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.

Thematic (Sector/Industry)

<ul><li>The listed property sector had a weak month in February, continuing a challenging start to 2024.</li><li>Listed property vehicles (LPVs) that reported in February came broadly in-line with expectations, with higher corporate costs and lower net interest costs being the key differences to our forecasts.</li><li>While operational metrics remain solid there were signs of slowing market rent growth. </li></ul>

The listed property sector had a weak month in February, continuing a challenging start to 2024.Listed property vehicles (LPVs) that reported in February came broadly in-line with expectations, with higher corporate costs and lower net interest costs being the key differences to our forecasts.While operational metrics remain solid there were signs of slowing market rent growth. 

Real Estate Reflections - A Challenging Start to the Year

Equity Bottom-Up

Goodman Property Trust / Equity Bottom-Up

<ul><li>Goodman Property Trust (GMT) has announced it has reached an agreement with its manager, Goodman Group (GMG), to internalise its management contract.</li><li>GMT is one of the shrinking number of externally managed property vehicles on the NZX.</li><li>In our view the internalisation proposal has merit given internal structure offers better alignment of interests between management and shareholders, and the ability to pursue a wider range of growth options. </li></ul>

Goodman Property Trust (GMT) has announced it has reached an agreement with its manager, Goodman Group (GMG), to internalise its management contract.GMT is one of the shrinking number of externally managed property vehicles on the NZX.In our view the internalisation proposal has merit given internal structure offers better alignment of interests between management and shareholders, and the ability to pursue a wider range of growth options. 

Goodman Property Trust - The Managed Becomes the Manager

<ul><li>Goodman Property Trust (GMT) provided a draft revaluation update which saw the value of its property portfolio reduce by -5% over 2H24.</li><li>The decrease in portfolio value was primarily driven by a +40 bps increase in portfolio cap rates in 2H24 (+80 bps since FY23), and was partially offset by modest market rental growth.</li><li>This revaluation update comes earlier than normal for GMT which typically releases its full year valuations mid-to-late March. </li></ul>

Goodman Property Trust (GMT) provided a draft revaluation update which saw the value of its property portfolio reduce by -5% over 2H24.The decrease in portfolio value was primarily driven by a +40 bps increase in portfolio cap rates in 2H24 (+80 bps since FY23), and was partially offset by modest market rental growth.This revaluation update comes earlier than normal for GMT which typically releases its full year valuations mid-to-late March. 

Goodman Property Trust - Going Early on Revaluations

<ul><li>For the first time in three years we are moving our WACC assumptions down.</li><li>This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.</li><li>We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. </li></ul>

For the first time in three years we are moving our WACC assumptions down.This is driven by a modestly lower (-25 bps) interpolated 10-year interest rate assumption; our proxy for the risk free rate.We also incorporate our C&amp;ESG ratings into our WACC assumptions. We do this on an overall neutral basis, with a scale of -25 bps to +25 bps added to the cost of equity. 

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

<ul><li>Goodman (GMT) reported a tidy 1H24 result with cash earnings +7% on the prior period and slightly ahead of our expectations.</li><li>FY24 guidance was unchanged which suggests a flat 2H24, likely reflecting rental growth is currently being offset by higher interest costs.</li><li>We forecast these themes will continue into FY25 as hedging rolls off, but with the added headwind of higher tax payable as depreciation deductions are removed. </li></ul>

Goodman (GMT) reported a tidy 1H24 result with cash earnings +7% on the prior period and slightly ahead of our expectations.FY24 guidance was unchanged which suggests a flat 2H24, likely reflecting rental growth is currently being offset by higher interest costs.We forecast these themes will continue into FY25 as hedging rolls off, but with the added headwind of higher tax payable as depreciation deductions are removed. 

Goodman Property Trust - Tidy 1H24 Result but Valuation Still Full

New Zealand

Goodman Property Trust is a property trust that invests in, manages and develope portfolio of diversified property assets in Auckland. The Trust's portfolio comprises of office, industrial and retail properties.

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Goodman Property Trust (GMT NZ)

Real Estate Reflections - A Challenging Start to the Year

Listed property vehicles (LPVs) that reported in February came broadly in-line with expectations, with higher corporate costs and lower net...

Forsyth Barr

Goodman Property Trust - The Managed Becomes the Manager

Goodman Property Trust (GMT) has announced it has reached an agreement with its manager, Goodman Group (GMG), to internalise its management contract.

Forsyth Barr

Goodman Property Trust - Going Early on Revaluations

Goodman Property Trust (GMT) provided a draft revaluation update which saw the value of its property portfolio reduce by -5% over 2H24.

Forsyth Barr

Equity Strategy - WACC Review; a Lower Rfr and Adding C&ESG

For the first time in three years we are moving our WACC assumptions down. This is driven by a modestly lower (-25 bps) interpolated 10-year...

Forsyth Barr

Goodman Property Trust - Tidy 1H24 Result but Valuation Still Full

Goodman (GMT) reported a tidy 1H24 result with cash earnings +7% on the prior period and slightly ahead of our expectations.

Forsyth Barr

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