New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Munroe Lane is the last asset standing: APL announced that Stoddard Road has been conditionally sold for NZ$36.8m or a c.7.5% passing yield.</li><li>Portfolio valuation falls: The portfolio devaluation of -NZ$13m was driven by (1) Munro Lane now being valued on an as complete cap rate of 6.0% (was c.5.2% and 5.5% yield on cost), and adjusted for remaining cost to complete (May completion), and (2) reducing Stoddard Rd's book value to its conditional sale price less divestment costs</li><li>What might a 'return of capital' scenario look like?: The contracted sale of Graham St dictates the timing of any capital return, with first potential settlement date 1 December 2023, and the second a year later.</li></ul>

Munroe Lane is the last asset standing: APL announced that Stoddard Road has been conditionally sold for NZ$36.8m or a c.7.5% passing yield.Portfolio valuation falls: The portfolio devaluation of -NZ$13m was driven by (1) Munro Lane now being valued on an as complete cap rate of 6.0% (was c.5.2% and 5.5% yield on cost), and adjusted for remaining cost to complete (May completion), and (2) reducing Stoddard Rd's book value to its conditional sale price less divestment costsWhat might a 'return of capital' scenario look like?: The contracted sale of Graham St dictates the timing of any capital return, with first potential settlement date 1 December 2023, and the second a year later.

Thematic (Sector/Industry)

<ul><li>Property sector underperforms the broader market: The NZ LPV sector was down -1.2% in March, underperforming the NZX50G which was broadly flat.</li><li>Cap rates starting to creep higher: Goodman (GMT), Investore (IPL), Kiwi Property (KPG) and Stride (SPG) have all reported 2H23 valuation movements ahead of their full year results in May</li><li>Balance sheets remain in the spotlight: Portfolio valuation changes also lifted loan-to-value ratios</li></ul>

Property sector underperforms the broader market: The NZ LPV sector was down -1.2% in March, underperforming the NZX50G which was broadly flat.Cap rates starting to creep higher: Goodman (GMT), Investore (IPL), Kiwi Property (KPG) and Stride (SPG) have all reported 2H23 valuation movements ahead of their full year results in MayBalance sheets remain in the spotlight: Portfolio valuation changes also lifted loan-to-value ratios

Real Estate Reflections: Cap Rates Creep Higher

<ul><li>Dust settles on February reporting season: Four property companies reported in February; Precinct Properties (PCT), Property for Industry (PFI), Winton (WIN) and Vital Healthcare (VHP). </li><li>Solid month for the property sector: The NZ LPV sector was up +1.6% in February, outperforming the NZX50 which was down -0.6%</li><li>Relative valuations looking attractive but only back to fairer value vs bond yields</li></ul>

Dust settles on February reporting season: Four property companies reported in February; Precinct Properties (PCT), Property for Industry (PFI), Winton (WIN) and Vital Healthcare (VHP). Solid month for the property sector: The NZ LPV sector was up +1.6% in February, outperforming the NZX50 which was down -0.6%Relative valuations looking attractive but only back to fairer value vs bond yields

Real Estate Reflections: Refurbishing the Monthly

<ul>
<li>Last year was a turbulent time for listed property vehicles (LPVs) - the sector was down -26% in the year as it adjusted to the higher interest rate environment</li>
<li>Valuations remain above historical relationships with bond yields, and the growth outlook has moderated</li>
<li>The sector is trading c-30% below its net asset backing but we consider this largely priced in.</li>
</ul>


Last year was a turbulent time for listed property vehicles (LPVs) - the sector was down -26% in the year as it adjusted to the higher interest rate environment
Valuations remain above historical relationships with bond yields, and the growth outlook has moderated
The sector is trading c-30% below its net asset backing but we consider this largely priced in.


Real Estate Reflections: Five Themes for the Year Ahead

<ul><li>1H23 listed property results highlighted solid operational outcomes, but we are starting to see higher interest rates impact forward earnings expectations and capital management strategies</li><li>Development is being delayed, non-core assets sold and distribution growth moderated</li><li>While results were generally in line with our expectations, we lowered our earnings and dividend forecasts for most of the sector</li></ul>

1H23 listed property results highlighted solid operational outcomes, but we are starting to see higher interest rates impact forward earnings expectations and capital management strategiesDevelopment is being delayed, non-core assets sold and distribution growth moderatedWhile results were generally in line with our expectations, we lowered our earnings and dividend forecasts for most of the sector

Real Estate Reflections: Adjusting to a Higher Rates Environment

New Zealand

Asset Plus Limited carries on the business of a property company that invests in and manages commercial, industrial and retail properties. The Company's investment property portfolio consists of retail, commercial, and industrial properties located in New Zealand.

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Asset Plus (APL NZ)

Asset Plus: One Asset, Plus Cash

Asset Plus (APL) announced progress on its sell-down strategy with the conditional divestment of Stoddard Rd. APL's remaining asset is its Munroe...

Forsyth Barr

Real Estate Reflections: Cap Rates Creep Higher

March was a mixed month for the property sector where interest rates are typically a key driver of LPV sector performance, but despite a -40bp fall...

Forsyth Barr

Real Estate Reflections: Refurbishing the Monthly

Listed property companies that reported in February saw strong operational results; While results were broadly in line with our expectations, we...

Forsyth Barr

Real Estate Reflections: Five Themes for the Year Ahead

Last year was a turbulent time for listed property vehicles (LPVs) - the sector was down -26% in the year as it adjusted to the higher interest...

Forsyth Barr

Real Estate Reflections: Adjusting to a Higher Rates Environment

1H23 listed property results highlighted solid operational outcomes, but we are starting to see higher interest rates impact forward earnings...

Forsyth Barr

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