FIXED RATE SENIOR SECURED BOND OFFER - AUGUST 2016 - Amazon AWS
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FIXED RATE
SENIOR SECURED
BOND OFFER
AUGUST 2016
Joint Lead Managers
Co-Manager
Important information and disclaimer Important Information The offer of fixed rate senior secured bonds (Bonds) by Kiwi Property Group Limited (Kiwi Property) is made in reliance upon the exclusion in clause 19 of schedule 1 of the Financial Markets Conduct Act 2013 (FMCA). The offer contained in the Terms Sheet is an offer of bonds that have identical rights, privileges, limitations and conditions (except for the interest rate and maturity date) as Kiwi Property’s $125 million fixed rate senior secured bonds maturing on 20 August 2021 which are currently quoted on the NZX Debt Market under the ticker code KPG010 (KPG010 Bonds). The Bonds are of the same class as the KPG010 Bonds for the purposes of the FMCA and the Financial Markets Conduct Regulations 2014 (FMC Regulations). Kiwi Property is subject to a disclosure obligation that requires it to notify certain material information to NZX Limited (NZX) for the purpose of that information being made available to participants in the market and that information can be found by visiting www.nzx.com/companies/KPG/announcements. The KPG010 Bonds (which have a fixed interest rate of 6.15% p.a. and a maturity date of 20 August 2021) are the only debt securities of Kiwi Property that are in the same class as the Bonds and are currently quoted on the NZX Debt Market. Investors should look to the market price of the KPG010 Bonds referred to above to find out how the market assesses the returns and risk premium for those bonds. Disclaimer This presentation is for preliminary information purposes only and is not an offer to sell or the solicitation of any offer to purchase or subscribe for any financial products and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. The information in this document is given in good faith and has been obtained from sources believed to be reliable and accurate at the date of preparation, but its accuracy, correctness and completeness cannot be guaranteed. All of the data provided in this document is derived from publicly available information in relation to Kiwi Property (including the annual report of Kiwi Property for the year ended 31 March 2016), unless otherwise indicated. Unless otherwise indicated, all of the numerical data provided in this presentation is stated as at 31 March 2016. All figures are rounded. A Terms Sheet dated 23 August 2016 (Terms Sheet) has been prepared in respect of the offer of the Bonds. Investors should not purchase the Bonds until they have read the Terms Sheet. Investors should consider the risks that are associated with an investment in the Bonds, particularly with regard to their personal circumstances (including financial and tax issues). The selling restrictions set out in the Terms Sheet apply to the Bonds. This presentation is dated August 2016. Kiwi Property > Fixed rate senior secured bond offer > August 2016 2
Contents
Important information and disclaimer 02 Presented by:
Chris Gudgeon, Chief Executive
Key terms of the bond offer 04
Gavin Parker, Chief Operating Officer
Company overview 05
Pro-forma gearing ratio 06
Strategic and operational overview 07
The Bonds 14
Appendices 20
Our retail assets 21
Our office assets 23
Pro-forma key portfolio metrics 24 Unless otherwise indicated, all
numerical data provided in this
Pro-forma geographic and sector diversification 25 presentation is stated as at
31 March 2016.
Pro-forma tenant diversification 26 All figures are rounded.
Kiwi Property > Fixed rate senior secured bond offer > August 2016 3
Key terms of the bond offer
Issuer Kiwi Property Group Limited
Instrument Fixed rate senior secured bonds (Bonds)
Issue amount Up to $75 million, with the ability to accept oversubscriptions of up to $50 million
Use of proceeds Repayment of bank debt and for general corporate purposes
Tenor 7 years
Maturity Date 7 September 2023
Interest Rate The Interest Rate will be set following the bookbuild on 31 August 2016
Interest payments Semi-annual in arrear on 7 March and 7 September
Guarantors The Issuer and its wholly-owned subsidiaries, Kiwi Property Holdings Limited, Sylvia Park Business Centre Limited
and Kiwi Property Te Awa Limited on a joint and several basis
Security The Guarantors have granted security over all of their assets under a general security agreement in favour of the
Security Trustee for the benefit of all Beneficiaries (including Bondholders, the bank lenders, hedging providers
and any new future secured creditors) on an equal ranking basis. The security includes a security interest over all
personal property, a charge over real property and an agreement to mortgage in respect of real property and
secures all amounts owing to the applicable secured creditors
Ranking Senior secured obligations of the Issuer that will rank equally amongst themselves and equally with all other senior
secured obligations owed to Kiwi Property’s other senior secured creditors (including Bondholders, the bank
lenders, hedging providers and any new future secured creditors), and ahead of the listed shares in Kiwi
Property. In an insolvency of a Guarantor, the claims of these senior secured creditors, including the
Bondholders, will (by virtue of that security) rank ahead of all other unsecured creditors of the relevant Guarantor
other than certain statutorily preferred creditors
Credit rating Kiwi Property and the Bonds are unrated
Application amount Minimum of $5,000 and in multiples of $1,000 thereafter
Quotation The Issuer must take any necessary steps to ensure the Bonds are quoted immediately after issue. It is expected
that the Bonds will be quoted under the code KPG020 on the NZX Debt Market
Fees Brokerage: 0.50% and Firm fee: 0.25%
Kiwi Property > Fixed rate senior secured bond offer > August 2016 4
Company overview
As at 31 March 2016
Proven track Sound financial Solid property Record FY16
record position fundamentals result
> New Zealand’s > $2.70 billion > Diversified > Profit after tax
largest listed total assets portfolio of retail $250.8 million,
property and office +117.7% on prior
company > Conservative assets
year
gearing of 30.3%
> Ranked within > 374,739 sqm net
the top 15 on the > Net tangible lettable area
S&P/NZX 50 Index assets per share > 887 tenants
> ~$2 billion market
$1.34
> 98.7%
capitalisation > Weighted occupancy
> Internally average term to
> 5.1 years
managed with a maturity of weighted
22-year record of finance debt average lease
solid results 3.9 years term
Kiwi Property > Fixed rate senior secured bond offer > August 2016 5
Pro-forma gearing ratio
Post balance date acquisition and disposal
> On 31 May 2016 Kiwi Property acquired a 50% interest in The Base shopping
centre, Hamilton from The Base Limited (TBL) for $192.5 million
> On 11 August 2016 Kiwi Property’s $46.8 million sale of Centre Place – South,
Hamilton, settled
> The following is a pro-forma calculation showing the impact of these
transactions on Finance Debt, Total Tangible Assets and the Gearing Ratio
Acquisition of Pro-forma post
As at 50% interest in Sale of Centre acquisition
31-Mar-16 The Base Place – South and sale
$000 $000 $000 $000
Finance Debt 815,500 192,500 (46,800) 961,200
Total Tangible Assets 2,691,503 192,500 (46,700) 2,837,303
Gearing Ratio1 30.3% 33.9%
> TBL has the right to require Kiwi Property to acquire its remaining 50% interest,
at a price determined by independent valuation, between 2018 and 2021
1. Ratio of Finance Debt to Total Tangible Assets. Finance Debt, for the purposes of the Gearing Covenant, excludes any subordinated debt and any
unrealised indebtedness or exposure in respect of a derivative contract before its close-out. Total Tangible Assets, for the purposes of the Gearing
Covenant, excludes any unrealised amount owing under a derivative contract before its close-out and any deferred tax asset.
Kiwi Property > Fixed rate senior secured bond offer > August 2016 6
Strategic and operational overview
Our vision, objective and investment strategy
Our vision
> To be synonymous with New Zealand’s best retail and workplace experiences
Our objective
> To provide investors with a reliable investment in New Zealand property, targeting
superior, risk-adjusted returns over time through the ownership and active
management of a diversified high-quality portfolio
Our investment strategy
> To invest in a diversified portfolio of retail and office assets that are expected to
outperform by consistently attracting high levels of tenant demand
• We favour diversification as it reduces the volatility of income returns and provides flexibility
to allocate capital to individual sector opportunities
• We have a bias towards the retail sector and specifically regional shopping centres that are
dominant within their catchments
• We favour the Auckland region, given its superior prospects for economic, population and
employment growth
Kiwi Property > Fixed rate senior secured bond offer > August 2016 7
Strategic and operational overview
Our vision, objective and investment strategy (continued)
Our investment strategy (continued)
Our core portfolio comprises:
Retail portfolio Office portfolio
• Auckland • Auckland
Dominant regional shopping centres and Prime-grade office with desired attributes
large format retail (quality, floorplate, services, location and
car parking)
• Outside of Auckland
Dominant regional shopping centres and • Wellington
large format retail centres in regions with Core government office accommodation
positive prospects for growth (economic, supported by long-term leases to the
population and employment) Government
Third party management
> We also manage properties for third parties and joint owners as this enables us to:
• diversify our investments over a greater pool of assets, and
• leverage returns by generating additional property management fee income
Kiwi Property > Fixed rate senior secured bond offer > August 2016 8
Strategic and operational overview Refer to the appendices (page 24) for
pro-forma statistics post the acquisition of
a 50% interest in The Base shopping
Key portfolio metrics centre and sale of Centre Place – South.
Occupancy
%, by net lettable area
No. of Net lettable No. of 100% 99.1% 98.7%
assets area (sqm) tenants
98% 97.4%
Retail portfolio 9 254,158 812
96%
Office portfolio 5 120,581 75
94%
Total 14 374,739 887 92%
90%
Retail Office Total
48%
Lease expiry profile Weighted average lease term
% portfolio by gross income Years, by gross income
40% 10
8.2
30% 8
24%
6 5.1
20% 16% 3.9
13% 12% 13% 4
9%
10% 7%
3% 3% 2
0% 0
Vacant or FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24+ Retail Office Total
holdover
Kiwi Property > Fixed rate senior secured bond offer > August 2016 9
Strategic and operational overview Refer to the appendices (page 24) for
pro-forma statistics post the acquisition of
a 50% interest in The Base shopping
Geographic and sector diversification centre and sale of Centre Place – South.
Geographic diversification Sector diversification
(by portfolio value) (by portfolio value)
Auckland
64% Retail
67%
Office
31%
Hamilton
Christchurch 4%
9%
Palmerston
North
Wellington 8% Other
15% 2%
Kiwi Property > Fixed rate senior secured bond offer > August 2016 10Strategic and operational review Refer to the appendices (page 24) for
pro-forma statistics post the acquisition of
a 50% interest in The Base shopping
Tenant diversification centre and sale of Centre Place – South.
Total portfolio Top 20
% of core portfolio gross income % of core portfolio gross income
New Zealand chains 30 ● ASB Bank 7.3 Collectively, our top
1 20 tenants:
Australian and international chains 25 ● Farmers 3.8
Department stores 7 ● Progressive Enterprises 3.2 Occupy
Supermarkets 5 ● Russell McVeagh 2.5
Independent retailers 5 ● Vero Insurance 2.4
Cinemas 2 ● Foodstuffs 2.1
48%
Retail 74 ● Bell Gully 2.0
Banking 6 ● Cotton On Clothing 2.0
Legal 5
● Just Group 1.8 of portfolio area
● Hallenstein/Glasson 1.6
Government 4 Contribute
● The Warehouse 1.6
Insurance 4
● Kmart 1.5
Consultancy 2
● Hoyts Cinemas 1.2
Financial services 2 39%
● ANZ Bank 1.0
Other 3
● Whitcoulls1 1.0
Office 26
● Reading Cinemas 0.8
1
● Pascoes 0.8 of portfolio income
● Hannahs 0.8
Have a weighted average
● Valleygirl 0.8 lease term of
● Retail portfolio ● Goldman Sachs 0.7 6.8 years
● Office portfolio
● Total portfolio 1. Controlled by the James Pascoe Group
Kiwi Property > Fixed rate senior secured bond offer > August 2016 11Strategic and operational overview
Development and transaction activity
Office developments Retail developments Transactions
Wellington LynnMall Westgate Lifestyle
- Two adjacent buildings - Opened the - New large format
providing 32,000 sqm of $39 million retail centre
Crown award-winning (construction
accommodation ‘Brickworks’ completed
- Combined $85 million entertainment July 2016)
refurbishment works and dining - Cost of $82.5 million
- Combined WALT of precinct - 8.0 year WALT
16.6 years - Immediate
Centre Place - South
positive impact
- Sold for $46.8 million
on sales across
(settled 11 August
the whole
Sylvia Park 2016)
centre
- New $80 million,
Sylvia Park
10-level (12,170 sqm)
- Secured
office development
international
commencing
fashion retailers
August 2016 and due The Base
H&M and Zara
for completion in - Settled the $192.5
- Undertaking
May 2018 million acquisition of
$19.2 million of
- Anchored by a 50% interest on
development
3,324 sqm 12-year lease 31 May 2016
works
to IAG New Zealand - Kiwi Property
- Target opening
dates in spring manages the entire
2016 centre
Kiwi Property > Fixed rate senior secured bond offer > August 2016 12Strategic and operational overview
Forthcoming priorities
> Integrate the ownership and management of The Base
> Complete Wellington government office precinct
> Advance plans to dispose of ~$200 million of non-core assets
> Open new stores for H&M and Zara at Sylvia Park
> Advance development and leasing of Sylvia Park office building
> Evolve plans to further develop Sylvia Park. We are currently evaluating further
plans with a potential cost of $180 million, including:
• a new Galleria mall of up to 20,000 sqm incorporating a department store, international
mini-majors, retail brands new to New Zealand and a new concept café court
• new multi-deck parking including vehicle guidance/signage and valet parking options
Kiwi Property > Fixed rate senior secured bond offer > August 2016 13The Bonds
Objective
> Kiwi Property is committed to maintaining a strong financial position and has a
long history of conservative gearing. The Bonds will:
• further diversify our sources of funding
• extend the weighted average duration of our funding base
> Bond proceeds will be used to repay bank debt and for general corporate
purposes
Debt maturity profile1 $m %
FY17 FY17 $0 - -
FY18 FY18 $50 million 50.0 4.4
FY19 FY19 $258 million 258.0 22.9
FY20 FY20 $258 million 258.0 22.9
ANZ, BNZ, CBA and
FY21 FY21 $259 million 259.0 23.0 Westpac bank debt
facilities
FY22 FY22 $100 million $125 million 225.0 20.0
Aug-21 Bonds
FY23 FY23 $0 Sep-23 Bonds
1. Assumes $75 million bond
FY24 FY24 $75 million 75.0 6.8 issue and repayment /
cancellation of
$75 million of short-dated
Total facilities 1,125.0 100.0 bank debt facilities.
Kiwi Property > Fixed rate senior secured bond offer > August 2016 14The Bonds
Security arrangements
> The Bonds are issued by Kiwi Property Group Limited (the Issuer) and guaranteed
by its wholly-owned subsidiaries, Kiwi Property Holdings Limited, Sylvia Park Business
Centre Limited and Kiwi Property Te Awa Limited (together with the Issuer, the
Guarantors) on a joint and several basis
> General security granted over all of the assets of the Guarantors
• Security interest over all personal property
• Charge over all real property
• Agreement to grant mortgages in respect of real property following certain trigger events,
including an Event of Default
> Restrictions on granting further security interests
> Security is held for the benefit of Bondholders, bank lenders, hedging providers and
any new future secured creditors on an equal ranking basis
Kiwi Property > Fixed rate senior secured bond offer > August 2016 15The Bonds
Covenant and default
> Gearing Covenant
• Group Finance Debt to Total Tangible Assets must not exceed 45%
• The pro-forma gearing ratio1 is 33.9%
> Default
• Breach of Gearing Covenant is an Event of Review, requiring rectification within a 13-month
remedy period (once that breach is disclosed to the Bond Trustee in a director’s report)
> Events of Default include (among others):
• Non-payment of interest or principal
• Cross-acceleration
• Insolvency
1. The pro-forma gearing ratio is calculated as at 31 March 2016 and adjusted for the $192.5 million acquisition of a 50% interest in The Base shopping
centre, Hamilton and the $46.8 million sale of Centre Place – South, Hamilton. Refer to page 6 for further details.
Kiwi Property > Fixed rate senior secured bond offer > August 2016 16The Bonds
Offer structure
> Offer size
• Up to $75 million, with the ability to accept oversubscriptions of up to $50 million
> Firm offer
• NZX firms, institutional investors and other approved parties are invited to
participate in the bookbuild process
• No public pool
> Minimum applications
• $5,000 and multiples of $1,000 thereafter
> Fees
• Retail brokerage fee of 0.50%
• Firm fee of 0.25% to those participating in the bookbuild
Kiwi Property > Fixed rate senior secured bond offer > August 2016 17The Bonds
Key dates
Offer launched Tuesday 23 August 2016
Roadshow presentations Tuesday 23 August and Wednesday 24 August 2016
Bookbuild closes 11.00am Wednesday 31 August 2016
Interest Rate set and
Wednesday 31 August 2016
firm allocations notified
Settlement and allotment Wednesday 7 September 2016
Quotation and trading expected to
Thursday 8 September 2016
commence
Semi-annual interest payment dates 7 March and 7 September
Maturity Date 7 September 2023
Kiwi Property > Fixed rate senior secured bond offer > August 2016 Vero Centre, Auckland 18The Bonds
Key credit strengths
> New Zealand’s largest listed property company
> 22-year track record
> History of conservative gearing
> Internally managed
> Strong corporate governance
> Active asset and capital management
> Diversified portfolio of high-quality retail and office assets
> Broad base of high-quality tenants
> Rental cash flows secured across a broad and high-quality tenant base
Kiwi Property > Fixed rate senior secured bond offer > August 2016 19Appendices
Abbreviations used in the appendices:
NLA Net lettable area
WALT Weighted average lease term
MAT Moving annual turnover
20Our retail assets Centre Sylvia Park Sylvia Park Lifestyle LynnMall Westgate Lifestyle1 The Base2 Location Auckland Auckland Auckland Auckland Hamilton Centre type Regional Large format Regional Large format Regional/large format Owned since Jun-07 Dec-14 Dec-10 Sep-15 May-16 NLA (sqm) 68,783 16,536 37,227 5,205 85,256 Tenants (No.) 209 16 142 3 168 Carparks (No.) 3,937 393 1,353 622 3,343 Occupancy (%) 100.0 100.0 98.7 100.0 95.8 WALT (years) 3.6 4.1 4.6 8.7 3.2 MAT ($m) 455.2 N/A 207.6 N/A 262.8 Valuation ($m) 704.0 69.8 269.0 70.3 192.5 Cap. rate (%) 6.00 6.50 6.75 6.75 6.63 1. Westgate Lifestyle tenant number and NLA represents only those tenants open and trading at 31 March 2016. At 31 March 2016, the property’s ‘on completion’ valuation was assessed as $85.3 million. 2. Acquired on 31 May 2016. Valuation represents a 50% interest. All other statistics represent a 100% management interest. Kiwi Property > Fixed rate senior secured bond offer > August 2016 21
Our retail assets Centre Centre Place North The Plaza North City Northlands Location Hamilton Palmerston North Porirua Christchurch Centre type CBD Regional Regional Regional Owned since Dec-94 Aug-93 Dec-93 Mar-94/Mar-98 NLA (sqm) 16,029 32,401 25,473 41,571 Tenants (No.) 77 108 105 126 Carparks (No.) 556 1,251 1,102 1,716 Occupancy (%) 93.2 100.0 100.0 99.1 WALT (years) 3.2 4.0 4.1 3.2 MAT ($m) 58.5 181.3 104.8 315.5 Valuation ($m) 65.5 211.0 109.5 243.0 Cap. rate (%) 8.75 7.00 7.75 7.25 Kiwi Property > Fixed rate senior secured bond offer > August 2016 22
Our office assets Building Vero Centre ASB North Wharf The Majestic Centre The Aurora Centre1 44 The Terrace Location Auckland Auckland Wellington Wellington Wellington Grade Premium A-grade A-grade A-grade B-grade Owned since Apr-01 May-13 Mar-94/Dec-97 Apr-04 Sep-04 NLA (sqm) 39,530 21,625 24,604 24,699 10,123 Typical floor (sqm) 1,200 4,000 1,000 1,100-1,800 800 Carparks (No.) 422 97 246 310 - Occupancy (%) 99.4 98.8 91.9 98.2 100.0 WALT (years) 5.2 14.6 7.1 18.0 10.7 Valuation ($m) 358.0 187.8 112.2 125.9 35.5 Cap. rate (%) 6.13 6.05 7.50 6.75 7.25 1. The Aurora Centre statistics, excluding the valuation and cap rate, are on completion of the redevelopment. After taking into consideration the $4.8 million present value of the estimated costs to complete, as at 31 March 2016, the value of the property on completion is $130.7 million. Kiwi Property > Fixed rate senior secured bond offer > August 2016 23
Pro-forma key portfolio metrics
As at 31-Mar-16 restated for 50% acquisition of The Base and disposal of Centre Place - South
Occupancy
%, by net lettable area
No. of Net lettable No. of 100%
98.7% 98.4%
assets area (sqm) tenants
98% 97.4%
Retail portfolio 9 328,481 954
96%
Office portfolio 5 120,581 75
94%
Total 14 449,062 1,029 92%
90%
Retail Office Total
48%
Lease expiry profile Weighted average lease term
% portfolio by gross income Years, by gross income
40% 10
8.2
8
30%
22% 6 4.9
20% 16% 3.8
13% 11% 13% 4
10%
10% 8%
3% 4% 2
0% 0
Vacant or FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24+ Retail Office Total
holdover
Kiwi Property > Fixed rate senior secured bond offer > August 2016 24Pro-forma geographic and sector diversification
As at 31-Mar-16 restated for 50% acquisition of The Base and disposal of Centre Place - South
Geographic diversification Sector diversification
(by portfolio value) (by portfolio value)
Auckland Retail
61% 69%
Office
Hamilton 29%
9%
Christchurch
9%
Palmerston
Wellington North
Other
14% 7%
2%
Kiwi Property > Fixed rate senior secured bond offer > August 2016 25Pro-forma tenant diversification
As at 31-Mar-16 restated for 50% acquisition of The Base and disposal of Centre Place - South
Total portfolio Top 20
% of core portfolio by gross income % of core portfolio by gross income
New Zealand chains 31 ● ASB Bank 6.6 Collectively, our top
1 20 tenants:
Australian and international chains 26 ● Farmers 3.5
Department stores 6 ● Progressive Enterprises 2.8 Occupy
Supermarkets 5 ● Russell McVeagh 2.2
Independent retailers 5 ● Cotton On Clothing 2.2
Cinemas 2 ● Vero Insurance 2.1
48%
Retail 75 ● The Warehouse 2.1
Banking 6 ● Foodstuffs 1.8
Legal 5
● Just Group 1.8 of portfolio area
● Bell Gully 1.8
Government 4 Contribute
● Hoyts Cinemas 1.6
Insurance 4
● Hallenstein/Glasson 1.6
Financial services 2
● Kmart 1.3
Consultancy 2 37%
● ANZ Bank 1.0
Other 2
● Whitcoulls1 1.0
Office 25
● Hannahs 0.8
● Mitre 10 MEGA 0.8 of portfolio income
● Pascoes1 0.8
Have a weighted average
● Reading Cinemas 0.7 lease term of
● Retail portfolio ● Goldman Sachs 0.7 7.1 years
● Office portfolio 1
Controlled by the James Pascoe Group
● Total portfolio
Kiwi Property > Fixed rate senior secured bond offer > August 2016 26You can also read
