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>Rising cap rates drive revaluations: Draft 2H23 revaluations of VHP's portfolio resulted in a -NZ$160m movement in asset values with +34bps increase in cap rates partly offset by rent growth and FX movements.</li><li>Asset devaluations more than priced in: The listed equity market had already more than priced in this level of cap rate expansion and asset devaluation.</li><li>Higher gearing being offset through asset sales: We estimate VHP's FY23 gearing to be c.38%, which is creeping towards its management's upper limit of 42.5%.</li></ul>

Rising cap rates drive revaluations: Draft 2H23 revaluations of VHP's portfolio resulted in a -NZ$160m movement in asset values with +34bps increase in cap rates partly offset by rent growth and FX movements.Asset devaluations more than priced in: The listed equity market had already more than priced in this level of cap rate expansion and asset devaluation.Higher gearing being offset through asset sales: We estimate VHP's FY23 gearing to be c.38%, which is creeping towards its management's upper limit of 42.5%.

Vital Healthcare: Benign Revaluation Diagnosis

Thematic (Sector/Industry)

<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

<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>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

Kiwi Property Group Ltd is a property trust that invests in, manages and develops a portfolio of diversified properties throughout New Zealand. The Trust's properties include office, retail and industrial properties.

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.

Argosy Property Limited invests in and manages retail, commercial and industrial properties in New Zealand.

Stride Stapled Group operates as a real estate investment company. The Company invests in a portfolio of places with enduring demand, as well as acquires retail properties. Stride Stapled conducts business in New Zealand.

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

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.

Asset Plus Limited carries on the business of a property company that invests in and manages commercial, industrial and retail properties. The Company's investment property portfolio consists of retail, commercial, and industrial properties located in New Zealand.

Goodman Property Trust is a property trust that invests in, manages and develope portfolio of diversified property assets in Auckland. The Trust's portfolio comprises of office, industrial and retail properties.

CDL Investments New Zealand Limited operates as a property investment and development company.  The Company, through its subsidiaries, provide land-based investment and development, management and the provision of property services. CDL Investments New Zealand serves clients in New Zealand.

AIMS APAC REIT is a real estate investment trust. The Trust's principal investment objective is owning and investing in a diversified portfolio of income-producing industrial real estate assets throughout Asia Pacific, including warehousing and logistics, manufacturing, business parks and hi-tech spaces.

Cromwell Property Group is a property and funds manager. The Company, through its subsidiary, provides funds management, property transactions, property and facilities management, finance, compliance, debenture issues, and debt management.

Ichigo Office REIT Investment Corporation is a real estate investment trust (J-REIT). The Company mainly invests in office buildings in major cities in Japan. The REIT merged with FC Residential Investment Corporation in 2005.

Ichigo Office REIT Investment Corporation (8975 JP)

Ichigo Office REIT Investment Corporation

CPN Retail Growth Leasehold REIT is a closed-end fund incorporated in Thailand. The Fund invests in shopping complex projects: Central Plaza Rama II, Central Plaza Ratchada-Rama II, & Central Plaza Pinklao.

CPN Retail Growth Leasehold REIT (CPNREIT TB)

Tesco Lotus Retail Growth Freehold & Leasehold Property Fund is a closed-end fund incorporated in Thailand. The Fund's objective is to achieve good returns. The Fund invests in freehold & leasehold of 17 shopping malls anchored by a Tesco Lotus hypermarket in cities including Bangkok and tourist destinations such as Krabi.

Whitestone REIT is a real estate investment trust.  The Trust invests in and operates retail, industrial and office properties.

Cathay No.1 REIT is a property trust established in Taiwan by Cathay Financial Holding Co. The Company purchases and leases a portfolio of commercial properties in Taipei.

Hudson Pacific Properties Inc. is a real estate company focusing on owning, operating, and acquiring office properties.  The Company focuses on opportunities in Northern and Southern California.

Starhill Global REIT is a real estate investment trust.  The trust invests in retail and office buildings in Singapore and overseas.

Axis Real Estate Investment Trust is a real estate investment trust that owns and invests in a portfolio of commercial, office and office/retail real estate located in Malaysia. The portfolio includes Axis Business Park, Menara Axis, Crystal Plaza, Infinite Centre and Axis Plaza.

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: Benign Revaluation Diagnosis

Vital Healthcare's (VHP) 2H23 draft valuations have resulted in a -5% reduction in the value of its property assets with larger value declines in...

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

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

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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