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>Stride Property Group FY21 EPS guidance lifted, +3-5% vs. our expectations, DPS unchanged</h2>
Stride Property Group (SPG) has lifted FY21 distributable profit guidance to 11.30-11.50cps (from 9.91-10.43cps implied by its DPS guidance of at least 9.91cps and 95-100% payout policy), with the upgrade attributable to (1) higher activity-based fee income in its management business, and (2) recently completed office acquisitions. This represents a +3-5% increase&nbsp;vs.&nbsp;our current expectations&nbsp;of&nbsp;10.97cps.&nbsp;with the key variance being higher activity fees (likely from a range of sources including higher performance fees in Investore, asset acquisitions in Industre, and development fees in Diversified).
The upgrade to earnings has not translated to a lift in FY21 distribution guidance with SPG maintaining dividend guidance of at least 9.91cps. This is due to SPG reviewing its distribution policy, which suggests that it (and also possibly Investore) maybe moving to an AFFO based dividend policy which has become the sector norm as it reflects a sustainable dividend backed by underlying cash flows.
We currently have an OUTPERFORM rating on SPG, with our positive investment thesis underpinned by the leverage and valuation upside in its management business. Following recent acquisitions, SPG has near-term plans to establish an office fund which will add further scale to its management business. Additionally, the Centuria acquisition of Augusta last year, 360 Capital’s partnership with PMG Funds Management, and Precinct Properties recent internalisation all highlight the growing demand (and multiples paid) for property asset management businesses.
SPG will report its FY21 result on 27 May 2021.
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:1697783735460960883&amp;th=178fbd4fe9961a73&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ-2la6WM8ieXdPFuCRps3FQsGudU6z7fvFTn5RSksOET_yqVOqB4F2Uban-y3ME061l69cDietL8H1W8ZmLwX4FEOcGoCuR1OLdd5WXkAGBpFY_0HnGRpcaC-k&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

Stride Property Group FY21 EPS guidance lifted, +3-5% vs. our expectations, DPS unchanged
Stride Property Group (SPG) has lifted FY21 distributable profit guidance to 11.30-11.50cps (from 9.91-10.43cps implied by its DPS guidance of at least 9.91cps and 95-100% payout policy), with the upgrade attributable to (1) higher activity-based fee income in its management business, and (2) recently completed office acquisitions. This represents a +3-5% increase&nbsp;vs.&nbsp;our current expectations&nbsp;of&nbsp;10.97cps.&nbsp;with the key variance being higher activity fees (likely from a range of sources including higher performance fees in Investore, asset acquisitions in Industre, and development fees in Diversified).
The upgrade to earnings has not translated to a lift in FY21 distribution guidance with SPG maintaining dividend guidance of at least 9.91cps. This is due to SPG reviewing its distribution policy, which suggests that it (and also possibly Investore) maybe moving to an AFFO based dividend policy which has become the sector norm as it reflects a sustainable dividend backed by underlying cash flows.
We currently have an OUTPERFORM rating on SPG, with our positive investment thesis underpinned by the leverage and valuation upside in its management business. Following recent acquisitions, SPG has near-term plans to establish an office fund which will add further scale to its management business. Additionally, the Centuria acquisition of Augusta last year, 360 Capital’s partnership with PMG Funds Management, and Precinct Properties recent internalisation all highlight the growing demand (and multiples paid) for property asset management businesses.
SPG will report its FY21 result on 27 May 2021.
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

Stride Property Group: FY21 EPS Guidance Lifted, +3-5% Vs. Our Expectations, DPS Unchanged