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

<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

Equity Bottom-Up

<ul><li>Portfolio metrics remain solid: FY22 AFFO declined -5% to NZ$44.6m, largely driven by higher corporate and interest costs.</li><li>Further declines in book value of assets likely: PFI’s asset values reduced -NZ$57m due to yields lifting +20bp to 4.62%</li><li>Developments a line ball: On a committed basis, including the Bowden Rd and Springs Rd Stage 1 redevelopments, we calculate PFI's gearing to be 33% which is at the lower end of the target range (30–40%)</li></ul>

Portfolio metrics remain solid: FY22 AFFO declined -5% to NZ$44.6m, largely driven by higher corporate and interest costs.Further declines in book value of assets likely: PFI’s asset values reduced -NZ$57m due to yields lifting +20bp to 4.62%Developments a line ball: On a committed basis, including the Bowden Rd and Springs Rd Stage 1 redevelopments, we calculate PFI's gearing to be 33% which is at the lower end of the target range (30–40%)

Property For Industry: FY22 — A Year of Development Ahead

<ul><li>Property for Industry (PFI) reported adjusted funds from operations (AFFO) -5% to NZ$44.6m (ForBar NZ$45.2m) largely driven by higher corporate costs and interest costs. </li><li>PFI guided to FY22 DPS of 8.10-8.30cps with higher interest rates the key headwind to better growth</li><li>PFI has historically been relatively conservative in its guidance and with the top end in line with our own and consensus expectations as such we see little in the earnings outlook that has surprised the market.</li></ul>

Property for Industry (PFI) reported adjusted funds from operations (AFFO) -5% to NZ$44.6m (ForBar NZ$45.2m) largely driven by higher corporate costs and interest costs. PFI guided to FY22 DPS of 8.10-8.30cps with higher interest rates the key headwind to better growthPFI has historically been relatively conservative in its guidance and with the top end in line with our own and consensus expectations as such we see little in the earnings outlook that has surprised the market.

Property for Industry: FY22 – Solid Result, Guidance in Line with Expectation

<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

Property for Industry Limited is a property company that invests in New Zealand industrial properties. The Company's property portfolio includes sites in Auckland, Hamilton, Tauranga, Wellington and Christchurch.

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Property For Industry (PFI 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

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

Property For Industry: FY22 — A Year of Development Ahead

Property for Industry (PFI) reported a FY23 result that was in line with our expectations, with interest costs more than offsetting...

Forsyth Barr

Property for Industry: FY22 – Solid Result, Guidance in Line with Expectation

Property for Industry (PFI) reported adjusted funds from operations (AFFO) -5% to NZ$44.6m (ForBar NZ$45.2m) largely driven by higher corporate...

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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