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>Leading into reporting season, listed property stocks have rallied but still slightly underperformed the broader market in July</li><li>Generally positive operating trends</li><li>A drop in bond rates has spurred property sector rally </li></ul>

Leading into reporting season, listed property stocks have rallied but still slightly underperformed the broader market in JulyGenerally positive operating trendsA drop in bond rates has spurred property sector rally 

Real Estate Reflections: A Look Under the Hood (10-Aug-2022)

Equity Bottom-Up

<ul><li>Investore's (IPL) 1H24 distributable earnings was broadly in line with expectations.</li><li>The key surprise in the result was a reduction in dividends, with FY24 guidance reduced -9% to 7.2cps and FY25 implied distributions of at least 6.5cps.</li><li>With non-core asset sales taking longer than expected and interest rates remaining elevated, the motivation to cut distributions is twofold: (1) to retain capital and reduce gearing which is at the top end of its target range, and (2) to get ahead of higher tax to be paid and the lift in interest costs as hedging rolls off. </li></ul>

Investore's (IPL) 1H24 distributable earnings was broadly in line with expectations.The key surprise in the result was a reduction in dividends, with FY24 guidance reduced -9% to 7.2cps and FY25 implied distributions of at least 6.5cps.With non-core asset sales taking longer than expected and interest rates remaining elevated, the motivation to cut distributions is twofold: (1) to retain capital and reduce gearing which is at the top end of its target range, and (2) to get ahead of higher tax to be paid and the lift in interest costs as hedging rolls off. 

Investore - 1H24 Result—Getting Ahead of the Curve

<ul><li>Solid result, flat guidance slightly below expectations: IPL reported FY23 adjusted funds from operations (AFFO) +9% to NZ$28.6m.</li><li>Management of interest costs a key focus: IPL has hedges in place which fix 92%/72%/64% of IPL's FY24/25/26 debt at a rate of 4.0%/3.8%/3.6% (including 2.0% line fee and margin).</li><li>Asset sales maintain flexibility but moderate earnings: FY23 gearing was 36.5% and committed gearing was 38.1%, towards the top end of IPL's target range of 30%–40% but below its bank debt covenant of 52.5%. </li></ul>

Solid result, flat guidance slightly below expectations: IPL reported FY23 adjusted funds from operations (AFFO) +9% to NZ$28.6m.Management of interest costs a key focus: IPL has hedges in place which fix 92%/72%/64% of IPL's FY24/25/26 debt at a rate of 4.0%/3.8%/3.6% (including 2.0% line fee and margin).Asset sales maintain flexibility but moderate earnings: FY23 gearing was 36.5% and committed gearing was 38.1%, towards the top end of IPL's target range of 30%–40% but below its bank debt covenant of 52.5%. 

Investore: FY23 Result — Through the Checkout

<ul><li>Investore (IPL) has reported FY23 adjusted funds from operations (AFFO) +10% to NZ$31.1m.</li><li>The result was slightly above our expectations with lower tax and maintenance capex the key drivers.</li><li>IPL continues to see turnover rent increase, +NZ$0.4m to NZ$1.4m in FY23 with 2H23 NZ$0.8m, with Countdown sales supported by solid food price inflation.</li></ul>

Investore (IPL) has reported FY23 adjusted funds from operations (AFFO) +10% to NZ$31.1m.The result was slightly above our expectations with lower tax and maintenance capex the key drivers.IPL continues to see turnover rent increase, +NZ$0.4m to NZ$1.4m in FY23 with 2H23 NZ$0.8m, with Countdown sales supported by solid food price inflation.

Investore: FY23 Result – Initial Thoughts

<ul><li>Revaluations primarily driven by expanding cap rates: the portfolio devaluation was due to (1) independent revaluations which saw a +67bps increase in portfolio cap rate in 2H23 to 5.70% (+20bps 1H23), and (2) increased allowances for seismic works which contributed -1% of the -12% total movement in portfolio value.</li><li>Asset devaluations largely priced in: the listed equity market had already more than priced this level of cap rate expansion/asset devaluation</li><li>Gearing creeping to the top of management's target range: IPL expects FY23 gearing to be 37% and we calculate committed gearing to be 39%, the top end of IPL's target range of 30%–40% but below its bank debt covenant of 52.5%</li></ul>

Revaluations primarily driven by expanding cap rates: the portfolio devaluation was due to (1) independent revaluations which saw a +67bps increase in portfolio cap rate in 2H23 to 5.70% (+20bps 1H23), and (2) increased allowances for seismic works which contributed -1% of the -12% total movement in portfolio value.Asset devaluations largely priced in: the listed equity market had already more than priced this level of cap rate expansion/asset devaluationGearing creeping to the top of management's target range: IPL expects FY23 gearing to be 37% and we calculate committed gearing to be 39%, the top end of IPL's target range of 30%–40% but below its bank debt covenant of 52.5%

Investore: Large Devaluation Already in the Price

New Zealand

Investore Property Limited operates as a real estate investment company. The Company invests in retail property assets. Investore Property also provides leasing services. Investore Property serves clients in New Zealand.

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Investore Property (IPL NZ)

Real Estate Reflections: A Look Under the Hood (10-Aug-2022)

Leading into reporting season, listed property stocks have rallied but still slightly underperformed the broader market in July

Forsyth Barr

Investore - 1H24 Result—Getting Ahead of the Curve

The key surprise in the result was a reduction in dividends, with FY24 guidance reduced -9% to 7.2cps and FY25 implied distributions of at least...

Forsyth Barr

Investore: FY23 Result — Through the Checkout

Investore (IPL) reported a solid FY23 result under pinned by acquisitions and rent growth, but mostly offset by higher interest...

Forsyth Barr

Investore: FY23 Result – Initial Thoughts

Investore (IPL) has reported FY23 adjusted funds from operations (AFFO) +10% to NZ$31.1m; IPL continues to see turnover rent increase, +NZ$0.4m to...

Forsyth Barr

Investore: Large Devaluation Already in the Price

Investore's (IPL) 2H23 revaluations have resulted in a -12% reduction in the fair value of its property assets; A +67bp increase in the 2H23...

Forsyth Barr

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