Investment Policy and Strategy

Investment strategy

The Trust’s portfolio is made up of 81 high quality investment properties with an average value of approximately $11 million. With the recent difficulties facing the financial markets there has been a focus by investors and analysts on quality investment.

Of key importance is the degree to which each asset meets the wants and needs of the tenant. What is always important is of course the location of a property. An asset such as the Trust owned Stewart Dawson Corner, Wellington will never be in the wrong location and clearly represents a quality investment, in spite of being well over 100 years old. Buildings such as the Citigroup Centre in Auckland’s central business district are now in a better location than when the property was acquired by the Trust, due to the change in location preference of occupiers to focus on the Waitemata Harbour and the city’s transport hub.

As the property sector is essentially an accommodation provider for business, Management also has an obligation to understand the economic environment in which its tenants operate. The better this is understood, the more equipped the Manager is to meet both current and future needs of its tenants, both existing and potential. By fully understanding the market the Manager is able to add value to unitholders beyond the market and show the sort of results evidenced by this year’s revaluation results.

Active management philosophy

The Manager actively manages the existing portfolio to ensure that the quality of the portfolio is maintained and, where possible, enhanced. Key facets of this philosophy are both a divestment and acquisition programme, and actively managing and investing in existing assets to improve investment quality levels.

Disciplined financial criteria

At all times, the overriding imperative of the Manager is to provide a return to unitholders that adequately reflects the risks of the Trust and represents an appropriate return on capital.

Diversification

The Manager will continue to develop a well balanced, diversified portfolio by actively reviewing the composition of the Trust’s portfolio (by use, type of building, tenants and location) to identify types of property that are under-represented in the portfolio.

Focus investment on quality properties

Ideally, the Trust seeks acquisition opportunities involving new, recently refurbished and well maintained properties, as these typically have reduced capital expenditure requirements and attractive cash flow characteristics.

Value range

The Manager targets the acquisition of properties having a value between $10 million and $100 million. The Manager will also consider larger portfolio and corporate acquisitions and properties that have strategic benefit to the Trust.

Land

The Manager aims to invest in land and complete its own developments, although in a structure that reduces development risk for the Trust. No more than 5% of the portfolio value will be held in land development opportunities, when the land is not income producing or when it is producing a less than commercial return, at the time of purchase.