Stride is forming a portfolio of places with Enduring Demand that attract the highest returns in all market conditions, because they meet the needs of our customers (our tenants), their staff, their visitors, and their customers.
In each case, the properties have attributes that drive strong investment performance. Those attributes vary depending on the sector and the market but are a combination of accessibility, amenity, functionality and a value proposition that is compelling.
Stride’s portfolio is diversified across the three core property sectors – office, retail and industrial. Each sector has slightly different fundamentals. Investing across all three sectors allows Stride to diversify exposure to a wider cross section of the economy and to different property market supply cycles. It also provides the flexibility to invest in a range of opportunities in a tightly held market.
Within the bounds of our adopted strategy, we will continue to take development opportunities that are well founded and can be completed with an acceptable risk/return profile.
In order to deliver on our strategy, we are focused on developing and applying our expertise in four core competencies:
- Stock Selection
- Capital Management
- Informed Decision-making
- Skilful Management
Investment risk management
Stride aims for a maximum of 15% of contract rental expiring in any one year and no tenant providing more than 10% of our portfolio contract rental. All properties are fully insured both for full replacement value and loss of rents for the reinstatement period. Our relationship with tenants is fundamental to success and this is evidenced by the strong occupancy level (98.2% as at 30 September 2019) within the portfolio.
Property type diversification
Stride will continue to hold a diversified portfolio of investment grade property assets. The sector weighting is (as at 31 March 2019, when this was last reported) office 25%, retail shopping centres 35%,large format retail/large format retail centres 13% and industrial 27%. Stride also has a cornerstone 19.4% shareholding in Investore Property Limited (Investore) as at 1 January 2020, an NZX listed entity which a specific strategy of investing in large format retail properties. Investore is managed by Stride Investment Management Limited. Stride also owns approximately 2% of the units in Diversified NZ Property Trust, which owns four retail shopping centres throughout New Zealand.
Ongoing investment and refurbishment, and new property opportunities
The continued performance and growth of the Stride portfolio depends on acquiring and improving existing properties in established locations with expansion potential or locations with growth, and sourcing land and developing excellent facilities to meet the specific needs of new and existing tenants.
Commitment to quality
Stride develops property with a view to long-term ownership so our buildings will always meet high standards.
Minimisation of development risk
Development risk is only undertaken within agreed parameters as approved by Stride’s directors. The intention is to have no more than approximately 15% of property portfolio value, as measured by aggregate completion cost, held as investment properties under development at any point in time. The Board may exceed this guideline in special circumstances if a potential investment fits criteria and is adequately de-risked, or if a decision to not undertake a refurbishment or expansion of an existing property would result in its deterioration or the loss of a leasing opportunity.