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)</h2>
FY20 Result – Initial thoughts
Investore (IPL) reported a steady FY20 result with distributable profit +0.8% to NZ$21.1m with solid underlying rent growth and lower finance costs offsetting higher management fees. The result was +2.9% ahead of our expectations largely due to the better rent outcomes. However, adjusted funds from operations (AFFO) was -13.9% yoy to 6.49cps (and below our expectations) largely due to higher maintenance capex.
FY21 DPS guidance of 7.6cps provided with the April capital raise was unchanged. With gearing remaining low (c.30%) IPL retains headroom to drive growth via acquisitions. &nbsp;With the result broadly in line with expectations and guidance unchanged we don’t expect to make material changes to our earnings forecasts.
Key points
<ul>
<li>COVID-19 – No change to guidance for a NZ$1-2m impact on gross rents from support provided to tenants through lockdown.</li>
<li>Portfolio performance remains solid – FY20 WALT and occupancy of 10.4 years and 99.7% (FY19: 12.4 years / 99.9%). 40 rent reviews were completed over the year resulting in a +4.0% increase in rents. Turnover rent increased NZ$0.2m over the year to NZ$0.6m.</li>
<li>Some uptick in lease expiry – Expiries total 4.3%/3.5% of contract rent in FY21/22 (vs. 1.1% in FY20) with key FY21 expiries being Johnsonville Warehouse (1.1% of contract rent) and Countdown Mt Wellington (2.3%). 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 – NTA per share was stable at NZ$1.73 with minor changes to asset values. Gearing was 31.3% and remains low on a pro-forma basis at 30.4% with the April capital raise offsetting the settlement of 3 assets acquired. Gearing remains well within the company’s target of &lt;48% with undrawn bank debt of NZ$148m IPL has headroom to drive growth via acquisitions.</li>
</ul>
FY20 result summary (NZ$m)
<figure class="editor-figure mceNonEditable"><img src="https://mail.google.com/mail/u/0?ui=2&amp;ik=f57c39853c&amp;attid=0.1&amp;permmsgid=msg-f:1668425384094878045&amp;th=1727700c1138495d&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_kCLKt5gqfuzF-Pj9_16DD4h48IyH_4H1AeRGek2HclXsspnCrS0ZD8ZjYWTAX4ekKkQ6AEpiJ6oIesCmNFG9U-bcADKeM5HDZihA4tIynRjUkxMClGMEwnws&amp;disp=emb" width="511" height="390" class="editor-image img-responsive" data-image-whitelisted=""></figure>
Source: Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities Forsyth Barr Limited&nbsp;
P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Investore (IPL)
FY20 Result – Initial thoughts
Investore (IPL) reported a steady FY20 result with distributable profit +0.8% to NZ$21.1m with solid underlying rent growth and lower finance costs offsetting higher management fees. The result was +2.9% ahead of our expectations largely due to the better rent outcomes. However, adjusted funds from operations (AFFO) was -13.9% yoy to 6.49cps (and below our expectations) largely due to higher maintenance capex.
FY21 DPS guidance of 7.6cps provided with the April capital raise was unchanged. With gearing remaining low (c.30%) IPL retains headroom to drive growth via acquisitions. &nbsp;With the result broadly in line with expectations and guidance unchanged we don’t expect to make material changes to our earnings forecasts.
Key points

COVID-19 – No change to guidance for a NZ$1-2m impact on gross rents from support provided to tenants through lockdown.
Portfolio performance remains solid – FY20 WALT and occupancy of 10.4 years and 99.7% (FY19: 12.4 years / 99.9%). 40 rent reviews were completed over the year resulting in a +4.0% increase in rents. Turnover rent increased NZ$0.2m over the year to NZ$0.6m.
Some uptick in lease expiry – Expiries total 4.3%/3.5% of contract rent in FY21/22 (vs. 1.1% in FY20) with key FY21 expiries being Johnsonville Warehouse (1.1% of contract rent) and Countdown Mt Wellington (2.3%). FY22 expiries include The Warehouse MacLaggan St, Dunedin (1.5%) and NZ Post at Bay Central (0.8%).
Balance sheet primed for acquisitions – NTA per share was stable at NZ$1.73 with minor changes to asset values. Gearing was 31.3% and remains low on a pro-forma basis at 30.4% with the April capital raise offsetting the settlement of 3 assets acquired. Gearing remains well within the company’s target of &lt;48% with undrawn bank debt of NZ$148m IPL has headroom to drive growth via acquisitions.

FY20 result summary (NZ$m)

Source: Forsyth Barr analysis
Rohan Koreman-Smit&nbsp; Senior Analyst, Equities Forsyth Barr Limited&nbsp;
P: +64 9 368 0085 | TF: 0800 367 227&nbsp; Level 23, Lumley Centre, 88 Shortland Street, Auckland

Investore (IPL): FY20 Result – Initial Thoughts

Investore Property

Investore (IPL): FY20 Result – Initial Thoughts