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>Investore (IPL) reported a soft (as expected) 1H25 result. Adjusted funds from operations (AFFO) fell -12% in 1H25, as top line growth was more than offset by higher debt costs and a higher effective tax rate, as changes to building depreciation rules took effect.</li><li>IPL is taking steps to improve its portfolio, moving away from regional assets with higher capex requirements, towards newer Auckland assets with better growth profiles. However, gearing is above its target range.</li><li>As such, new acquisitions will need to be funded via divestment of non-core assets. While IPL is offering an attractive yield (8.8%) this remains in line with its historic relationship to long-term bond rates. NEUTRAL.</li></ul>

Investore (IPL) reported a soft (as expected) 1H25 result. Adjusted funds from operations (AFFO) fell -12% in 1H25, as top line growth was more than offset by higher debt costs and a higher effective tax rate, as changes to building depreciation rules took effect.IPL is taking steps to improve its portfolio, moving away from regional assets with higher capex requirements, towards newer Auckland assets with better growth profiles. However, gearing is above its target range.As such, new acquisitions will need to be funded via divestment of non-core assets. While IPL is offering an attractive yield (8.8%) this remains in line with its historic relationship to long-term bond rates. NEUTRAL.

Investore - 1H25 Result — No Change to the ’Store-Y

<ul><li>Investore (IPL) announced the sale of two regional supermarket assets and the purchase of Bunnings Westgate.</li><li>We view this transaction as positive, given: (1) the two assets sales were in line with current book values, (2) the portfolio is improved by swapping two older regional assets, with higher capex requirements, for a well-located new build with a more attractive lease structure, and (3) all with a minor impact on earnings. </li><li>The transaction does little to appease balance sheet pressure, but we are comfortable with higher gearing given the stage of the cycle. </li></ul>

Investore (IPL) announced the sale of two regional supermarket assets and the purchase of Bunnings Westgate.We view this transaction as positive, given: (1) the two assets sales were in line with current book values, (2) the portfolio is improved by swapping two older regional assets, with higher capex requirements, for a well-located new build with a more attractive lease structure, and (3) all with a minor impact on earnings. The transaction does little to appease balance sheet pressure, but we are comfortable with higher gearing given the stage of the cycle. 

<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

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)

Investore - 1H25 Result — No Change to the ’Store-Y

Adjusted funds from operations (AFFO) fell -12% in 1H25, as top line growth was more than offset by higher debt costs and a higher effective tax rate

Forsyth Barr

Investore - A Bit of DIY

We have adjusted our forecasts for both this transaction and the lower forward interest rate track. We now forecast IPL to deliver c.+2% per year...

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

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