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>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>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

Equity Bottom-Up

Precinct Properties New Zealand / Equity Bottom-Up

<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>Property sector underperforms the broader market: The NZ LPV sector was down -1.2% in March, underperforming the NZX50G which was broadly flat.</li><li>Cap rates starting to creep higher: Goodman (GMT), Investore (IPL), Kiwi Property (KPG) and Stride (SPG) have all reported 2H23 valuation movements ahead of their full year results in May</li><li>Balance sheets remain in the spotlight: Portfolio valuation changes also lifted loan-to-value ratios</li></ul>

Property sector underperforms the broader market: The NZ LPV sector was down -1.2% in March, underperforming the NZX50G which was broadly flat.Cap rates starting to creep higher: Goodman (GMT), Investore (IPL), Kiwi Property (KPG) and Stride (SPG) have all reported 2H23 valuation movements ahead of their full year results in MayBalance sheets remain in the spotlight: Portfolio valuation changes also lifted loan-to-value ratios

Real Estate Reflections: Cap Rates Creep Higher

<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

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)

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

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

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

Real Estate Reflections: Cap Rates Creep Higher

March was a mixed month for the property sector where interest rates are typically a key driver of LPV sector performance, but despite a -40bp fall...

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

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