<3 I. . ti ?il IONAL aces, ANNUAL RESULT PRESENTATION 2016 - Kiwi Property Contents Strategy overview 03 How we delivered in FY16 06 Our onward journey 13 Outlook and dividend guidance 18 Appendices 19 1. Financial review 21 2. Property portfolio review 33 3. Development update 46 4. Acquisition of The Base 55 5. Office market update 60 6. Other information 63 This annual result presentation for the year ended 31 March 2016 should be read in conjunction with the NZX announcement and online annual report also released on 16 May 2016. Refer to our website kp.co.nz or nzx.com Due to rounding, numbers presented throughout this presentation may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. Refer to Appendix 6 of this presentation for definitions Kiwi Property Our vision, objective, goals 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 goals Long-term total returns >9% per annum Pre-tax funds from operations per share growth >2% per annum Kiwi Property > 2016 annual result presentation > 16 May 2016 10.0% Achieved 5.1% Achieved 3 Kiwi Property Our vision, objective, goals and investment strategy (continued) 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 Diversification > Reduces the volatility of income returns > Enables greater consistency of income performance > Provides flexibility and enables us to allocate capital to individual sector opportunities Retail and Auckland bias > We have a bias towards the retail sector and specifically regional shopping centres that are: • dominant within their catchments • difficult to replicate > We view our specialist in-house retail management capability and our nationwide tenant relationships as a competitive advantage > We favour the Auckland region, given its superior prospects for economic, population and employment growth Kiwi Property > 2016 annual result presentation > 16 May 2016 4 Kiwi Property Our vision, objective, goals and investment strategy (continued) Our investment strategy (continued) Our core portfolio comprises: Retail portfolio Office portfolio • Auckland • Auckland Dominant regional shopping centres and large format retail • Outside of Auckland Dominant regional shopping centres and large format retail centres in regions with positive prospects for growth (economic, population and employment) Prime-grade office with desired attributes (quality, floorplate, services, location and car parking) • Wellington Core government office accommodation supported by long-term leases to the 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 > 2016 annual result presentation > 16 May 2016 5 We’re delivering on our retail strategy Acquired Westgate Lifestyle for $82.5m SEP 2015 $39m entertainment and dining precinct opened at LynnMall OCT 2015 secured at Sylvia Park NOV 2015 Conditional contract to sell Centre Place – South secured DEC 2015 POST MAR 2016 secured at Sylvia Park Increasing our exposure to large format retail Investing in dominant regional assets Creating exceptional places at our core retail assets Disposing of non-core assets Kiwi Property > 2016 annual result presentation > 16 May 2016 Announced the acquisition of a 50% interest in The Base for $192.5m For more information, refer to the following appendices: • 3.1–3.3 Sylvia Park • 3.4 Westgate Lifestyle • 3.5 LynnMall • 4.1–4.4 Acquisition of The Base 6 We’re delivering on our office strategy Wellington Auckland > Creating our Government office precinct > Maintaining our office buildings as best-in-class • 35,000 sqm of office space in adjacent buildings • 44 The Terrace – three 12-year leases over 80% of the building’s office space • Invested $1.7 million in upgrading the Vero Centre lobby and outdoor areas - Enhanced building communities - Strong tenant retention • The Aurora Centre – all office space leased for 18 years • $85 million of refurbishment works nearing completion on the two buildings 8.2 years = longest weighted average lease term in more than 10 years For more information, refer to the following appendices: • 3.7 The Aurora Centre • 3.8 44 The Terrace Kiwi Property > 2016 annual result presentation > 16 May 2016 7 A record year Delivered our highest ever profit Profit after tax Funds from operations Key contributors $250.8m $91.1m  Improved rental performance +$135.6m +117.7% Increased cash dividend +$6.3m +7.4%  Interest expense savings  Positive asset revaluations Cash dividend  Robust retail sales growth 6.60 cps  Positive property fundamentals +0.10 cps +1.5% Kiwi Property > 2016 annual result presentation > 16 May 2016 For more information, refer to the following appendices: • 1.1 Rental income • 1.2 Profit after tax • 1.5 Funds from operations • 1.6 Dividends 8 A record year Highest portfolio value and lowest cost of debt Strong balance sheet maintained Property assets Gearing Net asset backing per share $2.67b 30.3% $1.34 -320 bps +$0.13 cps +$394m +17.3% Lowest cost of debt in over 10 years Weighted average term to maturity Weighted average cost of debt 3.9 years 4.88% FY15: 3.6 years FY15: 6.02% Kiwi Property > 2016 annual result presentation > 16 May 2016 For more information, refer to the following appendices: • 1.7 Balance sheet • 1.9 Net finance debt movement • 1.10 Finance debt facilities • 1.11 Fixed-rate debt profile • 2.2 Portfolio values and cap rates 9 Strong portfolio metrics Delivered by active asset management > Record portfolio value > Firmer cap rates > Comparable rental income growth > Improved key portfolio metrics > Continued sustainability leadership position For more information, refer to the following appendices: • • • 1.1 Rental income • 2.2 Portfolio values and cap rates • 2.3 Capitalisation rate history • 2.4 New leasing and rent reviews 2.5 Portfolio statistics 2.11 Sustainability achievements Kiwi Property > 2016 annual result presentation > 16 May 2016 Vero Centre, Auckland 10 Robust retail sales growth Evolving the retail mix reaping rewards > Total retail sales of $1.36 billion • +5.8% over prior year > Uplift in discretionary spending categories including • Cinemas +7.4% • Commercial services +9.6% • Music video and games +14.0% • Food +4.2% • Personal services +5.0% • Outdoor and leisure +9.5% • Newsagents and books +7.7% > Department stores performed strongly +5.9% For more information, refer to Appendix 2.10 – Retail sales Kiwi Property > 2016 annual result presentation > 16 May 2016 11 Development activity $225 million of developments concluding Completed > LynnMall dining and cinema precinct Concluding in FY17 > Westgate Lifestyle > New stores for H&M and Zara at Sylvia Park > Transformational projects in Wellington • The Majestic Centre • The Aurora Centre • 44 The Terrace For more information, refer to Appendix 3 – Development update Kiwi Property > 2016 annual result presentation > 16 May 2016 The Aurora Centre, Wellington 12 Our onward journey Continue to deliver on strategy Retail > > > > Deliver development projects Progress development plans at Sylvia Park Settle disposal of Centre Place – South Settle the purchase of The Base and take on property management Office > Deliver development projects > Focus on forthcoming lease expiries Portfolio > Add value through acquisitions/asset improvements > Divest non-core assets Kiwi Property > 2016 annual result presentation > 16 May 2016 Sylvia Park, Auckland 13 Sylvia Park Creating a world-class retail destination Galleria/Café Court junction. Concept only. Subject to change. First stage underway Future expansion plans For more information refer to Appendices 3.1 to 3.3 • 2nd level • One or more department stores Stores for • Up to • Exciting new brands/concept stores H&M and 20,000 sqm • New concept café court Zara additional retail • Additional multi-deck carparks Kiwi Property > 2016 annual result presentation > 16 May 2016 • Potential cost: $180m • Potential start: 2017 • Potential completion: 2019 and 2021 14 14 Sylvia Park Bringing our town centre vision to life Concept only. Subject to change. For more information refer to Appendices 3.1 to 3.3 • Office building created in the airspace above the dining lane • Ground floor restaurants and nine-levels of office (11,200 sqm) • 5-GreenStar design and 4-star NABERSNZ energy rating •KiwiBike parks andresult end of trip> facilities Property > 2016 annual presentation 16 May 2016 • Potential cost: $80m • Potential start: late 2016 • Potential completion: 2018 15 15 Sylvia Park Why Sylvia Park?  Location  Scale  Extensive trade area population • Sits at the junction of three major highways Annual retail sales ($m) 475 • 12.6 million annual visitors 450 • Over $455m annual retail sales 425 • Main trade area: 764,470 400 • Total trade area: 917,470 375 (49% Auckland’s population) (59% Auckland’s population) • 440,000 people live within a  Exposure 10 minute drive and accessibility • 91% of Auckland live within a 30 minute drive • 200,000 passing vehicles per day  Carparking • Close to 4,000 carparks  Transport links • Train and bus links  Zoning • One of 10 council designated ‘Metropolitan Centres’ in Auckland +26 % $455m =3.4% AVERAGE ANNUAL GROWTH SINCE 2009 350 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Value gain ($m) 800 700 600 +$245m SINCE OPENING $704m 500 400 300 200 100 Kiwi Property > 2016 annual result presentation > 16 May 2016 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Cumulative capital expenditure Overall value gain 16 The Base Acquired a 50% interest (post-period) Acquiring Management Initial yield1 IRR1 50% interest for Kiwi Property 6.4% 8.5% $192.5m, to manage settling the entire 31 May 2016 centre 1. Excluding development land Kiwi Property > 2016 annual result presentation > 16 May 2016 Value add opportunities • Develop the 6.7 hectares of vacant land For more information refer to Appendix 4 • Apply our retail expertise 17 17 Outlook and dividend guidance Further uplift in cash dividend Outlook Cash dividend guidance for FY17 > New Zealand economy continues to grow positively Increased to > Supportive investment property fundamentals cents per share1 6.75 > Kiwi Property has: • • Key projects completing in FY17, bringing further rental income on-stream Stable occupancy and structured rent reviews • A strong balance sheet • Organic growth opportunities through development pipeline Growth in cash dividend (cents per share) 6.90 6.75 6.80 6.70 6.60 6.60 6.50 6.40 6.50 6.40 6.30 6.20 6.10 2014 For more information, refer to Appendix 1.6 Kiwi Property > 2016 annual result presentation > 16 May 2016 1. 2015 2016 2017 1 Guidance is subject to a continuation of reasonable economic conditions. 18 AQQendices Page Section Page 1 21 3 46 Rental income 1.1 22 3.1 47 Profit after tax 1.2 23 3.2 48 Interest and finance charges 1.3 24 Sylvia Park – H&M and Zara 3.3 49 Management expense ratio (MER) 1.4 25 Westgate Lifestyle 3.4 50 Funds from operations (FFO) 1.5 26 LynnMall 3.5 51 Dividends 1.6 27 The Majestic Centre 3.6 52 Balance sheet 1.7 28 The Aurora Centre 3.7 53 Investment properties movement 1.8 29 44 The Terrace 3.8 54 Net finance debt movement 1.9 30 Acquisition of The Base 4 55 Finance debt facilities 1.10 31 Transaction overview 4.1 56 Fixed-rate debt profile 1.11 32 Investment rationale 4.2 57 Property portfolio review 2 33 Property overview 4.3 58 Property portfolio summary 2.1 34 Investment summary 4.4 59 Portfolio values and cap rates 2.2 35 Office market update 5 60 Capitalisation rate history 2.3 36 Auckland CBD office market 5.1 61 New leasing and rent reviews 2.4 37 Wellington CBD office market 5.2 62 Portfolio statistics 2.5 38 Other information 6 63 Lease expiry profile 2.6 39 Glossary of terms 6.1 64 Sector and geographic diversification 2.7 40 Strategy delivery – Mar-10 vs. Mar-16 statistics 2.8 41 Tenant diversification 2.9 42 Retail sales 2.10 43 Sustainability achievements 2.11 44 Digital and signage 2.12 45 Financial review Development update Sylvia Park – Overview of expansion plans (ground floor) Sylvia Park – Overview of expansion plans (upper level) INDEX Section 20 2233.? a. Rental income 1.1 Positive contributions from all properties not under development 31-Mar-16 31-Mar-15 $m $m For the year ended Sylvia Park Variance $m Like-for-like var. % $m % +1.1 +2.9 36.4 36.0 ▲ +0.4 +1.0 4.5 1.2 ▲ +3.3 +286.2 15.4 15.3 ▲ +0.1 +0.1 7.1 6.8 ▲ +0.3 +5.7 +0.3 +5.7 The Plaza 15.1 14.7 ▲ +0.4 +2.7 +0.4 +2.7 North City 7.8 7.3 ▲ +0.5 +5.6 +0.5 +5.6 Northlands 18.6 17.7 ▲ +0.9 +5.4 +0.9 +5.4 104.9 99.0 ▲ +5.9 +5.9 +3.2 +3.8 Vero Centre 20.0 19.1 ▲ +0.9 +5.2 +0.9 +5.2 ASB North Wharf 11.1 10.9 ▲ +0.2 +2.2 +0.2 +2.2 - 0.7 ▼ -0.7 -100.0 5.9 5.8 ▲ +0.1 +2.0 -0.7 2.9 ▼ -3.6 -124.8 44 The Terrace 1.9 2.0 ▼ -0.1 -11.0 Office portfolio 38.2 41.4 ▼ -3.2 -7.9 +1.1 +4.1 2.6 2.5 ▲ +0.1 +4.9 +0.1 +4.9 145.7 142.9 ▲ +2.8 +1.9 +4.4 +3.9 Property management fees 8.6 8.3 ▲ +0.3 +3.6 Straight-lining of fixed rental increases 2.3 4.1 ▼ -1.8 -43.6 156.6 155.3 ▲ +1.3 +0.8 Sylvia Park Lifestyle LynnMall Centre Place Retail portfolio 205 Queen (sold Jun-14) The Majestic Centre The Aurora Centre Other properties Net operating income Net rental income [Appendix 1.2] Kiwi Property > 2016 annual result presentation > 16 May 2016 Total income > Positive contributions provided by: • A full year contribution from Sylvia Park Lifestyle • All other properties not under development > Offset by: • The Aurora Centre which has been 100% vacant from Nov-14 for refurbishment Like-for-like income > Like-for-like growth was positive across all properties 22 Profit after tax Driven by strong operating performance and rise in value of property portfolio For the year ended 31-Mar-16 31-Mar-15 $m $m Variance $m % 208.2 205.9 ▲ +2.3 +1.1 Property management income 0.4 0.4 ■ - - Interest and other income 0.2 0.4 ▼ -0.2 -50.0 Litigation settlement income 6.3 - ▲ +6.3 +100.0 Net fair value gain on investment properties 175.9 58.3 ▲ +117.6 +201.7 Total income 391.0 265.0 ▲ +126.0 +47.5 Direct property expenses [Appendix 1.1] -51.6 -50.5 ▲ -1.1 -2.2 Interest and finance charges [Appendix 1.3] -33.5 -52.6 ▼ +19.1 +36.3 Employment and administration expenses -16.2 -15.1 ▲ -1.1 -7.3 Net fair value loss on interest rate derivatives -17.6 -13.1 ▲ -4.5 -34.4 Loss on disposal of investment properties - -0.8 ▼ +0.8 +100.0 Restructuring costs - -2.1 ▼ +2.1 +100.0 Insurance adjustment - -5.1 ▼ +5.1 +100.0 -0.4 -1.3 ▼ +0.9 +69.2 Total expenses 119.3 140.6 ▼ +21.3 +15.1 Profit before tax 271.7 124.4 ▲ +147.3 +118.4 Income tax expense -20.9 -9.2 ▲ -11.7 -127.2 Profit after tax 250.8 115.2 ▲ +135.6 +117.7 Property revenue [Appendix 1.1] [Appendix 1.4] Litigation settlement expenses Kiwi Property > 2016 annual result presentation > 16 May 2016 1.2 Record result > Assisted by: • A significant rise in investment property values • Litigation settlement income • A lower interest expense, due to: - Lower debt levels following repayment of debt from proceeds of a 1 for 9 entitlement offer - Favourable cost of debt - Conversion of the mandatory convertible notes in Dec-14 • The absence of insurance adjustments (relating to Northlands) and restructuring costs incurred in the prior period > Offset by: • Unfavourable movement in interest rate derivatives due to movements in interest rates > Delivered despite: • An increase in current tax due to the deductibility of the internalisation payment made in the 2014 financial year 23 Interest and finance charges Significant reduction driven by repayment of debt and a lower cost of debt For the year ended Interest on bank debt 31-Mar-16 31-Mar-15 $m $m Variance $m % -31.1 -42.0 ▼ +10.9 +26.0 Interest on bonds -8.0 -5.4 ▲ -2.6 -48.1 Interest on MCNs - -8.4 ▼ +8.4 +100.0 -39.1 -55.8 ▼ +16.7 +29.9 LynnMall 0.7 0.1 ▲ +0.6 +600.0 Westgate Lifestyle 1.4 - ▲ +1.4 +100.0 The Majestic Centre 1.2 1.8 ▼ -0.6 -33.3 The Aurora Centre 1.9 0.8 ▲ +1.1 +137.5 Other properties under development 0.4 0.5 ▼ -0.1 -20.0 5.6 3.2 ▲ +2.4 +75.0 -33.5 -52.6 ▼ +19.1 +36.3 Interest expense incurred Interest capitalised to: Total capitalised interest Net interest expense Kiwi Property > 2016 annual result presentation > 16 May 2016 1.3 Interest on bank debt > Lower due to: • Lower debt levels following repayment of debt from proceeds of a 1 for 9 entitlement offer • Favourable cost of debt • Interest rate swaps closeout Bonds > Bonds issued in Aug-14 • FY16 represents a full-year interest cost MCNs > Conversion of the mandatory convertible notes in Dec-14 Capitalised interest > Assisted by the current high level of development activity 24 Management expense ratio (MER) Competitive MER maintained For the year ended 31-Mar-16 31-Mar-15 Variance $m $m $m Employment and administration expenses 16.2 15.1 ▲ +1.1 Less: property management fee recoveries -6.0 -5.9 ▲ -0.1 Net expenses 10.2 9.2 ▲ +1.0 2,473.0 2,203.0 ▲ +270.0 0.41 bps 0.42 bps ▼ -0.01 bps Average property assets Management expense ratio Kiwi Property > 2016 annual result presentation > 16 May 2016 1.4 Expense growth > Driven by the underlying number of assets owned, and leases managed by the Company > Additional resources delivering new digital, casual leasing and advertising revenues 25 Funds from operations 1.5 Strong underlying operating result For the year ended 31-Mar-16 31-Mar-15 $m $m 250.8 Variance $m % 115.2 ▲ +135.6 +117.7 -175.9 -58.3 -117.6 -201.7 - 0.8 -0.8 -100.0 17.6 13.1 +4.5 +34.4 Restructuring costs - 2.1 -2.1 -100.0 Insurance adjustment - 5.1 -5.1 -100.0 -5.9 1.3 -7.2 -553.8 -2.3 -4.1 +1.8 +43.6 Amortisation of tenant incentives 6.4 5.6 +0.8 +14.3 Deferred tax expense 0.4 4.0 -3.6 -90.0 +6.3 +7.4 Profit after tax [Appendix 1.2] Adjusted for: Net fair value gain on investment properties Loss on disposal of investment properties Net fair value loss on interest rate derivatives Litigation settlement expenses/(income) Straight-lining of fixed rental increases [Appendix Funds from operations1 1. 1.1] 91.1 84.8 ▲ > Record result achieved, despite the tax expense normalising relative to the two previous years which were lower due to the tax deductibility of the internalisation payment made in FY14 Funds from operations (‘FFO’) is an alternative performance measure used by Kiwi Property to assist investors in assessing the Company's underlying operating performance and to determine income available for distribution. FFO is calculated in accordance with guidelines issued by the Property Council of Australia. Kiwi Property > 2016 annual result presentation > 16 May 2016 26 Dividends 1.6 Shareholders to receive a 6.60 cents per share cash dividend 31-Mar-16 31-Mar-15 $m For the year ended $m 31-Mar-16 31-Mar-15 cps1 cps1 91.1 84.8 7.16 7.87 Amount retained -7.2 -14.5 -0.56 -1.37 Cash dividend 83.9 70.3 ▲ 6.60 6.50 ▲ Imputation credits 22.6 4.7 1.62 0.44 106.5 75.0 8.22 6.94 92% 83% Funds from operations [Appendix 1.5] Gross dividend Payout ratio 1. Calculated using the number of shares entitled to the relevant dividend. Kiwi Property > 2016 annual result presentation > 16 May 2016 27 Balance sheet 1.7 Balance sheet strength maintained 31-Mar-16 31-Mar-15 $m $m As at Investment properties [Appendix 1.8] Movement $m % 2,669.9 2,275.8 ▲ +394.1 +17.3 Cash [Appendix 1.9] 6.2 6.2 ■ - - Deferred tax asset 6.9 5.1 ▲ +1.8 +35.3 15.4 8.5 ▲ +6.9 +81.2 +402.8 +17.5 Other assets Total assets 2,698.4 Finance debt [Appendix 1.9] 2,295.6 814.2 766.4 ▲ +47.8 +6.2 Deferred tax liability 92.3 90.1 ▲ +2.2 +2.4 Other liabilities 75.1 56.5 ▲ +18.6 +32.9 Total liabilities 981.6 913.0 ▲ +68.6 +7.5 Total equity 1,716.8 1,382.6 ▲ +334.2 +24.2 Total equity and liabilities 2,698.4 2,295.6 ▲ +402.8 +17.5 30.3% 33.5% ▼ -320 bps $1.34 $1.21 ▲ +$0.13 Gearing ratio (requirement <45%) Net asset backing per share (NTA) Kiwi Property > 2016 annual result presentation > 16 May 2016 Other assets > Includes litigation settlement receivable Other liabilities > Increase driven by: • Company returning to a tax paying position • Development accruals due to the current high level of development activity Equity > Includes 1 for 9 entitlement offer, raising $148.1 million (net of costs) Gearing > Improved by lower debt and increased investment property values NTA > Assisted by increased investment property values 28 Investment properties ($m, movement FY15 to FY16) 1.8 Increase driven by value-add activities and revaluation gains 2,700 +$24.0 +$175.9 2,600 2,500 +$42.5 +$28.4 2,400 +$67.0 +$13.3 +$4.4 +$29.5 -$6.3 +$15.4 =$2,669.9 2,300 2,200 +$2,275.8 2,100 Kiwi Property > 2016 annual result presentation > 16 May 2016 As at Mar-16 Other Net fair value gain Amort'n of incentives/ fees 44 The Terrace Other The Aurora Centre The Majestic Centre LynnMall Development costs Sylvia Park Other As at Mar-15 Westgate Lifestyle Acquisitions 2,000 29 Net finance debt ($m, movement FY15 to FY16) 1.9 Active year for investment and financing activities 900 850 800 31-Mar-15 31-Mar-16 Bank debt 643.0 690.5 Bonds 123.4 123.7 Cash on deposit -6.2 -6.2 Net finance debt 760.2 808.0 750 +$137.6 +$11.1 +$64.1 +$14.9 +$77.9 -$148.1 700 +$15.6 650 =$808.0 +$34.9 $760.2 600 -$160.2 550 Kiwi Property > 2016 annual result presentation > 16 May 2016 Net finance debt Mar-16 Tax and other Dividends Proceeds from entitlement offer Settlement of interest rate derivatives Investment / development expenditure Acquisition of investment properties Employment / admin expenses Interest and finance charges Net rental income Net finance debt Mar-15 500 30 Finance debt facilities 1.10 Active treasury management delivers reduction in cost Facilities expiring $m % FY17 - - FY18 - - As at 31 March 2016 FY19 ANZ $52.5 BNZ $73.0 CBA $80.0 WBC $52.5 258.0 28.7 FY20 ANZ $52.5 BNZ $73.0 CBA $80.0 WBC $52.5 258.0 28.7 FY21 ANZ $52.5 BNZ $74.0 CBA $80.0 WBC $52.5 259.0 28.7 FY22 Bond $125.0 125.0 13.9 - - Total facilities 900.0 100.0 Facilities drawn 815.5 FY23 Undrawn facilities 84.5 As at 31-Mar-16 31-Mar-15 Weighted average term to maturity 3.9 years 3.6 years 4.88% 6.02% Weighted average cost of facilities (incl. margins and fees) Kiwi Property > 2016 annual result presentation > 16 May 2016 > All bank debt facilities extended in Nov-15 • • Reduced fees and margins by around 20 basis points Increased term by 1.3 years > Lowest cost of debt for over a decade > In March 2016, the Group entered into a bridge facility for up to $325 million with Westpac New Zealand to fund the acquisition of The Base shopping centre, which is due to settle on 31 May 2016. The facility will commence on 31 May 2016 for a term of one year 31 Fixed-rate debt profile 1.11 Disciplined treasury management Fixed-rate profile (inclusive of $125m bond issuance) Percentage of drawn finance debt at fixed rates Weighted average interest rate of active fixed-rate debt (excl. fees and margin) Weighted average term to maturity of active fixed-rate debt $600 Fixed-rate debt maturity profile 31-Mar-16 31-Mar-15 68% 81% 3.96% 4.68% 2.7 years 3.3 years 8% $500 7% $400 6% $300 5% $200 4% $100 3% $0 2% FY17 FY18 FY19 FY20 FY21 FY22 FY23 Face value of active hedges (including bond) ($m) [LHS] Weighted average interest rate of fixed-rate debt (excl. fees and margins) (%) [RHS] Kiwi Property > 2016 annual result presentation > 16 May 2016 32 Sylvia 1301mm: szquEO Property portfolio summary 2.1 Key metrics 31-Mar-16 Core portfolio metrics1 As at Retail Number of assets2 Value ($000)3 [Appendix 2.2] Proportion of total portfolio by value [Appendix 2.7] Weighted average capitalisation rate [Appendix 2.2] Over/(under) renting Net lettable area (sqm)4 [Appendix 2.5] Number of tenants4 [Appendix 2.9] Proportion of core portfolio by gross income [Appendix 2.9] Occupancy (by area)5 [Appendix 2.5] Weighted average lease term (by income) [Appendix 2.5] 31-Mar-15 Office Total Total 9 5 14 ▲ 12 $1,788.8 $819.4 $2,608.2 ▲ $2,204.8 67% 31% 98% ▲ 97% 6.69% 6.44% 6.61% ▼ 6.92% -0.5% +1.4% +0.1% 254,158 120,581 374,739 ▲ 364,713 812 75 887 ▲ 876 74% 26% 100% 99.1% 97.4% 98.7% ▲ 98.4% 3.9 years 8.2 years 5.1 years ▲ 4.5 years +0.1% 100% 1. At 31 March 2016, excludes adjoining properties which had a combined value of $61.7 million (2% of total portfolio value). At 31 March 2015, excluded adjoining properties which had a combined value of $71.0 million (3% of total portfolio value). 2. At 31 March 2016, Centre Place – North and Centre Place – South have been valued and reported as separate assets. At 31 March 2015, they were valued as separate assets but reported as a consolidated asset. 3. Kiwi Property has secured a conditional agreement to sell Centre Place – South. It is conditional on the consent of Hamilton City Council to the transfer of two ground leases. Settlement is expected to occur in June 2016. Centre Place – South was not independently valued at 31 March 2016. It is recorded at the agreed sale price. 4. Westgate Lifestyle represents only those tenants open and trading at 31 March 2016. 5. Tenancies vacated for development works are excluded from the occupancy statistics. At 31 March 2016, excludes 800 sqm at The Majestic Centre, all of The Aurora Centre and 1,500 sqm at 44 The Terrace. At 31 March 2015, excluded all of The Aurora Centre. Kiwi Property > 2016 annual result presentation > 16 May 2016 34 Property values and cap rates 2.2 Highest value ever and firmest portfolio cap rate in 10 years Portfolio / property As at Sylvia Park1 Capitalisation rates % 31-Mar-16 31-Mar-15 Adopted value $m Var. bps Fair value mvmt 31-Mar-16 31-Mar-15 $m % 6.00 6.25 25 704.0 601.0 +65.4 +10.2 6.50 7.00 50 69.8 64.4 +2.0 +3.0 LynnMall3 6.75 7.00 25 269.0 225.5 +14.1 +5.5 Westgate Lifestyle1 6.75 n/a n/a 70.3 - +2.0 +2.9 Centre Place – North4 8.75 9.25 50 65.5 69.0 -3.6 -5.2 Centre Place – South4,5 7.25 7.25 - 46.7 48.0 -0.5 -1.1 The Plaza 7.00 7.25 25 211.0 206.0 +5.0 +2.4 North City 7.75 8.25 50 109.5 97.5 +9.6 +9.6 Northlands 7.25 7.38 13 243.0 220.4 +19.6 +8.8 Retail portfolio 6.69 6.97 28 1,788.8 1,531.8 +113.6 +6.8 Vero Centre 6.13 6.50 38 358.0 323.0 +29.7 +9.1 ASB North Wharf 6.05 6.50 45 187.8 175.0 +10.6 +6.0 The Majestic Centre 7.50 7.75 25 112.2 80.8 +1.3 +1.2 The Aurora Centre3 6.75 7.25 50 125.9 70.7 +12.7 +11.2 44 The Terrace 7.25 8.63 138 35.5 23.5 +4.5 +14.7 Office portfolio 6.44 6.80 36 819.4 673.0 +58.8 +7.7 Investment portfolio 6.61 6.92 31 2,608.2 2,204.8 +172.4 +7.1 61.7 71.0 +3.5 +5.8 2,669.9 2,275.8 +175.9 +7.1 Sylvia Park Lifestyle2 Adjoining properties Total portfolio Kiwi Property > 2016 annual result presentation > 16 May 2016 1. The capitalisation rate at 31 March 2016 is the ‘on completion’ assessed rate. 2. The asset was not valued at 31 March 2015. It was recorded at the independent valuation undertaken at the time of acquisition in December 2014. 3. The capitalisation rate at 31 March 2015 was the ‘on completion’ assessed rate. 4. At 31 March 2016 Centre Place – North and Centre Place – South have been valued and presented as separate assets. At 31 March 2015 the asset was valued as two separate properties with the value and capitalisation rates shown as a consolidated asset. 5. Kiwi Property has secured a conditional agreement to sell Centre Place – South. It is conditional on the consent of Hamilton City Council to the transfer of two ground leases. Settlement is expected to occur in June 2016. Centre Place – South was not independently valued at 31 March 2016. It is recorded at the agreed sale price. The capitalisation rate presented is as per the 31 March 2015 independent valuation, which formed the basis of the agreed sale price. 35 Capitalisation rate history 2.3 Firming trend continues 9.0% 8.48% 8.5% 7.99% 8.0% 7.74% 7.5% 7.18% 7.0% 6.91% 6.69% 6.5% 6.61% 6.70% 6.44% 6.0% Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 ● Retail portfolio ● Office portfolio ● Total portfolio Kiwi Property > 2016 annual result presentation > 16 May 2016 36 New leasing and rent reviews 2.4 Active leasing delivered ongoing rental uplift and extended lease terms NLA Static portfolio leasing By portfolio No. of tenancies sqm Uplift over prior passing rent % of total portfolio $000 % Rent reviews 613 132,097 35 +2,575 +3.5 New leasing 207 33,916 9 +74 +0.3 Retail portfolio 820 166,013 44 +2,649 +2.8 Rent reviews 18 22,478 6 +356 +3.0 New leasing 23 22,509 6 +1,357 +12.8 Office portfolio 41 44,987 12 +1,713 +7.6 861 211,000 56 +4,362 +3.7 Total (static activity) Development leasing No. of tenancies ~NLA sqm Sylvia Park and LynnMall 13 7,212 Total (development activity) 13 7,212 Total (all activity) 874 218,212 WALT years CAGR 3.4% - % of all leases subject to fixed/CPI rent reviews 88 4.9 3.0% - 61 9.7 6.6 80 Retail Office > Active period for new leasing – the number of leases completed represents 25% of all retail tenancies, reflecting the high expiry profile during the year > Strong office leasing performance driven by: > Continued strong performance at Sylvia Park • Delivered uplift of 7.0% over previous rents • Retention of Russell McVeagh at Vero Centre, with a new 12-year lease • Continued strong leasing at The Majestic Centre, with average WALT for new leases of seven years • Three 12-year leases to Government tenants at 44 The Terrace, providing a 23% uplift on existing rental levels, achieved from completion of staged floor refurbishment > Performance underpinned by rent review structures Kiwi Property > 2016 annual result presentation > 16 May 2016 37 Portfolio statistics Active asset management has assisted in maintaining sound portfolio metrics Portfolio / property As at NLA sqm 31-Mar-16 Occupancy %1 31-Mar-15 31-Mar-16 WALT years 31-Mar-15 31-Mar-16 31-Mar-15 Sylvia Park2 68,783 72,165 100.0 99.6 3.6 3.1 Sylvia Park Lifestyle 16,536 16,182 100.0 100.0 4.1 4.9 LynnMall 37,227 32,054 98.7 100.0 4.6 3.4 5,205 n/a 100.0 n/a 8.7 n/a Centre Place – North 16,029 15,973 93.2 93.0 3.2 3.5 Centre Place – South 10,933 10,933 98.1 100.0 7.1 8.0 The Plaza 32,401 32,444 100.0 100.0 4.0 2.9 North City 25,473 25,466 100.0 99.1 4.1 3.1 Northlands 41,571 41,513 99.1 99.5 3.2 3.2 99.1 99.3 ▲ 3.9 3.4 Westgate Lifestyle3 Retail portfolio 254,158 246,730 ▲ Vero Centre 39,530 39,525 99.4 98.8 5.2 4.8 ASB North Wharf 21,625 21,625 98.8 100.0 14.6 15.6 The Majestic Centre 24,604 24,529 91.9 91.7 7.1 6.3 The Aurora Centre 24,699 22,195 - - - - 44 The Terrace 10,123 10,109 100.0 87.7 10.7 0.9 Office portfolio 120,581 117,983 ▲ 97.4 96.1 ▲ 8.2 7.6 Investment portfolio 374,739 364,713 ▲ 98.7 98.4 ▲ 5.1 4.5 2.5 Vacancy > Centre Place – North: largely external and upper level tenancies > ASB North Wharf: represents one retail tenancy WALT > The retail WALT is largely in line with long-term average > Assisted by: • Extensions to major tenant leases at The Plaza and North City • New tenants at Westgate Lifestyle > The office WALT is the longest in more than 10 years, driven by active leasing 1. Tenancies vacated for development works are excluded from the occupancy statistics. At 31 March 2016 excludes 800 sqm at The Majestic Centre, all of The Aurora Centre and 1,500 sqm at 44 The Terrace. At 31 March 2015, excluded all of The Aurora Centre. 2. Adjusted for tenancies under development as at 31 March 2016. 3. Represents only those tenancies open and trading at 31 March 2016. Kiwi Property > 2016 annual result presentation > 16 May 2016 38 Lease expiry profile 2.6 Active leasing and higher tenant retention rates extend WALT Weighted average lease term (years) Lease expiry profile By gross income As at 31-Mar-16 31-Mar-15 Retail 3.9 3.4 Office 8.2 7.6 Total 5.1 4.5 Vacant or holdover 4% 0% 3% 10% FY17 > Leases for current development activity and pending government leases will further extend WALT as follows: 7% 9% 13% FY18 Effect on WALT (years)1 WALT Retail H&M and Zara 11.4 +0.2 +0.1 Westgate Lifestyle 7.9 +0.2 +0.1 The Aurora Centre 18.0 (development completion) (government lease) All projects +0.3 Office +0.7 +1.7 +0.8 1. Assuming project complete as at 31-Mar-16. 13% Total +1.7 Relates to expiries at Vero Centre 12% Portfolio impact (developments) ● Retail portfolio ● Office portfolio ● Total portfolio By gross income 21% FY19 48% Relates to expiries at Sylvia Park 4% 16% 14% FY20 5% 12% 38% FY21+ 72% 47% 0% Kiwi Property > 2016 annual result presentation > 16 May 2016 10% 20% 30% 40% 50% 60% 70% 80% 39 Sector and geographic diversification 2.7 Our diversification Auckland ($1.7b) Auckland region: Pop. 1,416,000 (Largest region, 33.4% of NZ) 2 x shopping centres 2 x large format retail centre 2 x office buildings 1 property managed on behalf of third party 64% Hamilton ($112m) Waikato region: Pop. 404,000 (4th largest region, 9.5% of NZ) 4% Retail 2 x shopping centres1 67% 8% Office 31% Other 2% Palmerston North ($211m) Manawatu-Wanganui region: Pop. 223,000 (6th largest region, 5.3% of NZ) 1 x shopping centre 15% Wellington ($383m) Wellington region: Pop. 471,000 (3rd largest region, 11.1% of NZ) 1 x shopping centre 3 x office buildings 9% Christchurch ($243m) Canterbury region: Pop. 539,000 (2nd largest region, 12.7% of NZ) 1 x shopping centre Source: Statistics New Zealand (2013 Census results, usually resident population count). Key % by portfolio value 1. Following settlement of the acquisition of The Base and disposal of Centre Place – South, Kiwi Property will hold two assets in Hamilton with a value of $258.0 million. Kiwi Property > 2016 annual result presentation > 16 May 2016 40 Strategy delivery – Mar-10 vs. Mar-16 statistics How we have delivered on our strategy 2.8 > Our investment strategy is outlined on pages 3 to 5 > This slide demonstrates how delivery of our strategy has moved our portfolio statistics over the past five years In the retail portfolio 31-Mar-10 31-Mar-16 31-Mar-16 (Adjusted)1 $1.10b $1.79b $1.97b Weighting to Auckland retail2 25% 43% 41% Weighting to ‘core’ retail portfolio2 49% 60% 63% - 21,741 sqm 96,207 sqm 31-Mar-10 31-Mar-16 31-Mar-16 (Adjusted)3 3.1 years 10.7 years 16.6 years Strategy element Total retail portfolio value Large format retail portfolio In the office portfolio Strategy element The Aurora Centre and 44 The Terrace WALT 1. 2. 3. Represents the 31 March 2016 statistics adjusted for completion of development activity for H&M, Zara, Westgate Lifestyle, The Majestic Centre, The Aurora Centre and 44 The Terrace, together with settlement of the acquisition of The Base and the disposal Centre Place – South. Expressed as a percentage of the investment portfolio value. Based on 31 March 2016 statistics, assuming completion of The Aurora Centre and commencement of the 18-year Government lease. Kiwi Property > 2016 annual result presentation > 16 May 2016 41 Tenant diversification 2.9 Our tenants Total portfolio Top 20 % of core portfolio gross income % of core portfolio gross income New Zealand chains Australian and international chains 30 25 ● ASB Bank ● Farmers 1 7.3 3.8 Department stores 7 ● Progressive Enterprises 3.2 Supermarkets 5 ● Russell McVeagh 2.5 Independent retailers 5 ● Vero Insurance 2.4 Cinemas 2 ● Foodstuffs 2.1 74 ● Bell Gully 2.0 ● Cotton On Clothing 2.0 ● Just Group 1.8 ● Hallenstein/Glasson 1.6 ● The Warehouse 1.6 ● Kmart 1.5 ● Hoyts Cinemas 1.2 ● ANZ Bank 1.0 ● Whitcoulls1 1.0 ● Reading Cinemas 0.8 Retail (812 tenants) Banking 6 Legal 5 Government 4 Insurance 4 Consultancy 2 Financial services 2 Other 3 Office (75 tenants) 26 ● Retail portfolio ● Office portfolio ● Total portfolio Kiwi Property > 2016 annual result presentation > 16 May 2016 1 ● Pascoes 0.8 ● Hannahs 0.8 ● Valleygirl 0.8 ● Goldman Sachs 0.7 Collectively, our top 20 tenants: Occupy 48% of portfolio area Contribute 39% of portfolio income Have a weighted average lease term of 6.8 years 1. Controlled by the James Pascoe Group. 42 Retail sales Strong performance driven by discretionary spending MAT $m Centre Sylvia Park 31-Mar-16 Specialty sales % var. from 31-Mar-15 $/sqm GOC % 455.2 +7.8 9,700 14.8 5.0 n/a n/a n/a 207.6 +7.9 7,100 16.1 Centre Place – North 58.5 +7.3 5,400 17.1 Centre Place – South 36.7 +17.7 4,300 19.9 The Plaza 181.3 +5.5 7,800 16.5 North City 104.8 +9.9 6,500 16.2 Northlands 315.5 -2.2 8,100 16.0 1,364.6 +5.8 7,700 15.9 Sylvia Park Lifestyle1 LynnMall Total MAT $m Category 31-Mar-16 Like-for-like % var. from 31-Mar-15 $m Ann % var Supermarkets 323.3 -1.1 323.3 -1.1 Department stores 201.6 +5.9 201.6 +5.9 23.6 +18.7 21.3 +7.4 Mini-majors 160.0 +17.4 73.4 +5.6 Specialty 540.1 +3.9 453.2 +2.9 Commercial services 116.0 +19.9 93.9 +9.6 1,364.6 +5.8 1,166.7 +3.0 Cinemas Total Kiwi Property > 2016 annual result presentation > 16 May 2016 2.10 > Strong sales growth at all centres except Northlands • Northlands is impacted by an increase in floorspace in the post-earthquake re-build environment, particularly within the supermarkets category • The LynnMall expansion completed in Nov-15 has reaped rewards for the entire centre. Monthly sales for the overall centre are up on average ~20% per across the period since opening > Growth in all categories except supermarkets • Countdown supermarkets at LynnMall and Northlands were affected by new supermarket openings within these catchments > Growth is being experienced in discretionary spending categories, and in line with our strategy of evolving the retail mix to include more dining, leisure, entertainment and services beyond conventional retail. Key category performers (like-for-like) are: • Cinemas +7.4% • Commercial services (predominantly mobile phone and travel stores) +9.6% • Within the mini-major/specialty category: - Music, video and games +14.0% - Food +4.2% - Personal services +5.0% - Outdoor and leisure +9.5% - Newsagents and books +7.7% 1. Under prior ownership, tenants did not report sales. Sales data is now being requested. The sales presented reflects only the six tenants (representing 17% of NLA) who provide sales data. 43 Sustainability achievements 2.11 How we delivered in 2016 > Only New Zealand company and one of only 113 globally, included on the 2015 Climate A-List > Included for the third year running in the CDP 2015 NZX 50 Climate Disclosure Leadership Index > The output from the solar array panels at Sylvia Park is ahead of forecast • 19% of Sylvia Park’s common area power > Our EV car charging > Awarded a ‘Judges Commendation’ in the ‘Impact Renewables’ category of the 2015 NZI Sustainable Business Network Awards stations at Sylvia Park have been used over 1,600 times since being installed > Continued support of the NZ Green Building Council via participation in NABERSNZ > 5,000 new LED lights installed in the common area of our properties • saving 2,000,000 kWh per annum – enough to power the equivalent of 200 typical homes Environmental savings Our annual environmental programme continues to reap significant rewards. Even though we have increased trading hours at our key shopping centre and increased the size of our portfolio, since 2008 we have made the following savings across our portfolio. We have: > Saved 7,500,000 kWh of energy • Enough to supply 748 typical homes > Saved 134 million litres of water • Enough to fill 2,680 domestic swimming pools Kiwi Property > 2016 annual result presentation > 16 May 2016 > Diverted 331 tonnes of waste from landfill • Equivalent to filling 540 jumbo bins > Reduced our carbon emissions by 904 tonnes • Equivalent to 214 return flights from Auckland to London 44 Digital and signage We’re enhancing our customer experience 2.12 > We’re enhancing our customer experiences through: • Upgraded and mobile optimised corporate and retail websites • Implementing new carpark management systems • New state-of-the-art digital media solutions • Installing digital in-centre wayfinding boards • Implementing enhanced WiFi capabilities at the centres • Implementing data capture and customer relationship systems > Our new retail websites and mobile functionality are delivering better shopping experiences • We’ve had 22% more visits to our websites over the prior year • Users are spending 24% more time on our websites • There has been a 60% increase in the average time spent on our websites o mobile devices > Our focus on digital signage has delivered $1.2 million in revenues, up 56% over the prior year Ooh Media screen, North City Kiwi Property > 2016 annual result presentation > 16 May 2016 45 o?RiT "Mu rebelsport.co.nz DEVELOPMENT UPDATE Appendix 3. 7 'maiechland (as at 14 April Sylvia Park 3.1 Overview of expansion plans (ground floor) Ground level Concept only. Subject to change. Any scheme will be market led, appropriately de-risked and subject to commercial viability. 1 1 2 3 1 International retailers The first stage of expansion is already underway with construction of stores for H&M and Zara 2 Expand and refresh dining and leisure Planning in progress for new alfresco dining, a signature pavilion building and a refreshed existing dining lane (to be completed in conjunction with 3.) Kiwi Property > 2016 annual result presentation > 16 May 2016 3 Office building and town square • 11,200 sqm building – incl. ground floor restaurants and nine office levels • Target 5-GreenStar design rating and NABERSNZ 4-star energy rating • In advanced discussions with a potential tenant for one-third of the office space Potential cost: $80 million Potential start: Late 2016 Potential completion: 2018 47 Sylvia Park 3.2 Overview of expansion plans (upper level) Concept only. Subject to change. Any scheme will be market led, appropriately de-risked and subject to commercial viability. 5 4 4 South fashion galleria • Up to 20,000 sqm of additional retail space • Introducing new international brands, concept stores and mini-majors/ specialty stores • One or more department stores • New concept café court Kiwi Property > 2016 annual result presentation > 16 May 2016 Potential cost: Up to $180 million Potential start: 2017 Potential completion: 2019 – 2021 5 Carparking • Four-level multi-deck carpark • Will increase carparking from ~3,900 to ~4,400 • Customer friendly - will incorporate carpark guidance systems, digital wayfinding signage and valet parking options 48 Sylvia Park H&M and Zara developments 3.3 Programme status > Works on each tenancy are progressing on schedule > Mall ambience upgrade design works in progress Financial status > The forecast cost of $19.2 million1 remains on track • $11.5 million for Zara • $7.7 million for H&M and adjacent mall upgrades 1. Cost profile Spent to 31-Mar-16 FY17 $7.3m $11.9m Kiwi Property > 2016 annual result presentation > 16 May 2016 49 Westgate Lifestyle 3.4 Opening progressively from March 2016 to mid-2016 Centre details (On completion) NLA 25,800 sqm Tenancies 28 Carparks 622 Leasing to date (On completion) Financial metrics Occupancy (by area) Cost (Acquired Sep-15) WALT (years) 90% 8.0 Valuation (On completion at Mar-16) Spent to 31-Mar-16 1. Cost profile Kiwi Property > 2016 annual result presentation > 16 May 2016 $67.5m > At 31 March 2016, three tenancies were open $82.5m1 and trading. A further four were open and $85.3m trading at 30 April 2016. The balance are FY17 opening progressively $15.0m through to mid-2016 50 LynnMall Development: Opened on time, on budget and fully leased Development complete Financial metrics achieved > An eight-screen Reading Cinemas multiplex on a 15-year lease > ‘The Brickworks’ dining lane containing restaurants /cafés > An expanded retail mix Pre-development value Development cost $206m $39m Total investment $245m Value on completion (@ 6.75% cap rate) $269m Development margin Yield on project cost Kiwi Property > 2016 annual result presentation > 16 May 2016 3.5 $24m >7% 51 The Majestic Centre Seismic strengthening: Further milestones achieved 3.6 Project status > Further project milestones reached: • on-floor strengthening works complete • all key tower seismic works complete • all tenants relocated to their final tenancies > Remaining works include the tower and podium: • isolated works to the residual of the tower programmed to continue until mid-2016 • podium works will continue into the fourth quarter of 2016 Financial status > Forecast cost of $83.5 million1 Leasing status > Since project commencement in July 2012, office leases have been completed for: • • 20,147 sqm (91% of office NLA) an average tenure of nine years for new leases > Focus for FY17 is on leasing the remaining vacant space 1. Cost profile Spent to 31-Mar-16 FY17 $81.2m $2.3m Kiwi Property > 2016 annual result presentation > 16 May 2016 52 The Aurora Centre 3.7 24,000 sqm government office project on programme and budget Programme status > Base building office works completed and handed over for tenant fit-out > Residual works on the lobby and carpark on programme to complete in July 2016 Financial status > The forecast cost of $72.0 million1 remains on track Leasing status > All office space 100% leased to Ministry of Social Development for 18 years from August 2016 > Focus now turns to leasing the ground floor retail space As at 21 April 2016 Kiwi Property > 2016 annual result presentation > 16 May 2016 1. Cost profile (inclusive of letting up allowances) Spent to 31-Mar-16 FY17 $66.9m $5.1m 53 44 The Terrace 3.8 On programme to complete late 2016 Project status > Works commenced June 2015 > Seven of the 10 floors leased to Crown tenants have now been handed back to tenants strengthened and refurbished > Refurbishment work progressing ahead of programme and due for completion September 2016 Cost status > The forecast cost of $12.6 million1 remains on track Leasing status > 8,000 sqm of 10,100 sqm leased for 12 years from July 2015 to: • Commerce Commission • Tertiary Education Commission • Energy Efficiency and Conservation Authority > Focus now turns to leasing the remaining two floors currently utilised as decant space 44 The Terrace, Wellington Kiwi Property > 2016 annual result presentation > 16 May 2016 1. Cost profile (inclusive of letting up allowances) Spent to 31-Mar-16 FY17 $7.5m $5.1m 54 Transaction overview 4.1 Binding agreement to acquire a 50% interest in The Base Interest to be acquired 50% Acquisition price $192.5m Kiwi Property to manage the entire centre Initial yield1 % 6.1 Initial yield2 % 6.4 IRR2 % 8.5 Pre-paid ground rent 120 years Settlement due 31 May 2016 Funded through bank debt and asset recycling 1. Including development land. 2. Excluding development land. Kiwi Property > 2016 annual result presentation > 16 May 2016 56 Investment rationale Aligns with strategy 4.2 > Aligns with our strategy of owning dominant regional shopping centres • The Base - is New Zealand’s largest single-site retail centre at 85,256 sqm - is located within New Zealand’s ‘golden triangle’ of economic and residential growth (Auckland, Hamilton and Tauranga) - is located in Hamilton’s growth corridor - dominates its catchment, with a 30%+ share of retail sales - offers positive future sales growth due to the pre-eminent position the centre enjoys, its easy access and high-profile location and projected population and retail sales growth - offers future development opportunities, with 6.7 hectares of vacant land • As an asset class, dominant regional shopping centres tend to deliver superior and less volatile returns over the long term compared with other classes of property > Immediately accretive to earnings • • Final level of accretion will depend on extent and outcome of asset recycling Provides property management fee income > Potential to add value through active asset management and portfolio-wide retailer relationships Kiwi Property > 2016 annual result presentation > 16 May 2016 57 Property overview 4.3 Te Awa (Regional shopping mall) Large format retail NLA 31,380 sqm NLA 53,876 sqm Completed 2011 Completed 2005 – 2014 No. tenants 103 No. tenants 89 Majors Farmers Hoyts Cinema Majors The Warehouse Mitre 10 Mega Mini-majors Noel Leeming, Briscoes, Rebel Sport, Postie Plus, Number One Shoes, Heathcote Appliances The Base NLA 85,256 sqm Land area 30 hectares No. tenants 192 No. carparks 3,343 (3.92 per 100 sqm NLA) Ped. count >7.5 million per annum Kiwi Property > 2016 annual result presentation > 16 May 2016 58 Investment summary 4.4 Valuation summary for 50% interest1,2 Property statistics Valuer JLL Occupancy 95.8% Value $192.5 million WALT (by income) 3.18 years Capitalisation rate 6.63% Moving annual turnover3 $263 million Net passing income $11.7 million Te Awa specialty GOC3 14.6% Net passing income – fully leased $13.1 million Under renting 3.1% Incl. land2 Excl. land2 Initial yield – passing 6.08% 6.38% Initial yield – fully leased 6.78% 7.11% IRR (10-year) 8.17% 8.47% 1. As at 31 March 2016. 2. $9.0 million of the purchase price is attributed to vacant land for future development. 3. As at 31 December 2015. Kiwi Property > 2016 annual result presentation > 16 May 2016 59 Auckland CBD office market Market analysis 5.1 Auckland office weighting (by total portfolio value) Outlook Key points (Premium and A-grade accommodation) ► Supply > No major changes to Premium-grade until 2019 when two buildings are assumed to come on stream, although market expectation is that only one will proceed > Increase in A-grade stock from 2016 with Victoria Street and Wynyard Quarter ▲ Absorption > Solid tenant demand environment expected to result in positive absorption across Prime office grades in the short term ► Vacancy ▲ ▼ Rents ($/sqm / net effective) Yield > With no new supply, Premium-grade vacancy is expected to remain at negligible levels until new supply comes on board > A-grade vacancy forecast to increase from early 2016 as new supply comes on stream > The rate of rental growth eased over 2015. Rents are forecast to grow at an average of 1.6% and 2.5% per annum from 2015-2019 for Premium and A-grade respectively > Further firming expected for both grades to the end of 2016 > The potential supply and vacancy in the market is expected to limit further yield compression thereafter Source: CBRE Research. Auckland Property Market Outlook (November 2015), Auckland Property Market Outlook (February 2016). Kiwi Property > 2016 annual result presentation > 16 May 2016 Premium 14% A-grade 7% Our exposure to the Auckland market Premium A-grade Vacancy WALT (years) 0.6% 1.2%1 5.2 14.6 1. Represents retail space only. Our expectations > Given low vacancy rates, coupled with demand for quality space, we expect to see continued rental growth at Vero Centre over the short to medium term > Vero Centre and ASB North Wharf should both continue to benefit from firming yields 61 Wellington CBD office market Market analysis 5.2 Wellington office weighting (by total portfolio value) Outlook Key points (A-grade and B-grade accommodation) ▲ Supply > Stable supply in the A-grade market in the short term, but a large amount of space will re-enter the market in 2016/17 (largely pre-committed) > The B-grade environment is complex with numerous seismic upgrades underway and a number of planned projects dependent on pre-commitment ► Absorption > Both A and B-grade buildings have fluctuating absorption forecasts over the next five years as the various upgrade scenarios play out ▲ ► Vacancy Rents ($/sqm / net effective) ▼ Yield > Most new A-grade stock coming on stream is precommitted. Vacancy fluctuates but remains within a range of 2.3% to 4.1% over the short to medium term > B-grade vacancy is expected to remain low until 2018 when 30,000 sqm at Bowen Campus returns to stock > Modest short-term rental growth is expected > B-grade rentals have stabilised as the market has adopted additional contractual obligations when dealing with buildings with low seismic ratings > Further firming expected for both grades to the end of 2016 with yields stabilising at ~7.7% and ~9.2% for A and B grades respectively Source: CBRE Research. Wellington Property Market Outlook (November 2015), Wellington Property Market Outlook (February 2016). Kiwi Property > 2016 annual result presentation > 16 May 2016 A-grade 9% B-grade 1% Our exposure to the Wellington market A-grade B-grade Vacancy 4.0% 0.0% WALT (years) 12.8 10.7 Vacancy and WALT statistics include the Ministry of Social Development lease at The Aurora Centre which commences August 2016. Our expectations > Our long-term leases to the Crown largely limit our exposure to Wellington market conditions > Completion of works at The Majestic Centre and 44 The Terrace will enable leasing of the remaining 2,800 sqm and 1,500 sqm of current vacant/decant space respectively 62 HABWALFE Appendix 6. OTHER INFORMATION Glossary of terms 6.1 Department stores Includes both full line and discount department stores (i.e. Farmers, Kmart and The Warehouse) Funds from operations (FFO) FFO is an alternative performance measure used to assist investors in assessing the Company’s underlying operating performance and to determine income available for distribution. FFO is calculated in accordance with guidelines issued by the Property Council of Australia. Gearing ratio Calculated as finance debt (which includes secured bank debt and the $125 million face value of the bonds) over total tangible assets (which excludes interest rate derivatives) GOC: Specialty sales gross occupancy cost Calculated as total gross occupancy costs over total specialty moving annual turnover (excluding GST) Like-for-like rental income Excludes assets purchased, disposed of or undergoing development in either year of comparison Like-for-like retail sales Only includes sales from those tenancies who have traded for the past 24 months Moving annual turnover Stated excluding GST Net interest expense Net of interest income and interest capitalised Net operating income (NOI) Excludes income resulting from straight-lining of fixed rental increases and includes the amortisation of lease incentives Net rental income (NRI) Gross rental income less property operating expenses, including amortisation of lease incentives and rental income resulting from straight-lining of fixed rental increases Kiwi Property > 2016 annual result presentation > 16 May 2016 64 Disclaimer Kiwi Property Group Limited (‘Kiwi Property’) has prepared this presentation (the ‘Presentation’) and the information contained in it is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. It is not intended as investment or financial advice and must not be relied upon as such. Some of the information in this Presentation is based on unaudited financial data which may be subject to change. You should assess whether the Presentation is appropriate for you and consider talking to a financial adviser or consultant before making any investment decision. This Presentation is not an offer or invitation for subscription or purchase of securities or other financial products. All reasonable care has been taken in relation to the preparation and collation of the Presentation. Neither Kiwi Property, its directors, officers, employees, agents, associates, nor any other person accepts responsibility for any loss or damage howsoever occurring resulting from the use of or reliance on the Presentation by any person. Past performance is not indicative of future performance and no guarantee of future returns is implied or given. Caution regarding forward-looking statements This Presentation includes forward-looking statements regarding future events and the future financial performance of Kiwi Property. Any forward-looking statements included in this Presentation involve subjective judgement and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to Kiwi Property, its directors, officers, employees, agents and associates. Actual results, performance or achievements may vary materially from any forward-looking statements and the assumptions on which those statements are based including, without limitation, in particular because of risks associated with the New Zealand economy which could affect the future performance of Kiwi Property’s property portfolio, its ability to obtain funding on acceptable terms, the risks inherent in property ownership and leasing, and Kiwi Property’s business generally. Given these uncertainties, you are cautioned that this Presentation should not be relied upon as a recommendation or forecast by Kiwi Property, any of its directors, officers, employees, agents or associates. None of Kiwi Property, any of its directors, officers, employees, agents or associates undertakes any obligation to revise the forward-looking statements included in this Presentation to reflect any future events or circumstances. Copyright and confidentiality The copyright of this document and the information contained in it is vested in Kiwi Property. This document should not be copied, reproduced or redistributed without prior written consent. 16 May 2016 Kiwi Property > 2016 annual result presentation > 16 May 2016 65