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>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

Equity Bottom-Up

Precinct Properties New Zealand / Equity Bottom-Up

<ul><li>Precinct Properties (PCT) FY23 result was in line with guidance and Visible Alpha consensus expectations.</li><li>Higher rental and management fee income was partly offset by a lift in operating costs and increased interest rates.</li><li>Prime office market rents continue to increase and PCT believes its portfolio is now c.11% under-rented. </li></ul>

Precinct Properties (PCT) FY23 result was in line with guidance and Visible Alpha consensus expectations.Higher rental and management fee income was partly offset by a lift in operating costs and increased interest rates.Prime office market rents continue to increase and PCT believes its portfolio is now c.11% under-rented. 

<ul><li>Rising cap rates reduce portfolio valuations: FY23 valuations for PCT's portfolio have resulted in a -NZ$250m decline in asset values with a +70bp increase in cap rates partly offset by solid market rent growth in both Auckland and Wellington.</li><li>Revaluations shrink the discount: The listed market had already more than priced in this level of cap rate expansion and asset devaluation.</li><li>Gearing rising but under control: We estimate that this revaluation will see gearing end FY23 at c.35%, compared to PCT's target limit of 40%. </li></ul>

Rising cap rates reduce portfolio valuations: FY23 valuations for PCT's portfolio have resulted in a -NZ$250m decline in asset values with a +70bp increase in cap rates partly offset by solid market rent growth in both Auckland and Wellington.Revaluations shrink the discount: The listed market had already more than priced in this level of cap rate expansion and asset devaluation.Gearing rising but under control: We estimate that this revaluation will see gearing end FY23 at c.35%, compared to PCT's target limit of 40%. 

Precinct Properties NZ: Portfolio Marked to Market

<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

New Zealand

Precinct Properties New Zealand Ltd. invests in manages and leases commercial office properties. The Company invests in properties in Auckland and Wellington.

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Precinct Properties New Zealand (PCT NZ)

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

Precinct Properties NZ - FY23 Result

Precinct Properties (PCT) FY23 result was in line with guidance and Visible Alpha consensus expectations. Higher rental and management fee income...

Forsyth Barr

Precinct Properties NZ: Portfolio Marked to Market

Precinct Properties' (PCT) FY23 valuations have resulted in a -7% decrease in the value of its property portfolio; This decline was primarily...

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

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