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>VHP has reported FY23 AFFO +8% to NZ$73.3m reflecting higher rental income from acquisitions, developments, and inflation linked rent growth being partially offset by higher interest and tax.</li><li>However, due to an expanded capital base, AFFO per unit was down -6% on the prior period.</li><li>The result was slightly below our expectations largely due to higher tax expense.</li></ul>

VHP has reported FY23 AFFO +8% to NZ$73.3m reflecting higher rental income from acquisitions, developments, and inflation linked rent growth being partially offset by higher interest and tax.However, due to an expanded capital base, AFFO per unit was down -6% on the prior period.The result was slightly below our expectations largely due to higher tax expense.

Vital Healthcare - FY23 Result First Take – FY24 Guidance Slightly Below

Thematic (Sector/Industry)

<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>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

<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

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 - FY23 Result First Take – FY24 Guidance Slightly Below

VHP has reported FY23 AFFO +8% to NZ$73.3m reflecting higher rental income from acquisitions, developments, and inflation linked rent growth being...

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

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

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