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>Property for Industry (PFI) reported adjusted funds from operations (AFFO) -5% to NZ$44.6m (ForBar NZ$45.2m) largely driven by higher corporate costs and interest costs. </li><li>PFI guided to FY22 DPS of 8.10-8.30cps with higher interest rates the key headwind to better growth</li><li>PFI has historically been relatively conservative in its guidance and with the top end in line with our own and consensus expectations as such we see little in the earnings outlook that has surprised the market.</li></ul>

Property for Industry (PFI) reported adjusted funds from operations (AFFO) -5% to NZ$44.6m (ForBar NZ$45.2m) largely driven by higher corporate costs and interest costs. PFI guided to FY22 DPS of 8.10-8.30cps with higher interest rates the key headwind to better growthPFI has historically been relatively conservative in its guidance and with the top end in line with our own and consensus expectations as such we see little in the earnings outlook that has surprised the market.

Property for Industry: FY22 – Solid Result, Guidance in Line with Expectation

Thematic (Sector/Industry)

<ul>
<li>Last year was a turbulent time for listed property vehicles (LPVs) - the sector was down -26% in the year as it adjusted to the higher interest rate environment</li>
<li>Valuations remain above historical relationships with bond yields, and the growth outlook has moderated</li>
<li>The sector is trading c-30% below its net asset backing but we consider this largely priced in.</li>
</ul>


Last year was a turbulent time for listed property vehicles (LPVs) - the sector was down -26% in the year as it adjusted to the higher interest rate environment
Valuations remain above historical relationships with bond yields, and the growth outlook has moderated
The sector is trading c-30% below its net asset backing but we consider this largely priced in.


Real Estate Reflections: Five Themes for the Year Ahead

<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

<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

Property for Industry Limited is a property company that invests in New Zealand industrial properties. The Company's property portfolio includes sites in Auckland, Hamilton, Tauranga, Wellington and Christchurch.

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Property For Industry (PFI NZ)

Property for Industry: FY22 – Solid Result, Guidance in Line with Expectation

Property for Industry (PFI) reported adjusted funds from operations (AFFO) -5% to NZ$44.6m (ForBar NZ$45.2m) largely driven by higher corporate...

Forsyth Barr

Real Estate Reflections: Five Themes for the Year Ahead

Last year was a turbulent time for listed property vehicles (LPVs) - the sector was down -26% in the year as it adjusted to the higher interest...

Forsyth Barr

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

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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