New Zealand Professional Investment Services Firm

Forsyth Barr

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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).

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Asset Plus Eastgate sold for NZ$43.45m</h2>
Asset Plus (APL) has announced the unconditional sale of the Eastgate Shopping Centre for NZ$43.45m, reflecting an 8.3% yield. APL has also negotiated a delayed settlement date to maintain an earnings stream while developments complete.
While the sale price is -8% below its 1H21 NZ$47.4m, we view the outcome as a favourable one for shareholders; Eastgate was a challenged asset in a highly competitive Christchurch retail market and APL is now net cash and can focus on its development projects. Our APL rating is OUTPERFORM.
Key points
<ul>
<li>Deposit received, settlement deferred – APL has received a 3.5% deposit (NZ$1.5m), with the remaining portion subject to deferred settlement. The settlement date is the earlier of (1) 22 February 2022, or a date nominated by the purchaser that is not before 22 August 2021 (with 20 working days’ notice). This allows APL to maintain income from Eastgate while developments compete, however this also lifts settlement risk given the length of time.</li>
<li>Dividend reaffirmed – A net cash position will improve shareholders confidence around APL’s dividend. Dividends are not AFFO covered and remain subject to quarterly review, however management reaffirmed that APL &nbsp;intends to hold dividends constant through the Munroe Lane development period.</li>
<li>Dilutive to earnings – Following the Eastgate sale, AFFO is expected to decrease by 0.45cps on an annualised basis (FY22/23e AFFO of 1.22/1.32cps).</li>
<li>NTA sustained at 44cps – While the sale is -8% below its 1H21 valuation, initial FY21 valuations should see this impact offset by gains on the balance of the portfolio. APL thus expect NTA to remain at 44cps post completion of the Eastgate sale.</li>
<li>35 Graham is now the focus – The next key milestone for APL is tenant commitment at 35 Graham Street before Auckland Councils lease ends in December 2021. APL recently received resource consent for the preferred (full-scale) redevelopment option. Office market sentiment has improved; Colliers recently highlighted that “while a number of mooted projects have been put on hold earlier in 2020, confidence is returning about the future. This is showcased by some project commencements we are aware of that are expected to be announced soon.”</li>
</ul>

Asset Plus Eastgate sold for NZ$43.45m
Asset Plus (APL) has announced the unconditional sale of the Eastgate Shopping Centre for NZ$43.45m, reflecting an 8.3% yield. APL has also negotiated a delayed settlement date to maintain an earnings stream while developments complete.
While the sale price is -8% below its 1H21 NZ$47.4m, we view the outcome as a favourable one for shareholders; Eastgate was a challenged asset in a highly competitive Christchurch retail market and APL is now net cash and can focus on its development projects. Our APL rating is OUTPERFORM.
Key points

Deposit received, settlement deferred – APL has received a 3.5% deposit (NZ$1.5m), with the remaining portion subject to deferred settlement. The settlement date is the earlier of (1) 22 February 2022, or a date nominated by the purchaser that is not before 22 August 2021 (with 20 working days’ notice). This allows APL to maintain income from Eastgate while developments compete, however this also lifts settlement risk given the length of time.
Dividend reaffirmed – A net cash position will improve shareholders confidence around APL’s dividend. Dividends are not AFFO covered and remain subject to quarterly review, however management reaffirmed that APL &nbsp;intends to hold dividends constant through the Munroe Lane development period.
Dilutive to earnings – Following the Eastgate sale, AFFO is expected to decrease by 0.45cps on an annualised basis (FY22/23e AFFO of 1.22/1.32cps).
NTA sustained at 44cps – While the sale is -8% below its 1H21 valuation, initial FY21 valuations should see this impact offset by gains on the balance of the portfolio. APL thus expect NTA to remain at 44cps post completion of the Eastgate sale.
35 Graham is now the focus – The next key milestone for APL is tenant commitment at 35 Graham Street before Auckland Councils lease ends in December 2021. APL recently received resource consent for the preferred (full-scale) redevelopment option. Office market sentiment has improved; Colliers recently highlighted that “while a number of mooted projects have been put on hold earlier in 2020, confidence is returning about the future. This is showcased by some project commencements we are aware of that are expected to be announced soon.”


Asset Plus

Asset Plus: Eastgate Sold for NZ$43.45m