Property Stocks

[Snoopy]

Hi all. What's the best NZ REIT to invest in? And why does Kiwi Property Group have a much higher divided yield than Property for Industry?
PS I have enough Precinct. Thanks in advance, but not for DYORs. Chronically lazy, but keeps out of a lot of trouble.

Nor, I have spent around a year researching this question. And never having invested in the property sector before, I don't have any attachment bias. I came to the conclusion that I should prefer 'big box' over 'office towers'. And 'commercial' over 'retail'. From what I have read there seems to be a shortage of good commercially zoned land around Auckland. So I started looking more closely at the property trusts that owned 'big box', 'commercial' properties with a bias to the Auckland region.

That lead me to 'Property for Industry' and 'Goodman Property Trust'. Both held the groupings of property I was after, but Goodman's was just way too expensive (yield far too low, even with the imminent rent rises touted). So I had a look at PFI more closely. PFI has a very impressive history, a 30 year run of buying and managing 'Properties for Industry' without getting side tracked into other property fashions along the way. So I figured out the price I was prepared to pay for the PFI earnings stream and waited and waited, but.....it has never hit my mark.

You can read the conclusion to all my PFI workings here:
https://www.sharetrader.co.nz/showth...=1#post1043980

Then suddenly over the last six weeks or so, other opportunities in other sectors of the market with what I consider a better risk return ratio have come up. So the answer as to which of the big eight property trusts that is most worthy of your investment on today's market is ..... drum roll..... none of them. It was a somewhat painful decision for me to make, having invested so much time into researching the options. But if the risk return thesis does not stack up, sometimes it is best to walk away. And before you ask. yes I was modelling in the PIE tax advantages of property trusts, and the governments more to remove structural depreciation on buildings into my analysis

SNOOPY

P.S. Kiwi Income Property is a bit of a special case because they have morphed from being a property investor into being a property developer. I would suggest that the dividend is likely to reduce from current levels as they commit serious cash to developing Drury. It is a higher risk higher reward play than the others in my judgement.

[kiora]

Nor, I have spent around a year researching this question. And never having invested in the property sector before, I don't have any attachment bias. I came to the conclusion that I should prefer 'big box' over 'office towers'. And 'commercial' over 'retail'. From what I have read there seems to be a shortage of good commercially zoned land around Auckland. So I started looking more closely at the property trusts that owned 'big box', 'commercial' properties with a bias to the Auckland region.

That lead me to 'Property for Industry' and 'Goodman Property Trust'. Both held the groupings of property I was after, but Goodman's was just way too expensive. So I had a look at PFI more closely. PFI has a very impressive history, a 30 year run of buying and managing 'Properties for Industry' without getting side tracked into other property fashions along the way. So I figured out the price I was prepared to pay for the PFI earnings stream and waited and waited, but.....it has never hit my mark.

You can read the conclusion to all my PFI workings here:
https://www.sharetrader.co.nz/showth...=1#post1043980

Then suddenly over the last six weeks or so, other opportunities in other sectors of the market with what I consider a better risk return ratio have come up. So the answer as to which of the big eight property trusts that is most worthy of your investment on today's market is ..... drum roll..... none of them. It was a somewhat painful decision for me to make, having invested so much time into researching the options. But if the risk return thesis does not stack up, sometimes it is best to walk away. And before you ask. yes I was modelling in the PIE tax advantages of property trusts, and the governments more to remove structural depreciation on buildings into my analysis

SNOOPY

P.S. Kiwi Income Property is a bit of a special case because they have morphed from being a property investor into being a property developer. I would suggest that the dividend is likely to reduce from current levels as they commit serious cash to developing Drury. It is a higher risk higher reward play than the others in my judgement.

They've been a property developer for a while
"The development is owned by Sylvia Park Business Centre Ltd (SPBCL), a subsidiary of Kiwi Property Group. The development is situated on 24 hectares of land, a large part of which is still to be developed as of the late 2000s. Kiwi Property acquired the land in two transactions in 1995."
https://en.wikipedia.org/wiki/Sylvia...rse%20breeding.

[Snoopy]

They've been a property developer for a while
"The development is owned by Sylvia Park Business Centre Ltd (SPBCL), a subsidiary of Kiwi Property Group. The development is situated on 24 hectares of land, a large part of which is still to be developed as of the late 2000s. Kiwi Property acquired the land in two transactions in 1995."
https://en.wikipedia.org/wiki/Sylvia...rse%20breeding.

I guess you could argue that Sylvia Park was the 'beginning of the transition' of KPG becoming a property developer. Perhaps you could argue that the tipping point was when they changed their ticker from KIP (Kiwi Income Property Group) to KPG (Kiwi Property Group). I can't recall exactly when this happened. I do recall eyebrows being raised with the idea of building a mega mall in an industrial area of nowhere. That Sylvia park has been such an operational success is a great credit to KPG management. Whether it has been a great success for unit holders is another matter, with both the share price and dividend income from KPG reducing.

Back in 1995, Kiwi Income Property Trust was just that: an income generating company for unitholders. There was a much larger geographical spread of shopping malls and office towers owned. The emphasis was on managing existing properties for commercial tenants. The current business model is entirely different to that. KPG are now down to just 3 sites (other peripheral holdings are on the sell off block), and the emphasis has changed to building whole of life needs of people in one location, which includes jobs and long term rental accommodation. These kind of projects have 'execution risk' that pure property owners do not have. I am not saying it is wrong or necessarily unfavourable to go down this new path. I am saying it puts KPG in a different category to SPG, IPL, GMT, PFI, ARG, VHP and PCT, the other members of the property 'big eight'.

SNOOPY