Stride Property Group · NZX:SPG
Stride Property — HY22 Earnings Presentation
50 slides from Stride Property's earnings presentation, Nov 25, 2021
Slide 1: Stride Property Group Interim Results and Capital Raising
Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1
Slide 2: Disclaimer and Important Notice
Disclaimer and Important Notice To the maximum extent permitted by law, each Specified Person disclaims and excludes all liability (whether in tort (including negligence) or This presentation has been prepared by Stride Property Limited (SPL) and Stride Investment Management Limited (SIML) (SPL othe
Slide 3: Contents
Contents 4 Capital Raise Overview 6 HY22 Highlights 17 Interim Financial Results 22 Capital Management 25 Capital Raise 35 Conclusion 39 Glossary 41 Appendices Capitalised and technical terms are defined in the glossary on page 39 Stride Property Group Interim Results for the six months ended 30 Sep
Slide 4: Capital Raise Overview
Capital Raise Overview Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4
Slide 5: Capital Raise
Capital Raise Stride is undertaking a capital raise to provide greater flexibility in pursuing its strategic objective of growing its investment 46 Sale Street, Auckland 20 Customhouse Quay, management business Wellington Capital raise • Stride today announces a $120m raise consisting of a $100m und
Slide 6: HY22 Highlights
HY22 Highlights Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 6
Slide 7: Performance
Performance Stride Property Group (Stride) – Consolidated HY22 financial highlights • $30.1m net rental income, up 46.9% from HY21 ($20.5m) due to $532m Profit after income tax from property acquisitions undertaken since September 2020 continuing operations • $12.8m management fee income1, down 2.4%
Slide 8: Places
Places Stride Property Limited (SPL) Acquisitions • 46 Sale Street, Auckland – Office property acquired in June 2021 for $152m Refurbishment and upgrades • 22 The Terrace, Wellington - SPL is upgrading this building to 100% NBS and targeting 5 Star Green Star and 5 Star NABERSNZ ratings. Base build
Slide 9: Products
Products HY22 highlights HY22 highlights HY22 highlights • Net valuation growth +4.1% to $1.15bn1 • Net valuation growth +3.1% to $508.4m • Net valuation growth +12.7% to $737.7m • $73.3m new acquisitions completed • Queensgate rebuild with cinema • $42.7m new acquisitions completed • Dividend growt
Slide 10: Developments
Developments Developments are becoming an increasingly meaningful source of AUM growth in Stride’s Products, with a focus on sustainability becoming embedded into Stride’s development process Completions (last 12 Committed Remaining months) projects spend - $40m $16m - $37m $37m - $146m $19m $50m $4
Slide 11: Products
Products Since 31 March 2021, Stride’s AUM has grown by $439m to $3.4bn with external AUM increasing from $2.1bn to $2.4bn as at 30 September 2021. Current potential acquisitions and developments would further increase Stride’s AUM to $3.8bn Portfolio composition by value as at 30 September 2021 Off
Slide 12: SIML Management Contracts Value
SIML Management Contracts Value SIML management fees income growth The value of SIML’s management $16.3m Activity and performance fees contracts are not included on Stride’s Base fees balance sheet and therefore not $13.1m $12.8m $4.6m captured in Stride’s NTA of $2.24 $2.6m $9.2m $4.6m $7.3m $6.5m
Slide 13: SPL Places
SPL Places SPL – Office and Town Centre portfolios As at As at Lease expiry profile by Contract Rental SPL Portfolio1 30 Sep 21 31 Mar 21 as at 30 September 2021 Properties (no.) 15 14 47% Tenants (no.) 342 347 Net Lettable Area (sqm) 145,781 135,350 Net Contract Rental ($m) 60.9 54.5 WALT (years) 5
Slide 14: SPL Portfolio Metrics
SPL Portfolio Metrics SPL's look-through portfolio value2 When SPL’s directly held investment properties are combined with SPL’s look-through holdings in the other Stride Products, Retail SPL’s $1.7bn look-through portfolio1 shows strong investment Shopping Centre metrics, including 97.7% occupancy
Slide 15: People
People • New Director Ross Buckley appointed to the Stride Boards, as part of the ongoing Boards refresh, with Director John Harvey indicating he expects to retire during 2022 • SIML welcomed a new member to its executive team during HY22, with Jessica Rod appointed to the position of General Manage
Slide 16: Sustainability
Sustainability Stride is committed to developing and improving its sustainability practices, including understanding the impact of climate change on Stride’s business and the businesses of the Stride Products. Stride’s Board Sustainability Committee has set a Sustainability Strategy which guides its
Slide 17: Interim Financial Results
Interim Financial Results Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 17
Slide 18: Financial Performance
Financial Performance Stride – Consolidated Unaudited Unaudited Change 30 Sep 21 30 Sep 20 $m $m $m % Net rental income 30.1 20.5 +9.6 +46.9 Management fee income 12.8 13.1 (0.3) (2.4) Corporate expenses1 (16.9) (9.4) (7.5) (79.3) Profit before net finance expense, other income/(expense) and income
Slide 19: Distributable Profit
Distributable Profit1 Stride – Consolidated Unaudited Unaudited Change 30 Sep 21 30 Sep 20 $m $m $m % Profit before income tax (including discontinued operations) 69.5 57.0 +12.5 +21.9 Non-recurring, non-cash, and other adjustments: Net change in fair value of investment properties (13.4) (21.1) +7.
Slide 20: AFFO Distributable Profit
AFFO1 Distributable Profit Stride – Consolidated Unaudited Unaudited Change 30 Sep 21 30 Sep 20 $m $m $m % Distributable profit after current income tax 24.2 21.1 +3.1 +14.7 Adjustments to funds from operations: - Maintenance capital expenditure (1.1) (1.0) (0.0) (2.0) Adjusted Funds From Operations
Slide 21: Financial Summary
Financial Summary Stride – Consolidated 30 Sep 21 v As at As at 31 Mar 21 30 Sep 21 31 Mar 21 Change Investment Properties1 ($m) 1,216.4 1,050.5 165.9 Bank debt drawn ($m) 429.1 261.0 168.1 Equity ($m) 1,062.2 1,017.8 44.4 Shares on issue (million) 473.2 472.8 0.4 NTA per share $2.24 $2.15 $0.09 Adj
Slide 22: Capital Management
Capital Management Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 22
Slide 23: Capital Management – Debt Facilities
Capital Management – Debt Facilities Highlights Pro forma1 As at As at • SPL’s next debt facility to mature is for $170m in August 2022, Debt facilities 30 Sep 21 30 Sep 21 31 Mar 21 however post balance date commitments have been secured for Banking facility limit an extension of this facility to A
Slide 24: Capital Management – Cost of Debt
Capital Management – Cost of Debt SPL - (excl. Industre joint operation assets and debt) Highlights Cost of debt As at 30 Sep 21 As at 31 Mar 21 • As at 30 September 2021, $220m of swaps were active, representing 51.3% of drawn debt at that time Weighted average cost of debt 2.87% 4.13% (incl. margi
Slide 25: Capital Raise
Capital Raise Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 25
Slide 26: Offer Overview
Offer Overview • Stride is seeking to raise $120m through a $100m underwritten Placement1 and a $20m non-underwritten Retail Offer2 (with the ability to accept additional applications Capital Raise1,2 $120m at Stride’s discretion) (the Placement and the Retail Offer together are the Offer) • Proceed
Slide 27: Use of Proceeds
Use of Proceeds Pro forma SPL LVR (%) • The net proceeds of the Offer received by SPL will initially be used to repay bank debt • Upon completion of the Offer, Stride expects pro forma (9.3%) (1.9%) bank covenant LVR2 to decrease to 29.8% assuming a $120m capital raise (from 41.0% as at 30 September
Slide 28: Offer Details
Offer Details Structure • Underwritten Placement to eligible investors • Non-underwritten Retail Offer to all eligible shareholders with an address in New Zealand on the Record Date, under which each eligible shareholder can apply for up to $50,000 of new stapled securities • Offer structure is desi
Slide 29: Offer Timetable
Offer Timetable Placement Announcement of Offer and cleansing notice released to the NZX Thursday 25 November 2021 Stride enters trading halt and bookbuild undertaken Thursday 25 November 2021 Announcement of results of Placement and trading halt lifted Friday 26 November 2021 Placement settlement d
Slide 30: Key Risks
Key Risks This section outlines the key risks which Stride has identified in connection with the Offer. Stride's business activities are subject to a number of risks which may, individually or in combination, affect the future operating and financial performance of Stride and the value of an investm
Slide 31: Key Risks (cont.)
Key Risks (cont.) Key Risk Details Key risks relating to the portfolio Stride is exposed to the retail • Stride directly owns two retail shopping centres located in Auckland, has a 50% interest in another retail shopping centre located in Johnsonville, property market sector Wellington and has retai
Slide 32: Key Risks (cont.)
Key Risks (cont.) Key Risk Details Key risks relating to the portfolio (cont.) Property valuation risk • This presentation includes valuations of SPL's portfolio as at 30 September 2021 as assessed by SPL's external independent valuers, which have been reviewed by Stride’s auditors, PwC, and approve
Slide 33: Key Risks (cont.)
Key Risks (cont.) Key Risk Details Key risks relating to the portfolio (cont.) Seismic risk and other natural • The process undertaken and standards which are applied in seismic assessments evolve over time as the engineering profession's understanding of disasters (cont.) seismic events develops. T
Slide 34: Key Risks (cont.)
Key Risks (cont.) Key Risk Details Other key risks relating to the business (cont.) Risk of changes in • More tenants are demanding sustainable environments, including buildings that have a specific Green Star or equivalent rating. Green Star is a rating environmental requirements system administere
Slide 35: Conclusion
Conclusion Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 35
Slide 36: Conclusion
Conclusion • Stride will continue to pursue its investment management strategy and focus on achieving further growth across its investment management business • To help deliver this growth, Stride will remain active in supporting its existing products to continue to grow and enhance these portfolios
Slide 37: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new stapled securities (New Stapled No advertisement, invitation or document relating to the New Stapled Securities has been Securities) of Stride in any jurisdiction in which it would be unlawful. In particular, this or
Slide 38: Thank you
Stride Property Group Thank you Level 12, 34 Shortland Street Auckland 1010, New Zealand PO Box 6320 Victoria Street West Auckland 1142, New Zealand P +64 9 912 2690 W strideproperty.co.nz Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DI
Slide 39: Glossary
Glossary Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 39
Slide 40: Glossary
Glossary AUM Assets under management Contract Rental is the amount of rent payable by each tenant, plus other amounts payable to SPL (or the relevant landlord) by that tenant under the terms of the relevant lease as at Contract Rental the relevant date, annualised for the 12-month period on the basi
Slide 41: Appendices
Appendices Stride Property Group Interim Results for the six months ended 30 September 2021 and Capital Raising NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 41
Slide 42: Appendix 1: About Stride Property Group
Appendix 1: About Stride Property Group Stride Property Group Our people Specialist real estate Investment investment manager philosophy • A fund manager and investor, • Auckland based head office Managing one of New Zealand’s • Places, People, Performance listed on the NZX largest property portfoli
Slide 43: Appendix 2: Stride Fund Structure
Appendix 2: Stride Fund Structure Stride Property Group (NZX:SPG) NZX’s only SPL and SIML SPL stapled security SIML shares are stapled and trade together Stride Property Limited Stride Investment Management on the NZX under (property / investment holding entity) Limited (property management entity)
Slide 44: Appendix 3: SIML Assets Under Management
Appendix 3: SIML Assets Under Management $3,806m $254m5 $1,301m $1,047m4 $55m1 $37m3 $2,505m $2,395m $19m2 $116m $165m $2,113m $527m $527m $508m $466m $738m $792m $792m $610m $1,149m $1,185m $1,185m $1,038m External AUM External AUM External AUM External AUM Industre Diversified Investore Pro forma
Slide 45: Appendix 4: Portfolio by Sector
Appendix 4: Portfolio by Sector Overview Total Portfolio Office Industrial Large Format Retail Shopping Centres Office and retail portfolio1 Properties (no.) 15 11 42 Net Contract Rental ($m) 60.9 39.1 21.8 WALT (years) 5.6 6.3 4.2 Occupancy Rate (% by area) 96.5 96.1 96.8 Portfolio Valuation ($m) 1
Slide 46: Appendix 5: SPL Portfolio as at 30 September 2021
Appendix 5: SPL Portfolio as at 30 September 2021 Office - Location by Contract Rental Office - Tenant classification by Contract Rental Professional Services 44% and Insurance Information Technology 16% NZ Government Agencies 12% Auckland 40% Banking 12% Wellington Other 10% 60% Specialty retail 6%
Slide 47: Appendix 6: Stride Pro Forma Balance Sheet
Appendix 6: Stride Pro Forma Balance Sheet $m 30 Sep 21 Placement2 Retail Offer2 Pro forma post Offer Cash and cash equivalents 22.5 22.5 Investment properties1 1,237.5 1,237.5 Other assets 335.0 335.0 Total assets 1,595.0 1595.0 Bank borrowings 427.4 (97.9) (19.6) 309.9 Other liabilities 105.4 105.
Slide 48: Appendix 7: Shareholder returns
Appendix 7: Shareholder returns Stride continues to outperform the S&P/NZX All Real Estate Index Stride has outperformed against the S&P/NZX All Real Estate index since inception Outperformance highlights the defensive nature of Stride’s broad direct and indirect property asset class exposure, and g
Slide 49: Appendix 8
Appendix 8 Net Contract Rental $7.9m $0.4m $0.6m $60.9m ($2.0m) ($0.5m) ($0.1m) $54.5m As at Office acquisition Expiries Rent review Net leasing impact Net opex Other As at 31 Mar 21 recoverability 30 Sep 21 Profit before other income and income tax from continuing operations $11.1m $0.2m $0.2m ($1.
Slide 50: Appendix 8 (cont.)
Appendix 8 (cont.) Net Tangible Asset per share $0.08 $0.01 $2.24 $0.04 $2.15 $0.03 ($0.02) ($0.05) As at Profit before tax Income tax expense Dividends paid Net change in fair Share of profit in Movement in cash As at 31 Mar 21 value of Investment associate flow hedges, net of 30 Sep 21 properties