Stride Property Ltd & Stride Investment Management Ltd (NS) Analysis

Overview

Stride Property Group is a stapled group comprising Stride Property Limited ("Stride") and Stride Investment Management Limited ("SIML"). Stride is a listed portfolio investment entity (PIE) that invests in New Zealand office, retail and industrial property. SIML is a real estate investment manager. SIML currently manages Diversified NZ Property Trust and its predecessor fund Diversified NZ Property Fund Limited, Stride and Investore Property Limited ("Investore"). Investore is an NZX listed property company specialising in large format retail assets.

Stride Property Group was formed in July 2016 when SIML was demerged from Stride in a distribution of all of the SIML shares to Stride shareholders and the shares of each company were stapled so that they could only be transferred as a parcel of one Stride share and one SIML share.

Originally known as DNZ Property Fund Limited (DNZ), Stride Property Limited was established on 30 September 2008 through the amalgamation of DNZ Foundation Property Fund Limited, DNZ Income Property Fund Limited, DNZ Retail Property Fund Limited and DNZ Tauranga Property Fund Limited.

Shares in Stride began trading on the NZX Main Board on 16 August 2010 at $0.97. The company entered the S&P/NZX50 on 18 October 2010.

On 25 September 2015, DNZ Property Fund Limited was renamed to Stride.

Each of Stride Property Limited ("Stride") and Stride Investment Management Limited ("SIML") (together, the "Stride Property Group"), has been granted Listing with a 'Non-Standard' ("NS") designation.

The NS designation was assigned to SPG, due to Stride and SIML having constitutions that require Stride to have a board of directors which mirrors the composition of SIML's board of directors (and shareholders of Stride consequently not voting directly on the appointment or removal of Stride directors).

For further information, please see a copy of the waiver under Documents on SPG's homepage on nzx.com.

Performance

The following information was extracted from Stride Property Group Limited's full year results, released 28 May 2025

• $21.7 million profit after income tax, up $77.8 million from FY24, due primarily to a smaller net portfolio valuation reduction

-FY25 full year dividend of 8.0 cents per share represents a payout of 93% of combined distributable profit (Note 2)

• Portfolio (Note 3) demonstrates strong metrics with value (Note 4) of $1.5 billion, 6.6 years WALT, 95% occupancy and 6.2% weighted average capitalisation rate
• Strong portfolio (Note 3) rental growth of 3.8% growth on prior rentals from new lettings, renewals and rent reviews
• FY25 combined net rental income and management fee income (excluding fees from SPL) of $89.5 million is $(2.7) million lower than FY24, impacted by $(3.0) million as a result of restructure of Industre (Note 5), Stride’s industrial property Product. Excluding the restructure, combined net rental income and management fee income is slightly higher than FY24
• Careful management of costs resulted in corporate overhead expenses of $(15.9) million, down $2.5 million from FY24

-SPL continues to have a robust balance sheet, with a loan to value ratio (LVR) of 29.0% on a balance sheet basis (Note 6) and a bank LVR (Note 7) of 38.7%, up on 31 March 2024 (36.7%) largely due to ongoing office upgrades and a $(29.5)m net portfolio valuation reduction

• SIML continues to be an active investment manager, and has undertaken a number of strategic transactions for the Stride Products (Note 5), including acquisition and divestments for Investore and two new developments underway for Industre
• Progress continues towards meeting sustainability targets, with a carbon reduction plan in progress

-Combined cash dividend guidance for FY26 of 8.0 cents per share, in line with FY25

Stride Property Group Chair Tim Storey noted “While we have seen the challenging macro-economic conditions of recent years continue through FY25, the last half of FY25 appears to have been the low point in the cycle for commercial property. Recent activity suggests that the investment market is stabilising following the cuts to the Official Cash Rate by the Reserve Bank of New Zealand."

Stride’s diversified revenue sources, comprising its real estate investment management business together with its direct and indirect commercial property investment, continued to deliver resilient financial performance during FY25. Profit after income tax for FY25 was $21.7 million, up $77.8 million on FY24, with the FY25 result being impacted by a lower net reduction in fair value of investment properties, a positive share of profit in equity-accounted investments, and higher income tax expense (including as a result of the Government’s policy decision to remove tax deductions for depreciation on commercial buildings).