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>1H23 listed property results highlighted solid operational outcomes, but we are starting to see higher interest rates impact forward earnings expectations and capital management strategies</li><li>Development is being delayed, non-core assets sold and distribution growth moderated</li><li>While results were generally in line with our expectations, we lowered our earnings and dividend forecasts for most of the sector</li></ul>

1H23 listed property results highlighted solid operational outcomes, but we are starting to see higher interest rates impact forward earnings expectations and capital management strategiesDevelopment is being delayed, non-core assets sold and distribution growth moderatedWhile results were generally in line with our expectations, we lowered our earnings and dividend forecasts for most of the sector

Real Estate Reflections: Adjusting to a Higher Rates Environment

<ul><li>High interest rates and low transactions volumes has created uncertainty around commercial property valuations</li><li>Our analysis suggests that most property balance sheets can withstand a significant decrease in asset values with Argosy (ARG), Goodman Trust (GMT), and Property for Industry (PFI) the most resilient given low current gearing and/or limited capital commitments.</li><li>Kiwi Property (KPG), Stride (SPG), and Vital Healthcare (VHP) have the least resilient balance sheets owing to either higher initial gearing and/or significant capital commitments</li></ul>

High interest rates and low transactions volumes has created uncertainty around commercial property valuationsOur analysis suggests that most property balance sheets can withstand a significant decrease in asset values with Argosy (ARG), Goodman Trust (GMT), and Property for Industry (PFI) the most resilient given low current gearing and/or limited capital commitments.Kiwi Property (KPG), Stride (SPG), and Vital Healthcare (VHP) have the least resilient balance sheets owing to either higher initial gearing and/or significant capital commitments

Equity Bottom-Up

<ul><li>KPG reported a solid 1H23 result that was slightly ahead of our expectations on an underlying basis</li><li>Trading at its malls has been strong, with shoppers returning post COVID and rents are growing</li><li>KPG continues to recycle capital to fund its committed projects but gearing on our numbers remains towards the top end of target range and ongoing earthquake spend remains a drag.</li></ul>

KPG reported a solid 1H23 result that was slightly ahead of our expectations on an underlying basisTrading at its malls has been strong, with shoppers returning post COVID and rents are growingKPG continues to recycle capital to fund its committed projects but gearing on our numbers remains towards the top end of target range and ongoing earthquake spend remains a drag.

Kiwi Property Group: 1H23 Result: Has Wings but Can't Fly

<ul><li>Kiwi Property (KPG) has delivered 1H23 Underlying NPAT in line with our forecast but reversal of COVID rent relief provisions saw AFFO exceed our expectations</li><li>Top line rent growth exceeded our forecast and was partly offset by higher interest and tax</li><li>KPG also suggested that with zoning now obtained, the sale of residential super lots could be a funding mechanism for the large format retail precinct at Drury, although this might prove challenging given the current residential market conditions. T</li></ul>

Kiwi Property (KPG) has delivered 1H23 Underlying NPAT in line with our forecast but reversal of COVID rent relief provisions saw AFFO exceed our expectationsTop line rent growth exceeded our forecast and was partly offset by higher interest and taxKPG also suggested that with zoning now obtained, the sale of residential super lots could be a funding mechanism for the large format retail precinct at Drury, although this might prove challenging given the current residential market conditions. T

Kiwi Property Group: 1H23 Result – Initial Thoughts

<ul><li>Cap rates expanding, NAVs rebased: Interest rates continue to place upward pressure on cap rates and downward pressure on asset values and NTA</li><li>Looking forward to the reporting season: Six LPVs will be reporting interim results in September</li><li>LPVs had a mixed month in the market: The NZ LPV sector was down -2% in October, and underperformed the broader market by 4%</li></ul>

Cap rates expanding, NAVs rebased: Interest rates continue to place upward pressure on cap rates and downward pressure on asset values and NTALooking forward to the reporting season: Six LPVs will be reporting interim results in SeptemberLPVs had a mixed month in the market: The NZ LPV sector was down -2% in October, and underperformed the broader market by 4%

Real Estate Reflections Time for a Check Up

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)

Real Estate Reflections: Adjusting to a Higher Rates Environment

1H23 listed property results highlighted solid operational outcomes, but we are starting to see higher interest rates impact forward earnings...

Forsyth Barr

Listed Property Insights: In the Balance

High interest rates and low transactions volumes has created uncertainty around commercial property valuations, which has manifested in the NZ...

Forsyth Barr

Kiwi Property Group: 1H23 Result: Has Wings but Can't Fly

KPG reported a solid 1H23 result that was slightly ahead of our expectations on an underlying basis; It continues to recycle capital to fund its...

Forsyth Barr

Kiwi Property Group: 1H23 Result – Initial Thoughts

Kiwi Property (KPG) has delivered 1H23 Underlying NPAT in line with our forecast but reversal of COVID rent relief provisions saw AFFO exceed our...

Forsyth Barr

Real Estate Reflections Time for a Check Up

It was another roller coaster month for the listed property sector - the sector sold off as long bond yields peaked at 4.7% mid-month before a ...

Forsyth Barr

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