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>Investore (IPL) 1H21 Result – Initial thoughts</h2>
Investore (IPL) reported a&nbsp;strong 1H21&nbsp;result with AFFO +54.7% to NZ$13.7m driven by acquisitions, lower interest and tax expenses, and no maintenance capex being undertaken in the period. The result was ahead of our expectations of NZ$11.7m largely due to maintenance capex, which can be lumpy. Performance fees of NZ$1.4m were ahead of expectations, and with a carried forward return of 28.4% are likely to feature in 2H21.
FY21 DPS guidance of 7.6cps was unchanged as such we don’t expect to make material changes to our earnings&nbsp;with&nbsp;higher performance fees offset by lower maintenance capex. Our forecasts assume NZ$100m of acquisitions occur in 2H21.
Key points
<ul>
<li>COVID-19 – gross rent relief reduced to NZ$1m from NZ$1-2m.</li>
<li>Portfolio performance remains solid – 1H21 WALT and occupancy of 10.2 years and 99.7% (FY20: 10.4 years / 99.7%). 28 rent reviews were completed over the year resulting in a +2.2% increase in rents. Turnover rent increased +NZ$0.3m to NZ$0.7m over the 12-months to September.</li>
<li>Some uptick in lease expiry – Countdown exercised its 6-year renewal at Mt Wellington Centre (2.3% of contract rent). Expiries total 1.7%/2.8% of contract rent in FY21/22 vs. 4.3%/3.5% at March. The key FY21 expiry is Johnsonville Warehouse (1.0% of contract rent) and FY22 expiries include The Warehouse MacLaggan St, Dunedin (1.5%) and NZ Post at Bay Central (0.8%).</li>
<li>Balance sheet primed for acquisitions – Interim asset revaluations lifted NTA +20cps NZ$1.93. Gearing was 28.3% and remains low vs. the company’s limit of 48%. With undrawn bank debt of NZ$196m IPL has headroom to drive growth via acquisitions however there was no detailed update on potential acquisitions or portfolio development opportunities.</li>
</ul>
Conference call:&nbsp;11.00am, dial in 0800 444 845, passcode 4888893
FY20 result summary (NZ$m)
<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:1683551746227448516&amp;th=175d2d64b2e02ac4&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_VHIBB-8LvE8wfezOZjyG7vzy-Hro2-fz6Z3D5VcxnArf0DB0qUoi6wEQPV57p3RtWbRl18tTaQEKKhHxKzlBeZfjuQgakqh0ERqYzPA8WPTFT97cLESnCGCY&amp;disp=emb" width="514" height="358" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: 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=0.1&amp;permmsgid=msg-f:1683551746227448516&amp;th=175d2d64b2e02ac4&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_I3zCxhncHonVe5jlc16GtWNhR1qnq2dinM3eJ4EpXQeszz_6ZcP2tDuY4RMQcV09RGjbZyZn7aES9BulCPLu6_xbFlj03MhGDXU0xlA8I0euGT4Gs9iVy5RQ&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

Investore (IPL) 1H21 Result – Initial thoughts
Investore (IPL) reported a&nbsp;strong 1H21&nbsp;result with AFFO +54.7% to NZ$13.7m driven by acquisitions, lower interest and tax expenses, and no maintenance capex being undertaken in the period. The result was ahead of our expectations of NZ$11.7m largely due to maintenance capex, which can be lumpy. Performance fees of NZ$1.4m were ahead of expectations, and with a carried forward return of 28.4% are likely to feature in 2H21.
FY21 DPS guidance of 7.6cps was unchanged as such we don’t expect to make material changes to our earnings&nbsp;with&nbsp;higher performance fees offset by lower maintenance capex. Our forecasts assume NZ$100m of acquisitions occur in 2H21.
Key points

COVID-19 – gross rent relief reduced to NZ$1m from NZ$1-2m.
Portfolio performance remains solid – 1H21 WALT and occupancy of 10.2 years and 99.7% (FY20: 10.4 years / 99.7%). 28 rent reviews were completed over the year resulting in a +2.2% increase in rents. Turnover rent increased +NZ$0.3m to NZ$0.7m over the 12-months to September.
Some uptick in lease expiry – Countdown exercised its 6-year renewal at Mt Wellington Centre (2.3% of contract rent). Expiries total 1.7%/2.8% of contract rent in FY21/22 vs. 4.3%/3.5% at March. The key FY21 expiry is Johnsonville Warehouse (1.0% of contract rent) and FY22 expiries include The Warehouse MacLaggan St, Dunedin (1.5%) and NZ Post at Bay Central (0.8%).
Balance sheet primed for acquisitions – Interim asset revaluations lifted NTA +20cps NZ$1.93. Gearing was 28.3% and remains low vs. the company’s limit of 48%. With undrawn bank debt of NZ$196m IPL has headroom to drive growth via acquisitions however there was no detailed update on potential acquisitions or portfolio development opportunities.

Conference call:&nbsp;11.00am, dial in 0800 444 845, passcode 4888893
FY20 result summary (NZ$m)

Source: 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

Investore (IPL): 1H21 Result – Initial Thoughts

Investore Property

Investore (IPL): 1H21 Result – Initial Thoughts