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

Vital Healthcare Property Trust / Equity Bottom-Up

<ul><li>Vital Healthcare (VHP) reported a flat FY24 result and guided for another flat outcome in FY25, both as we had expected.</li><li>Non-core asset sales continued to fund development activity and support balance sheet gearing.</li><li>VHP has further divestments underway which will more than fund the remaining project spend, which largely completes over the next 12 months.</li></ul>

Vital Healthcare (VHP) reported a flat FY24 result and guided for another flat outcome in FY25, both as we had expected.Non-core asset sales continued to fund development activity and support balance sheet gearing.VHP has further divestments underway which will more than fund the remaining project spend, which largely completes over the next 12 months.

Vital Healthcare - FY24 Result — Passing Its Annual Physical

<ul><li>We upgrade Vital Healthcare (VHP) to OUTPERFORM. VHP's share price has declined -18% over the last two months, reflecting: (1) higher short-term Australian interest rates (75% of VHP's assets are in Australia), (2) hospital operator profitability pressure in Australia, and (3) expected index removals.</li><li>It now looks attractive vs its historical relationship to bond yields.</li><li> VHP's portfolio is defensive and benefits from long CPI-linked leases to private hospital operators. </li></ul>

We upgrade Vital Healthcare (VHP) to OUTPERFORM. VHP's share price has declined -18% over the last two months, reflecting: (1) higher short-term Australian interest rates (75% of VHP's assets are in Australia), (2) hospital operator profitability pressure in Australia, and (3) expected index removals.It now looks attractive vs its historical relationship to bond yields. VHP's portfolio is defensive and benefits from long CPI-linked leases to private hospital operators. 

Vital Healthcare - Solid Vital Signs, up to OUTPERFORM

<ul><li>Vital Healthcare (VHP) provided a largely uneventful 1H24 result, with a small adjusted funds from operation (AFFO) decline driven largely by higher interest costs and asset sales.</li><li>Over the last 12 months VHP has been busy selling non-core assets (c.NZ$220m) to help fund its development pipeline and support its balance sheet.</li><li>With c.NZ$210m to spend on committed developments and gearing close to its 40% top end, more work needs to be done. </li></ul>

Vital Healthcare (VHP) provided a largely uneventful 1H24 result, with a small adjusted funds from operation (AFFO) decline driven largely by higher interest costs and asset sales.Over the last 12 months VHP has been busy selling non-core assets (c.NZ$220m) to help fund its development pipeline and support its balance sheet.With c.NZ$210m to spend on committed developments and gearing close to its 40% top end, more work needs to be done. 

Vital Healthcare - 1H24 Result — Recycling for Growth

<ul><li>Vital Healthcare (VHP) announced its 1H24 revaluations which saw the value of its property portfolio decline by -4% or -NZ$145m.</li><li>This was driven by a +16 bps expansion in cap rate to 5.21%, with the share price implying cap rates will expand further.</li><li>The declines were larger in Australia (-5%) than NZ (-3%), which is a reversal of recent trends where NZ valuations reacted faster to higher interest rates. </li></ul>

Vital Healthcare (VHP) announced its 1H24 revaluations which saw the value of its property portfolio decline by -4% or -NZ$145m.This was driven by a +16 bps expansion in cap rate to 5.21%, with the share price implying cap rates will expand further.The declines were larger in Australia (-5%) than NZ (-3%), which is a reversal of recent trends where NZ valuations reacted faster to higher interest rates. 

Vital Healthcare - 1H24 Valuation Check-Up

Thematic (Sector/Industry)

<ul><li>Following a historically strong two months in July and August, the NZ listed property vehicles (LPVs) gave back some of their gains in September.</li><li>We continue to expect the sector to perform well in what is likely to be a period of sustained interest rate cuts.</li><li>There will be some bumps along the way, as prior cycles have shown weak economic activity eventually flows through to higher vacancy and lower rents. </li></ul>

Following a historically strong two months in July and August, the NZ listed property vehicles (LPVs) gave back some of their gains in September.We continue to expect the sector to perform well in what is likely to be a period of sustained interest rate cuts.There will be some bumps along the way, as prior cycles have shown weak economic activity eventually flows through to higher vacancy and lower rents. 

Real Estate Reflections - Snakes and Ladders

New Zealand

Vital Healthcare Property Trust is a property trust that invests in and manages healthcare facilities in New Zealand and Australia.

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Vital Healthcare Property Trust (VHP NZ)

Vital Healthcare - FY24 Result — Passing Its Annual Physical

The key risks are further downward pressure on the share price in the short term from index selling, and stronger-for-longer interest rates in...

Forsyth Barr

Vital Healthcare - Solid Vital Signs, up to OUTPERFORM

VHP's share price has declined -18% over the last two months, reflecting: (1) higher short-term Australian interest rates (75% of VHP's assets are...

Forsyth Barr

Vital Healthcare - 1H24 Result — Recycling for Growth

Vital Healthcare (VHP) provided a largely uneventful 1H24 result, with a small adjusted funds from operation (AFFO) decline driven largely by...

Forsyth Barr

Vital Healthcare - 1H24 Valuation Check-Up

Vital Healthcare (VHP) announced its 1H24 revaluations which saw the value of its property portfolio decline by -4% or -NZ$145m.

Forsyth Barr

Real Estate Reflections - Snakes and Ladders

Following a historically strong two months in July and August, the NZ listed property vehicles (LPVs) gave back some of their gains in September.

Forsyth Barr

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