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>Kiwi Property (KPG) have announced the conditional sale of its Aurora Centre office asset in Wellington for NZ$143m.</li><li>FY23 reported gearing was 35.0% and at the top end of management's target range of 25%–35% but below its lowest covenant of 45%.</li><li>While KPG offers an attractive gross yield it remains in the early stages of a capital hungry strategic transformation refocussing its portfolio on its larger upper North Island assets, has a flat dividend growth outlook, and the outlook for retail spend is moderating. NEUTRAL.</li></ul>

Kiwi Property (KPG) have announced the conditional sale of its Aurora Centre office asset in Wellington for NZ$143m.FY23 reported gearing was 35.0% and at the top end of management's target range of 25%–35% but below its lowest covenant of 45%.While KPG offers an attractive gross yield it remains in the early stages of a capital hungry strategic transformation refocussing its portfolio on its larger upper North Island assets, has a flat dividend growth outlook, and the outlook for retail spend is moderating. NEUTRAL.

Thematic (Sector/Industry)

<ul><li>Property sector softer through reporting season: The NZ LPV sector was down -0.7% in May, outperforming the NZX50 which was down -1.7%.</li><li>Dust settles on May reporting season: Six property companies reported full year results in May. The results were broadly in line with our expectations as solid tenant demand continues to drive strong operational outcomes.</li><li>Sector valuation remains mixed: The property sector continues to look attractive relative to other yield stocks but still remains above its long-run valuation metrics relative to bond yields.</li></ul>

Property sector softer through reporting season: The NZ LPV sector was down -0.7% in May, outperforming the NZX50 which was down -1.7%.Dust settles on May reporting season: Six property companies reported full year results in May. The results were broadly in line with our expectations as solid tenant demand continues to drive strong operational outcomes.Sector valuation remains mixed: The property sector continues to look attractive relative to other yield stocks but still remains above its long-run valuation metrics relative to bond yields.

Real Estate Reflections: Reporting on Property

<ul><li>Strong retail sales underpin a solid operational result: KPG reported adjusted funds from operations (AFFO) +16% to NZ$116m with lower COVID costs offset by higher operating expenses and interest cost.</li><li>Gearing elevated with more asset sales to come: FY23 reported gearing was 35.0% vs. the top end of management's target range of 25%–35% and its lowest covenant of 45%</li><li>A challenging phase in its transformation: KPG is in the early stages of a strategic transformation aimed at lowering its retail exposure and reinvesting in its best assets</li></ul>

Strong retail sales underpin a solid operational result: KPG reported adjusted funds from operations (AFFO) +16% to NZ$116m with lower COVID costs offset by higher operating expenses and interest cost.Gearing elevated with more asset sales to come: FY23 reported gearing was 35.0% vs. the top end of management's target range of 25%–35% and its lowest covenant of 45%A challenging phase in its transformation: KPG is in the early stages of a strategic transformation aimed at lowering its retail exposure and reinvesting in its best assets

Kiwi Property Group: FY23 Result — A Year of Consolidation Ahead

<ul><li>Kiwi Property (KPG) has delivered FY23 adjusted funds from operations (AFFO) +16% to NZ$117m</li><li>Top line rental income was slightly ahead of our forecast but higher corporate costs and tax resulted in underlying NPAT in line</li><li>AFFO was above largely due to the one-off add back of digital implementation costs.</li></ul>

Kiwi Property (KPG) has delivered FY23 adjusted funds from operations (AFFO) +16% to NZ$117mTop line rental income was slightly ahead of our forecast but higher corporate costs and tax resulted in underlying NPAT in lineAFFO was above largely due to the one-off add back of digital implementation costs.

Kiwi Property Group: FY23 Result – Initial Thoughts

<ul><li>Flat month for the property sector: The NZ LPV sector was broadly flat in April, underperforming the NZX50G which was up +1.1%.</li><li>Looking ahead to the May reporting season: Low vacancy, solid tenant demand, and the high cost of new supply all continue to underpin solid rent growth.</li><li>Sector valuations track sideways: The property sector continues to look attractive relative to other yield stocks, however, spreads remain compressed when compared to long-term relationships to bond yields</li></ul>

Flat month for the property sector: The NZ LPV sector was broadly flat in April, underperforming the NZX50G which was up +1.1%.Looking ahead to the May reporting season: Low vacancy, solid tenant demand, and the high cost of new supply all continue to underpin solid rent growth.Sector valuations track sideways: The property sector continues to look attractive relative to other yield stocks, however, spreads remain compressed when compared to long-term relationships to bond yields

Real Estate Reflections: Gearing Up for Reporting Season

New Zealand

Kiwi Property Group Ltd is a property trust that invests in, manages and develops a portfolio of diversified properties throughout New Zealand. The Trust's properties include office, retail and industrial properties.

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Kiwi Property (KPG NZ)

Kiwi Property: Sale of Aurora Centre

Kiwi Property (KPG) have announced the conditional sale of its Aurora Centre office asset in Wellington for NZ$143m; In our view the Aurora Centre...

Forsyth Barr

Real Estate Reflections: Reporting on Property

The results of listed property vehicles (LPVs) that reported in May was largely in line with expectations; Strong tenant demand underpinned strong...

Forsyth Barr

Kiwi Property Group: FY23 Result — A Year of Consolidation Ahead

Kiwi Property Group (KPG) reported a solid FY23 result in line with our expectations on an underlying basis; While trading at its malls has been...

Forsyth Barr

Kiwi Property Group: FY23 Result – Initial Thoughts

Kiwi Property (KPG) has delivered FY23 adjusted funds from operations (AFFO) +16% to NZ$117m; Top line rental income was slightly ahead of our...

Forsyth Barr

Real Estate Reflections: Gearing Up for Reporting Season

April was a flat month for the listed property sector; Long-bond yields have been range bound for the last eight months, as tight yield spreads...

Forsyth Barr

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