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 Property (ARG)</h2>
<p><strong>1H20 result – initial thoughts</strong></p>
<ul>
<li>The ARG 1H20 result was close to expectations with Flat revenue and EBIT, and a gain in distributable EPS of +4% boosted by slightly lower interest costs than we were forecasting. No material changes to our numbers is expected.</li>
<li>The 2Q dividend is 1.57 cps providing a flat 1H20 dividend n of 3.14 cps, slightly ahead of ARG’s published AFFO of 3.06cps. The flat DPS guidance of 6.275cps for FY20 has been re-iterated.</li>
<li>There was an interim revaluation gain of +3.1% (NZ$50m) which has lifted the NTA from NZ$1.22 to NZ$1.28. The bulk of the gain was from Auckland assets, and the industry properties in particular. The average cap rate firmed from 6.65% to 6.36%. Gearings is steady at 36%.</li>
<li>The solid WALT of 6 years has been maintained, however it would have been pleasing to get a lift in occupancy that remains steady at 97.6%. Like for like rental growth was +3.2%. The lease expiry looks manageable with an average of just 7% of the portfolio expiring each year over the next five.</li>
<li>The 7 Waterloo Quay (old NZ Post) seismic and redevelopment project is now 82% leased, with good interest in the remaining space and completion is expected before the end of FY20. Insurance negotiations are still ongoing. The portfolio remains well positioned with a 70% weighting to Auckland and a 47% weighting to the industrial sector. ARG has highlighted its ‘green’ development focus and this is a key strategic priority for the business.</li>
</ul>
<p><strong>1H20 result summary</strong></p>
<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:1650664711073939539&amp;th=16e856cf22d5c053&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8vnizjIe3ghG7W4MX8yJJiIl-v1ueyN09N4SkvChTc32jyJTiqIq6wBKAAX2EmYoIQQCWTL36YcVx4uh6dC72Ad5xzehkEaNOHFZFesgWoRgaFkgdLtJOkdLs&amp;disp=emb" width="582" height="491" class="editor-image img-responsive" data-image-whitelisted=""></figure>
<p>Source: Forsyth Barr analysis</p>
<div>
<div>
<p><strong>Jeremy Simpson&nbsp; CFA</strong><br><em>Director / Senior Analyst, Equities</em></p>
</div>
<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:1650664711073939539&amp;th=16e856cf22d5c053&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-Sp60x8E7GNvwicnomJ0T0axpdgwPNqL1pkWbaDvf3h_eiIj-aHNx5glodQeGbRMSs2H509rD5VC4H3KQeRuL4uG93Zr1_Ti0eRhTtBLXUrSR9Oxq5wsmivU8&amp;disp=emb" width="110" height="17" class="editor-image img-responsive" data-image-whitelisted=""></figure>
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<table class="table table-striped">
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<p>T:&nbsp;</p>
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<p>+64 9 368 0022</p>
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<p>M:&nbsp;</p>
</td>
<td>
<p>+64 21 995 998</p>
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<p>TF:&nbsp;</p>
</td>
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<p>0800 367 227</p>
</td>
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<p>F:&nbsp;</p>
</td>
<td>
<p>+64 9 368 0092</p>
</td>
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<p>P:&nbsp;</p>
</td>
<td>
<p>PO Box 97, Auckland 1140</p>
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<p>&nbsp;</p>
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<p>&nbsp;</p>
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<p>W:&nbsp;</p>
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<td>
<p><a href="http://www.forsythbarr.co.nz/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://www.forsythbarr.co.nz&amp;source=gmail&amp;ust=1574292713581000&amp;usg=AFQjCNFjrmXG5I5fYaVdXoXOsVmszZa8Ag" rel="noopener">www.forsythbarr.co.nz</a></p>
</td>
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<td>
<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:1650664711073939539&amp;th=16e856cf22d5c053&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ8sUPPEXW4LJu9g-dMNWDcP_SxPbogVmJooVPrOzYsq0FWp2syHI_8lhzV4EPiXjGBzic6eSGqtesxfm1UOkpGdtd9gIjDzBaKaBWJLPM69a2IWZ48R6jy4hus&amp;disp=emb" width="12" height="10" class="editor-image img-responsive" data-image-whitelisted=""></figure>
</td>
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<p><a href="http://twitter.com/forsythbarr" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://twitter.com/forsythbarr&amp;source=gmail&amp;ust=1574292713581000&amp;usg=AFQjCNGCSdhSmqJ66-txOPdFxirjYIZZBw" rel="noopener">@forsythbarr</a></p>
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Argosy Property (ARG)
1H20 result – initial thoughts

The ARG 1H20 result was close to expectations with Flat revenue and EBIT, and a gain in distributable EPS of +4% boosted by slightly lower interest costs than we were forecasting. No material changes to our numbers is expected.
The 2Q dividend is 1.57 cps providing a flat 1H20 dividend n of 3.14 cps, slightly ahead of ARG’s published AFFO of 3.06cps. The flat DPS guidance of 6.275cps for FY20 has been re-iterated.
There was an interim revaluation gain of +3.1% (NZ$50m) which has lifted the NTA from NZ$1.22 to NZ$1.28. The bulk of the gain was from Auckland assets, and the industry properties in particular. The average cap rate firmed from 6.65% to 6.36%. Gearings is steady at 36%.
The solid WALT of 6 years has been maintained, however it would have been pleasing to get a lift in occupancy that remains steady at 97.6%. Like for like rental growth was +3.2%. The lease expiry looks manageable with an average of just 7% of the portfolio expiring each year over the next five.
The 7 Waterloo Quay (old NZ Post) seismic and redevelopment project is now 82% leased, with good interest in the remaining space and completion is expected before the end of FY20. Insurance negotiations are still ongoing. The portfolio remains well positioned with a 70% weighting to Auckland and a 47% weighting to the industrial sector. ARG has highlighted its ‘green’ development focus and this is a key strategic priority for the business.

1H20 result summary

Source: Forsyth Barr analysis


Jeremy Simpson&nbsp; CFA Director / Senior Analyst, Equities










T:&nbsp;


+64 9 368 0022




M:&nbsp;


+64 21 995 998




TF:&nbsp;


0800 367 227




F:&nbsp;


+64 9 368 0092




P:&nbsp;


PO Box 97, Auckland 1140




&nbsp;


&nbsp;




W:&nbsp;


www.forsythbarr.co.nz







@forsythbarr







Argosy Property (ARG): 1H20 Result – Initial Thoughts