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>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

Equity Bottom-Up

Precinct Properties New Zealand / Equity Bottom-Up

<ul><li>Development machine is capital hungry: PCT has built a solid track record of successful development execution, with NZ$1.2b of completions over the last Commercial Bay and Wynyard Quarter Stages 1 and 2 in Auckland, and Bowen Campus in Wellington</li><li>No problems with the LVR: This development activity is capital intensive and PCT have funded this activity via a mix of asset sales, debt and new equity</li><li>ICR at the low end but will improve with development completions in FY24</li></ul>

Development machine is capital hungry: PCT has built a solid track record of successful development execution, with NZ$1.2b of completions over the last Commercial Bay and Wynyard Quarter Stages 1 and 2 in Auckland, and Bowen Campus in WellingtonNo problems with the LVR: This development activity is capital intensive and PCT have funded this activity via a mix of asset sales, debt and new equityICR at the low end but will improve with development completions in FY24

Precinct Properties NZ: Project Completions Improve Debt Metrics

<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

<ul><li>Solid start to FY23: PCT reported 1H23 adjusted funds from operations (AFFO) growth of +10% from the prior period to NZ$54m</li><li>Prime office remains in demand: PCT's headline portfolio metrics remain strong, with 98% occupancy and an average lease term of 6.2 years</li><li>Rapidly expanding investment management business: PCT has continued to expand its asset management business with the sale of the 124 Halsey St development into the GIC partnership and the divestment of Bowen Campus Stage 2 on completion to a JV with PAG</li></ul>

Solid start to FY23: PCT reported 1H23 adjusted funds from operations (AFFO) growth of +10% from the prior period to NZ$54mPrime office remains in demand: PCT's headline portfolio metrics remain strong, with 98% occupancy and an average lease term of 6.2 yearsRapidly expanding investment management business: PCT has continued to expand its asset management business with the sale of the 124 Halsey St development into the GIC partnership and the divestment of Bowen Campus Stage 2 on completion to a JV with PAG

Precinct Properties NZ: 1H23 Result — Partnering for Growth

<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

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: 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

Precinct Properties NZ: Project Completions Improve Debt Metrics

Precinct's (PCT) 1H23 interest coverage ratio was low due to it being toward the end of another development cycle; With debt covenants and funding...

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

Precinct Properties NZ: 1H23 Result — Partnering for Growth

Precinct (PCT) reported a strong start to FY23 but left guidance unchanged, and continues to make significant progress on its capital partnering...

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

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