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>Investore (IPL) has reported FY23 adjusted funds from operations (AFFO) +10% to NZ$31.1m.</li><li>The result was slightly above our expectations with lower tax and maintenance capex the key drivers.</li><li>IPL continues to see turnover rent increase, +NZ$0.4m to NZ$1.4m in FY23 with 2H23 NZ$0.8m, with Countdown sales supported by solid food price inflation.</li></ul>

Investore (IPL) has reported FY23 adjusted funds from operations (AFFO) +10% to NZ$31.1m.The result was slightly above our expectations with lower tax and maintenance capex the key drivers.IPL continues to see turnover rent increase, +NZ$0.4m to NZ$1.4m in FY23 with 2H23 NZ$0.8m, with Countdown sales supported by solid food price inflation.

Investore: FY23 Result – Initial Thoughts

Thematic (Sector/Industry)

<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

<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>Revaluations primarily driven by expanding cap rates: the portfolio devaluation was due to (1) independent revaluations which saw a +67bps increase in portfolio cap rate in 2H23 to 5.70% (+20bps 1H23), and (2) increased allowances for seismic works which contributed -1% of the -12% total movement in portfolio value.</li><li>Asset devaluations largely priced in: the listed equity market had already more than priced this level of cap rate expansion/asset devaluation</li><li>Gearing creeping to the top of management's target range: IPL expects FY23 gearing to be 37% and we calculate committed gearing to be 39%, the top end of IPL's target range of 30%–40% but below its bank debt covenant of 52.5%</li></ul>

Revaluations primarily driven by expanding cap rates: the portfolio devaluation was due to (1) independent revaluations which saw a +67bps increase in portfolio cap rate in 2H23 to 5.70% (+20bps 1H23), and (2) increased allowances for seismic works which contributed -1% of the -12% total movement in portfolio value.Asset devaluations largely priced in: the listed equity market had already more than priced this level of cap rate expansion/asset devaluationGearing creeping to the top of management's target range: IPL expects FY23 gearing to be 37% and we calculate committed gearing to be 39%, the top end of IPL's target range of 30%–40% but below its bank debt covenant of 52.5%

Investore: Large Devaluation Already in the Price

<ul><li>Dust settles on February reporting season: Four property companies reported in February; Precinct Properties (PCT), Property for Industry (PFI), Winton (WIN) and Vital Healthcare (VHP). </li><li>Solid month for the property sector: The NZ LPV sector was up +1.6% in February, outperforming the NZX50 which was down -0.6%</li><li>Relative valuations looking attractive but only back to fairer value vs bond yields</li></ul>

Dust settles on February reporting season: Four property companies reported in February; Precinct Properties (PCT), Property for Industry (PFI), Winton (WIN) and Vital Healthcare (VHP). Solid month for the property sector: The NZ LPV sector was up +1.6% in February, outperforming the NZX50 which was down -0.6%Relative valuations looking attractive but only back to fairer value vs bond yields

Real Estate Reflections: Refurbishing the Monthly

New Zealand

Investore Property Limited operates as a real estate investment company. The Company invests in retail property assets. Investore Property also provides leasing services. Investore Property serves clients in New Zealand.

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Investore Property (IPL NZ)

Investore: FY23 Result – Initial Thoughts

Investore (IPL) has reported FY23 adjusted funds from operations (AFFO) +10% to NZ$31.1m; IPL continues to see turnover rent increase, +NZ$0.4m to...

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

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

Investore: Large Devaluation Already in the Price

Investore's (IPL) 2H23 revaluations have resulted in a -12% reduction in the fair value of its property assets; A +67bp increase in the 2H23...

Forsyth Barr

Real Estate Reflections: Refurbishing the Monthly

Listed property companies that reported in February saw strong operational results; While results were broadly in line with our expectations, we...

Forsyth Barr

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