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'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

Thematic (Sector/Industry)

<ul><li>Following a torrid few months, a fall in long bond rates provided relief for the property sector in November.</li><li>1H24 results were generally uneventful, with the major surprise being Investore (IPL) cutting its dividend ahead of the tax changes next year.</li><li>We expect a few others will follow suit when guidance for FY25 is issued in May. On the positive side, Auckland Council approved the sale of the Downtown Carpark to Precinct (PCT). </li></ul>

Following a torrid few months, a fall in long bond rates provided relief for the property sector in November.1H24 results were generally uneventful, with the major surprise being Investore (IPL) cutting its dividend ahead of the tax changes next year.We expect a few others will follow suit when guidance for FY25 is issued in May. On the positive side, Auckland Council approved the sale of the Downtown Carpark to Precinct (PCT). 

Real Estate Reflections - On the Interest Rate Roller Coaster

<ul><li>It has been a bleak couple of months for the listed property sector.</li><li>The one-two punch of the proposed tax changes and higher for longer interest rates has seen the sector sell off -14% over the last three months.</li><li>This was the fourth largest three month correction since 1996, behind only the Asian debt crisis, the rapid rate hiking cycle in June last year, and the start of the COVID pandemic. </li></ul>

It has been a bleak couple of months for the listed property sector.The one-two punch of the proposed tax changes and higher for longer interest rates has seen the sector sell off -14% over the last three months.This was the fourth largest three month correction since 1996, behind only the Asian debt crisis, the rapid rate hiking cycle in June last year, and the start of the COVID pandemic. 

Real Estate Reflections - The Storm Before the Storm

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 - 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

Real Estate Reflections - On the Interest Rate Roller Coaster

1H24 results were generally uneventful, with the major surprise being Investore (IPL) cutting its dividend ahead of the tax changes next year.

Forsyth Barr

Real Estate Reflections - The Storm Before the Storm

The one-two punch of the proposed tax changes and higher for longer interest rates has seen the sector sell off -14% over the last three months.

Forsyth Barr

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