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>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

Equity Bottom-Up

Goodman Property Trust / Equity Bottom-Up

<ul><li>Goodman Property Trust (GMT) reported a strong 1H23 result, with cash earnings +7% on the prior year to NZ$49.4m</li><li>The result was largely driven by strong rent growth and acquisitions</li><li>GMT's valuation remains full (PE of 28x and no yield spread to government bonds), particularly considering the slower growth outlook</li></ul>

Goodman Property Trust (GMT) reported a strong 1H23 result, with cash earnings +7% on the prior year to NZ$49.4mThe result was largely driven by strong rent growth and acquisitionsGMT's valuation remains full (PE of 28x and no yield spread to government bonds), particularly considering the slower growth outlook

Goodman Property Trust: Strong 1H23 Result but Slower Going Forward

<ul><li>Goodman Property Trust (GMT) has reported a solid 1H23 result, with cash earnings +7% yoy to NZ$49.4m</li><li>The Auckland industrial has had another strong six-months; GMT believes its portfolio is now c.18% under-rented and achieved spreads of +23% vs. prior rents on leasing completed in the half</li><li>There was no change to GMTs FY23 guidance for cash earnings +4% to 6.9cps (ForBarr 6.9cps) and DPS +7% 5.9cps (ForBarr 5.9cps)</li></ul>

Goodman Property Trust (GMT) has reported a solid 1H23 result, with cash earnings +7% yoy to NZ$49.4mThe Auckland industrial has had another strong six-months; GMT believes its portfolio is now c.18% under-rented and achieved spreads of +23% vs. prior rents on leasing completed in the halfThere was no change to GMTs FY23 guidance for cash earnings +4% to 6.9cps (ForBarr 6.9cps) and DPS +7% 5.9cps (ForBarr 5.9cps)

Goodman Property Trust: 1H23 Result – Initial Thoughts

<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

Goodman Property Trust is a property trust that invests in, manages and develope portfolio of diversified property assets in Auckland. The Trust's portfolio comprises of office, industrial and retail properties.

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Goodman Property Trust (GMT NZ)

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