continues to deliver stable cash returns for investors today, while investing in New Zealand’s industrial
future.”
ENDS
--------
10
As at 14 August 2024.
11
Excludes expiries on pre-leased development sites.
NZX and media
announcement
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26 August 2024
Page 5
The PFI management team will present the results via live webcast from 10am NZT on 26 August 2024.
To view and listen to the webcast, please visit https://edge.media-server.com/mmc/p/b5qhsebs. 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/BI9732e473aac448269ea2556dd9881b51. 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).
ABOUT PFI & CONTACT
PFI is an NZX listed property vehicle specialising in industrial property. PFI’s nationwide portfolio of 91 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
NZX and media
announcement
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26 August 2024
Page 6
Appendices
Appendix 1 – FFO and AFFO Calculations
Funds / Adjusted Funds From Operations For the six
months ended
For the six
months ended
(unaudited, $000, unless noted) 30 June 2024 30 June 2023
Profit (loss) and total comprehensive income after income
tax attributable to the shareholders of the Company
21,181 (30,527)
Adjusted for:
Fair value loss / (gain) on investment properties 4,166 55,046
Material damage insurance income (6) (140)
Loss / (gain) on disposal of investment properties 526 931
Fair value loss / (gain) on derivative financial instruments (3,611) 2,210
Amortisation of tenant incentives 1,259 1,330
Straight lining of fixed rental increases 21 (323)
Deferred taxation 1,709 (4,080)
Other - 280
Funds From Operations (FFO) 25,245 24,727
FFO per share (cents) 5.03 4.92
Maintenance capex (1,971) (1,366)
Incentives and leasing fees given for the period (349) (242)
Other (incl. reversal of accounting entries for COVID-19 abatement
and deferral deals)
53 76
Adjusted Funds From Operations (AFFO) 22,978 23,195
AFFO per share (cents) 4.58 4.62
Appendix 2 – FFO and AFFO Dividend Pay-out Ratios
FP24 2023
Full year dividends per share (cents) 4.15 (8.30
annualised)
8.30
FFO dividend pay-out ratio (%) 83% 83%
AFFO dividend pay-out ratio (%) 91% 93%
Appendix 3 – Rolling three-year AFFO Dividend Pay-out Ratios
FP24 2023 2022 2021 2020
Rolling three-year AFFO dividend pay-
out ratio (%)
92% (FP24
annualised)
90% 91% 92% 98%
---
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 6 months to 30 June 2024
Previous Reporting Period 6 months to 30 June 2023
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$47,196 +2%
Total Revenue $47,196 +2%
Net profit/(loss) from
continuing operations
$21,181 +169%
Total net profit/(loss) $21,181 +169%
Final Dividend
Amount per Quoted Equity
Security
$0.02200000
Imputed amount per Quoted
Equity Security
$0.00000000
Record Date 02 September 2024
Dividend Payment Date 11 September 2024
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$2.707 $2.882
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please note: the results presented are for the six-month period
from 1 January to 30 June 2024 (referred to as Financial Period
24, or FP24). FP24 is a six-month “full year” financial period, as
opposed to the usual 12-month “full year” financial period
presented due to the change in PFI and its subsidiaries’ balance
date from 31 December to 30 June.
The audited financial statements for FP24, which accompany
this announcement, have been prepared in accordance with
Generally Accepted Accounting Practice in New Zealand and
the New Zealand Equivalents to International Financial
Reporting Standards, which require a comparative period of 12-
months to 31 December 2023.
In order to provide a useful basis for comparison, the results
above for FP24 have been compared to the unaudited interim
six-month results from 1 January to 30 June 2023, or as at 30
June 2023 in the case of “Net tangible assets per Quoted Equity
Security”.
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 August 2024
---
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 2 September 2024
Ex-Date (one business day before the
Record Date)
30 August 2024
Payment date (and allotment date for
DRP)
11 September 2024
Total monies associated with the
distribution
$11,048,386
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.02200000
Gross taxable amount $0.00000000
Total cash distribution $0.02200000
Excluded amount (applicable to listed
PIEs)
$0.02200000
Supplementary distribution amount $0.00000000
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed
Partial imputation
No imputation X
If fully or partially imputed, please
state imputation rate as % applied
0%
Imputation tax credits per financial
product
$0.00000000
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 August 2024
---
Please note: the results presented are for the six-month period from 1 January to 30 June 2024
(referred to as Financial Period 24, or FP24). FP24 is a six-month “full year” financial period, as
opposed to the usual 12-month “full year” financial period presented in an annual report, due to
the change in PFI and its subsidiaries’ balance date from 31 December to 30 June. The financial
statements for FP24 have been prepared in accordance with Generally Accepted Accounting
Practice in New Zealand (GAAP) and the New Zealand Equivalents to International Financial
Reporting Standards (NZ IFRS), which require a comparative period of 12-months to 31
December 2023. In order to provide a useful basis for comparison, throughout this document the
results for FP24 have been compared to the unaudited interim six-month results from 1 January
to 30 June 2023, unless otherwise noted.
GREEN STAR DEVELOPMENT PIPELINE ADVANCED:
Tenant commitment secured for Stage 2 of the redevelopment of 78
Springs Road, balance of 30-32 Bowden Road leased for a term of 12-
years, active Green Star projects on track with ~$33m of committed spend
remaining, opportunity to deploy ~$350m on Green Star development over
the medium-term
5
FP24 RESULT:
Profit after tax of $21.2m, up $51.7m on the prior comparable period (pcp)
incorporating fair value losses on properties of $4.2m, as compared to losses
of $55.0m in the pcp, Funds From Operations (FFO) up 2.2% on the pcp to
5.03 cents per share (cps), Adjusted Funds From Operations (AFFO) down
0.9% on the pcp to 4.58 cps, FP24 cash dividends of 4.15 cps, consistent with
FY23 dividends on an annualised basis, fully covered by AFFO and strong
cash flows from operations
LIQUIDITY PROFILE EXTENDED:
$600m of facilities refinanced or established since December 2023,
~$300m of facility headroom following post-balance date refinancing,
gearing comfortable at 32.9%, interest rate environment forecast to
improve
PORTFOLIO UNDER-RENTING PROVIDES EMBEDDED GROWTH:
Industrial property portfolio valuation of ~$2.1bn has stabilised and is
~16% under-rented, $36.3m of contract rent reviewed during FP24
delivering an average annualised uplift of 5.7%, $5.9m of contract rent
leased during FP24 at an average of 25.3% above previous contract rents
32 BOWDEN ROAD – JULY 2024
Annual
Results
Briefing
FP24
Portfolio
Snapshot
PROPERTIES
91
TENANTS
126
5.
WEIGHTED
AVERAGE
LEASE TERM
(WALT)
07
DEC 2023 : 92
DEC 2023 : 126
DEC 2023 : 5.06 YEARS
CONTRACT
RENT
DEC 2023 : $96.6M
$
99.
7
MILLION
OCCUPANCY
98.
6
%
DEC 2023 : 100%
INCLUDING
BROWNFIELD
LEASES:
91
127 98.7%
$
106.9M
6.04 YEARS
YEARS
7
▪Of the $9.5m of stabilised contract rent secured during
FP24, rents were agreed on $5.9m of this
▪These rents were settled 25.3% above previous
contract rents
eighted
verage
ease
erm
W
A
L
T
across FP24
leasing transactions
▪Remaining $3.6m of stabilised contract rent secured
during FP24 is subject to market reviews on renewal
or commencement date
▪Those renewals are ~17% under-rented as at 30 June
2024 (all un-capped), with a weighted average review
date of December 2025
8
▪Total of $11.6m of contract rent secured during FP24
▪$2.1m of contract rent secured during FP24 relates to
newly acquired or developed properties
1
1
Being Tokyo Food at 30-32 Bowden Road and Astron Plastics at 45 Cryers Road.
1.4%
5.6%
7.5%
14.6%
13.7%
11.9%
13.8%
6.9%
8.9%
6.0%
9.7%
0%
5%
10%
15%
20%
25%
VacantFY25FY26FY27FY28FY29FY30FY31FY32FY33Onwards
Total ExpiriesBrownfield Opportunities
▪Portfolio is 98.6% occupied (1.4% vacancy) and 5.6% of contract rent (1.6%
excluding brownfield opportunities) is due to expire in FY25 (chart below)
▪No large expiries in next 12 months. Largest single expiry (22.4% of FY25 expiries
excluding brownfield opportunities) is $364k, or 0.4% of contract rent
▪Works underway on vacant space at 212C Cavendish Drive (ex-Mainfreight space,
1.3% of contract rent) to replace warehouse floor slab and refurbish office space,
available to lease from September 2024
9
Fixed 57.0%
CPI 10.8%
Market 10.8%
Expiries 5.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1
Excludes active brownfield development sites
10
▪63 rent reviews delivered an increase of 8.3% on ~$36.3m of contract rent
(~5.7% annualised, up from 4.2% in 2023)
−39 fixed reviews delivered an increase of 2.6% on ~$20.1m of contract
rent (~2.6% annualised)
−8 market rent reviews delivered an increase of 48.8% on $3.2m of
contract rent (annualised increase of 15.3% over an average review
period of 3.2 years)
▪FY25 expiries and market reviews (16.4% of contract rent) ~24% under-
rented at June 2024 after factoring in review caps
▪Independent market rental assessment estimates PFI’s portfolio is ~16%
under-rented
1
, with PFI estimating its Auckland warehouse spaces (~$49m
of contract rent) are ~23% under-rented
▪Around 85% of PFI’s portfolio is subject to some form of lease event during
FY25
-$200m
$m
$200m
$400m
$600m
$800m
20192020202120222023FP24
Fair Value Gain/(Loss) on Investment PropertiesCumulative Fair Value Gain/(Loss) on Investment Properties
11
48.3
+1.5
+0.1
+1.5
+0.4
-1.6
-0.8
-0.1
47.4
$45m
$46m
$46m
$47m
$47m
$48m
$48m
$49m
$49m
$50m
H1 2023 net
rental income
New leases &
renewals
AcquisitionsDevelopmentsDisposalsVacancyRent reviews &
adjustments
OtherFP24 net rental
income
▪Net rental income (excluding service
charges) of $48.3m up $0.9m or 1.9%
on the pcp($47.4m), growth on
stabilised portion of the portfolio of
4.3%
▪Positive leasing activity contributed to
an increase totalling +$3.4m (rent
reviews & adjustments +$1.5m, new
leases & renewals +$1.5m, other
+$0.4m)
▪Acquisitions in the current period
resulted in an increase of +$0.1m
▪Decreases due to lost income from
brownfield development projects
(-$1.6m), current and prior year
disposal activity (-$0.8m) and vacancy
(-$0.1m)
13
+0.14
+0.03
+0.02
-0.00
-0.12
-0.07
-0.04
4.62
4.58
4.0
4.1
4.2
4.3
4.4
4.5
4.6
4.7
2023 H1 AFFORebase for
shares issued
Maintenance
capex
Administrative
expenses /
Other
Interest expense
and bank fees
Current taxationNon-recoverable
property costs
Net rental
income
FP24 AFFO
▪AFFO of 4.58 cps, 0.04 cps or 0.9%
down on the pcp
▪Maintenance capex up $0.6 million on
the pcp to 19 basis points
▪Admin expense increases due to
climate-related disclosures and other
compliance costs
▪Interest expense and bank fees up
$0.2m or 0.04 cps on the pcp
▪Effective tax rate of 9.7% down 2.6%
on the pcp
▪Net rental income (including AFFO
adjustments) up $0.1m or
0.02 cps on the pcp
14
80%
85%
90%
95%
100%
105%
110%
6.50
7.00
7.50
8.00
8.50
9.00
9.50
FY20FY21FY22FY23FP24 (Annualised)
AFFO (cps)DPS (cps)Pay-out % (3-year - rhs)Pay-out % (1-year - rhs)
▪FP24 cash dividends total 4.15 cps, consistent with 2023
dividends (annualised)
▪FY25 dividend guidance of 8.30 to 8.50 cps, an increase
of up to 0.20 cps or 2.4% on annualised FP24 dividends
▪While currently challenging, interest rate environment is
forecast to improve, with upside risk to guidance coming
from interest rates falling further and faster than forecast,
downside risk from matters outside of the Company’s
control
▪FY25 cash dividends of 8.30 to 8.50 cps anticipated to
result in a dividend pay-out towards the lower end of
dividend policy range
▪Dividend policy to distribute between 90% to 100% of
AFFO on a rolling three-year historic average basis
EARNINGSFP24 CPSH123 CPSCHANGE
FUNDS FROM OPERATIONS
5.034.92+0.11 CPS or +2.2%
ADJUSTED FUNDS FROM OPERATIONS
4.584.62-0.04 CPS or -0.9%
15
2,050.5
+49.5
+6.8
+0.0
-29.4
-4.2
2,027.7
$1,800m
$1,850m
$1,900m
$1,950m
$2,000m
$2,050m
$2,100m
December 2023
investment
properties & AHFS
Capital expenditure
& interest
AdditionsMovement in lease
incentives, fees and
fixed rental income
DisposalsFair value lossJune 2024
investment
properties
▪Portfolio value of $2.05 billion
▪Capex at 30-32 Bowden Road and 78
Springs Road (Green Star
developments), 28 Paraite Road (yard
works), 314 Neilson Street (warehouse
extension)
▪45 Cryers Road, East Tamaki,
acquisition settled February 2024
▪15 Artillery Place, Nelson and 10c
Stonedon Drive, East Tamaki,
disposals settled in March and June
2024, respectively
▪Decrease from 30 June 2024
independent valuations of $4.2 million
or 0.2%, signalling valuations are
stabilising
16
270.9
270.7
+0.7
-0.0
-0.8
-0.1
240
245
250
255
260
265
270
275
December 2023 NTARebase for shares
purchased
Fair value loss on
investment properties
Retained earningsFair value gain on
derivative financial
instruments
June 2024 NTA
▪Net tangible assets (NTA) per share
decreased by 0.2 cps or 0.1%
▪Decrease in the fair value of
investment properties (-0.8 cps),
largely offset by an increase in the net
fair value asset for derivative financial
instruments (+0.7 cps)
▪Muted NTA per share movement
reflective of the stabilisation of PFI’s
investment property valuations, which
looking forward, are supported by a
large portfolio under-renting gap along
with an interest rate environment that is
forecast to improve in the next 24
months
17
▪$50m facility established with CBA in May 2024, short-term
BNZ facility subsequently reduced by $50m to $50m
▪Post balance date:
−$25m, 8.5-year drawdown made on Pricoa shelf facility
in July 2024, short-term BNZ facility subsequently
reduced by $25m to $25m
−$300m syndicated facilities refinanced in August 2024,
short-term BNZ facility refinanced into a new $100m
syndicated facility
−$125m CBA Term Loan extended to August 2029, a
five-year term
▪$29.4m of divestments settled in FP24, with proceeds
recycled into current brownfield redevelopment projects
▪PFI’s comfortable gearing, sufficient hedging and ample bank
liquidity provide the flexibility to execute on near-term
development pipeline and repay upcoming bond maturities
using existing funding envelope
JUNE 2024DECEMBER 2023
FUNDING
BANK FACILITIES DRAWN
$450.5m$423.9m
BANK FACILITIES LIMIT
$675.0m$675.0m
BANK FACILITIES HEADROOM
$224.5m$251.1m
DCM
1
$225.0m$225.0m
FUNDING TERM (AVERAGE)
2.2 years2.4 years
BANKS
ANZ, BNZ, CBA,
Westpac
ANZ, BNZ, CBA,
Westpac
COVENANTS
LOAN-TO-VALUE RATIO (COVENANT: <50%)
32.9%32.0%
INTEREST COVER RATIO (COVENANT: >2.0X)
2.8 times2.8 times
INTEREST RATES
WEIGHTED AVERAGE COST OF DEBT
5.72%5.70%
INTEREST RATE HEDGING (EXCL. FORWARD
STARTING)
$400m / 2.64% / 2.6 years$370m / 2.35% / 2.7 years
FORWARD STARTING INTEREST RATE HEDGING
$175m / 4.05% / 3.6 years$165m / 3.89% / 3.8 years
19
1
Includes Note Purchase and Private Shelf Agreement with PGIM, Inc (Pricoa)
100.0
150.0 150.0
100.0 100.0
50.0
75.0
25.0
125.0
25.0
50.0
25.0
$m
$50m
$100m
$150m
$200m
$250m
$300m
$350m
FY25FY26FY27FY28FY29FY30FY31FY32FY33
Pricoa 8.5-yr
CBA 7-yr Revolver
Pricoa 6-yr
CBA 5-yr
BNZ 4-yr Green Term Loan
Westpac 4-yr Green Loan
ANZ & CBA 3-yr Green Loan
Bonds
Syndicated Bank Facilities
▪Following post-balance date
refinancing activity, PFI’s debt
instruments have an average term to
expiry of ~3.6 years
1
(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 ~2.74%
during FY25, offering some protection
from floating interest rates
20
1.5%
1.9%
2.3%
2.7%
3.1%
3.5%
3.9%
4.3%
4.7%
$0m
$50m
$100m
$150m
$200m
$250m
$300m
$350m
$400m
$450m
Jun-24Dec-24Jun-25Dec-25Jun-26Dec-26Jun-27Dec-27
Cover (lhs)Interest Rate (rhs)
1
As at 14 August 2024
32.9%
36.6%
+0.3%
+0.7%
+0.0%
+1.3%
+1.2%
31.0%
32.0%
33.0%
34.0%
35.0%
36.0%
37.0%
June 2024 LVR %30-32 Bowden Road
development
78 Springs Road
development (stage
1)
Other capital
commitments
78 Springs Road
development (stage
2)
Spedding Road land
acquisition
Pro-forma LVR %
▪June 2024 gearing of 32.9% lifting to
~35.4% after committed acquisitions,
divestments and projects, near the middle
of PFI’s target range
▪Spedding Road land acquisition ($40.6m)
conditional on titles being received and
works being complete, resulting in
gearing of ~36.6% by mid-2027, all else
equal
▪Funding for near-term development
pipeline covered by existing liquidity
profile, funding options for Stage 3 of
Springs Road and Spedding Road
currently being assessed
21
~
Annual
Results
Briefing
FP24
Sustainability
Targets -
Green Star
Developments
TARGETS: HOW WE’RE TRACKING
GREEN STAR
SOLAR
METERING
TARGET
Significant new buildings to target
minimum 5 Green Star rating
STATUS
ON TRACK
Bowden Road Stage 1 awarded a
5 Green Star rating
1
Bowden Road Stage 2 and Springs
Road Stage 1 both targeting 5
Green Star certification
23
Annual
Results
Briefing
FP24
Sustainability
Targets -
Solar
TARGETS: HOW WE’RE TRACKING
GREEN STAR
SOLAR
METERING
TARGET
Install solar systems at five
buildings by the end of 2025
STATUS
ACHIEVED
We have installed 1180 solar
panels across 5 buildings in
collaborations with our tenants
AMI RepairHub, Electrolux, Daikin,
Tokyo Food and Central Joinery
24
Annual
Results
Briefing
FP24
Sustainability
Targets -
Metering
TARGETS: HOW WE’RE TRACKING
GREEN STAR
SOLAR
METERING
TARGET
Implement power metering and
monitoring for 50% of properties
by the end of 2025
STATUS
ACHIEVED
We have installed power metering
at 57 properties, equal to 63% of
our portfolio
25
Dec-22Jun-23Dec-23Jun-24
▪Significant re-leasing spreads being achieved following strong
market rental growth over the last three years (over 30%
cumulative growth), helping offset increased borrowing costs
(top chart)
▪PFI’s ~16% portfolio under-renting provides embedded
pathway for near-to-medium-term rental growth
▪CBRE forecasting Auckland market rental growth to slow in
near-term, driven by slowdown in domestic economy and
absorption of new supply, with incentives expected to increase
from record low levels
▪PFI’s portfolio is well positioned with limited vacancy and low
levels of expiries
3
in the next 24 months (~10% of contract
rent, bottom chart)
▪Higher-levels of expiries through FY27-FY28 expected to
coincide with return to more favourable occupier market
conditions (bottom chart)
1
Re-leasing spreads presented on a six-monthly basis,
2
CBRE “Auckland Market Outlook” June 2024,
3
Excludes expiries on pre-leased development sites
27
0.0%
4.0%
8.0%
12.0%
16.0%
0.0%
1.0%
2.0%
3.0%
4.0%
FP24FY25FY26FY27FY28FY29+
PFI Lease Expiries (rhs)CBRE - Primary Industrial Rent Forecast (lhs)CBRE - Secondary Industrial Rent Forecast (lhs)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
20142015201620172018201920202021202220232024202520262027
OCRRBNZ ForecastANZASBBNZWestpacMarket Pricing
-30%
-20%
-10%
0%
10%
20%
30%
2019202020212022202320242025202620272028
Income returnCapital return based on rent changeCapital return based on yield changeTotal return
▪The RBNZ cut the OCR by 0.25% to 5.25% at the August
MPS and made significant downward revisions to its
projected OCR track, noting headline inflation is returning
to the target band of 1-3% and weak activity is contributing
to spare capacity in the economy (top chart)
▪Markets are now pricing ~0.75% of OCR cuts over the two
remaining RBNZ policy meetings of 2024 and a cumulative
2.00% of cuts by the end of 2026, with main bank
economists also predicting between 1.75% to 2.50% of
cuts over the same period (top chart)
▪As evidenced by PFI’s revaluation outcomes for the six
months to 30 June 2024, the rate of cap rate softening in
the last six months has been the lowest since the effects of
the RBNZ’s recent tightening cycle were first felt in 2022
(bottom chart)
▪Looking forward, CBRE forecast Auckland industrial total
returns to average ~10.4% over the next four years, as
yields respond to forecast interest rate cuts and under-
renting gaps close (bottom chart)
1
RBNZ, Bloomberg, ANZ Research, ASB Economics, BNZ Research, Westpac Economics as at 22 August 2024,
2
CBRE “Auckland Market Outlook” June 2024
28
29
30
▪Tokyo Food building has achieved
practical completion and has been
awarded a 5 Green Star rating
1
▪Speculative component leased to Daikin
for a term of 12-years, expected to
complete in October 2024
▪Stage 1 is ahead of schedule and on
budget, with completion now expected
in November 2024
▪Post-balance date, tenant commitment
secured for Stage 2 (~6,500 sqm of
warehouse leased to MiTek, remaining
~4,800 sqm to be developed on a
speculative basis)
▪Spedding Road provides the opportunity
to invest an additional ~$130m
(including land) into PFI’s development
pipeline, bringing PFI’s total pipeline of
incremental development spend to
~$350m
2
▪PFI to commence redevelopment of
remaining brownfield sites from 2027
and beyond
▪Redevelopment of end-of-life buildings
to a Green Star standard is a key part of
PFI’s transition to a low-carbon, climate-
resilient portfolio
1
Being a 5 Star Green Star Design & As Built NZv1.0 Design rating,
2
Excludes value of land already owned
31
▪Spec build leased to Daikin for a term of 12-years, 100% of
development now leased for an average lease term of 12-
years
▪Tokyo Food building has achieved practical completion and
has been awarded a 5 Green Star rating
1
, Daikin building
expected to complete in October 2024 following additional
design changes
▪Expected to be delivered on time and in line with budget,
once complete, the two buildings will combine to create PFI’s
first 5 Green Star rated industrial estate, with close to 24,000
sqm of covered workable area
32
30-32 BOWDEN ROAD – JUNE 2024
1
Being a 5 Star Green Star Design & As Built NZv1.0 Design rating
33
34
▪Current plans for the balance of the site (Stage
3) include a ~17,500 sqm warehouse with 500
sqm of office, 4,200 sqm of breezeway and
canopies and 2,300 sqm of yard
▪Stage 3 has an estimated incremental cost of
~$50m, and is likely to be tenant-led
▪Based on current plans, once complete, all
three stages of the redevelopment of 78
Springs Road are expected to combine to
create over 70,000 sqm of 5 Green Star rated,
covered, workable industrial area
▪Design and Build Agreement to Lease signed with
MiTek, PFI to develop ~6,500 sqm of warehouse,
anchoring Stage 2, with the balance (~4,800 sqm
of warehouse) to be developed on a speculative
basis
▪Early works (demolition, earthworks etc) are
expected to begin in late 2024 / early 2025, with
the project expected to complete in mid / late 2026
▪Stage 2 has an estimated total incremental cost of
around $42m, with a targeted yield on cost,
including land, in excess of 6%
▪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 an option to expand the warehouse to
30,000 sqm
▪The programme of works for Stage 1 is ahead
of schedule and on budget, with completion
now expected in November 2024
▪Stage 1 expected to deliver a yield on cost in
excess of 5.3%, ~$23m of remaining spend as
at 30 June 2024
▪Spedding Road land acquisition ($40.6m) conditional on
titles being received and works being complete (expected
mid-2025)
▪5% deposit payable on subdivision consents being
obtained (no later than 30 November 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
~$130m (including land), a decrease of ~$20m on initial
estimates, reflective of design changes and recent
construction estimates received
▪Strong levels of tenant enquiry to date, in advanced
discussions with prospective tenant for ~7,000 sqm of
industrial facilities
35
“Positive leasing outcomes have continued to deliver a growing
income stream in the face of a high interest rate environment.
With 100% of PFI’s active brownfield development pipeline now
leased, our attention shifts to capturing value from the next
stages of the redevelopment of Springs Road and the
development of land at Spedding Road, supported by an
interest rate environment that is forecast to improve in the next
24 months.”
37
HIGHLIGHTS:
Questions?
The information included in this presentation is provided as at 26 August 2024 and should be read in conjunction with the annual report, 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 annual 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.
38
---
Annual
Report
30
June
YOUR
INDUSTRIAL
PROPERTY
EXPERTS
PROPERTY FOR INDUSTRY LIMITED
20
24
DISCLOSURES2024
REVIEW
04
PAGE
13
PAGE
DELIVERING TODAY,
INVESTING FOR
We invest for the long-term, combining our capital and specialist industry capability
to deliver strong, stable returns.
Market conditions may be subdued, but we’re committed to a thriving and resilient industrial property
sector. Every day we’re making decisions that get all of us ready for a better tomorrow – from best-in-class 5 Green
Star rating buildings to helping tenants fulfil their sustainability aspirations.
By leasing from us, our tenants free up their capital to make operational efficiencies. And by leveraging
our knowledge, experience, connections and capability, they can create effective and productive workspaces
that grow their competitive advantage.
With more than 90 quality properties, worth over $2 billion, our well diversified portfolio focuses on strategic
locations that represent significant and sustainable growth opportunities.
Today and in the years ahead.
The results presented are for the six-month period
from 1 January to 30 June 2024 (referred to as
Financial Period 24, or FP24). FP24 is a six-month
“full year” financial period, as opposed to the usual
12-month “full year” financial period presented in an
annual report, due to the change in PFI and its
subsidiaries’ balance date from 31 December to
30 June. The financial statements for FP24 have
been prepared in accordance with Generally
Accepted Accounting Practice in New Zealand and
the New Zealand Equivalents to International
Financial Reporting Standards, which require a
comparative period of 12-months to 31 December
2023. In order to provide a useful basis for
comparison, throughout this document the results
for FP24 have been compared to the unaudited
interim six-month results from 1 January to 30 June
2023, unless otherwise noted.
PLEASE NOTE
2
PFI
ANNUAL REPORT
2024
2024 REVIEW
DISCLOSURES
SECTION
1
SECTION
2
Looking Forwardpage 02
Hardworking / Business Performance
Portfoliopage 04
Performance & sustainability page 05
Our Focused Approach / Business Review
Healthy cashflow, stable resultspage 07
Developing opportunities page 09
Strengthening our own capabilities page 12
Progressing our sustainability strategy page 12
Financial Statements page 13
Other Disclosures page 62
Directory page 80
Calendar page 81
CONTENTS
PFI
ANNUAL REPORT
2024
3
DISCLOSURES2024 REVIEWCONTENTS
PROPERTIES
TENANTS
126
5
WEIGHTED
AVERAGE
LEASE TERM
(WALT)
YEARS
.07
PORTFOLIO:
ALLOCATION
73 - 84%
CORE GENERIC
HOLDINGS
77%
10 - 15%
BROWNFIELD
OPPORTUNITIES
15%
5 - 10%
SPECIALISED
ASSETS
8%
CURRENT:
CURRENT:
CURRENT:
CURRENT:
1 - 2%
ASSETS HELD
FOR SALE
0%
AUCKLAND
75 - 85%
OUT OF
AUCKLAND
15 - 25%
86%14%
CURRENT:CURRENT:
BUSINESS PERFORMANCE
1
Business performance: Hardworking – portfolio,
performance & sustainability p04
Business review: Our focused approach –
healthy cashflow, stable results p07
Developing opportunities p09Strengthening
our own capabilities p12 Progressing our
sustainability strategy p12
IN THIS SECTION
2024 REVIEW
BUSINESS PERFORMANCE
HARD
WORKING
91
PFI
ANNUAL REPORT
2024
4
DISCLOSURESCONTENTS2024 REVIEW
PERFORMANCE:SUSTAINABILITY:
%
~16
UNDER-RENTING
SQM
80
,000
LEASING ACTIVITY
SIGNIFICANT NEW BUILDINGS
TARGETING MINIMUM
5 GREEN STAR CERTIFICATION
POWER METERING AND
MONITORING INSTALLED AT
63% OF PROPERTIES
SOLAR SYSTEMS
INSTALLED AT
FIVE BUILDINGS
CURRENT PORTFOLIO
VALUATION
2,050
.5
$
M
CLIMATE-RELATED
DISCLOSURES REPORT
PUBLISHED APRIL 2024
BUSINESS PERFORMANCE CONTINUED
.7
CONTRACT
RENT
$
99
M
CPS
5
FUNDS FROM
OPERATIONS
.03
CPS
4
DIVIDENDS
DECLARED
.15
4
ADJUSTED
FUNDS FROM
OPERATIONS
.58
CPS
.9
GEARING
32
%%
5
PASSING
YIELD
.14
_ Tokyo Food,
Bowden Road.
PFI
ANNUAL REPORT
2024
5
DISCLOSURESCONTENTS2024 REVIEW
FOCUSED
OUR
APPROACH
PFI has continued to deliver consistent dividend
returns to shareholders despite the challenging
economic environment. Portfolio valuations appear
to have largely stabilised, with only a small
movement as a result of independent valuations,
while leasing transactions continued to provide
strong outcomes, growing income.
Over time, capturing significant under-renting – the
difference between market and contracted rents – will
provide ongoing increases in cashflow. An interest rate
environment that is forecast to improve is grounds for
optimism in terms of containing costs, while our
development pipeline has continued on track and to budget.
As a listed, internally managed, pure-play industrial
platform, our view is long-term. Our well diversified,
high-quality industrial property portfolio includes a mix
of new builds and existing stock, and our green and
brownfield opportunities across multiple, attractive
industrial sites give us a scale pipeline of attractive
developments over the coming years.
While our existing core holdings continue to account
for just under 80% of our portfolio allocation, Stage 1
at Bowden Road, Mount Wellington achieved practical
completion on time and on budget at the end of June
2024, with Stage 2 at Bowden Road and Stage 1 at
Springs Road, East Tamaki expected to complete on
time and on budget this calendar year. Combined,
these projects will deliver almost 55,000 square metres
of new, core, sustainable assets.
Enhancing our internal capabilities will continue to
de-risk our business, increase our capacity and capability
for growth, and build trust and credibility in our brand.
BUSINESS REVIEW
PFI
ANNUAL REPORT
2024
6
DISCLOSURESCONTENTS2024 REVIEW
HEALTHY CASHFLOW, STABLE RESULTS
Capacity for rent growth
Our strong leasing outcomes continue to generate cashflow
and maintain stability, with our portfolio performing
strongly over the first six months of the calendar year.
During the first half of 2024, we reviewed $36.3m of
contract rent, resulting in an average annualised uplift of
5.7%. In the same period, 11.6% of contract rent was leased.
$2.1 million of the contract rent secured related to newly
acquired or developed properties, with the rest relating
to the stabilised portfolio. Of the $9.5 million of stabilised
contract rent secured, rents were settled on $5.9 million
at 25.3% above previous contract rents. The remaining
stabilised contract rent is subject to market reviews on
renewal or commencement date, and those renewals are
~17% under-rented at June 2024.
Further, an independent assessment of our full portfolio
indicated our properties are ~16% under-rented, providing
further opportunity for significant future growth in rents.
While vacancies for industrial property in the Auckland
market have begun to rise slightly, weakening demand is
expected to be somewhat mitigated by high levels of new
supply already being pre-committed.
A pleasing result
Property valuations appear to have stabilised, with a
write-down from independent valuations of $4.2 million
or 0.2% over the last six months.
That small write down, offset by strong operating
cashflows, contributed to a profit after tax of $21.2 million.
Funds From Operations or FFO increased by 2.2% as
compared with H1 2023 to 5.03 cents per share, and
Adjusted Funds from Operations or AFFO reduced slightly
by 0.9% to 4.58 cents per share, representing a pleasing
result given the overall operating environment.
Our net tangible assets or NTA at 30 June 2024 is largely
unchanged since the beginning of the period at $2.71 per
share. Gearing rose slightly over the first half of the year to
32.9% as we continued to invest in our development projects,
but remains at a level we consider comfortable.
Our strategy to achieve the best use of our capital is to
prioritise value-creating opportunities with the potential to
increase shareholder returns beyond current levels, and
closely align the financing of our investments with our
sustainability objectives.
Our investments in the regeneration of Bowden and
Springs Roads are on track, with in excess of $43 million
deployed during the first six months of the calendar year
on these projects targeting 5 Green Star ratings. A further
$33 million will be deployed towards these projects before
the end of 2025, with the remaining work on both expected
to be completed on time and on budget.
Disciplined control of our borrowings
We continue to have good access to debt capital, with
more than $200 million of undrawn bank facilities at the
end of June 2024, and further liquidity added following
a second drawdown on our Prioca shelf facility and the
refinancing of our banking syndicate post balance date.
During the financial period, we established a $50 million
seven-year facility with the Commonwealth Bank of
Australia, and at the same time we reduced a shorter-term
Bank of New Zealand facility by the same amount. $29.4
million of divestments were also settled during the period,
with proceeds recycled into current brownfield
redevelopment projects.
BUSINESS REVIEW CONTINUED
Our strong leasing
outcomes continue
to generate cashflow
and maintain stability,
with our portfolio
performing strongly
over the first six
months of the
calendar year.”
SIMON WOODHAMS
Chief Executive Officer
PFI
ANNUAL REPORT
2024
7
DISCLOSURESCONTENTS2024 REVIEW
OUR FOCUSSED APPROACH
Post balance date, we made a number of changes to our
facilities, including arranging $75 million of new money.
As a result of those changes, the Company’s $975 million
of facilities have a weighted average term to expiry in
excess of three and a half years, and our gearing, hedging
and liquidity provide the ability to execute on our near-term
development pipeline despite upcoming bond maturities.
Changes to the Board
As signalled in our December 2023 annual report, a
number of changes to the Board also took place during the
first half of the calendar year, including the appointment
of Dean Bracewell as Board Chair. Previous Board Chair
Anthony Beverley remains on the Board as an Independent
Director, while Gregory Reidy retired from the Board, and
Jeremy Simpson joined as a new Independent Director.
Post balance date, Jeremy joined PFI’s Audit and Risk
Committee, and David Thomson stepped down from this
committee to focus on his role as People Committee Chair.
These changes are all part of the PFI Board’s ongoing
succession plans, which seek to balance technical and
specialist governance skills, while at the same time
maintaining a Board with strong, practical, commercial
capability and a diversity of experience.
Looking forward
Overall, we are pleased with our performance for the first six
months of 2024, given slowing economic conditions. Cashflow
remains strong, with significant under-renting providing
strong tailwinds for rental growth over the medium term.
Looking ahead, the 2025 financial year will see the
Company’s results affected by changes to depreciation
rules. As we have indicated previously, we expect these rule
changes to increase our tax bill by more than $2 million a year.
BUSINESS REVIEW CONTINUED
_ Jeremy Simpson
has joined the
PFI Board as an
Independent Director.
PFI
ANNUAL REPORT
2024
8
DISCLOSURESCONTENTS2024 REVIEW
OUR FOCUSSED APPROACH
Offsetting this increase, an interest rate environment that
is forecast to improve is expected to be supportive of both
earnings and values.
PFI also remains well positioned courtesy of low levels of
vacancy, a weighted average lease term in excess of five
years and a diversified tenant base.
Our current developments are progressing well, and with
new projects like Spedding Road, Whenuapai waiting in the
wings, our longer-term prospects are strong.
Balancing these factors, dividend guidance for the 2025
financial year has been set at 8.30 to 8.50 cps, an increase
of up to 0.20 cps or 2.4% on annualised FP24 dividends.
DEVELOPING OPPORTUNITIES
As of 30 June 2024, $313 million of our portfolio is allocated
to a range of brownfield opportunities, providing a pipeline of
regeneration developments we believe will outperform the
market over time.
In 2023, we also secured 5.8 hectares at the Spedding Road
industrial estate currently being created at the end of the
Northwestern Motorway in Auckland, providing us with a scale
greenfield development opportunity in an Auckland location
we perceive as under-supplied for both industrial-zoned land
and industrial buildings of quality or scale. The developer of
this estate has continued to make excellent progress on the
site works, and we expect to take possession mid-2025.
In line with our climate commitments, all significant new
buildings will target a minimum 5 Green Star rating, and the
projects add to our credentials in successfully undertaking
large-scale, highest-quality industrial development.
BUSINESS REVIEW CONTINUED
Bowden Road enters a new stage
Our Bowden Road redevelopment is
progressing well and is on time and on
budget, with significant milestones
achieved during the financial period.
On commencement, about 40% of the
development was pre-leased to Tokyo
Food, and that building achieved
practical completion at the end of June
2024. We also are pleased to report that
the building has been awarded a 5 Star
Green Star Design & As Built NZv1.0
Design rating. This marked a significant
milestone for PFI, representing our first
industrial Green Star certification, and
setting the standard for all of our future
major developments.
The remaining 60% of the development
was started without tenant pre-
commitment, but in May, Daikin Air
Conditioning New Zealand Limited
(Daikin) entered into a 12-year lease for
the second warehouse in this project.
This building is also on time and on
budget, and is scheduled for practical
completion in the second half of 2024.
When completed, Bowden Road will be
our first fully Green Star-rated industrial
estate, with close to 24,000 square
metres of covered workable area.
BOWDEN ROAD
_ Bowden Road
development
setting the future
standard for PFI.
PFI
ANNUAL REPORT
2024
9
DISCLOSURESCONTENTS2024 REVIEW
BUSINESS REVIEW CONTINUED
BOWDEN ROAD
_ The Tokyo Food building
at Bowden Road has been
awarded a 5 Star Green
Star Design & As Built
NZv1.0 Design rating.
FIRST
BUILDING LEASED
TO TOKYO FOOD
FOR 12 YEARS.
STAGE
PFI
ANNUAL REPORT
2024
10
DISCLOSURESCONTENTS2024 REVIEW
SPRINGS ROAD
BUSINESS REVIEW CONTINUED
Springs Road moves forward
Stage 1 of the redevelopment of our
Springs Road property is also on course.
The 25,500 square metre warehouse
we are developing for our long-term
tenant Fisher & Paykel Appliances is
also scheduled for practical completion
in the second half of 2024.
Post balance date, we have committed
to a second stage at Springs Road: an
11,300 square metre warehouse facility
with 2,450 square metres of breezeway,
1,000 square metres of canopy and
associated offices and yards. More than
60% of this stage has been pre-leased to
global manufacturer MiTek New Zealand
Limited for an initial term of 12 years,
with the remainder being constructed
without tenant pre-commitment.
Overall, this redevelopment continues
the transformation of this 10-hectare
site into a best-in-class 5 Green Star
industrial estate.
_ Springs Road
development
transformation
continues.
PFI
ANNUAL REPORT
2024
11
DISCLOSURESCONTENTS2024 REVIEW
STRENGTHENING OUR OWN CAPABILITIES
We also continued to focus on enhancing our “engine
room” during the first half of 2024: upgrading internal
enablers to de-risk our business.
A key pillar of this work is the successful transition
to an in-house facilities management model, which
was completed in the middle of 2023. Since this
change, we have been able to focus more strongly on
the operational performance of our buildings, and to
advance our solar and power-metering initiatives.
We are pleased to report that we reached our sustainability
target of installing solar systems at five buildings well ahead
of schedule. 1,180 solar panels are now installed across five
properties leased by Electrolux, RepairHub, Daikin, Tokyo
Food, and Central Joinery.
We also reached our target to implement power metering
and monitoring for 50% of properties by the end of 2025
ahead of schedule, with 63% of properties now metered.
PROGRESSING OUR SUSTAINABILITY STRATEGY
Good progress has been made during the financial period
to deliver on the sustainability strategy we shared in early
2023, with advances made on our developments targeting
5 Green Star ratings, solar installations and the installation
of power metering.
In April, we published our first mandatory Climate-Related
Disclosures in accordance with the Aotearoa New Zealand
Climate Standards. We will publish our second mandatory
Climate-Related Disclosures in accordance with the Aotearoa
New Zealand Climate Standards, along with additional
sustainability reporting, at https://www.propertyforindustry.
co.nz/sustainability/ by 31 October 2024.
Our sustainability strategy is critical to continuing to
deliver strong economic performance as our sector
continues to evolve with regulatory change, changing
market demands, and increasing expectations from our
business partners and investors.
Our sustainability
strategy is critical to
continuing to deliver
strong economic
performance as our
sector continues
to evolve.”
CRAIG PEIRCE
Chief Finance and
Operating Officer
1,180
SOLAR PANELS
INSTALLED AT 5
PROPERTIES
PROPERTIES NOW
HAVE POWER METERING.
THIS IS 63% OF ALL
PROPERTIES
57
BUSINESS REVIEW CONTINUED
PFI
ANNUAL REPORT
2024
12
DISCLOSURESCONTENTS2024 REVIEW
OTHER DISCLOSURES
Financial Statements p13 Other disclosures Company
Structure and Statutory Information p62. Directory p80
OTHER DISCLOSURES
BUSINESS PERFORMANCE
2
IN THIS SECTION
DISCLOSURES
FINANCIAL STATEMENTS
_ Stage 1
Springs Road
Development.
PFI
ANNUAL REPORT
2024
13
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
ALL VALUES IN $000SNOTE
JUNE 2024
6 MONTHS
DECEMBER 2023
12 MONTHS
Rental and management fee income2.357,082114,787
Business interruption insurance income2.610685
Property costs2.4(9,896)(22,695)
Net property income47,19692,777
Administrative expenses5.1(6,097)(10,336)
Profit before finance income/(expenses), other gains/(losses) and income tax41,09982,441
Finance income/(expenses)
Interest expense and bank fees(14,609)(29,160)
Fair value gain/(loss) on derivative financial instruments3.23,611(10,151)
Interest income60114
(10,938)(39,197)
Other gains/(losses)
Fair value loss on investment properties and non-current assets classified as held for sale2.1,2.2(4,166)(140,830)
Loss on disposal of investment properties and non-current assets classified as held for sale(526)(789)
Increase in costs relating to post settlement obligation of disposed property5.10–(1,070)
Material damage insurance income2.66689
(4,686)(142,000)
Profit/(loss) before income tax25,475(98,756)
Income tax (expense)/benefit5.2(4,294)964
Profit/(loss) and total comprehensive income after income tax attributable to the shareholders of the Company21,181(97,792)
Basic earnings per share (cents)4.14.22(19.48)
Diluted earnings per share (cents)4.14.22(19.48)
The accompanying notes form part of these financial statements.
PFI
ANNUAL REPORT
2024
14
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
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 2023 – 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 plan5.8 78,789 264 139 – 403
Balance as at 31 December 2023 – 502,129,313 572,901 754 786,614 1,360,269
Total comprehensive (loss) / income – – – – 21,181 21,181
Dividends
Q4 2023 final dividend - 13/3/2024 2.45 – – – (12,304) (12,304)
Q1 2024 interim dividend - 28/5/2024 1.95 – – – (9,793) (9,793)
Long-term incentive plan5.8 70,038 326 (184) – 142
Balance as at 30 June 2024– 502,199,351 573,227 570 785,698 1,359,495
The accompanying notes form part of these financial statements.
PFI
ANNUAL REPORT
2024
15
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
ALL VALUES IN $000SNOTEJUNE 2024DECEMBER 2023
CURRENT ASSETS
Cash at bank 1,481 1,187
Accounts receivable, prepayments and other assets5.3 7,814 9,806
Derivative financial instruments3.2 267 739
Total current assets 9,562 11,732
NON-CURRENT ASSETS
Investment properties2.1 2,050,525 1,998,325
Property, plant and equipment 3,235 3,449
Derivative financial instruments3.2 22,815 20,973
Total non-current assets 2,076,575 2,022,747
Non-current assets classified as held for sale2.2– 29,400
Total assets 2,086,137 2,063,879
The accompanying notes form part of these financial statements.
PFI
ANNUAL REPORT
2024
16
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONTINUED
AS AT 30 JUNE 2024
ALL VALUES IN $000SNOTEJUNE 2024DECEMBER 2023
CURRENT LIABILITIES
Accounts payable, accruals and other liabilities5.4 19,787 22,301
Taxation payable 159 772
Borrowings3.1 150,000 100,000
Derivative financial instruments3.2 1,090 3,509
Total current liabilities 171,036 126,582
NON-CURRENT LIABILITIES
Borrowings3.1 523,940 547,049
Derivative financial instruments3.2 3,692 3,515
Lease liabilities5.9 1,778 1,909
Deferred tax liabilities5.2 26,196 24,555
Total non-current liabilities 555,606 577,028
Total liabilities 726,642 703,610
Net assets4.2 1,359,495 1,360,269
EQUITY
Share capital 573,227 572,901
Share-based payments reserve5.8 570 754
Retained earnings 785,698 786,614
Total equity 1,359,495 1,360,269
These Group financial statements are signed on behalf of Property for Industry Limited and were authorised for issue on 26 August 2024.
Dean Bracewell Carolyn Steele
Chair, Board of Directors Chair, Audit and Risk Committee
The accompanying notes form part of these financial statements.
PFI
ANNUAL REPORT
2024
17
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
ALL VALUES IN $000SNOTE
JUNE 2024
6 MONTHS
DECEMBER 2023
12 MONTHS
CASH FLOWS FROM OPERATING ACTIVITIES
Property and management fee income received 58,368 111,031
Net goods and services tax paid 2,892 (3,990)
Interest received 60 114
Business interruption insurance income received2.6 15 680
Payments to suppliers and employees (15,478) (25,138)
Interest and other finance costs paid (14,831) (27,933))
Income tax paid (3,198) (7,831)
Net cash flows from operating activities 27,828 46,933
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment properties and non-current assets classified as held for sale1.8 28,874 27,899
Material damage insurance income received2.6 6 689
Expenditure on investment properties - development (48,289) (64,417)
Expenditure on investment properties - stabilised (1,620) (9,115)
Acquisition of investment properties2.1 (6,787)–
Capitalisation of interest on development properties2.1 (4,054) (3,246)
Acquisition of property, plant and equipment (30) (254)
Expenditure on post settlement obligation of disposed property5.10– (1,070)
Net cash flows from investing activities (31,900) (49,514)
The accompanying notes form part of these financial statements.
PFI
ANNUAL REPORT
2024
18
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS CONTINUED
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
ALL VALUES IN $000SNOTE
JUNE 2024
6 MONTHS
DECEMBER 2023
12 MONTHS
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from / (repayment of) syndicated bank facility 2,085 (105,305)
Net proceeds from green loan facilities24,499 125,501
Net proceeds from Pricoa facility– 25,000
Dividends paid to shareholders (22,097) (42,680)
Principal elements of finance lease payments (121) (80)
Net cash flows from financing activities 4,366 2,436
Net increase / (decrease) in cash and cash equivalents 294 (145)
Cash and cash equivalents at beginning of period 1,187 1,332
Cash and cash equivalents at end of period 1,481 1,187
Cash and cash equivalents at end of period comprises:
ALL VALUES IN $000S
JUNE 2024
6 MONTHS
DECEMBER 2023
12 MONTHS
Cash at bank 1,481 1,187
Cash and cash equivalents at end of period 1,481 1,187
The accompanying notes form part of these financial statements.
PFI
ANNUAL REPORT
2024
19
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS CONTINUED
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
RECONCILIATION OF PROFIT / (LOSS) AFTER INCOME TAX TO NET CASH FLOWS FROM OPERATING ACTIVITIES
ALL VALUES IN $000SNOTE
JUNE 2024
6 MONTHS
DECEMBER 2023
12 MONTHS
Profit/(loss) for the period after income tax 21,181 (97,792)
Non-cash items:
Fair value loss on investment properties and non-current assets classified as held for sale2.1, 2.2 4,166 140,830
Increase / (decrease) in deferred taxation 5.2 1,709 (6,565)
Depreciation5.1 243 569
Loss on disposal of investment properties and non-current assets classified as held for sale 526 789
Employee benefits expense – share-based payments 175 349
Provision for doubtful debts 8 28
Fair value (gain) / loss on derivative financial instruments (3,611) 10,151
Movements in working capital items:
Decrease / (increase) in accounts receivable, prepayments and other assets 3,056 (4,586)
Increase in accounts payable, accruals and other liabilities 994 5,009
Decrease in taxation payable (613) (2,230)
Other: material damage insurance income (classified as cash flows from investing activities)2.6 (6) (689)
Other: post settlement obligation of disposed property (classified as cash flows from investing activities)5.10– 1,070
Net cash flows from operating activities 27,828 46,933
The accompanying notes form part of these financial statements.
PFI
ANNUAL REPORT
2024
20
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
1. GENERAL INFORMATION 22
1.2. Basis of preparation 22
1.3. Group companies 22
1.4. Basis of consolidation 22
1.5. Critical judgements, estimates and assumptions 22
1.6. Accounting policies 23
1.7. Non-GAAP measures 23
1.8. Significant events and transactions 24
2. PROPERTY 25
2.1. Investment properties 25
2.2. Non-current assets classified as held for sale 35
2.3. Rental and management fee income 36
2.4. Property costs 37
2.5. Net rental income 37
2.6. Insurance income 37
3. FUNDING 38
3.1. Borrowings 38
3.2. Derivative financial instruments 40
4. INVESTOR RETURNS AND INVESTMENT METRICS 42
4.1. Earnings per share 42
4.2. Net tangible assets per share 42
5. OTHER 43
5.1. Administrative expenses 43
5.2. Taxation 43
5.3. Accounts receivable, prepayments and other assets 46
5.4. Accounts payable, accruals and other liabilities 46
5.5. Financial instruments 46
5.6. Financial risk management 47
5.7. Related party transactions 49
5.8. Share-based payments 50
5.9. Leases 53
5.10. Post settlement obligation of disposed property 54
5.11. Operating segments 54
5.12. Capital commitments 54
5.13. Subsequent events 55
PFI
ANNUAL REPORT
2024
21
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
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 subsidiaries, P.F.I. Property No. 1
Limited (PFI No. 1) and P.F.I. Cover Limited (PFI Cover), (collectively, 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 Generally Accepted
Accounting Practice in New Zealand (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 Accounting 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 30 June 2024, PFI No. 1 and PFI Cover (a company incorporated in the
Cook Islands on 11 April 2024) are wholly owned and controlled entities of the Company.
As at 31 December 2023, PFI No. 1 was the only subsidiary of the Company.
1.4. Basis of consolidation
The consolidated financial statements comprise the Company and the entities 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 25
3.2. Derivative financial instruments Page 40
5.2. Taxation Page 43
5.8. Share-based payments Page 50
PFI
ANNUAL REPORT
2024
22
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
1. GENERAL INFORMATION CONTINUED
1.6. Accounting policies
No changes to accounting policies have been made during the period and policies have
been consistently applied to all reporting periods 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
In May 2023, the External Reporting Board (XRB) amended the existing standard FRS-44
Disclosure of Fees for Audit Firms’ Services, effective for reporting periods beginning
on or after 1 January 2024. The Group has adopted this amended standard in these
financial statements.
In May 2024, the XRB introduced NZ IFRS 18 Presentation and Disclosure in Financial
Statements, effective for reporting periods beginning on or after 1 January 2027, and
replaces NZ IAS 1 Presentation of Financial Statements. NZ IFRS 18 primarily introduces
a defined structure for the statement of comprehensive income, disclosure of management-
defined performance measures (a subset of non-GAAP measures) in a single note together
with reconciliation requirements. This standard is not mandatory for the 30 June 2024
reporting period and has not been early adopted by the Group. The Group has not yet
assessed the impacts.
1.7. Non-GAAP measures
The consolidated statement of comprehensive income includes a non-GAAP measure,
Profit before finance income/(expenses), other gains/(losses) and income tax. This
non-GAAP measure is presented to provide additional insight to the Group’s financial
performance and assist investors in assessing the performance of the Group’s core
operating activities.
This non-GAAP measure does not have a standard meaning prescribed by GAAP
and therefore may not be comparable to information presented by other entities.
PFI
ANNUAL REPORT
2024
23
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
1. GENERAL INFORMATION CONTINUED
1.8. 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 16 February 2024, the Group settled the acquisition of the property located at
45 Cryers Road, East Tamaki for a net purchase price of $6.70 million.
On 15 March 2024, the Group settled the disposal of a non-current asset classified as
held for sale located at 15 Artillery Place, Nelson for a gross sale price of $8.50 million.
On 27 June 2024, the Group settled the disposal of a non-current asset classified as held
for sale located at 10c Stonedon Drive, Auckland for a gross sales price of $20.90 million.
Captive Insurer
On 11 April 2024, PFI Cover was incorporated in the Cook Islands as a captive insurer
for the Group.
CBA Facility
On 4 June 2024, the Group announced that it had established a new $50 million 7-year
revolving credit facility provided by the Commonwealth Bank of Australia (CBA); the facility
remains undrawn as at 30 June 2024. Simultaneously, the loan facility with the Bank of
New Zealand (BNZ, also known as Syndicated Bank Facility C), expiring on 31 March 2025,
was reduced from $100 million to $50 million. The $50 million drawn funds from the
Syndicated Bank Facility C was reallocated to the Syndicated Bank Facility A of the banking
syndicate comprising of ANZ Bank New Zealand Limited (ANZ), BNZ, Westpac New Zealand
Limited (Westpac) and CBA.
Balance date change
On 26 February 2024, the Group announced the results for the year ended 31 December
2023 and at the same time, announced that the Group intended to change the balance date
for the Group and its subsidiaries from 31 December to 30 June, subject to customary
approvals. The Group has since obtained all necessary approvals for the balance date
change. These consolidated financial statements are the first adoption of the change to a
30 June balance date and reflect a six month period to 30 June 2024 and the comparative
period covers the 12 months ended 31 December 2023. Accordingly, the amounts presented
may not be directly comparable.
PFI
ANNUAL REPORT
2024
24
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
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 $000S
JUNE 2024
6 MONTHS
DECEMBER 2023
12 MONTHS
Opening balance1,998,3252,096,200
Capital movements:
Additions6,787–
Disposals–(7,688)
Transfer to non-current assets classified as held for sale–(29,400)
Capital expenditure45,47878,831
Capitalised interest
1
4,0543,246
Movement in lease incentives, fees and fixed rental income47(2,034)
56,36642,955
Unrealised fair value loss(4,166)(140,830)
As at period end2,050,5251,998,325
1 The effective interest rate applied to capitalised interest was 5.68% (2023: 5.56%).
2. PROPERTY
PFI
ANNUAL REPORT
2024
25
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
ALL VALUES IN $000S
UNLESS NOTED
KEY TENANT
2024
OCCUPANCY (%)
YIELD ON
VALUATION (%)CONTRACT RENT
LETTABLE
AREA (SQM)
2024
VALUER
2024
CARRYING
VALUE
2023
CAPITAL
MOVEMENTS
2024
FAIR VALUE
ADJUSTMENT
2024
CARRYING
VALUE
2024 20242023202420232024 2023
Avondale:
15 Copsey PlaceCanterbury 100%100%5.6%5.4%1,0471,0187,907Colliers18,950(4)(146)18,800
32 Honan PlaceSolo Plastics 100%100%5.4%5.4%149149795JLL2,750(1)12,750
15 Jomac PlaceSouthern Spars 100%100%6.2%6.1%1,7461,7469,534Savills28,75013(763)28,000
61-69 Patiki RoadBidfood 100%100%6.1%5.6%1,4981,3449,776Savills24,2003346624,600
320 Rosebank RoadDoyle Sails 100%100%4.6%4.4%8428226,625Colliers18,750(29)(221)18,500
520 Rosebank RoadKenderdine Electrical 100%100%4.8%4.7%1911911,995Savills4,100(4)(96)4,000
528-558 Rosebank RoadETEL 97%100%6.0%5.9%3,7333,70326,852CBRE62,500(104)(596)61,800
670-680 Rosebank RoadNew Zealand Comfort 100%100%6.7%5.7%2,7082,29717,458Savills40,50058(58)40,500
686 Rosebank RoadBrand Developers 100%100%5.5%5.6%3,2123,21423,885Savills57,2509066058,000
99%100%5.9%5.6%15,12614,484104,827257,750353(1,153)256,950
East Tamaki:
17 Allens RoadContract Warehousing 100%100%5.0%4.9%1,4551,44311,904Savills29,750174(924)29,000
43 Cryers RoadAstron Plastics 100%100%5.1%5.1%9048806,068Colliers17,20011138917,700
45 Cryers RoadAstron Plastics 100%–4.0%–269–5,000Colliers–6,870(170)6,700
6-8 Greenmount DriveBridon 100%100%4.3%4.2%7777586,590CBRE17,9001668418,150
92-98 Harris RoadGrainCorp 100%100%6.2%5.4%1,5941,45810,687Colliers27,00086(1,186)25,900
36 Neales RoadMainfreight 100%100%4.5%4.4%1,6231,62318,942CBRE36,75013(813)35,950
1 Ron Driver PlaceGlen Dimplex 100%100%5.8%4.3%7755535,393JLL12,8002262813,450
78 Springs Road
1
Fisher & Paykel Appliances 100%100%2.9%3.7%4,0704,07024,510JLL111,05025,3824,018140,450
10c Stonedon DriveChemical Freight Services 100%100%–4.9%–1,0338,711–––––
11 Turin PlaceThermakraft Industries 100%100%5.2%5.0%1,0691,0699,981Savills21,50061(811)20,750
12 Zelanian DriveCentral Joinery 100%100%3.8%3.9%7787786,098JLL20,000410(10)20,400
23 Zelanian DriveExclusive Tyre Distributors 100%100%4.7%4.5%4984983,811Colliers11,10057(557)10,600
100%100%4.1%4.6%13,81214,163117,695305,05033,352648339,050
1 Partially under development.
2.1. Investment properties continued
PFI
ANNUAL REPORT
2024
26
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
ALL VALUES IN $000S
UNLESS NOTED
KEY TENANT
2024
OCCUPANCY (%)
YIELD ON
VALUATION (%)CONTRACT RENT
LETTABLE
AREA (SQM)
2024
VALUER
2024
CARRYING
VALUE
2023
CAPITAL
MOVEMENTS
2024
FAIR VALUE
ADJUSTMENT
2024
CARRYING
VALUE
2024 20242023202420232024 2023
Manukau:
212 Cavendish Drive
1
Kiwi Logistics 55%100%3.2%4.2%1,5432,20925,898Savills52,5001,014(5,514)48,000
232 Cavendish DriveFletcher Building Products 100%100%4.6%4.5%1,5321,43216,832Savills32,00015984133,000
47 Dalgety DrivePeter Hay Kitchens 100%100%4.1%4.9%99999910,155Savills20,200(40)4,34024,500
47a Dalgety DriveShaw 100%100%4.9%4.6%6216064,832Savills13,250(27)(623)12,600
59 Dalgety DriveStore Rite Logistics 100%100%5.0%4.7%1,3311,29911,844Savills27,50019(1,019)26,500
12 Hautu DriveKiwi Steel 100%100%4.9%4.8%7487486,492Colliers15,45012(62)15,400
25 Langley RoadGrayson Engineering 100%100%4.6%4.5%2,2452,24521,248Colliers49,400(35)(865)48,500
1 Mayo RoadTDX 100%100%5.3%5.2%7437436,361Colliers14,300117(417)14,000
61 McLaughlins RoadMOVe Logistics 100%100%4.9%4.7%1,3141,31413,347Colliers27,800130(1,030)26,900
9 Narek PlaceWaste Tallow Care 100%100%5.2%5.0%7096843,577Savills13,550(5)20513,750
9 Nesdale AvenueBrambles 100%100%4.5%4.4%88988914,163CBRE20,00020(320)19,700
44 Noel Burnside RoadCottonsoft 100%100%4.6%4.5%3,4883,48832,807JLL77,000(37)(1,363)75,600
93%100%4.5%4.6%16,16216,656167,556362,9501,327(5,827)358,450
Mt Wellington:
30-32 Bowden Road
2
Tokyo Food 100%–2.1%–1,828–12,920Savills70,70019,306(3,106)86,900
50 Carbine RoadFletcher Building Products 100%100%4.3%4.3%2392392,592JLL5,60031(131)5,500
54 Carbine Road &
6a Donnor Place
Pharmacy Retailing 100%100%5.0%4.8%2,4632,29917,063JLL47,5002811,81949,600
76 Carbine RoadAtlas Gentech 100%100%5.3%5.4%6466465,080JLL12,0502822212,300
7 Carmont PlaceCMI 100%100%4.6%4.7%7597595,776JLL16,05026733316,650
6 Donnor PlaceCoca-Cola 100%100%5.1%5.3%1,6401,64016,686JLL31,000(19)1,01932,000
4-6 Mt Richmond DriveIron Mountain 100%100%4.0%3.6%1,0109187,946CBRE25,45024(124)25,350
509 Mt Wellington HighwayFletcher Building Products 100%100%4.8%4.8%1,1901,1828,744JLL24,70054(104)24,650
1 Includes development land $1.50 million.
2 Partially under development.
2.1. Investment properties continued
PFI
ANNUAL REPORT
2024
27
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
ALL VALUES IN $000S
UNLESS NOTED
KEY TENANT
2024
OCCUPANCY (%)
YIELD ON
VALUATION (%)CONTRACT RENT
LETTABLE
AREA (SQM)
2024
VALUER
2024
CARRYING
VALUE
2023
CAPITAL
MOVEMENTS
2024
FAIR VALUE
ADJUSTMENT
2024
CARRYING
VALUE
2024 20242023202420232024 2023
511 Mt Wellington HighwayStryker 100%100%4.6%4.7%5405263,054JLL11,200(3)45311,650
515 Mt Wellington HighwayKiwi Management Services 100%100%4.8%4.6%3393332,324Colliers7,2001(101)7,100
523 Mt Wellington HighwayMotion New Zealand 100%100%5.0%4.4%3172851,677Savills6,50016(116)6,400
1 Niall Burgess RoadBremca Industries 100%100%4.2%4.1%2792721,742JLL6,700(43)436,700
2-6 Niall Burgess RoadMcAlpine Hussmann 100%100%5.4%5.7%1,2631,2636,874CBRE22,200721,02823,300
3-5 Niall Burgess RoadElectrolux 100%100%4.5%4.4%1,3681,33513,266JLL30,100(4)25430,350
7-9 Niall Burgess RoadDHL Supply Chain 100%100%4.5%4.5%2,7402,65523,565JLL59,200(37)1,63760,800
10 Niall Burgess RoadNEP Broadcast Services 100%100%4.5%4.6%3093091,725CBRE6,650–2006,850
5 Vestey DrivePPG Industries 100%100%5.5%5.3%3003001,270Savills5,70022(222)5,500
7 Vestey DriveTrue North 100%100%5.2%4.9%8488256,075Savills16,75030(530)16,250
9 Vestey DriveMultispares 100%100%4.6%4.3%2432321,600Savills5,4008(108)5,300
11 Vestey DriveN & Z 100%100%4.9%4.7%5415413,470Savills11,40014(464)10,950
15a Vestey DrivePact Group Holdings 100%100%5.5%5.2%6116113,261Savills11,70011(611)11,100
36 Vestey DriveMotion New Zealand 100%100%4.2%4.2%1871871,120JLL4,42510654,500
100%100%4.3%4.0%19,66017,357147,830438,17520,0691,456459,700
North Shore:
2-4 Argus PlacePharmapac 100%100%4.6%4.5%4864863,560CBRE10,80054(354)10,500
47 Arrenway DriveDevice Technologies 100%100%4.9%5.0%2652581,245JLL5,200821685,450
51 Arrenway DrivePacific Hygiene 100%100%5.0%5.2%4694692,680JLL9,050523489,450
15 Omega StreetWesfarmers 100%100%5.1%5.4%6416413,498JLL11,9003556512,500
322 Rosedale RoadBSGi 100%100%5.3%5.2%1,2491,2317,936CBRE23,500(7)(93)23,400
41 William Pickering DriveInnopak Global 100%100%5.2%5.2%5495413,027Colliers10,45064(14)10,500
100%100%5.1%5.1%3,6593,62621,94670,90028062071,800
2.1. Investment properties continued
PFI
ANNUAL REPORT
2024
28
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
ALL VALUES IN $000S
UNLESS NOTED
KEY TENANT
2024
OCCUPANCY (%)
YIELD ON
VALUATION (%)CONTRACT RENT
LETTABLE
AREA (SQM)
2024
VALUER
2024
CARRYING
VALUE
2023
CAPITAL
MOVEMENTS
2024
FAIR VALUE
ADJUSTMENT
2024
CARRYING
VALUE
2024 20242023202420232024 2023
Penrose:
4 Autumn PlaceRyco Hydraulics 100%100%5.3%5.4%2422421,210Colliers4,50045554,600
6 Autumn PlaceMOTAT 100%100%4.2%3.8%2001961,718Colliers5,100(1)(299)4,800
10 Autumn PlaceMOTAT 100%100%3.9%3.8%7507357,646Colliers19,6003(603)19,000
122 Captain Springs RoadNew Zealand Crane Group 100%100%6.0%4.6%7455777,431Colliers12,60011(111)12,500
8 Hugo Johnston DriveMountcastle 96%96%6.8%7.2%8448514,359JLL11,800854212,350
12 Hugo Johnston DriveW H Worrall 100%100%5.2%5.5%4804752,639JLL8,650134879,150
16 Hugo Johnston DriveNewflor Industries 100%100%5.8%5.1%5464342,619JLL8,550198819,450
80 Hugo Johnston DriveBoxkraft 100%100%4.3%4.1%5445303,872Colliers12,900110(410)12,600
102 Mays Road2 Cheap Cars 100%100%4.8%4.6%6996796,596CBRE14,850(28)(122)14,700
304 Neilson StreetFletcher Building Products 100%100%5.0%4.4%84984913,438Colliers19,2005(2,205)17,000
306 Neilson StreetTrade Depot 100%100%5.5%5.3%1,0109886,301Colliers18,750(9)(241)18,500
312 Neilson StreetTransport Trailer Services 100%100%5.2%5.1%4724723,862Colliers9,25037(187)9,100
314 Neilson StreetWakefield Metals 100%100%4.8%4.6%1,0491,0139,265Colliers21,950150(100)22,000
318 Neilson StreetHi-Tech Security Disposals 100%100%3.3%3.3%1871874,977Colliers5,750(1)(49)5,700
12 Southpark PlaceQCD 100%100%4.8%4.6%6676675,477Savills14,400(27)(373)14,000
100%100%5.0%4.7%9,2848,89581,410187,850335(2,735)185,450
Other Auckland:
58 Richard Pearse Drive,
Mangere
Pharmacy Retailing 100%100%4.2%4.1%1,2551,25512,708CBRE30,95013(1,013)29,950
51-61 Spartan Road,
Takanini
Action Manufacturing 100%100%4.9%4.8%1,0541,02513,519CBRE21,350554521,450
170 Swanson Road,
Swanson
Transportation Auckland 100%100%6.0%3.5%2,2331,14839,676CBRE33,00054,09537,100
100%100%5.1%4.0%4,5423,42865,90385,300733,12788,500
2.1. Investment properties continued
PFI
ANNUAL REPORT
2024
29
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
ALL VALUES IN $000S
UNLESS NOTED
KEY TENANT
2024
OCCUPANCY (%)
YIELD ON
VALUATION (%)CONTRACT RENT
LETTABLE
AREA (SQM)
2024
VALUER
2024
CARRYING
VALUE
2023
CAPITAL
MOVEMENTS
2024
FAIR VALUE
ADJUSTMENT
2024
CARRYING
VALUE
2024 20242023202420232024 2023
North Island (outside Auckland):
124 Hewletts Road,
Mt Maunganui
RMD Bulk Storage 100%100%5.6%5.6%3,9373,84534,802CBRE69,200301,37070,600
124a Hewletts Road,
Mt Maunganui
Ballance Agri-Nutrients 100%100%5.1%4.7%1,1571,15710,497CBRE24,500(21)(1,679)22,800
124b Hewletts Road,
Mt Maunganui
Ballance Agri-Nutrients 100%100%5.5%5.3%1,1091,0668,867CBRE20,000––20,000
3 Hocking Street,
Mt Maunganui
BR & SL Porter 100%100%5.0%5.4%1861862,374CBRE3,450102403,700
143 Hutt Park Road,
Wellington
Masterpet 100%100%5.9%6.2%1,4771,47711,372JLL23,75091,24125,000
8 McCormack Place,
Wellington
Fletcher Building Products 100%100%6.0%5.9%8148056,686CBRE13,750(14)(86)13,650
28 Paraite Road,
New Plymouth
MOVe Logistics 100%100%7.9%7.9%1,3661,36615,636CBRE17,25011(11)17,250
Shed 22, 23 Cable Street,
Wellington
3
Shed 22 Hospo 100%100%8.1%7.9%9759512,809CBRE12,000(31)8112,050
2 Smart Road,
New Plymouth
New Zealand Post 100%100%7.7%7.7%3703702,359CBRE4,80017(42)4,775
558 Te Rapa Road, HamiltonDEC Manufacturing 100%100%6.0%6.0%5505505,026Savills9,100522(422)9,200
22 Whakatu Road, HastingsEnzafruit New Zealand 100%100%5.6%5.5%3,6593,65952,718Bayleys66,75043(1,543)65,250
100%100%5.9%5.6%15,60015,432153,146264,550576(851)264,275
2.1. Investment properties continued
3 Included in the 2024 balance is a right-of-use asset of $4.00 million (2023: $4.13 million) primarily in relation to a ground lease,
representing the value of the land, with an associated immaterial lease liability.
PFI
ANNUAL REPORT
2024
30
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
ALL VALUES IN $000S
UNLESS NOTED
KEY TENANT
2024
OCCUPANCY (%)
YIELD ON
VALUATION (%)CONTRACT RENT
LETTABLE
AREA (SQM)
2024
VALUER
2024
CARRYING
VALUE
2023
CAPITAL
MOVEMENTS
2024
FAIR VALUE
ADJUSTMENT
2024
CARRYING
VALUE
2024 20242023202420232024 2023
South Island:
15 Artillery Place, NelsonMOVe Logistics 100%100%–7.3%–61718,052–––––
41 & 55 Foremans Road,
Christchurch
MOVe Logistics 100%100%6.2%6.2%83883814,710CBRE13,5005(5)13,500
44 Mandeville Street,
Christchurch
Fletcher Building Products 100%100%7.9%8.0%1,01698411,154CBRE12,300(4)55412,850
100%100%7.0%9.5%1,8542,43943,91625,800154926,350
Investment properties - total99%100%4.9%4.8%99,69996,480904,2291,998,32556,366(4,166)2,050,525
2.1. Investment properties continued
PFI
ANNUAL REPORT
2024
31
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
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 period 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 for accounting
purposes. However, for tax purposes, depreciation was claimed on building fit-out and
building structure for the six month period ended 30 June 2024 and in the comparative
12 month period ended 31 December 2023. 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 30 June 2024 and 31 December 2023 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 for the six-month period ended 30 June 2024, the Group made an exemption
to this policy for three properties. This exemption was applied to the properties with
live developments to maintain the specialist knowledge needed for these valuations
due to the complexity and time consuming valuation process. For the period ended
31 December 2023, the Group made an exemption to this policy for four properties
to cater for certain properties adjacent to each other, for example, the Company’s
Neilson Street properties, to be valued by the same valuer, and 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.
PFI
ANNUAL REPORT
2024
32
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
2.1. Investment properties continued
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.
• Residual Approach: The subject property is valued based on what the property is expected to be worth on completion of the works and deducting all expected costs to complete the
works, including a profit and risk allowance and holding costs. This approach relates to the development properties at 78 Springs Road and 30-32 Bowden Road, refer to Note 5.12 for
committed costs to complete.
Below are the significant inputs used in the valuations, together with the impact on the fair value of a change in the inputs:
VALUATION METHOD
RANGE OF SIGNIFICANT
UNOBSERVABLE INPUTS MEASUREMENT SENSITIVITY
JUNE 2024DECEMBER 2023
INCREASE
IN INPUT
DECREASE
IN INPUT
Market capitalisation rate (%)
1
Direct Capitalisation 4.00 - 8.00 4.25 - 8.13 Decrease Increase
Net Market rental ($ per sqm)
2
Direct Capitalisation & Discounted Cash Flow 54 - 297 33 - 316 Increase Decrease
Discount rate (%)
3
Discounted Cash Flow 7.00 - 9.25 6.25 - 9.25 Decrease Increase
Rental growth rate (%)
4
Discounted Cash Flow 1.00 - 3.50 2.00 - 3.75 Increase Decrease
Terminal capitalisation rate (%)
5
Discounted Cash Flow 4.00 - 8.25 4.50 - 8.38 Decrease Increase
Profit and risk allowance (%)
6
Residual Approach 2.50 3.75 - 7.50 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 valuer’s 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.
6 The profit and risk allowance reflects the current stage of the development and estimated completion date of the development, taking into account any risks surrounding the construction works.
PFI
ANNUAL REPORT
2024
33
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
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 VALUE
JUNE 2024
MARKET CAPITALISATION RATE DISCOUNT RATE
+ 0.25%- 0.25%+ 0.25%- 0.25%
Valuation 2,050,525
Change (84,000) 92,000 (63,000) 67,000
Change (%)(4%)4%(3%)3%
ALL VALUES IN $000S
FAIR VALUE
DECEMBER 2023
MARKET CAPITALISATION RATE DISCOUNT RATE
+ 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%
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.
2.1. Investment properties continued
PFI
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2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
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 period, 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 six month period ended 30 June 2024.
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 owners and occupiers place a greater emphasis
on this topic.
2.1. Investment properties continued2.2. 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 $000S
JUNE
2024
DECEMBER
2023
10c Stonedon Drive, Auckland
1
–20,900
15 Artillery Place, Nelson
1
–8,500
Total non-current assets classified as held for sale–29,400
1 In the prior year, 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.
PFI
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2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
2.3. Rental and management fee income
ALL VALUES IN $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Gross rental receipts48,98495,911
Service charge income recovered from tenants8,30419,118
Fixed rental income adjustments(21)577
Capitalised lease incentive adjustments(526)(1,438)
Impact of rental income deferred and abated due to the
COVID-19 pandemic
(54)(168)
Management fee income395787
Total rental and management fee income57,082114,787
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 is 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.
Future minimum rentals receivable under non-cancellable operating leases are as follows:
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
Within one year 92,725 87,012
After one year but not more than five years 261,785 247,856
More than five years 108,587 120,224
Total 463,097 455,092
PFI
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2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
2. PROPERTY CONTINUED
2.4. Property costs
ALL VALUES IN $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Rates & insurance (5,226) (9,881)
Property maintenance costs (2,953) (9,213)
Utilities (182) (504)
Bad and doubtful debts expense (42) (28)
Lease incentives amortisation (336) (660)
Other non-recoverable property costs (1,157) (2,409)
Total property costs (9,896) (22,695)
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 $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Gross rental income
Gross rental receipts 48,984 95,911
Service charge income recovered from tenants 8,304 19,118
Fixed rental income adjustments (21) 577
Capitalised lease incentive adjustments (526) (1,438)
Impact of rental income deferred and abated due to the
COVID-19 pandemic
(54) (168)
Total gross rental income 56,687 114,000
Service charge expenses
Rates & insurance (5,226) (9,881)
Property maintenance costs (2,953) (9,213)
Utilities (182) (504)
Total service charge expenses (8,361) (19,598)
Net rental income 48,326 94,402
2.6. Insurance income
A small number of the Group’s properties suffered damage in the extreme weather events
during the year ended 31 December 2023. 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.
PFI
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2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
3. FUNDING
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 $000S
JUNE
2024
DECEMBER
2023
Current
Fixed Rate Bond (PFI010) 100,000 100,000
Syndicated Bank Facility C 50,000 –
Total current borrowings 150,000 100,000
Non-current
Bilateral CBA Bank Facility 125,000 125,000
Syndicated Bank Facility A 125,485 73,400
Syndicated Bank Facility C– 100,000
ANZ & CBA Green Facility D1 50,000 40,200
BNZ Green Facility D2 25,000 25,000
Westpac Green Facility D3 75,000 60,301
Pricoa Facility 25,000 25,000
Fixed Rate Bond (PFI020) 100,000 100,000
Unamortised borrowings establishment costs (1,545) (1,852)
Total non-current borrowings 523,940 547,049
Total borrowings 673,940 647,049
Weighted average interest rate for drawn debt (inclusive of
current interest rate swaps, margins and line fees)5.72%5.70%
Weighted average term to maturity (years) 2.25 2.40
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.
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
3. FUNDING CONTINUED
3.1. Borrowings continued
(ii) Composition of borrowings
ALL VALUES IN $000S
AS AT 30 JUNE 2024
ISSUE
DAT E
MATURITY
DAT E
INTEREST
RATE
FACILITY DRAWN /
AMOUNT
UNDRAWN
FACILITY
FAIR
VALUE
Fixed Rate Bond (PFI010)28–Nov–1728–Nov–244.59% 100,000 – 99,475
Syndicated Bank Facility C–31–Mar–25Floating 50,000 – 50,000
Syndicated Bank Facility A–02–Jul–25Floating 125,485 24,515 125,485
Fixed Rate Bond (PFI020)01–Oct–1801–Oct–254.25% 100,000 – 98,189
Syndicated Bank Facility B–02–Jul–26Floating – 150,000 –
ANZ & CBA Green Facility D1–18–Jul–26Floating 50,000 – 50,000
BNZ Green Facility D2–18–Jul–27Floating 25,000 – 25,000
Westpac Green Facility D3–18–Jul–27Floating 75,000 – 75,000
Bilateral CBA Bank Facility–16–Apr–28Floating 125,000 – 125,000
Pricoa Facility–15–Dec–29Floating 25,000 – 25,465
CBA Bank Facility–31–May–31Floating – 50,000 –
Total borrowings 675,485 224,515 673,614
ALL VALUES IN $000S
AS AT 31 DECEMBER 2023
ISSUE
DAT E
MATURITY
DAT E
INTEREST
RATE
FACILITY DRAWN /
AMOUNT
UNDRAWN
FACILITY
FAIR
VALUE
Fixed Rate Bond (PFI010)28-Nov-1728-Nov-244.59%100,000–98,648
Syndicated Bank Facility C–31-Mar-25Floating100,000–100,000
Syndicated Bank Facility A–02-Jul-25Floating73,40076,60073,400
Fixed Rate Bond (PFI020)01-Oct-1801-Oct-254.25%100,000–97,561
Syndicated Bank Facility B–02-Jul-26Floating–150,000–
ANZ & CBA Green Facility D1–18-Jul-26Floating40,2009,80040,200
BNZ Green Facility D2–18-Jul-27Floating25,000–25,000
Westpac Green Facility D3–18-Jul-27Floating60,30114,69960,301
Bilateral CBA Bank Facility–16-Apr-28Floating125,000–125,000
Pricoa Facility–15-Dec-29Floating25,000–25,420
Total borrowings648,901251,099645,530
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
3. FUNDING CONTINUED
3.1. Borrowings continued
(ii) Composition of borrowings continued
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 $50 million facility (C) and CBA, providing facilities totalling
$175 million.
In accordance with the Group’s Green Finance Framework, the Group has also established
$150 million of Green Loan facilities during the period 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 (2023: 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
2023: $1,800,000,000). 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 30 June
2024, investment properties totalling $2,050,525,000 (31 December 2023: $2,027,725,000)
were mortgaged as security for the Group’s borrowings.
3.2. Derivative financial instruments
(i) Fair values
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
Current assets267739
Non-current assets22,81520,973
Current liabilities(1,090)(3,509)
Non-current liabilities(3,692)(3,515)
Total18,30014,688
PFI
ANNUAL REPORT
2024
40
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
3. FUNDING CONTINUED
3.2. Derivative financial instruments continued
(ii) Notional principal values, maturities and interest rates
JUNE
2024
DECEMBER
2023
Notional value of interest rate swaps – fixed rate payer –
start dates commenced ($000s)400,000370,000
Notional value of interest rate swaps – fixed rate receiver
1
– start dates commenced ($000s)200,000200,000
Notional value of interest rate swaps – fixed rate payer –
forward starting ($000s)175,000165,000
Total ($000s)775,000735,000
Percentage of borrowings fixed (%)59%57%
Fixed rate payer swaps:
Average period to expiry – start dates commenced (years)2.572.69
Average period to expiry – forward starting (years from
commencement)3.573.79
Average (years)2.873.03
Fixed rate payer swaps:
Average interest rate
2
– start dates commenced (%)2.64%2.35%
Average interest rate
2
– forward starting (% during
effective period)4.05%3.89%
Average (%)3.07%2.82%
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) Fair value gain/(loss) on derivative financial instruments
ALL VALUES IN $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Interest rate swaps3,611(10,151)
Total fair value gain/(loss) on derivative
financial instruments3,611(10,151)
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
(31 December 2023: 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 30 June 2024 of between 5.63% for the 90 day BKBM (31 December
2023: 5.64%) and 4.49% for the 10 year swap rate (31 December 2023: 4.14%). There
were no changes to these valuation techniques during the reporting period.
PFI
ANNUAL REPORT
2024
41
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
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
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Total comprehensive (loss) / income for the period
attributable to the shareholders of the Company ($000s)
21,181(97,792)
Weighted average number of ordinary shares (shares) 502,177,801502,118,817
Basic earnings per share (cents) 4.22(19.48)
(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
184,006 (2023: 71,070) rights issued under the Group’s LTI Plan as at 30 June 2024.
This adjustment has been calculated using the treasury share method. Refer to
note 5.8 “Share-based payments” for further details.
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Total comprehensive (loss) / income for the period
attributable to the shareholders of the Company ($000s) 21,181(97,792)
Weighted average number of shares for purpose of diluted
earnings per share (shares) 502,361,807502,189,887
Diluted earnings per share (cents)
1
4.22(19.47)
1 As the Group has recorded a total comprehensive loss in the prior year, diluted earnings per share is
deemed to be equal to basic earnings per share (2024: (19.48) cents).
4.2. Net tangible assets per share
JUNE
2024
DECEMBER
2023
Net assets ($000s) 1,359,4951,360,269
Net tangible assets ($000s) 1,359,4951,360,269
Closing shares on issue (shares) 502,199,351502,129,313
Net tangible assets per share (cents) 271271
PFI
ANNUAL REPORT
2024
42
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
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 $000SNOTE
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Auditor remuneration
Audit or review of the financial statements (250) (263)
Other services
1
(58) (5)
Depreciation (243) (569)
Directors' fees5.7 (352) (665)
Employee benefits (3,212) (5,369)
Facilities management project – (456)
IT - licence fees and support (249) (474)
IT - implementation costs (16) (97)
Office expenses (596) (1,076)
Other expenses (1,008) (1,275)
Sustainability (113) (87)
Total administrative expenses (6,097) (10,336)
1 In the six month period ended 30 June 2024, PwC were engaged to provide an evaluation of whether
the preconditions for assurance exist in preparation for assurance over greenhouse gas emissions.
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 profit / (loss) before income tax to income tax expense
ALL VALUES IN $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Profit / (loss) before income tax25,475(98,756)
Prima facie income tax calculated at 28%(7,133)27,652
Adjusted for:
Non-tax deductible revenue and expenses(37)(18)
Fair value loss on investment properties(1,166)(39,432)
Loss on disposal of investment properties(147)(521)
Depreciation2,6365,560
Disposal of depreciable assets331,153
Deductible capital expenditure2,0882,972
Lease incentives, fees and fixed rental income116(4)
Gain / (loss) on derivative financial instruments1,015(2,835)
Impairment gain / (allowance)6(8)
Current tax prior period adjustment(30)151
Other34(271)
Current taxation expense(2,585)(5,601)
Depreciation(547)3,610
Lease incentives, fees and fixed rental income–4
(Gain) / loss on derivative financial instruments(1,015)2,835
Impairment (allowance) / gain(6)8
Other(141)108
Deferred taxation (expense) / benefit(1,709)6,565
Total income tax (expense) / benefit reported in
Consolidated Statement of Comprehensive Income(4,294)964
PFI
ANNUAL REPORT
2024
43
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
5. OTHER CONTINUED
5.2. Taxation continued
(ii) Deferred tax
DECEMBER 2022
DECEMBER 2023
12 MONTHSDECEMBER 2023
JUNE 2024
6 MONTHSJUNE 2024
ALL VALUES IN $000S AS AT
RECOGNISED
IN PROFIT AS AT
RECOGNISED
IN PROFIT AS AT
Deferred tax assets
Impairment allowance – (8) (8) 6 (2)
Office lease liability
1
(606) 3 (603) 34 (569)
Other (164) (205) (369) 78 (291)
Gross deferred tax assets (770) (210) (980) 118 (862)
Deferred tax liabilities
Investment properties 24,543 (3,614) 20,929 547 21,476
Derivative financial instruments 6,913 (2,835) 4,078 1,015 5,093
Office lease asset
1
598 (70) 528 (39) 489
Gross deferred tax liabilities 32,054 (6,519) 25,535 1,523 27,058
Share-based payment reserve – 164 – 68 –
Net deferred tax liability 31,284 (6,565) 24,555 1,709 26,196
1 The deferred tax on the office lease liability and office lease asset have been reallocated from the ‘Other’ line item and disclosed separately within this note. There is no change to the overall deferred tax
position in the respective periods.
(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 $000SJUNE 2024DECEMBER 2023
Opening balance 433 2,299
Taxation paid / payable 2,537 5,490
Imputation credits attached to dividends paid (3,194) (7,356)
Additional period end adjustment
2
224 –
Closing balance available to shareholders for use in subsequent periods – 433
2 The imputation credit account balance is in debit for the period ended 30 June 2024. The expectation is that the imputation credit account would never remain in a debit position, and additional payment will be
made to ensure the imputation credit account balance is in credit as at 31 March 2025.
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
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.
PFI
ANNUAL REPORT
2024
45
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
5. OTHER CONTINUED
5.3. Accounts receivable, prepayments and other assets
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
Accounts receivable4,6424,702
Provision for doubtful debts(8)(28)
Prepayments and other assets3,1805,132
Total accounts receivable, prepayments and other assets7,8149,806
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 $000S
JUNE
2024
DECEMBER
2023
Accounts payable 466 10,887
Accrued interest expense and bank fees 3,836 4,365
Accruals and other liabilities in respect of investment
properties 9,650 5,614
Accrued employee benefits 261 182
Accruals and other liabilities 5,574 1,253
Total accounts payable, accruals and other liabilities 19,787 22,301
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. 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 $000S
JUNE
2024
DECEMBER
2023
Financial Assets
Financial assets at amortised cost:
Cash at bank1,4811,187
Accounts receivable and other assets4,6344,674
Total – Financial assets at amortised cost6,1155,861
Financial assets at fair value through profit or loss:
Derivative financial instruments23,08221,712
Total – Financial assets at fair value through profit or loss23,08221,712
Total Financial Assets29,19727,573
Financial Liabilities
Financial liabilities at amortised cost:
Accounts payable, accruals and other liabilities19,27221,875
Lease liabilities2,0322,153
Borrowings673,940647,049
Total - Financial liabilities at amortised cost695,244671,077
Financial liabilities at fair value through profit or loss:
Derivative financial instruments4,7827,024
Total – Financial liabilities at fair value through
profit or loss4,7827,024
Total Financial Liabilities700,026678,101
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FINANCIAL STATEMENTS
5. OTHER CONTINUED
5.6. 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.
JUNE 2024DECEMBER 2023
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 3,704 (3,748) 3,478 (3,370)
Impact on equity 2,667 (2,699) 2,504 (2,426)
(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 5.5 approximates the Group’s maximum
exposure to credit risk. For certain receivables the Group holds bank guarantees, parent
company guarantees or personal guarantees.
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
5. OTHER CONTINUED
(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 2.2 years (31 December 2023: 2.4 years). All borrowings are due later than one year except for the PFI010
fixed rate bond and the Syndicated Bank Facility C, which the Group expects to repay (31 December 2023: later than one year except for the PFI010 fixed rate bond, maturing on
28 November 2024). Further details of the Group’s borrowings, including the maturities of the Group’s borrowings and undrawn facilities, are disclosed in note 3.1.
The table below analyses the contractual undiscounted cash flows of the Group’s financial liabilities (principal and interest) by the relevant maturity groupings based on the remaining
period as at 30 June 2024 and 31 December 2023.
ALL VALUES IN $000S
CARRYING
AMOUNT
CONTRACTUAL CASH FLOWS
0 - 1 YEAR 1 - 2 YEARS 2 - 5 YEARS > 5 YEARS TOTAL
Financial liabilities
Accounts payable, accruals and other liabilities19,27219,272–––19,272
Lease liabilities2,0322542751,3421612,032
Derivative financial instruments
1
(18,300)(6,699)(5,962)(7,414)(618)(20,693)
Borrowings673,940195,015250,609302,38825,893773,905
Total as at 30 June 2024676,944207,842244,922296,31625,436774,516
Accounts payable, accruals and other liabilities21,87521,875–––21,875
Lease liabilities2,1532442651,2913532,153
Derivative financial instruments
1
(14,688)(5,538)(4,090)(6,658)(241)(16,527)
Borrowings647,049148,044305,081286,73926,857766,721
Total as at 31 December 2023656,389164,625301,256281,37226,969774,222
1 The carrying amount of derivative financial instruments shown is the net position of both derivative financial instrument assets and derivative financial instrument liabilities.
5.6. Financial risk management continued
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FINANCIAL STATEMENTS
5. OTHER CONTINUED
5.6. Financial risk management continued
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to
continue as a going concern whilst maximising the return to shareholders through
maintaining an optimal balance of debt and equity to optimise the cost of capital. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares, 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 period.
The Group operates a Dividend Reinvestment Scheme (DRS) which allows eligible
shareholders to reinvest dividends in shares. The Board, at its sole discretion, may suspend
the DRS at any time and/or apply a discount to which shares are issued under the DRS.
5.7. Related party transactions
(i) Key management personnel and directors compensation
ALL VALUES IN $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Key management personnel
1
Short-term employee benefits 1,277 2,388
Post-employment benefits 78 111
Share-based payments 175 349
Directors' fees
2
352 665
Total 1,882 3,513
1 The figures above represent amounts processed in the Statement of Comprehensive Income in the
current and previous financial period. In the 2023 financial statements, the amounts shown in this
note disclosure for other long-term benefits represented the fair value of the vested Long Term
Incentive awards recognised in the financial statements. If the same methodology was applied in the
current financial period, total other long-term benefits would be nil.
2 In 2024, there were changes to the composition of the Board of Directors of the Group. Jeremy
Simpson was appointed as an independent director effective from 24 February 2024. Anthony
Beverley retired from his role as Chair of the Board of Directors on 3 April 2024 but remains on the
Board as an independent director. Following this change, Dean Bracewell stepped down from his role
as People Committee Chair to take on the role as Chair of the Board of Directors and David Thomson
took on the role of People Committee Chair. (2023: Angela Bull as appointed 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).
PFI
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FINANCIAL STATEMENTS
5. OTHER CONTINUED
(ii) Other related party transactions
The Group also has related party relationships with the following parties:
RELATED PARTYABBREVIATIONNATURE OF RELATIONSHIP(S)
The Board of
Directors
DirectorsThe Board of Directors.
Bayleys Valuation
Limited
BayleysAngela 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 the related party took place:
RELATED
PARTY
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Valuation fees paid Bayleys2218
Valuation fees owing
2
Bayleys711
2 Amounts owing as at 30 June 2024 and 31 December 2023 are included in the line item ‘Accounts
payable, accruals and other liabilities’ in the Consolidated Statement of Financial Position.
NUMBER
RELATED
PARTY
JUNE
2024
DECEMBER
2023
Shares held beneficially in the companyDirectors240,708195,708
Shares held non-beneficially
in the company
Directors––
No related party debts have been written off or forgiven during the period (2023: NIL).
5.8. Share-based payments
Long-term incentive plan (Equity settled)
PFI operates a long-term incentive plan (LTI Plan) for all members of the key management
personnel in the Group. Under the LTI Plan, Performance Share Rights (PSRs) are issued to
members of the key management personnel 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 key
management personnel with the Company’s performance over a multi-year period. Grants
of PSRs and outstanding PSRs at the end of the current or prior financial period were made
on 22 February 2021 (2021 Grant), on 21 February 2022 (2022 Grant), on 22 August 2023
(2023 Grant), and on 6 March 2024 (2024 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 2022 Grant under the LTI Plan had or 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 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).
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
5. OTHER CONTINUED
• The 2023 Grant and 2024 Grant under the LTI Plan have 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 dates
of 1 January 2023 and 1 January 2024. 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.
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
5. OTHER CONTINUED
5.8. Share-based payments continued
The following table reconciles the opening PSR balance as at 1 January 2024 to the closing PSR balance as at 30 June 2024. Please note that due to the change in the Company’s balance
date to 30 June, there were no shares eligible for vesting in the six-month period to 30 June 2024.
GRANT YEAR
2023
OPENING
(PSRS)
2023
GRANTED
(PSRS)
2023
VESTED
(PSRS)
2023
LAPSED
(PSRS)
2023
CLOSING /
2024
OPENING
(PSRS)
2024
GRANTED
(PSRS)
2024
VESTED
(PSRS)
2024
LAPSED
(PSRS)
2024
CLOSING
(PSRS)
2024 – – – – – 274,338 274,338
2023 – 246,840 (61,713) (20,570) 164,557 – – – 164,557
2022 111,273 – (20,862) (34,773) 55,638 – – – 55,638
2021 51,724 – (25,862) (25,862) – – – – –
Total 162,997 246,840 (108,437) (81,205) 220,195 274,338 – – 494,533
The PSRs outstanding at 30 June 2024 had a weighted - average contractual life of 1.22 years (31 December 2023: 1.37 years).
The LTI Plan has resulted in a share-based payment reserve totalling $570,000 as at 30 June 2024 (31 December 2023: $754,000).
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
2024 GRANT2023 GRANT2022 GRANT
Part BPart BPart APart B
Weighted average fair value at grant date$1.28$1.38$2.80$1.66
Share price at grant date$2.23$2.34$2.80$2.80
Expected volatility (weighted-average)15.4%15.4%N/A11.8%
Expected life (weighted-average)21 months16 months22 months22 months
Risk-free interest rate5.04%5.67%N/A2.23%
PFI
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2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
5. OTHER CONTINUED
The expected volatility and correlation measures are based on the standard deviation
and correlation of weekly returns of the property peer group, over a two year period
(2023: two year period).
The risk-free rate was based on government bond yields over a period of 1.82 years
(2023: 1.36 years).
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 all key management personnel will remain employed with the
Company on each of the vesting dates and that the non-market performance conditions
will be met.
5.8. Share-based payments continued5.9. 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 $000S
JUNE
2024
DECEMBER
2023
Right-of-use assets
1
Properties 1,748 1,884
Total right-of-use assets 1,748 1,884
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 2024 financial period
(31 December 2023: Nil).
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
Lease liabilities
Current
2
254 244
Non-current
3
1,778 1,909
Total lease liabilities 2,032 2,153
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.
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5. OTHER CONTINUED
5.9. Leases continued
(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 $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Depreciation charge of right-of-use assets
4
Properties (136) (320)
Total depreciation charge of right-of-use assets (136) (320)
4 Included in the line item ‘Administrative expenses’ in the Consolidated Statement of
Comprehensive Income.
ALL VALUES IN $000S
JUNE
2024
6 MONTHS
DECEMBER
2023
12 MONTHS
Interest cost
5
(53) (116)
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 the six month period ended 30 June 2024 was
$174,000 (31 December 2023: $196,000).
5.10. 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 ended 31 December
2023 which resulted in an increase of $1,070,000 for the works, over and above the initial
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.
5.11. Operating segments
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker. The chief operating decision-maker has
been identified as the Board of Directors. The Group is internally reported as a single
operating segment to the chief operating decision-maker.
5.12. Capital commitments
As at 30 June 2024, the Group had capital commitments totalling $35,975,000
(31 December 2023: $80,358,000) as follows:
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
Development capital commitments 33,469 72,990
Other capital commitments 2,506 7,368
Total capital commitments 35,975 80,358
Development capital commitments
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
30-32 Bowden RoadDesign and build (Green Star)
Land value on commencement 32,500 32,500
Development cost
1
67,914 64,114
Less: spend to date (57,676) (39,190)
Committed costs to complete 10,238 24,924
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
5. OTHER CONTINUED
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
78 Springs Road - Stage 1Design and build (Green Star)
Land value on commencement 37,817 37,817
Development cost
1
76,562 76,562
Less: spend to date (53,331) (28,496)
Committed costs to complete 23,231 48,066
Total development capital commitments 33,469 72,990
1 Excluding land value
Other capital commitments
ALL VALUES IN $000S
JUNE
2024
DECEMBER
2023
AddressProject
212 Cavendish DriveRefurbishment 1,550 –
12 Zelanian DriveCanopy extension & installation of
solar panels
956 1,338
45 Cryers RoadAcquisition (net of deposit paid) – 6,030
Total other capital commitments 2,506 7,368
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, Auckland, 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
(no later than 30 November 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
30 June 2024.
5.13. Subsequent events
On 2 July 2024, the Group made a second $25 million drawdown on the Group’s
uncommitted Note Purchase and Private Shelf Agreement with PGIM, Inc (also known as
Pricoa). The drawdown is for 8.5 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 a further
$25 million of the Group’s BNZ facility (also known as Syndicated Bank Facility C).
On 14 August 2024, the Group refinanced its $300 million syndicated bank facility by
extending the term of the two existing syndicate tranches, Syndicated Bank Facility A and
Syndicated Bank Facility B ($150 million each), by four to five years from 2 July 2025 and
2026 to 14 August 2028 and 2029 respectively. In addition, the Group has refinanced the
$25 million short term Syndicated Bank Facility C with BNZ into a new $100 million
three-year facility with an expiry date of 14 August 2027. These syndicated bank facilities
are provided by ANZ, BNZ, CBA and Westpac, each providing $100 million. Finally, the expiry
of the Bilateral CBA Bank Facility has also been extended from April 2028 to August 2029,
a five-year term.
On 9 August 2024, the Group entered into a Design and Build Agreement to Lease with
MiTek New Zealand Limited, who have pre-committed to a 12-year lease over a ~6,500 sqm
warehouse facility. As a result of this pre-commitment, the PFI Board has approved Stage 2
of the redevelopment of 78 Springs Road. Stage 2 will deliver a ‘dual-unit’ warehouse
facility with the balance of the development (4,800 sqm of warehouse) to be completed on
a speculative basis. Early works are expected to begin in December 2024, with the project
expected to complete in July 2026.
On 26 August 2024, the Board of Directors of the Company approved the payment of a cash
dividend of 2.2 cents per share to be paid on 11 September 2024. There will be no
imputation credits attached to this final dividend for the six months period ending 30 June
2024. 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
30 June 2024 in respect of this dividend.
5.12. Capital commitments continued
PFI
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report
To the shareholders of Property for Industry Limited
Our opinion
In our opinion, the accompanying consolidated financial statements (the financial statements) of
Property for Industry Limited (the Company), including its subsidiaries (the Group), present fairly, in
all material respects, the financial position of the Group as at 30 June 2024, its financial performance
and its cash flows for the six month period 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 30 June 2024;
● the consolidated statement of comprehensive income for the six month period then ended;
● the consolidated statement of changes in equity for the six month period then ended;
● the consolidated statement of cash flows for the six month period 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 has provided other services to the Group. This involved an evaluation of whether the
preconditions for assurance exist in preparation for assurance over greenhouse gas emissions.
The provision of these services have not impaired our independence as auditor of the Group.
PFI
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
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 period. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Description of the key audit matterHow our audit addressed the key audit matter
Valuation of investment properties
As disclosed in note 2.1 of the financial statements, the Group’s investment property portfolio
was valued at $2,050.5 million as at 30 June 2024.The valuation of the Group’s investment
property portfolio is inherently subjective due to, amongst other factors, the individual nature
of each property, location and the expected future rental income for each property. A small
percentage difference in any one of the key individual assumptions used in the property
valuations, when aggregated, could result in a material misstatement of the overall valuation
of investment properties and considering the significance of investment property to the Group,
this is a key audit matter.
The valuations were performed by independent registered valuers (the Valuers). The Valuers
are experienced in the markets in which the Group operates and are rotated across the
portfolio on a three-year end cycle, with the exception of certain properties as disclosed
in note 2.1 of the financial statements.
In determining a property’s valuation, the Valuers predominantly used two approaches 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. For properties under development, the residual approach
was used as this is a common approach for properties under development.
For each property, the Valuers take into account property specific information such as
the current tenancy agreements and rental income earned by the asset. They then apply
assumptions in relation to market capitalisation rate, net market rental, discount rate, rental
growth rate and terminal capitalisation rate. For properties under development, the valuation
incorporates deductions for estimated costs to complete and a profit and risk allowance.
Due to the unique nature of each property, the assumptions applied take into consideration
the individual property characteristics at a granular tenant by tenant level, as well as the
qualities of the property as a whole.
Given the inherent subjectivity and that there are alternative assumptions and valuation methods that
may result in a range of values, we performed the following procedures.
We held discussions with management to understand the movements in the Group’s investment
property portfolio; changes in the condition of any property; and the controls in place over the
valuation process.
In assessing the individual valuations, we read the valuation reports for all properties. We also held
separate discussions with each of the Valuers in order to gain an understanding of the assumptions
and estimates used and the valuation methodology applied. We also sought to understand and consider
restrictions imposed on the valuation process (if any) and the market conditions at balance date.
We confirmed with the Valuers that the valuation approach for each property was in accordance with
accounting standards and suitable for use in determining the fair value of investment properties as at
30 June 2024.
Our work over the assumptions focused on a sample of properties in the portfolio where the
assumptions used and/or year-on-year fair value movement suggested a possible outlier versus
market data. We engaged our own in-house valuation expert to critique and independently assess the
work performed and assumptions used by the Valuers on a sample basis. In particular, we obtained
an understanding of the key inputs in the valuation, agreed contractual rental and lease terms to lease
agreements with tenants, considered whether seismic assessments and/or capital maintenance
requirements had been taken into account in the valuations with reference to supporting documentation
and that changes in tenant occupancy risks were also incorporated. In addition, for properties under
development, we obtained evidence to support the estimated cost to complete and assessed the
reasonableness of profit and risk allowance deducted from the ‘as if complete’ valuation.
With regards to the impact of climate-related risks on the property valuations, while the Valuers
confirmed in our discussions that these were considered, the Valuers made no explicit adjustments
to their valuations as at 30 June 2024 in respect of climate-related matters.
We considered whether or not there was a bias in determining significant assumptions in individual
valuations and found no evidence of bias.
We also assessed the Valuers’ qualifications, expertise and their objectivity and we found no evidence
to suggest that the objectivity of any Valuer, in their performance of the valuations, was compromised.
It was also evident from our discussions with management and the Valuers and from our review of the
valuation reports that close attention had been paid to each property’s individual characteristics and its
overall quality, geographic location and desirability as a whole.
We considered the appropriateness of the disclosures made in the financial statements.
INDEPENDENT AUDITOR’S REPORT CONTINUED
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT CONTINUED
Our audit approach
Overview
Materiality
Audit scope
Key audit
matters
Overall Group materiality: $1.3 million, which represents approximately 5%
of profit before tax excluding fair value movements relating to investment
properties and derivative financial instruments.
We chose this benchmark because, in our view, it is reflective of the metric
against which the performance of the Group is most likely to be measured
by users.
We selected transactions and consolidated balances to audit based on the
overall Group materiality rather than determining the scope of procedures
to perform by auditing only specific subsidiaries or the Company.
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.
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, and the Climate-Related Disclosures report to be published at a later date.
Other than the Climate-Related Disclosures report which we will receive at a later date, we have
received all the other information expected to be included in the Annual Report.
Our opinion on the financial statements does not cover the other information and we do not and
will 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.
When we read the Climate-Related Disclosures report, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the Directors and use our
professional judgement to determine the appropriate action to take.
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.
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT CONTINUED
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 Samuel
Shuttleworth.
For and on behalf of:
Chartered Accountants Auckland
26 August 2024
PFI
ANNUAL REPORT
2024
59
DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
PERIOD ENDED
30 JUNE
2024
1
31 DECEMBER
2023
31 DECEMBER
2022
31 DECEMBER
2021
31 DECEMBER
2020
ALL VALUES IN $M UNLESS OTHERWISE NOTED
FINANCIAL PERFORMANCE
Net property income47.292.893.392.181.4
Profit before finance income/(expenses), other gains/(losses) and income tax41.182.484.884.675.5
Fair value (loss)/gain on investment properties and non-current assets classified as held for sale(4.2)(140.8)(56.7)392.572.5
(Loss)/profit before income tax25.5(98.8)(6.5)472.8135.7
Income tax benefit/(expense)(4.3)1.0(7.4)(20.0)(22.2)
(Loss)/profit and total comprehensive income after income tax21.2(97.8)(13.9)452.8113.5
Weighted average number of ordinary shares (‘000 shares)502,178502,119504,719503,302499,650
IFRS basic earnings per share (cents per share) 4.22 (19.48) (2.76)89.9722.71
DISTRIBUTIONS
Total comprehensive income after tax21.2(97.8)(13.9)452.8113.5
Distribution adjustments1.8142.658.5(406.1)(73.4)
Adjusted Funds From Operations (AFFO)23.044.844.646.740.1
AFFO per share (cents per share)4.588.928.839.298.03
Gross dividends paid relating to the year reported (cents per share)4.469.6710.199.999.73
Net dividends paid relating to the year reported (cents per share)4.158.308.107.907.70
AFFO pay-out ratio (%)90.7%93.1%91.7%85.1%95.9%
FIVE-YEAR PERFORMANCE SUMMARY
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
1 The results presented are for the six month period ended and as at 30 June 2024 and comparative period covers the 12 months ended and as at 31 December in respective periods. Accordingly, the amounts
presented may not be directly comparable.
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
FINANCIAL STATEMENTS
FIVE-YEAR PERFORMANCE SUMMARY CONTINUED
PERIOD ENDED
30 JUNE
2024
1
31 DECEMBER
2023
31 DECEMBER
2022
31 DECEMBER
2021
31 DECEMBER
2020
ALL VALUES IN $M UNLESS OTHERWISE NOTED
FINANCIAL POSITION
Investment properties2,050.51,998.32,096.22,158.91,524.8
Goodwill–––29.129.1
Other assets35.665.666.629.0133.5
Total assets2,086.12,063.92,162.82,217.01,687.4
Borrowings673.9647.0601.5598.7487.6
Other liabilities52.756.660.955.663.2
Total liabilities726.6703.6662.4654.3550.8
Total equity1,359.51,360.31,500.31,562.71,136.6
Closing shares on issue (‘000 shares)502,199502,129502,051505,494501,303
Net tangible (excluding goodwill) assets (cents per share)270.7270.9298.8303.4220.9
Gearing (%)32.9%32.0%28.5%27.7%30.0%
PROPERTY PORTFOLIO METRICS
Number of properties (#)9192949794
Number of tenants (#)126126132136148
Contract rent99.796.498.295.689.8
Occupancy (%)98.6%100.0%100.0%100.0%99.4%
Net lettable area including yard (sqm) 904,229 923,511 930,453 940,204 838,403
Weighted average lease term (years)5.075.065.085.405.28
Portfolio market capitalisation rate (%)5.8%5.6%5.0%4.4%5.5%
1 The results presented are for the six month period ended and as at 30 June 2024 and comparative period covers the 12 months ended and as at 31 December in respective periods. Accordingly, the amounts
presented may not be directly comparable.
PFI
ANNUAL REPORT
2024
61
DISCLOSURESCONTENTS2024 REVIEW
_ Stage 1 Springs
Road Development.
OTHER DISCLOSURES
PFI
ANNUAL REPORT
2024
62
DISCLOSURESCONTENTS2024 REVIEW
COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
PRINCIPAL ACTIVITY
Property for Industry Limited (PFI, the Company) is a listed industrial property investment
company. PFI and its subsidiaries, P.F.I. Property No. 1 Limited and P.F.I. Cover Limited
1
(collectively, 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 six-month period to 30 June 2024 (Financial
Period 2024, or FP24), nor in the classes of business in which the Company has an interest.
NZX WAIVERS
On 4 June 2024, PFI was granted a waiver from NZX Listing Rules 3.8.1(a), 3.8.1(b) and
3.8.1(d), to the extent that the NZX Listing Rules would otherwise require PFI to prepare full
disclosures regarding its compliance with the NZX Code in its FP24 Annual Report. A copy
of this waiver is available at https://www.propertyforindustry.co.nz/investor-centre/
company-announcements/
GOVERNANCE
A copy of PFI’s Annual Report for the year ended 31 December 2023 (FY23) is available on
the PFI website at https://www.propertyforindustry.co.nz/investor-centre/reports-and-
presentations/ and contains:
§
a statement on the extent to which PFI has followed the recommendations of the NZX
Corporate Governance Code (the NZX Code) during FY23, as required by NZX Listing
Rules 3.8.1(a) and 3.8.1(b). A description of PFI’s corporate governance policies,
practices, and processes by reference to the NZX Code’s eight key principles and
supporting recommendations can be found in pages 73-93 of PFI’s FY23 Annual Report.
§
an evaluation from the Board on PFI’s performance with respect to its diversity policy,
as required by NZX Listing Rule 3.8.1(d), which can be found on page 79 of PFI’s FY23
Annual Report.
During FP24, PFI has continued to apply the same corporate governance practices as those
set out in the FY23 Annual Report.
PFI’s Board has continued to evaluate the Company’s performance against its Diversity and
Inclusion Policy and formed the same conclusion as to performance against that policy for
FP24 as set out in the FY23 Annual Report.
BOARD COMPOSITION
As at 30 June 2024, there were six Directors of the Company, all of whom are independent.
The Directors of the Company who held office during FP24 and their status is as follows:
DIRECTOR STATUS
Dean BracewellIndependent Director
Board Chair
1
People Committee Chair
2
Anthony BeverleyIndependent Director
Board Chair
1
Angela BullIndependent Director
Carolyn SteeleIndependent Director
Audit and Risk Committee Chair
David ThomsonIndependent Director
People Committee Chair
2
Gregory Reidy
3
Independent Director
Jeremy Simpson
4
Independent Director
SUBSIDIARY COMPANIES – DIRECTORS
All current Directors of the Company are also Directors of P.F.I. Property No.1 Limited;
Dean Bracewell, Anthony Beverley, Angela Bull, Carolyn Steele, David Thomson, and
Jeremy Simpson.
As at 30 June 2024, Simon Woodhams, Craig Peirce, and Fronzuance Tiseli were Directors
of P.F.I. Cover Limited. Simon Woodhams and Craig Peirce are also officers of PFI.
(1) Dean Bracewell replaced Anthony Beverley as Chair of the Board effective 3 April 2024. Anthony
Beverley remains on the Board as an Independent Director.
(2) David Thomson replaced Dean Bracewell as Chair of the People Committee effective 3 April 2024.
(3) Independent Director Gregory Reidy retired from the Board effective 3 April 2024. Gregory Reidy
also retired as a director of P.F.I. Property No.1 Limited on that date.
(4) Jeremy Simpson joined the Board effective 27 February 2024.
(1) P.F.I. Cover Limited was incorporated in the Cook Islands during the six-month period to 30 June
2024, for the purpose of establishing a captive insurance programme for the Group.
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
DIRECTOR INDEPENDENCE
Director independence is determined in accordance with the requirements of the NZX
Listing Rules. The Board has determined that, as at 30 June 2024, all Directors of the
Company were independent: Anthony Beverley, Angela Bull, Carolyn Steele, David
Thomson, Dean Bracewell, and Jeremy Simpson. This assessment considered a range of
factors, including those described in Table 2.4 of the NZX Code, that may impact director
independence.
Anthony Beverley has served on the Board of PFI for 23 years and had been Chair of the
Board for five years until stepping down from that role on 3 April 2024. When assessing
independence, the Board considered the effect of Anthony Beverley’s length of tenure, and
has concluded that his length of tenure has not in practice impacted his 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, amongst other things, the other factors described in the NZX Code that
may impact Director independence.
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 periods is as follows:
FINANCIAL
YEAR MALEFEMALEGENDER DIVERSE
DIRECTORSOFFICERSSENIOR LEADERS
1
DIRECTORSOFFICERSSENIOR LEADERSDIRECTORSOFFICERSSENIOR LEADERS
FY23433201000
FP24433201000
DIRECTORS’ RELEVANT INTERESTS
Directors had no dealings in the Company’s financial products during FP24.
Details of Directors’ relevant interests in the Company’s financial products as at 30 June
2024 are as follows:
DIRECTOR NATURE OF RELEVANT INTEREST NUMBER OF SHARES
Dean BracewellBeneficial owner40,000
Gregory Reidy
1
Registered holder155,708
Jeremy SimpsonBeneficial owner45,000
No Director had a relevant interest in the Company’s bonds.
(1) Includes officers.
(1) Gregory Reidy, having ceased to be a director of the Company with effect from 3 April 2024,
remains subject to the disclosure requirements under section 297 of the Financial Markets
Conduct Act 2013 until 3 October 2024 (being the date which is 6 months following the date that
he ceased being a director of the Company).
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
Directors’ Interests Register
During the period, the Board authorised the renewal of the Directors’ and Officers’
insurance cover as at 30 June 2024 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 subsidiaries.
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 FP24. Any entry added by notices given by the Directors
during FP24 is denoted with a *. Any entry removed by notices given by the Directors
during FP24 is denoted with a ~.
DIRECTOR POSITIONCOMPANY
Angela BullDirectorBayley Corporation Limited
DirectorFoodstuffs (N.Z.) Limited
DirectorFoodstuffs South Island Limited
DirectorFoodstuffs (South Island) Properties
Limited
DirectorFulton Hogan Limited
DirectorFulton Hogan Land Development
Limited
DirectorMurdoch Manufacturing Limited
DirectorNorthwest Healthcare Properties
Management Limited
DirectorRealestate.co.nz Limited
Trust Board MemberSt Cuthbert’s College
DirectorStevenson Aggregates Limited
DirectorStevenson Concrete Limited
DirectorVital Healthcare Property Trust
Anthony BeverleyDirector; Chair of BoardArvida Group Limited
Director and ShareholderCarbon Systems (NZ) Limited
Director and ShareholderDC One H1 Limited
Director and ShareholderDC One H2 Limited
Director and ShareholderDryland Carbon Limited
Director and ShareholderDryland Manuka Limited
Director and ShareholderDryland Native Limited
Director and ShareholderGlazebrook Capital Limited
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
DIRECTOR POSITIONCOMPANY
Carolyn SteeleDirector; Chair of Audit and
Risk Committee
Green Cross Health Limited
Director; Chair of the BoardHalberg Foundation
DirectorInfratec New Zealand Limited
(subsidiary of WEL Networks
Limited)
DirectorNewpower Energy Limited
(subsidiary of WEL Networks
Limited)
DirectorNewpower Energy Services Limited
(subsidiary of WEL Networks
Limited)
Director; Investment
Committee Member
Oriens Capital GP 2 Limited
Director; Chair of Audit and
Risk Committee
Vulcan Steel Limited
Director; Chair of Audit and
Risk Committee
WEL Networks Limited
Dean BracewellDirectorAir New Zealand Limited
Director and ShareholderAra Street Investments Limited
Director and ShareholderDean Bracewell Limited
Executive Board MemberHalberg Foundation
DirectorPort of Tauranga Limited
DirectorTainui Group Holdings Limited~
Jeremy SimpsonTrusteePinc & Steel Cancer Rehabilitation
Foundation NZ*
Sole Director and ShareholderSouthern Land Enterprises Limited*
Other than noted in this report, there were no other entries recorded in the interest register
for the Company or any of its subsidiaries during FP24.
Substantial Product Holders as at 30 June 2024
As at 30 June 2024, the total number of ordinary shares on issue was 502,199,351. The
Company’s ordinary shares are the only quoted voting products the Company has on issue.
According to the Company’s records and notices received by the Company under the
Financial Markets Conduct Act 2013 (FMC Act), the persons, who, for the purposes of
section 293 of the FMC Act, were substantial product holders as at 30 June 2024 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%
FirstCape Group Limited26,072,6285.192%
PFI
ANNUAL REPORT
2024
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DISCLOSURESCONTENTS2024 REVIEW
COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
CLIMATE-RELATED DISCLOSURES
PFI is a climate-reporting entity under the FMC Act. The Group will publish its Climate-
related Disclosures for FP24 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 FP24 will be accessible on PFI’s website by
31 October 2024 via https://www.propertyforindustry.co.nz/sustainability/.
1
DONATIONS
The Company made the following donations during FP24:
§
$5,000 donation to the Sir John Kirwan Foundation
§
$2,000 donation to the Gut Foundation
§
$500 donation to Level Playing Field
The Company is a sponsor of Keystone New Zealand Property Education Trust and paid the
Trust $10,500 by way of sponsorship during the year.
PFI’s subsidiaries did not make any donations during FP24.
(1) As per clause 7 of the Financial Markets Conduct (Requirement to Include Climate Statements in
Annual Report) Exemption Notice 2023.
PFI
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2024
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COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
20 LARGEST REGISTERED SHAREHOLDERS AS AT 31 JULY 2024
HOLDER HOLDING % HOLDING
Custodial Services Limited67,113,03613.36%
Accident Compensation Corporation – NZCSD38,695,1967.71%
ANZ Wholesale Trans-Tasman Property Securities Fund –
NZCSD
25,586,4575.09%
BNP Paribas Nominees (NZ) Limited – NZCSD24,325,5554.84%
FNZ Custodians Limited22,997,3374.58%
New Zealand Depository Nominee Limited15,953,7833.18%
Forsyth Barr Custodians Limited14,790,7762.95%
Tea Custodians Limited, Client Property Trust Account – NZCSD12,932,1992.58%
HSBC Nominees (New Zealand) Limited – NZCSD12,301,5402.45%
Citibank Nominees (New Zealand) Limited – NZCSD9,642,9991.92%
Investment Custodial Services Limited7,642,5681.52%
Wildermoth Investment6,948,6051.38%
Admins Custodial Nominees Limited6,086,9801.21%
MFL Mutual Fund Limited – NZCSD5,949,8851.18%
PT (Booster Investments) Nominees Limited5,852,3841.17%
Mr. Mckee and Ms. Mckee5,566,3731.11%
ANZ Wholesale Property Securities – NZCSD5,501,9731.10%
Generate Kiwisaver Public Trust Nominees Limited5,463,3161.09%
Simplicity Nominees Limited4,924,7720.98%
Masfen Securities Limited4,767,7440.95%
Shares held by top 20 shareholders303,043,47860.34%
Balance of shares199,155,87339.66%
Total of issued shares502,199,351100.00%
SHAREHOLDER STATISTICS
Geographical spread
AS AT 31 JULY 2024
ORDINARY SHARES HOLDING % HOLDING
Auckland & Northern Region 173,676,916 34.57%
Hamilton & Surrounding Districts 112,269,759 22.36%
Wellington & Central Districts 143,103,739 28.50%
Dunedin & Southland 24,115,603 4.80%
Nelson, Marlborough & Christchurch 12,496,603 2.49%
Overseas 36,536,731 7.28%
Total 502,199,351 100.00%
Shareholder spread AS AT 31 JULY 2024
ORDINARY SHARES
NUMBER OF
HOLDERS HOLDING % HOLDING
Up to 4,999 1,213 3,017,530 0.60%
5,000 - 9,999 975 6,942,575 1.38%
10,000 - 49,999 1,869 39,220,882 7.81%
50,000 - 99,999 288 19,379,915 3.86%
100,000 - 499,999 246 49,352,394 9.83%
500,000 and above 82 384,286,055 76.52%
4,673 502,199,351 100.00%
PFI
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2024
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COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
20 LARGEST REGISTERED BONDHOLDERS AS AT 31 JULY 2024
HOLDER PFI 010 HOLDING PFI010 % HOLDING PFI 020 HOLDING PFI020 % HOLDING
Custodial Services Limited 24,013,000 24.01% 34,923,000 34.92%
Forsyth Barr Custodians Limited 19,800,000 19.80% 15,905,000 15.91%
FNZ Custodians Limited 8,290,000 8.29% 10,608,000 10.61%
Citibank Nominees (New Zealand) Limited - NZCSD – 0.00% 11,592,000 11.59%
Tea Custodians Limited Client Property Trust Account - NZCSD 6,776,000 6.78% 2,810,000 2.81%
NZPT Custodians (Grosvenor) Limited - NZCSD 8,467,000 8.47% 780,000 0.78%
HSBC Nominees (New Zealand) Limited - NZCSD 4,075,000 4.08% 3,920,000 3.92%
Generate Kiwisaver Public Trust Nominees Limited 2,000,000 2.00% 5,813,000 5.81%
Investment Custodial Services Limited 2,145,000 2.15% 1,328,000 1.33%
Public Trust - NZCSD 2,599,000 2.60% – 0.00%
Forsyth Barr Custodians Limited 1,286,000 1.29% 1,056,000 1.06%
Forsyth Barr Custodians Limited 1,197,000 1.20% 513,000 0.51%
FNZ Custodians Limited 930,000 0.93% 567,000 0.57%
NZX WT Nominees Limited 420,000 0.42% 372,000 0.37%
JBWere (Nz) Nominees Limited 730,000 0.73% – 0.00%
FNZ Custodians Limited 405,000 0.41% 244,000 0.24%
ANZ Bank New Zealand Limited – 0.00% 622,000 0.62%
JML Capital Limited – 0.00% 600,000 0.60%
Sandore Limited 500,000 0.50% – 0.00%
Forsyth Barr Custodians Limited 442,000 0.44% – 0.00%
Custodial Services Limited 185,000 0.19% 238,000 0.24%
Craig Paul Werner and Lea Lynn Werner 418,000 0.42% – 0.00%
Bank of New Zealand - Treasury Support 357,000 0.36% – 0.00%
Kiwigold.co.nz Limited – 0.00% 300,000 0.30%
Dunedin Diocesan Trust Board – 0.00% 250,000 0.25%
Forsyth Barr Custodians Limited – 0.00% 246,000 0.25%
Bonds held by top 20 Bondholders 85,035,000 85.04% 92,687,000 92.69%
Total Remaining Holders Balance 14,965,000 14.97% 7,313,000 7.31%
Total of issued Bonds 100,000,000 100.00% 100,000,000 100.00%
PFI
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2024
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COMPANY STRUCTURE AND STATUTORY INFORMATION
OTHER DISCLOSURES
REMUNERATION REPORT
PFI is pleased to present its remuneration report for the six-month period ended
30 June 2024 (FP24). 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 FP24.
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 FP24 and their status can be found
on page 63.
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.
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 during the financial period 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.
PFI last reviewed its remuneration policy in November 2023, 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 Senior Leadership Team and Directors and providing oversight
of the remuneration of PFI’s wider team of employees.
Bondholder spread: PFI010
AS AT 31 JULY 2024
BONDS NO. OF HOLDERS HOLDING % HOLDING
5,000 - 9,999 66 363,000 0.36%
10,000 - 49,999 395 7,379,000 7.38%
50,000 - 99,999 46 2,773,000 2.77%
100,000 - 499,999 39 6,677,000 6.68%
500,000 - 999,999 3 2,160,000 2.16%
1,000,000 and above 11 80,648,000 80.65%
Total 560 100,000,000 100.00%
Bondholder spread: PFI020 AS AT 31 JULY 2024
BONDS NO. OF HOLDERS HOLDING % HOLDING
5,000 - 9,999 40 231,000 0.23%
10,000 - 49,999 190 3,952,000 3.95%
50,000 - 99,999 27 1,530,000 1.53%
100,000 - 499,999 20 3,250,000 3.25%
500,000 - 999,999 5 3,082,000 3.08%
1,000,000 and above 9 87,955,000 87.96%
Total 291 100,000,000 100.00%
BONDHOLDER STATISTICS
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2024
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The People Committee must comprise at least two members, all of whom must be
Independent Directors. At 30 June 2024, the members of the People Committee were
David Thomson (Chair of the People Committee), Angela Bull and Dean Bracewell. David
Thomson, Angela Bull and Dean Bracewell were members of the People Committee at all
times during FP24 having joined the People Committee in March 2020, December 2022, and
May 2023 respectively. Effective from 3 April 2024, Dean Bracewell retired from his role as
People Committee Chair to take up the role of Board Chair. David Thomson became People
Committee Chair from 3 April 2024. All members of the People Committee during FP24
were Independent Directors.
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 14% 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 performance hurdles that are currently 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 pages 74 and 75. The value of PSRs awarded to participants in the LTI Plan is set at a
fixed amount which reflects between 12% 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.
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FP24 REMUNERATION OUTCOMES
Senior Leadership Team
The People Committee recommended, and the Board approved, the Senior Leadership
Team’s FP24 remuneration.
Following the preparation of the results for FP24, 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.
Payment of the STI earned in FY23 was made on 26 February 2024. STI payments for
FP24 will be made in August 2024 after the release of the FP24 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)
FP24 remuneration, and this was approved by the People Committee and Board via the
annual budgeting process.
External advice
PFI engages external consultants to provide market data and benchmarks in regard to
employment packages and pay practices. In respect of FP24 remuneration, the following
external consultants were engaged:
§
PricewaterhouseCoopers provided market remuneration data relating to executive levels
in 2023 that was taken into account when setting FP24 remuneration for the Senior
Leadership Team.
§
KPMG 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).
KEY PERFORMANCE SUMMARY
PFI’s key performance indicators relevant to the Senior Leadership Team’s STI and LTI
Plans over the past five financial periods are as follows:
FP24 FY23 FY22FY21FY20
Occupancy98.6%100.0%100.0%100.0%99.4%
Weighted Average
Lease Term5.07 years5.06 years5.08 years5.40 years5.28 years
FFO
1
5.03 cps10.03 cps10.21 cps11.07 cps9.67 cps
One year TSR
2
(%)N/A
3
-2%-17%4%27%
Two year TSR
2
(%)N/A
3
-19%-14%30%78%
Three year TSR
2
(%)N/A
3
-15%7%83%N/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.
(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. Please note that FFO for FP24 is for
a six-month period ended 30 June 2024.
(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.
(3) Whilst the LTI Plan was in operation during FP24, no portion of the LTI Plan was due to vest.
Accordingly, N/A has been entered for the one, two and three year TSR in FP24. The next vesting
of the LTI Plan is in relation to the year ended 31 December 2024.
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OTHER DISCLOSURES
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 the Chief
Executive Officer’s remuneration are as follows:
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) during the six-month period to 30 June 2024
was $368,372.
There is no commitment to making a severance payment in the Chief Executive
Officer’s contract.
Short Term Incentive (STI)
The Chief Executive Officer’s STI award is set as a fixed amount which 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 FP24 and FY23, the People Committee recommended, and the Board approved,
the payment of 100% of the potential STI payable to the Chief Executive Officer. The STI
awarded for FP24 was adjusted to reflect the six-month period from 1 January 2024 to
30 June 2024, with the value of the STI awarded in FP24 of $152,080 being approximately
half of the value of the STI awarded in FY23. The Chief Executive Officer’s FP24 STI was
assessed as earned in FP24 but will be paid after release of the FP24 annual results.
The Chief Executive Officer’s key performance indicators for the FP24 STI award are
outlined below:
MEASUREWEIGHTINGDESCRIPTION
Leadership10%Health and safety related targets.
Strategy 15%Strategy implementation and divestment related targets.
Portfolio &
Operations
15%Maintenance of key portfolio statistics, including
Occupancy and Weighted Averaged Lease Term, and
adherence to delivery targets for key projects.
Sustainability10%Sustainability-related targets.
Earnings40%Achievement of budgeted earnings outcome.
Financial10%Liquidity and debtor days related targets.
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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 30 June 2024 were made
on 21 February 2022 (FY22 Grant), on 22 August 2023 (FY23 Grant) and on 6 March 2024
(FY24 Grant)
1
.
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 FY22 Grant has three tranches with two separate performance hurdles applying
to each tranche. The three tranches enable a third of the PSRs to vest after one year,
two years and three years from the commencement date for those grants of 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 FY23 Grant and FY24 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 dates of those
grants of 1 January 2023 and 1 January 2024. 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.
§
Note that in respect of the FY22, FY23 and FY24 Grants, PFI does not intend to change
the vesting dates for these grants despite the change in balance date from 31 December
to 30 June.
§
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.
§
The LTI Plan uses a progressive vesting scale for determining the percentage of PSRs
that become eligible for vesting:
(1) Please note that the FY24 Grant is for the period 1 January 2024 to 31 December 2024. This is
different to FP24, which covers the period 1 January 2024 to 30 June 2024.
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–
The percentage of PSRs under the FY22 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
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 FY23 Grant and FY24 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 FP24.
Remuneration mix
The chart below illustrates the elements of the Chief Executive Officer’s remuneration
design for FP24:
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
FIXED
FixedVariable
EARNEDMAXIMUM
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Total FP24 CEO remuneration
The Chief Executive Officer’s total remuneration for the six-month period ended 30 June 2024, 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
FY19$450,000$31,711$481,711$200,000100%$71,810100%$271,810$753,521
FY20$500,000$30,824$530,824$225,000100%$162,391100%$387,391$918,215
FY21$550,000$40,199$590,199$250,000100%$238,164100%$488,164$1,078,363
FY22$576,640$44,939$621,579$263,250100%$134,20867%$397,458$1,019,037
FY23$628,538$50,529$679,067$286,943100%$115,13757%$402,079$1,081,146
FP24$333,125$35,247$368,372$152,080100%$0N/A$152,080$520,452
Note: the FP24 reporting period reflects a six-month period from 1 January 2024 to 30 June 2024 as a result of PFI changing its balance date to 30 June with effect in FP24.
FP24 STI Outcomes (Earned)
A breakdown of the amount earned by the Chief Executive Officer for achievement of the
FP24 STI key performance indicators is as follows:
STI AWARDEDEARNED% EARNED OF AWARDED
Leadership10%$15,208$15,208100%
Strategy 15%$22,812$22,812100%
Portfolio & Operations15%$22,812$22,812100%
Sustainability10%$15,208$15,208100%
Earnings40%$60,832$60,832100%
Financial10%$15,208 $15,208100%
Note: The quantum of the STI awarded for FP24 was adjusted to reflect the six-month period from
1 January 2024 to 30 June 2024.
FP24 LTI Outcomes (Vested)
Due to the change in the Company’s balance date to 30 June, there were no shares eligible
for vesting in the six-month period to 30 June 2024. Accordingly, the tables that track the
Company’s performance against the FFO and TSR performance hurdles in FP24 and show
the percentage and number of shares vested have not been included in this report.
(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.
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PSRs granted to the CEO as at 30 June 2024
A summary of the outstanding PSRs granted to the Chief Executive Officer under the FY22 Grant, FY23 Grant and FY24 Grant as at 30 June 2024 is as follows:
PSR AWARD
DAT E
VESTING DATEBALANCE
OF PSRS AT
31 DECEMBER
2023
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
PSRS AWARDEDMARKET PRICE AT AWARDPSRS LAPSEDPSRS VESTEDSHARES TO BE ISSUED / TRANSFERRED BASED ON VESTING OUTCOMESMARKET PRICE AT THE VESTING DATEISSUE / TRANSFER DAT E
21 Feb 202231 Dec 202426,6240N/A000N/AN/A26,624
22 Aug 202331 Dec 2024 & 202572,3580N/A000N/AN/A72,358
6 March 202431 Dec 2024, 2025 & 20260121,719$270,364000N/AN/A121,719
PFI intends to make a new grant of 62,364 PSRs to the CEO on or about the date of this remuneration report (the FY25 Grant). The number of PSRs to be awarded under the FY25 Grant has
been adjusted to reflect that the FY24 Grant was made earlier during 2024, with the value of the PSRs to be issued under the FY25 Grant being approximately half of the value of the PSRs
issued under the FY24 Grant.
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EMPLOYEE REMUNERATION BANDS
The following table notes the number of employees or former employees of the Company,
not being directors of the Company, who, during the six-month period of FP24, 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 RANGEFP24
$100,001 - $110,0002
$120,001 - $130,0001
$170,001 - $180,0001
$230,001 - $240,0001
$420,001 - $430,0001
$520,001 - $530,0001
Note: Due to the change in the Company’s balance date to 30 June, there were no shares
eligible for vesting in the six-month period to 30 June 2024, therefore the above figures do
not include any LTI awards vested.
There are no employees of the Company’s subsidiaries.
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 was 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:
ROLEPLUS GST (IF ANY)
Board Chair$175,000
Independent Director / Non-Executive Director$92,500
Audit and Risk Committee Chair$15,000
Audit and Risk Committee Member$7,500
People Committee Chair $13,500
People Committee Member$6,750
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
Simon Woodhams and Craig Peirce do not receive any director fees in respect of their
directorships of the Company’s subsidiary, P.F.I. Cover Limited.
Other than as noted in this report, neither the Company nor its subsidiaries have provided
additional remuneration or benefits to a director in respect of their directorships or in any
other capacity during FP24. Neither the Company nor its subsidiaries 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.
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Director remuneration outcomes
A breakdown of Board and Committee fees paid during the six-month period of FP24 are set
out in the table below (exclusive of GST, if any). Please note that the fees paid reflect
changes to Board composition during the financial period.
DIRECTOR BASE FEE
FEE FOR
AUDIT & RISK
COMMITTEE
FEE FOR
PEOPLE
COMMITTEE
TOTAL
REMUNERATION
RECEIVED
Anthony Beverley
1
$67,442$1,813$69,254
Angela Bull$46,000$3,375$49,375
Carolyn Steele
2
$46,000$7,500$53,500
David Thomson
3
$46,000$3,750$5,006$54,756
Dean Bracewell
4
$66,058$3,488$69,546
Gregory Reidy
5
$23,767$23,767
Jeremy Simpson
6
$31,775$31,775
Total$327,042$13,063$11,869$351,973
(1) Anthony Beverley stepped down from his role as Chair of the Board with effect 3 April 2024.
(2) Carolyn Steele served as Chair of the Audit and Risk Committee for the duration of FP24.
(3) David Thomson was appointed Chair of the People Committee with effect 3 April 2024.
(4) Dean Bracewell stepped down from his role as Chair of the People Committee and was appointed
as Chair of the Board effective from 3 April 2024.
(5) Gregory Reidy ceased to be a Director on 3 April 2024.
(6) Jeremy Simpson was appointed to the Board with effect 27 February 2024.
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DIRECTORY
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
Dean Bracewell (Board Chair)
Angela Bull
Anthony Beverley
Carolyn Steele
David Thomson
Jeremy Simpson
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 August 2024 and signed
on behalf of the Board by:
Carolyn Steele
Chair, Audit and Risk
Committee
Dean Bracewell
Chair, Board of
Directors
PFI
ANNUAL REPORT
2024
80
DISCLOSURESCONTENTS2024 REVIEW
REMUNERATION REPORT
OTHER DISCLOSURES
CALENDAR
insight
creative.co.nz
PFI233
AUGUST
§
FP24 Financial Period announcement
§
FP24 Annual report released
SEPTEMBER
§
FP24 Final dividend payment
§
FP24 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
MAY
§
FY25 Third-quarter announcement
JUNE
§
FY25 Third-quarter dividend payment
AUGUST
§
FY25 Full-year announcement
§
FY25 Annual report released
81
PFI
ANNUAL REPORT
2024
DISCLOSURES2024 REVIEWCONTENTS
YOUR
INDUSTRIAL
PROPERTY
EXPERTS
www.propertyforindustry.co.nz
CONTENTS
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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