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>It hasn't been a great couple of months for the property sector. After being hit with political promises of higher taxes in August, rising interest rates saw the sector sell off in September.</li><li>With the NZ 10 year Government bond yield now c.5.5%, sector valuation metrics, which already looked full versus history, have come sharply back into focus.</li><li>Persistently high interest rates remain a headwind for the sector, particularly given higher taxes and interest costs are likely to see dividends cut (we forecast -3% on average by FY26). </li></ul>

It hasn't been a great couple of months for the property sector. After being hit with political promises of higher taxes in August, rising interest rates saw the sector sell off in September.With the NZ 10 year Government bond yield now c.5.5%, sector valuation metrics, which already looked full versus history, have come sharply back into focus.Persistently high interest rates remain a headwind for the sector, particularly given higher taxes and interest costs are likely to see dividends cut (we forecast -3% on average by FY26). 

Real Estate Reflections - Here We Go Again?

<ul><li>After seven months of outperforming the broader NZ market, the listed property sector experienced a sharp correction in August.</li><li>This was driven by both National and Labour proposing to remove structure depreciation for commercial landlords to part fund their respective election promises.</li><li>Given the depreciations changes are proposed by both major political parties, we have lowered our forecasts to reflect the high likelihood that the sector will be paying more tax from 1 April 2024. </li></ul>

After seven months of outperforming the broader NZ market, the listed property sector experienced a sharp correction in August.This was driven by both National and Labour proposing to remove structure depreciation for commercial landlords to part fund their respective election promises.Given the depreciations changes are proposed by both major political parties, we have lowered our forecasts to reflect the high likelihood that the sector will be paying more tax from 1 April 2024. 

Real Estate Reflections - Tax Man Coming for Commercial

<ul><li>Strong month for the property sector: The NZ LPV sector had a strong June, rising +3.7% and outperforming the NZX 50 which was up +0.8%. </li><li>A flurry of annual shareholder meetings: There were a number of annual shareholder meetings in June where FY24 distribution guidance was reiterated.</li><li>Mixed valuation signals: The property sector continues to look attractive relative to other yield stocks but fully priced vs. bond yields.</li></ul>

Strong month for the property sector: The NZ LPV sector had a strong June, rising +3.7% and outperforming the NZX 50 which was up +0.8%. A flurry of annual shareholder meetings: There were a number of annual shareholder meetings in June where FY24 distribution guidance was reiterated.Mixed valuation signals: The property sector continues to look attractive relative to other yield stocks but fully priced vs. bond yields.

Real Estate Reflections: Property Jumps Ahead of the Pack

<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

Equity Bottom-Up

<ul><li>FY23 result was largely irrelevant: APL reported a slight loss for FY23 with adjusted funds from operations (AFFO) of -NZ$0.3m.</li><li>Converting assets to cash: After a busy 12 months APL is now effectively a single asset vehicle</li><li>Capital return the most likely scenario: The key message from the result was a broad indication that a return of capital is the most likely outcome following the sell down of assets.</li></ul>

FY23 result was largely irrelevant: APL reported a slight loss for FY23 with adjusted funds from operations (AFFO) of -NZ$0.3m.Converting assets to cash: After a busy 12 months APL is now effectively a single asset vehicleCapital return the most likely scenario: The key message from the result was a broad indication that a return of capital is the most likely outcome following the sell down of assets.

Asset Plus: FY23 Result — A Capital Return Equation

New Zealand

Asset Plus Limited carries on the business of a property company that invests in and manages commercial, industrial and retail properties. The Company's investment property portfolio consists of retail, commercial, and industrial properties located in New Zealand.

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Asset Plus (APL NZ)

Real Estate Reflections - Here We Go Again?

It hasn't been a great couple of months for the property sector. After being hit with political promises of higher taxes in August, rising interest...

Forsyth Barr

Real Estate Reflections - Tax Man Coming for Commercial

After seven months of outperforming the broader NZ market, the listed property sector experienced a sharp correction in August.

Forsyth Barr

Real Estate Reflections: Property Jumps Ahead of the Pack

June was a strong month for the property sector despite a slight lift in long bond yields - NZ-listed property vehicles (LPVs) have now...

Forsyth Barr

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

Asset Plus: FY23 Result — A Capital Return Equation

Asset Plus' (APL) FY23 result was largely irrelevant, with the market focussed on asset sales and the potential for a capital return; The key...

Forsyth Barr

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