New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Argosy 2H21 Revaluations Lift NTA to NZ$1.53</h2>
Argosy (ARG) has announced a 2H21 revaluation gain of +NZ$77.9m largely driven by its industrial assets. This brings ARG’s total FY21 portfolio valuation increase to +NZ$157.7m (or +8.5%) and lifts the portfolio value to NZ$2,010.8m as at 31 March 2021. ARG’s cap rate compressed -36bp in 2H21 largely driven by industrial assets which recorded -51bp in compression. Low interest rates and continuation of ecommerce and logistics tailwinds have driven strong demand for industrial assets and recent transactional evidence suggests there is likely further compression coming for ARG’s weighted average industrial cap rate of 5.42%. ARG’s office portfolio slipped backwards largely due to façade repairs at 7 Waterloo Quay and increased costs at its Statistics House development at 8-14 Willis Street/360 Lambton Quay. We estimate the 2H21 revaluation coupled with the settlement of the 7 Waterloo Quay insurance claim for NZ$23.5m lifts ARG’s NTA +9% to NZ$1.53cps.
We are OUTPERFORM rated on ARG reflecting its undemanding valuation metrics and industrial weighted portfolio. Following today’s announcement ARG is trading broadly in line with its NTA backing vs. the sector average premium of +5%. Furthermore, ARG’s portfolio is 49% industrial by valuation and industrial peers GMT and PFI are trading on implied portfolio cap rates of 4.42% and 4.52% respectively. We also highlight ARG’s gearing is now back towards the lower end of its 30-40% target range following the sale of the Albany Lifestyle Centre, receipt of insurance proceeds, and 2H21 valuation gains.
ARG will report its FY21 results on 19 May 2021.
ARG valuation summary
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1699072834233906277&amp;th=179451bd9c073465&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-jkr8XNl1hYEas1IMfaNP4hBe_qKlloAwi7uGyUxyK6DR5d-L40iiq2RCkwfrMI2E2aWSdWtH84WzveWzSNvRJyIKDXdB3kW9SiFMTyqmuYjsEcLhZlcMkPBE&amp;disp=emb" width="765" height="93" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Company data, Forsyth Barr analysis
ARG NTA bridge (NZ$/share)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.2&amp;permmsgid=msg-f:1699072834233906277&amp;th=179451bd9c073465&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9vLEi1QvuSVmxR6GLDs22ef4tDNkBju8lRpdPpOGBGs--St8tbW_b4t0844rFa4QX2MvysPTMVjtbXCrtRkNVajHf8NIWbQWmXy8TcxhKCiUzQ4PjsdLHudus&amp;disp=emb" width="453" height="302" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Company data, Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.3&amp;permmsgid=msg-f:1699072834233906277&amp;th=179451bd9c073465&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ93HXriNxPILwgSK2QGvT8gP41feyBdNtJnw03tUDrVw62wQdRR1qqy4y0uOQ5_Ntyg-mYPX9UfTEgLOeKR9DSVf8bcR46D0J9jerGiYGXMsiZwOe3p-vEfJHc&amp;disp=emb" class="editor-image img-responsive"></figure>
 P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Argosy 2H21 Revaluations Lift NTA to NZ$1.53
Argosy (ARG) has announced a 2H21 revaluation gain of +NZ$77.9m largely driven by its industrial assets. This brings ARG’s total FY21 portfolio valuation increase to +NZ$157.7m (or +8.5%) and lifts the portfolio value to NZ$2,010.8m as at 31 March 2021. ARG’s cap rate compressed -36bp in 2H21 largely driven by industrial assets which recorded -51bp in compression. Low interest rates and continuation of ecommerce and logistics tailwinds have driven strong demand for industrial assets and recent transactional evidence suggests there is likely further compression coming for ARG’s weighted average industrial cap rate of 5.42%. ARG’s office portfolio slipped backwards largely due to façade repairs at 7 Waterloo Quay and increased costs at its Statistics House development at 8-14 Willis Street/360 Lambton Quay. We estimate the 2H21 revaluation coupled with the settlement of the 7 Waterloo Quay insurance claim for NZ$23.5m lifts ARG’s NTA +9% to NZ$1.53cps.
We are OUTPERFORM rated on ARG reflecting its undemanding valuation metrics and industrial weighted portfolio. Following today’s announcement ARG is trading broadly in line with its NTA backing vs. the sector average premium of +5%. Furthermore, ARG’s portfolio is 49% industrial by valuation and industrial peers GMT and PFI are trading on implied portfolio cap rates of 4.42% and 4.52% respectively. We also highlight ARG’s gearing is now back towards the lower end of its 30-40% target range following the sale of the Albany Lifestyle Centre, receipt of insurance proceeds, and 2H21 valuation gains.
ARG will report its FY21 results on 19 May 2021.
ARG valuation summary

Source: Company data, Forsyth Barr analysis
ARG NTA bridge (NZ$/share)

Source: Company data, Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities

 P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Argosy (ARG): 2H21 Revaluations Gains of NZ$78m

Argosy Property

Argosy (ARG): 2H21 Revaluations Gains of NZ$78m