Fact Sheet initial public offering of ordinary shares in 13 September 2021 - Sorted Smart Investor
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Fact Sheet initial public offering of ordinary shares in 13 September 2021 Arranger, Bookrunner and Joint Lead Manager Joint Lead Managers
Important
Notice 20 Customhouse Quay,
WellingtonRetail
Fact Sheet
Fabric Property Limited (Fabric) is the issuer of the shares to be issued under
the offer (Offer) to which this fact sheet (Fact Sheet) relates. A product
disclosure statement dated 13 September 2021 (PDS), which sets out the
terms and conditions of the Offer, is available, and can be obtained from
www.business.govt.nz/disclose, offer number (OFR13166).
You should read the PDS and the information contained on the Offer Register
before applying for any Offer Shares. You can also seek advice from a financial
advice provider to help you to make an investment decision. You should seek your
own tax advice in relation to the Offer Shares.
Nothing in this Fact Sheet constitutes an invitation to subscribe for, or an offer
of, shares, securities or financial products to any person, in any country in which
it would be unlawful to do so. No information set out in this Fact Sheet will form
the basis of any contract. This Fact Sheet is not a product disclosure statement,
prospectus or other offering document and is for information and reference only.
The information set out in this Fact Sheet does not constitute investment advice,
or a recommendation, on whether you should acquire any security or product, is
in summary form, does not purport to contain all of the information that may be
relevant to any investment decision and does not take into account your specific
financial, investment, taxation or other circumstances. You should consult your own
advisers before making any financial decision. No person guarantees the Offer
Shares nor warrants or guarantees their performance.
This Fact Sheet includes certain financial measures that are "non-GAAP financial
information" under Guidance Note 2017: 'Disclosing non-GAAP financial
information' published by the New Zealand Financial Markets Authority. This Fact
Sheet also includes certain pro forma financial information to reflect the impact
of certain events and matters as described in the PDS. The pro forma financial
information provided in this Fact Sheet is for illustrative purposes only and has not
been prepared in accordance with GAAP. Non-GAAP financial information does
not have a standardised meaning prescribed by GAAP and therefore may not be
comparable to similar financial information presented by other entities. Recipients
are cautioned not to place undue reliance on any non-GAAP financial measures
included in the following material.
Fabric, its shareholder, the Joint Lead Managers, their respective affiliates and
advisers, and each of their respective directors, shareholders, employees and
representatives make no representation, warranty or undertaking, express or
implied, as to the fairness, accuracy, reliability or completeness of, and to the
maximum extent permitted by law hereby disclaim and shall have no liability for
any loss arising from, this Fact Sheet. This Fact Sheet is not intended for release
outside of New Zealand.
Application has been made to NZX Limited (NZX) for permission to list Fabric and
to quote its shares on the NZX Main Board. It is expected that Fabric will be given
a Non-Standard designation. However, NZX accepts no responsibility for any
statement in this Fact Sheet. The NZX Main Board is a licensed market operated by
NZX, which is a licensed market operator, regulated under the Financial Markets
Conduct Act 2013.
Capitalised terms used in this Fact Sheet but not defined have the meanings given
to those terms in the PDS.
3Fabric at a
Retail
Fact Sheet
Glance
Fabric has been Fabric currently owns 10 office properties located in Auckland and Wellington
(Current Portfolio), and has a conditional agreement to acquire a further property
established by Stride
at 110 Carlton Gore Road, Newmarket, Auckland (the CGR Property), which is
Property Limited (SPL) currently under development.
to invest in quality,
The Current Portfolio demonstrates a number of desirable metrics as at 31 July
sustainable office 2021, including a WALT of 6.3 years, 98% occupancy and a strong weighting
properties that exhibit to high quality tenants such as New Zealand Government departments, banks,
'enduring demand'. professional services and insurance firms.
Fabric's properties will continue to be managed by Stride Investment Management
Limited (SIML or the Manager), the real estate investment management business
that, together with Stride Property Limited (SPL), forms part of Stride Property
Group (Stride). Stride will also continue its involvement with Fabric through
SPL holding an initial cornerstone shareholding of approximately 25% to 32%
upon Listing.
Fabric will maintain a capital structure that supports a conservative and flexible
balance sheet for growth, with a long term target gearing range of approximately
30% to 40%. At completion of the Offer, Fabric is forecast to have an LVR of
15.8%, with an LVR of 35.4% on a pro forma basis including the acquisition of the
CGR Property.
The Board will target a cash dividend to Shareholders that is between 90% and
100% of Distributable Profit. This equates to an implied cash dividend yield of
4.2% - 4.4% in FY23F Pro Forma. Fabric will be a listed PIE with effect from the
date of Listing.
Portfolio Diversification
Current Portfolio1 Pro forma2
Location by portfolio value Grade by portfolio value Green Assets2 by portfolio value
44% 23% 32%
30%
58 %
42 %
54% 42% 58%
16%
13%
56 %
64% 68%
Auckland Wellington Prime A Grade B Grade Green Other
4Retail
Fact Sheet
Key Portfolio Metrics1
Auckland Wellington Current Acquisition Fabric Portfolio
(current) (current) Portfolio (pro forma)2 (pro forma)2
Properties (no.) 6 4 10 1 11
Valuation3 ($NZm) 301 413 714 218 931
NLA (sqm) 36,820 43,692 80,512 14,095 94,607
Occupancy (by NLA) 96% 100% 98% 100% 98%
Tenants (no.) 56 60 116 2 118
WALT (years) 4.7 7.5 6.3 10.5 7.2
Net Contract Rental ($m) 17.0 21.2 38.2 10.9 49.0
Average market 5.2% 5.0% 5.1% 4.5% 5.0%
capitalisation rate
1. As at 31 July 2021, assuming the acquisition by Fabric of the SPL Office Properties had completed as at that date. The valuation of the property at
22 The Terrace, Wellington, is as at 31 August 2021 as if the current works had been completed.
2. As at 31 July 2021, assuming the acquisition of the CGR Property had completed as at that date. The CGR Property is currently subject to one unconditional
lease with a further lease to be entered into as a condition of the acquisition, which will result in the property being 41% leased. The vendor has committed
to take a lease of any vacant space on completion of the development to provide a minimum net rental, WALT and occupancy. This committed minimum net
rental, WALT and occupancy have been reflected in the pro forma metrics.
3. Excludes lease liabilities.
Key dates for the Offer Institutional Offer and Bookbuild 21 September 2021
Final Price announced and allocation 22 September 2021
of Offer Shares between Broker Firm
Offer, Stride Shareholder Offer and
Institutional Offer
Broker Firm Offer and Stride 22 September 2021
Shareholder Offer opens
Broker Firm Offer and Stride 30 September 2021
Shareholder Offer closes
Settlement and allotment 5 October 2021
Expected date of quotation and 6 October 2021
commencement of trading of the Shares
on the NZX Main Board
Expected mailing of holding statements 11 October 2021
Expected date of first dividend payment March 2022
following the Offer
The above dates are indicative only and may change.
5The Offer
Retail
Fact Sheet
What is the Offer? An offer of 192.3 million - 241.71 million new Shares by Fabric (representing 42.0% to
50.6% of the Shares on issue upon Listing).
Size of the Offer $250 million to $290 million
Use of proceeds Amount Use of proceeds
$233.5 million - $272.7 million • Fund the CGR Loan and the Acquisition
• Repay part of the SPL Advance
$16.5 million - $17.3 million Fund Offer costs
$250.0 million - $290.0 million Gross proceeds from the Offer
Structure of the Offer The Offer comprises:
• the Stride Shareholder Offer, which is available to Eligible Stride Shareholders;
• the Broker Firm Offer, which is available to New Zealand resident clients of selected
NZX Firms who are not in the United States and have received a firm allocation of
Offer Shares from that NZX Firm; and
• the Institutional Offer, which is an invitation to selected NZX Firms and Institutional
Investors to apply for Offer Shares.
SPL proposes to distribute Shares to Stride shareholders under the Demerger so
that existing Stride Shareholders will hold approximately 24.8% to 25.8% of Fabric
following the Offer. SPL, being the existing Shareholder of Fabric, is expected to hold
approximately 24.6% to 32.2% of the total Shares upon Listing.
There is no general public offer. Members of the public wishing to subscribe for Offer
Shares must be allocated Offer Shares by an NZX Firm under the Broker Firm Offer, or
must be offered Offer Shares under the Stride Shareholder Offer.
No person may apply for Offer Shares (including through an NZX Firm or other approved
financial intermediary) unless they have obtained a copy of the PDS.
Fabric intends to quote its Shares on the NZX Main Board only.
Offer pricing The Indicative Price Range is $1.20 to $1.30 per Offer Share. The Indicative Price Range
may be changed at any time by Fabric.
All Offer Shares will be issued at the Final Price. The Final Price will be set by way of
the Bookbuild, expected to take place on 21 September 2021, and is expected to be
announced and posted on the Offer website (www.shareoffer.co.nz/Fabric) following
the Bookbuild.
The Bookbuild is a process through which selected Institutional Investors and NZX Firms
submit bids for the number of Offer Shares they wish to purchase across a range of
prices for the Offer Shares. That information is then used to assist with the determination
of the Final Price and allocations of Offer Shares.
Fabric, in agreement with the Joint Lead Managers, will set the Final Price following the
Bookbuild. Fabric reserves the right to set the Final Price within, above or below the
Indicative Price Range.
1. The range is calculated based on Fabric issuing such number of Offer Shares to raise the Minimum Raise at the upper end of the Indicative Price Range and
the Maximum Raise at the lower end of the Indicative Price Range.
6Fabric
Retail
Fact Sheet
Financial
Information
7Retail
Fact Sheet
Selected financial information1 FY22F FY23F Pro Forma FY23F
12 Months Ending 12 Months Ending 12 Months Ending
31 March 20222 31 March 20233 31 March 20234
Forecast Forecast Forecast
NZ$000 Statutory Statutory Pro Forma
Net rental income 30,153 38,803 43,692
EBITDA 14,526 37,081 38,988
Distributable Profit5 21,367 24,962 26,550
Adjusted Funds From Operations6 18,244 22,001 23,589
Net tangible assets (NTA)7 599,504 596,571 595,326
Key investment metrics FY22F FY23F Pro Forma FY23F
Distributable Profit per Share (CPS) 9.0 - 9.4 5.3 - 5.5 5.6 - 5.8
Adjusted Funds From Operations per Share (CPS) 7.7 - 8.0 4.6 - 4.8 5.0 - 5.2
Dividends per Share (CPS)8 2.9 - 3.0 5.0 - 5.2 5.3 - 5.5
Implied cash dividend yield9 3.6% - 3.8% 4.0% - 4.2% 4.2% - 4.4%
Implied gross dividend yield 10
3.6% - 3.8% 4.1% - 4.3% 4.2% - 4.4%
Earnings per Share (CPS) (as determined in accordance 2.3 - 2.3 4.0 - 4.2 4.1 - 4.2
with NZ GAAP)
Price/earnings per Share (where earnings is determined 53.0x - 55.5x 29.7x - 31.0x 29.3x - 30.7x
in accordance with NZ GAAP)
Implied enterprise value / EBITDA 56.5x - 58.0x 24.7x - 25.3x 23.5x - 24.1x
NTA per Share (NZ$)11 $1.27 - $1.31 $1.26 - $1.30 $1.26 - $1.30
Price / NTA per Share12 0.95x - 0.99x 0.95x - 1.00x 0.96x - 1.00x
Implied gross dividend yield based on individual tax rates13
10.5% taxpayer 4.0% - 4.2% 4.5% - 4.7% 4.7% - 5.0%
17.5% taxpayer 4.4% - 4.6% 4.8% - 5.1% 5.1% - 5.4%
30.0% taxpayer 5.1% - 5.4% 5.7% - 6.0% 6.1% - 6.3%
33.0% taxpayer 5.4% - 5.6% 5.9% - 6.2% 6.3% - 6.6%
39.0% taxpayer 5.9% - 6.2% 6.5% - 6.8% 6.9% - 7.3%
8Retail
Fact Sheet
Percentage
Key Offer statistics14 of ownership
Indicative Price Range15 $1.20 - $1.30
Number of Offer Shares 192.3m - 241.7m 42.0% - 50.6%
Number of Shares being distributed by SPL to Stride shareholders 118.3m 24.8% - 25.8%
Number of Shares held by SPL following the Offer 117.3m - 147.3m 24.6% - 32.2%
Total number of Shares following the Offer16 457.9m - 477.3m 100%
Total Offer size (gross proceeds of the Offer) $250m - $290m
Implied market capitalisation17 $572.8m - $595.3m
Implied enterprise value18 $681.1m - $703.6m
1. Financials are based on the PFI Case raise of $250 million, being the Directors' best estimate at the date of the PDS.
2. FY22F reflects the partial impact of the acquisition of the SPL Office Properties and Sale Street Property. No management fees or interest on the SPL Advance
have been forecast to be payable in the period prior to Listing. Accordingly, FY22F is not representative of a full financial year.
3. FY23F represents the first financial period where the Current Portfolio is held for a full 12-month period. However, the full earnings impact of the Acquisition
will not come into effect until FY24 following its expected settlement towards the end of FY23.
4. Pro Forma FY23F represents the statutory FY23F financials adjusted as if the Acquisition had settled as at 1 April 2022. Pro Forma FY23F is included to
provide an indication of the full year impact of the Acquisition, which would otherwise only have a partial impact during FY23F.
5. Distributable Profit is a non-NZ GAAP financial measure adopted by Fabric to assist Fabric and investors in assessing Fabric's profit available for distribution.
Distributable profit is presented to enable investors to see an earnings measure which more closely aligns to Fabric's underlying and recurring earnings
from its operations. It is defined as profit/(loss) before income tax adjusted for determined non-recurring and/or non-cash items (including non-recurring
adjustments for incentives payable to major tenants for lease extensions, interest on loan advanced for investment property and rental guarantee received)
and current tax. Refer to the non-NZ GAAP reconciliation table in the Supplementary Financial Information (which is available on the Offer Register).
6. Adjusted Funds From Operations (AFFO) is also a non-NZ GAAP measure adopted by Fabric and is intended as a supplementary measure of operating
performance. AFFO has been determined based on guidelines established by the Property Council of Australia. Cash spent during the period on capital
expenditure as part of maintaining a building's grade/quality, but not expensed as part of Distributable Profit after current income tax, is adjusted to enable
investors to see the cash generating ability of the business. Refer to the non-NZ GAAP reconciliation table in the Supplementary Financial Information.
7. NTA represents the total assets of Fabric, excluding intangible assets (Fabric does not carry any intangible assets on its balance sheet), less total liabilities.
8. Dividend per Share is based on the application of Fabric's dividend policy (see Section 6.4 of the PDS (Dividend Policy)) to the Distributable Profit per Share
over the relevant accounting period and the range of total number of Shares on issue following the Offer. Dividend per Share includes all earnings in the
relevant financial period.
9. Implied cash dividend yield is the Dividend per Share divided by the Indicative Price Range. The FY22 implied cash dividend yield is the forecast dividends
paid by Fabric post Demerger, annualised for a full 12 month period.
10. Implied gross dividend yield is the implied cash dividend yield plus imputation credits and other tax credits expected to be attached to the dividend.
11. NTA per Share is calculated on NTA at the close of the relevant financial period divided by the total Shares on issue which are derived from the Indicative
Price Range.
12. Price / NTA per Share is calculated by dividing the Indicative Price Range by NTA per Share.
13. Fabric will be a listed PIE with effect from 6 October 2021 and from this date is subject to the taxation regime for listed PIEs. The implied gross dividend yields
show the gross dividend yields that a New Zealand resident taxpayer, at each marginal income tax rate, would require to get the same cash dividend yield as
they do under the PIE taxation regime for a listed PIE.
14. Ranges in the Offer statistics are calculated based on the number of Offer Shares that would be issued at each end of the Indicative Price Range, based on
the PFI Case raise of $250 million and Maximum Raise of $290 million.
15. The Indicative Price Range is indicative only and may be changed at any time by Fabric.
16. The total number of Shares following completion of the Offer has been calculated based on the addition of the three categories of Shares immediately above
under a PFI Case raise, with SPL's holding being at the bottom end of the range if the number of Offer Shares at the top end of the range are issued (and vice
versa). Under the Maximum Raise ($290 million) a further $40 million of Offer Shares are issued, with SPL being paid the net proceeds by Fabric in repayment
of part of the SPL Advance.
17. Implied market capitalisation is the value of all of Fabric's equity securities, as implied by the price of the Offer Shares being offered. It tells you what Fabric is
proposing that Fabric's equity is worth.
18. Implied enterprise value (EV) is a measure of the total value of the business of Fabric, as implied by the price of the Offer Shares being offered. Implied
enterprise value is the amount that a person would need to pay to acquire all of Fabric's equity securities and to settle all of Fabric's borrowings. It is a measure
of what Fabric is proposing the business of Fabric as a whole is worth.
9Key Risks
Retail
Fact Sheet
Investments in shares are Tenant demand Fabric's financial performance and ability to pay dividends
risky. You should consider and office supply is substantially influenced by tenant demand for its office
if the degree of uncertainty space and the supply of office space. These factors
about Fabric's future impact the occupancy levels of properties in the portfolio
and the levels of rental income that can be achieved. Any
performance and returns is negative impact on rental income has the potential to have
suitable for you. The price of an adverse impact on the value of Fabric's properties, its
these Shares should reflect distributions and/or the value of the Shares.
the potential returns and Impact of Fabric could be negatively impacted by COVID-19,
the particular risks of these COVID-19 including as a result of rental rebates (31% of gross rental
Shares. Fabric considers from the Current Portfolio is subject to rent abatement if
that the most significant risk premises are inaccessible), impacts on tenants’ ability to
factors that could affect the pay rent, and negative impacts on valuations. The extent
to which COVID-19 related factors will have an impact on
value of the Shares are: Fabric's business will, in large part, depend on the extent
to which its tenants and the wider economy are impacted,
which will in turn depend on the severity and duration of
any Government imposed restrictions. The most recent
Valuation Reports were issued prior to New Zealand moving
to Alert Level 4 in August 2021. They refer to uncertainty
relating to COVID-19. However, the valuers have all
confirmed there is no material change to their valuations as
at 31 August 2021.
Growth and Fabric may seek to continue to grow through acquisitions
development or developments. Growth and development activities
involve elements of risk, including the risk that Fabric may
not be able to identify opportunities at prices that Fabric is
willing to pay. Fabric may face development risks which may
impact Fabric’s financial performance or financial position,
including programme and cost overruns. The Acquisition
also poses a number of risks for Fabric, including relating to
the repayment of the CGR Loan and contracting to acquire a
property that is under construction.
Financing Fabric is reliant upon external funding sources to support
arrangements its business. Fabric's financial performance may be
negatively impacted as a result of increased interest rates
or if it were unable to continue to access external funding
on commercially acceptable terms. A breach of any of
the financial covenants in Fabric's funding arrangements
may have a significant impact on Fabric's ability to retain
sufficient funding. In this case, Fabric may need to raise
capital or sell assets, potentially below their book value.
This summary does not cover all of the
risks of investing in the Shares. You
should also read Section 2 of the PDS
(Fabric and what it does) and Section 8 of
the PDS (Risks to Fabric's business and
plans) for more information.
10Retail
Fact Sheet
Seismic risk and Fabric's financial position would be materially adversely
other natural impacted by any significant damage or destruction to its
disasters properties or to the infrastructure relevant to its business,
including by way of earthquake or other natural disaster.
The costs of repairing damaged buildings, or seismically
strengthening buildings, could be significant. Insurance
coverage does not provide complete protection against all
potential events and resulting losses.
Performance of Fabric is reliant on the management of SIML and the
external manager expertise and experience of SIML's senior management
team. If SIML does not perform under the terms of the
Management Agreement, this could have a negative impact
on the financial performance of Fabric, including its net
rental income.
22 The Terrace,
Wellington
11Fabric Property Limited Level 12 34 Shortland Street Auckland 1010 Phone: +64 (9) 912 2690
You can also read
