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

Vital Healthcare Property Trust / Equity Bottom-Up

<ul><li>Solid operational result: VHP reported 1H23 adjusted funds from operations (AFFO) of NZ$37.7m which was just below our forecasts due to lower performance fee add back</li><li>Healthy porfolio metrics: VHP's portfolio metrics remain strong with 98.4% occupancy and a WALT of 17.2 years</li><li>Assets sales to fund the development pipeline: Given current market conditions, VHP is focussed on the completion of its NZ$510m (NZ$369m remaining to spend) development pipeline</li></ul>

Solid operational result: VHP reported 1H23 adjusted funds from operations (AFFO) of NZ$37.7m which was just below our forecasts due to lower performance fee add backHealthy porfolio metrics: VHP's portfolio metrics remain strong with 98.4% occupancy and a WALT of 17.2 yearsAssets sales to fund the development pipeline: Given current market conditions, VHP is focussed on the completion of its NZ$510m (NZ$369m remaining to spend) development pipeline

Vital Healthcare: 1H23 — Also in the Waiting Room

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><p>NZ drives asset devaluation: VHP expects a 1H23 devaluation of -NZ$65m or c.10cps</p></li><li>One development paused, another one started: VHP is pausing its A$99m Tasman medical centre which was a low yield (4.5%) fund-through project</li><li>Asset sales to manage gearing: VHP expects to divest NZ$200m of non core assets.</li></ul>

NZ drives asset devaluation: VHP expects a 1H23 devaluation of -NZ$65m or c.10cpsOne development paused, another one started: VHP is pausing its A$99m Tasman medical centre which was a low yield (4.5%) fund-through projectAsset sales to manage gearing: VHP expects to divest NZ$200m of non core assets.

Vital Healthcare: Improving Its Vital Signs

<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

New Zealand

Vital Healthcare Property Trust is a property trust that invests in and manages healthcare facilities in New Zealand and Australia.

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Vital Healthcare Property Trust (VHP NZ)

Vital Healthcare: 1H23 — Also in the Waiting Room

Vital Healthcare (VHP) delivered a solid 1H23 result but slightly below our expectations: VHP reported 1H23 adjusted funds from operations (AFFO)...

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

Vital Healthcare: Improving Its Vital Signs

Vital Healthcare (VHP) announced 1) a 1H23 asset devaluation, 2) the pause of one of its low yielding development projects, 3) its first life...

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

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