Craigs Investment Partners broker Greg Easton said while there were many positive aspects associated with investing in the listed property sector, risks such as earthquakes, and the costs that went along with them, remained.
Most portfolios were well diversified, met building code requirements and had good tenancies.
Reviewing the listed property companies, Mr Easton said some LPVs appeared more exposed than others to earthquake risk.
In recent years, Christchurch and Wellington had experienced the worst earthquakes, although, arguably, the entire country had the potential to suffer such a disaster.
Of the LPVs, Precinct had the largest exposure to Wellington with 46% of its assets there. DNZ, Argosy and Kiwi Income Property also had material exposures of between 19% and 25% to Christchurch and Wellington combined.
Goodman Property Trust, Vital Healthcare Property and Property for Industry had the lowest, with below 10% each.
The type of assets must also be considered when potential earthquake risks were assessed, he said.
High-rise office buildings with extensive fit-outs and lifts were likely to be more susceptible to damage than low-rise industrial sheds or bulk retail buildings. On that basis, Precinct, Argosy, DNZ and Kiwi appeared to be the most exposed across the sector.
''Generally, there appears to be minimal damage across the sector as a result of the Wellington earthquakes with most LPVs having released statements commenting on their portfolios.''
An additional negative impact of the recent earthquakes was LPVs, like most homeowners and businesses, were likely to face higher insurance premiums due to greater perceived risks from insurers and underwriters, Mr Easton said.
While some of those cost increases might be very high in nominal terms, they remained modest across the entire cost base of a property company.
Argosy had a cost base of about $50 million a year, with the largest components being interest ($23.7 million), direct property expenses ($16.32 million) and management and other costs of $8 million.
While Argosy's insurance costs of $2.2 million had more than doubled in recent years, they remained relatively modest at about 4.4% of the total, compared with all the other costs of managing the portfolio and running the company, he said.
''The worse-case scenario for the sector is the prospect of an LPV being unable to insure some or all of its assets. However, this appears highly unlikely at present.''
There would always be demand for good-quality property from tenants, and those who were able to provide higher-quality offerings might see some benefits as tenants became more demanding.
Also, some private or smaller property owners might be unwilling, or unable, to upgrade their buildings, which could reduce some of the lettable space and reduce supply pressure.
With the assets of the listed entities being of generally higher standard, they could see some increased demand, Mr Easton said.
