KIPT Annual Result To 31 March 2013

NZX & MEDIA RELEASE

13 May 2013

KIWI INCOME PROPERTY TRUST ANNOUNCES ANNUAL RESULT FOR THE YEAR ENDED 31 MARCH 2013

Kiwi Income Property Trust today announced its annual result for the year ended 31 March 2013, delivering an after tax profit1 of $109.8 million, up $20.6 million, or 23.1% on the previous year. Unit Holders will receive a full year cash distribution of 6.60 cents per unit, in line with guidance.

1 The reported profit has been prepared in accordance with New Zealand generally accepted accounting practice and complies with New Zealand Equivalents to International Financial Reporting Standards. The reported profit information has been extracted from the annual financial statements which have been the subject of an audit pursuant to New Zealand Auditing Standards issued by the External Reporting Board. Refer to the summary financial results in Attachment 1 for further information.

2 Operating profit before tax and distributable income are alternative performance measures used by the Trust to assist investors in assessing the Trust’s underlying operating performance and to determine income available for distribution. Refer to the summary financial results in Attachment 1 for full details of how these measures are calculated.

Mark Ford, Chairman of the Manager of the Trust said, “The Trust continued to focus on its key priorities including maintaining high portfolio occupancy, extending lease terms, recycling capital through asset sales, pursuing acquisition opportunities, extending debt maturities, and progressing value-adding and defensive development projects. The repayment of over $100 million of bank debt from insurance proceeds received for the PwC Centre, Christchurch and sale proceeds from Beca House, Auckland was positive from a balance sheet perspective. However the absence of rental income from these properties has contributed to a lower operating result.”

Operating profit before tax2 reduced $11.9 million to $69.4 million and distributable income2 was $61.2 million, down $10.5 million on the prior year. This was predominantly due to income no longer received from Beca House, an increase in net interest expense and the recognition of performance fees payable to the Manager.

Chris Gudgeon, Chief Executive of the Manager of the Trust, said, “From an operational perspective, we have focused on enhancing the security of future rental income streams through an active leasing program and by making solid progress on developments and projects underway at ASB North Wharf, Centre Place Shopping Centre, The Majestic Centre and Northlands Shopping Centre.”

Property markets

Across the broader economy, it has been a mixed but modestly positive year for retail sales with an improvement in consumer sentiment becoming more steadily established.

Most of the growth in sales occurred in Auckland, Waikato and Canterbury, while sales declined in Wellington and were flat across the rest of the country. Within shopping centres, many retail categories experienced price deflation as the benefits of a stronger currency flowed through to consumers. 2

In the office markets, conditions in Auckland have steadily improved. Vacancy rates have gradually declined, supply has remained stable and underlying market rents are trending upwards. In Wellington, the influence of seismic performance concerns, government sector rationalisation and insurance costs are creating headwinds.

Highlights

Highlights of the financial year include:

Financial

Net rental income of $135.5m, down $8.5m (-5.9%)

Like-for-like net rental income of $115.9m, down $0.6m (-0.5%)

Profit after tax of $109.8m, up $20.6m (+23.1%)

After tax distribution of 6.60 cents per unit, in line with guidance

Repayment of over $100m of bank debt from insurance and asset sale proceeds

Renewal and extension of $227.5m of bank facilities on favourable terms

Net gearing ratio reducing to 31.8%

Revaluation gain of $21.0m (+1.0%) lifting property portfolio value to $2.08b

Unit Holder funds of $1.13b, up $59.4m (+5.5%) with a corresponding increase in underlying net tangible assets per unit

Operational

Occupancy improved to 97.2% (+1.0 percentage point)

Weighted average lease term extended to 4.3 years (+0.4 years)

815 new leases and rent reviews concluded over 200,000 sqm, equivalent to almost 60% of total portfolio area

Development

On-program construction and fitout works for ASB Bank’s new head office

Steady progress on the Centre Place redevelopment, including execution of a new 15-year lease to Hoyts Cinemas for the multi-screen cinema complex

Commencement of seismic strengthening works at The Majestic Centre

Reconstruction of 10 new shops at Northlands

Focus for the 2014 financial year

The focus for the Trust during the 2014 financial year will be to:

maintain active retail and office leasing programs to minimise vacancy

successfully complete projects at ASB North Wharf, Centre Place and Northlands

progress seismic strengthening works at The Majestic Centre

conclude lease and refurbishment negotiations with the Crown at Unisys House

seek opportunities to undertake value-added acquisitions or divestments, consistent with the Trust’s strategy, and

actively manage the cost, term and sources of the Trust’s funding.

Outlook and distribution guidance

Mr Ford said, “The New Zealand economy continues to show signs of improvement with economic growth of 2.4% and 3.2% forecast for 2013 and 2014 respectively3. Latest business confidence indicators have also been positive. Combined, this should lead to wages and employment growth, which will likely benefit both the retail and office sectors in the medium term.”

“Overall, our outlook continues to be governed by the moderate pace of economic recovery in New Zealand. We continue to see the need to remain cautious while at the same time take into account the cost and income impacts of our earthquake strengthening requirements, notably at Northlands and The Majestic Centre.

“Based upon the outlook for the Trust and subject to a continuation of reasonable economic conditions, we are projecting distributions to Unit Holders for the year ending 31 March 2014 to be approximately 6.40 cents per unit. After utilising a portion of the distribution reserve, this would represent a payout ratio of approximately 104% (before performance fees, if any),” Mr Ford concluded.

Additional information

For further information please refer to the following:

Attachment 1: Summary financial results table

Attachment 2: Detailed operational update

The Trust has also released today the following documents which are available for download on the Trust’s website kipt.co.nz or the New Zealand Stock Exchange website nzx.com.

Annual Results presentation

2013 Annual Report (online version)

ENDS

130513__NZX_Release_FY13_Result_Announcment.pdf

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