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

Precinct Properties New Zealand / Equity Bottom-Up

<ul><li>Precinct Properties (PCT) FY23 result was in line with guidance and Visible Alpha consensus expectations.</li><li>Higher rental and management fee income was partly offset by a lift in operating costs and increased interest rates.</li><li>Prime office market rents continue to increase and PCT believes its portfolio is now c.11% under-rented. </li></ul>

Precinct Properties (PCT) FY23 result was in line with guidance and Visible Alpha consensus expectations.Higher rental and management fee income was partly offset by a lift in operating costs and increased interest rates.Prime office market rents continue to increase and PCT believes its portfolio is now c.11% under-rented. 

<ul><li>Rising cap rates reduce portfolio valuations: FY23 valuations for PCT's portfolio have resulted in a -NZ$250m decline in asset values with a +70bp increase in cap rates partly offset by solid market rent growth in both Auckland and Wellington.</li><li>Revaluations shrink the discount: The listed market had already more than priced in this level of cap rate expansion and asset devaluation.</li><li>Gearing rising but under control: We estimate that this revaluation will see gearing end FY23 at c.35%, compared to PCT's target limit of 40%. </li></ul>

Rising cap rates reduce portfolio valuations: FY23 valuations for PCT's portfolio have resulted in a -NZ$250m decline in asset values with a +70bp increase in cap rates partly offset by solid market rent growth in both Auckland and Wellington.Revaluations shrink the discount: The listed market had already more than priced in this level of cap rate expansion and asset devaluation.Gearing rising but under control: We estimate that this revaluation will see gearing end FY23 at c.35%, compared to PCT's target limit of 40%. 

Precinct Properties NZ: Portfolio Marked to Market

<ul><li>The proposal and key dates: PCT has proposed it will move to a stapled structure which splits its property ownership business and operational businesses into two distinct entities</li><li>Why staple?: Listed property vehicles (LPVs) are taxed under the listed PIE regime</li><li>What is the impact for shareholders?: From a current PCT shareholder's perspective there will be very limited change, they will still own one unit of PCT but this will now consist of two shares that can't be divested separately</li></ul>

The proposal and key dates: PCT has proposed it will move to a stapled structure which splits its property ownership business and operational businesses into two distinct entitiesWhy staple?: Listed property vehicles (LPVs) are taxed under the listed PIE regimeWhat is the impact for shareholders?: From a current PCT shareholder's perspective there will be very limited change, they will still own one unit of PCT but this will now consist of two shares that can't be divested separately

Precinct Properties NZ: Preserving the PIE

<ul><li>Development machine is capital hungry: PCT has built a solid track record of successful development execution, with NZ$1.2b of completions over the last Commercial Bay and Wynyard Quarter Stages 1 and 2 in Auckland, and Bowen Campus in Wellington</li><li>No problems with the LVR: This development activity is capital intensive and PCT have funded this activity via a mix of asset sales, debt and new equity</li><li>ICR at the low end but will improve with development completions in FY24</li></ul>

Development machine is capital hungry: PCT has built a solid track record of successful development execution, with NZ$1.2b of completions over the last Commercial Bay and Wynyard Quarter Stages 1 and 2 in Auckland, and Bowen Campus in WellingtonNo problems with the LVR: This development activity is capital intensive and PCT have funded this activity via a mix of asset sales, debt and new equityICR at the low end but will improve with development completions in FY24

Precinct Properties NZ: Project Completions Improve Debt Metrics

<ul><li>Solid start to FY23: PCT reported 1H23 adjusted funds from operations (AFFO) growth of +10% from the prior period to NZ$54m</li><li>Prime office remains in demand: PCT's headline portfolio metrics remain strong, with 98% occupancy and an average lease term of 6.2 years</li><li>Rapidly expanding investment management business: PCT has continued to expand its asset management business with the sale of the 124 Halsey St development into the GIC partnership and the divestment of Bowen Campus Stage 2 on completion to a JV with PAG</li></ul>

Solid start to FY23: PCT reported 1H23 adjusted funds from operations (AFFO) growth of +10% from the prior period to NZ$54mPrime office remains in demand: PCT's headline portfolio metrics remain strong, with 98% occupancy and an average lease term of 6.2 yearsRapidly expanding investment management business: PCT has continued to expand its asset management business with the sale of the 124 Halsey St development into the GIC partnership and the divestment of Bowen Campus Stage 2 on completion to a JV with PAG

Precinct Properties NZ: 1H23 Result — Partnering for Growth

New Zealand

Precinct Properties New Zealand Ltd. invests in manages and leases commercial office properties. The Company invests in properties in Auckland and Wellington.

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Precinct Properties New Zealand (PCT NZ)

Precinct Properties NZ - FY23 Result

Precinct Properties (PCT) FY23 result was in line with guidance and Visible Alpha consensus expectations. Higher rental and management fee income...

Forsyth Barr

Precinct Properties NZ: Portfolio Marked to Market

Precinct Properties' (PCT) FY23 valuations have resulted in a -7% decrease in the value of its property portfolio; This decline was primarily...

Forsyth Barr

Precinct Properties NZ: Preserving the PIE

Precinct Properties (PCT) has proposed moving to a stapled corporate structure and intends to separate its operating businesses from its property...

Forsyth Barr

Precinct Properties NZ: Project Completions Improve Debt Metrics

Precinct's (PCT) 1H23 interest coverage ratio was low due to it being toward the end of another development cycle; With debt covenants and funding...

Forsyth Barr

Precinct Properties NZ: 1H23 Result — Partnering for Growth

Precinct (PCT) reported a strong start to FY23 but left guidance unchanged, and continues to make significant progress on its capital partnering...

Forsyth Barr

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