KPG - Kiwi Property Group Limited

[Baa_Baa]

With a recent report out for Home ownership stats in the next 10 years renting look sets to increase.

Return on investment per annum will focus on the rental income after expenses, that equates to the modest but 4-5 times better return than a bank deposit. In addition Auckland residential real estate has almost trebled in capital value in the past 10 years, keep that in mind, aside from directly owing property, there are a few other indirect ownership opportunities. It's a positive shift in investment strategy for KPG, suited to the long term money portfolio. This isn't imo a big portfolio % or a short medium term play. Just have some and don't watch the share price every day.

[Beagle]

For what its worth I think the average Auckland house price at $1.2m at about 12 times average combined household income is probably unsustainable so the capital growth prospects from here are probably very modest and the prospect of a fall in the medium term should not be overlooked..
I very recently looked at a property in West Auckland on a gross yield of just over 6%, (net just on 5% if I managed this myself) and decided against it.
One of the key reasons was the risk of tenant damage and most specifically meth contamination. Another was the inability to deduct the legitimate business expense of mortgage interest which means for the investment to be effective I would have to own it unleveraged. Frankly I can get much better returns on my capital elsewhere.

We have previously owned two apartments close to Lynn Mall and found them very problematic on a number of fronts. Budgeted yields with residential apartments are one thing, what you really get after inadvertent and willful damage, non payment of rent and other delinquent tenant behavior is quite another thing and that's before you even start thinking about possible moisture ingress and meth contamination risks and remediation costs, issues that are FAR more common than you think. Believe me as an accountant I have seen some absolute horror stories in my long career. It may look okay on a spreadsheet, in the real world its quite another thing entirely.

I would say residential apartment investment is substantially more risky than shopping malls.

[Waltzing]

BTR = the new Projects.

we all know what happened to those "Our house to bauhaus" projects turned out round the world. All demolished.

"Bauhaus to Our House" Tom Wolf.

[Habits]

For what its worth I think the average Auckland house price at $1.2m at about 12 times average combined household income is probably unsustainable so the capital growth prospects from here are probably very modest and the prospect of a fall in the medium term should not be overlooked..
I very recently looked at a property in West Auckland on a gross yield of just over 6%, (net just on 5% if I managed this myself) and decided against it.
One of the key reasons was the risk of tenant damage and most specifically meth contamination. Another was the inability to deduct the legitimate business expense of mortgage interest which means for the investment to be effective I would have to own it unleveraged. Frankly I can get much better returns on my capital elsewhere.

We have previously owned two apartments close to Lynn Mall and found them very problematic on a number of fronts. Budgeted yields with residential apartments are one thing, what you really get after inadvertent and willful damage, non payment of rent and other delinquent tenant behavior is quite another thing and that's before you even start thinking about possible moisture ingress and meth contamination risks and remediation costs, issues that are FAR more common than you think. Believe me as an accountant I have seen some absolute horror stories in my long career. It may look okay on a spreadsheet, in the real world its quite another thing entirely.

I would say residential apartment investment is substantially more risky than shopping malls.

Be careful not to compare different stuff... your lemons with someone elses Oranges. You are an accountant of many long years, we are landlords of multi unit properties of many years. A professional investor was selling his time for a modest fee a few years ago and he explained how to make multi unit large scale rentals work. I started with one rental block and very quickly grew to over 50 units. It has been a very profitable business for us and we still have a large number of rentals both self managed and through a prpty mgr. My kids have grown up watching us work diligently and knew thats what they wanted to do too and are doing now. Anything that is done right will see huge demand and BTR build to rent units are a proven concept in an environment where the govt are encouraging more long term professional landlords and fewer mum and dad investors. Btw new dwellings are not subject to the interest non deduction rule and can still deduct interest on borrowings. Did you not know that or are you being duplicitous

[LaserEyeKiwi]

Be careful not to compare different stuff... your lemons with someone elses Oranges. You are an accountant of many long years, we are landlords of multi unit properties of many years. A professional investor was selling his time for a modest fee a few years ago and he explained how to make multi unit large scale rentals work. I started with one rental block and very quickly grew to over 50 units. It has been a very profitable business for us and we still have a large number of rentals both self managed and through a prpty mgr. My kids have grown up watching us work diligently and knew thats what they wanted to do too and are doing now. Anything that is done right will see huge demand and BTR build to rent units are a proven concept in an environment where the govt are encouraging more long term professional landlords and fewer mum and dad investors. Btw new dwellings are not subject to the interest non deduction rule and can still deduct interest on borrowings. Did you not know that or are you being duplicitous

Congrats on building your investment property portfolio to that level, impressive!

To me the biggest risk for property investment has always been the lack of scale to spread risk, in that it is actually far more risky to own just one or two rental properties than it is to own a hundred. I’ve only ever had one or two investment properties at any one time, and that aspect worries me the most. Owning one or two means an adverse event that impacts your ability to rent the property is near catastrophic to the business, whereas that same event occurring in one dwelling of a 100 property portfolio is merely a small inconvenience that the income from your other 99 properties can more than cover. I always wondered if we would see a corporate landlord with something like 500 or 1000 properties list on the NZX as a vehicle for people to invest in New Zealand real estate without the single dwelling risk, now I guess KPG is going to become that to a certain degree.

[Shareguy]

Congrats Habits on your portfolio. I too invested in residential property many years ago and built-up a large portfolio which enabled me to retire in my 40s. Sure there can be issues with Tenants now and again. Understand that a lot of people don’t like taking on large mortgages but overall it has been very ,very easy. Most tenants are good people. The key is picking the right tenants, doing proper reference checks and credit checks. Most of our properties are now worth four or five times what we paid for them. When we started buying people were saying the same things the knockers are saying now, “they’re too expensive, how can you cope with all the tenant problems, interest rates will skyrocket,”I have heard it all.

At the end of the day there is one simple fact “there is only limited supply of land” and like it or hate it our population is going to keep growing.

So going back to KPG I think it’s going to be a game changer for them in a positive way with residential towers at Sylvia park. The ability to take the lift down with bars, restaurants and shopping at your doorstep. A train station right there is why I think it’s going to be a gold mine. I currently have a small position in KPG and do agree with Beagle regarding the risk regarding the current net asset value. The two large shopping centres that they are selling to fund this have been on the market for some time with no announcements made.

Delta is a game changer so I would imagine that anyone looking to purchase these assets would want these at a very attractive price considering the risks. So until they have concluded the sale and we can get some clarity on the future with COVID I won’t be adding to my portfolio.

[Waltzing]

Certainly going to be very interesting to see how this plays out and weather KIP is as good at BTR as they were at S Park in south auckland.

Its certainly not a failed property developer yet but 10 years is a long time to wait.

Should start to see if it works inside 5 years.

But on this basis OCA might be a better flip of the coin.

[winner69]

KPG presentation re BTR

I like the way the artist has judiciously placed green trees in the foreground to make a 12 storey apartment block less imposing.

Probably hard for same artist to make 25 stories at Lynn Mall not to look ugly as

[winner69]

……

It may look okay on a spreadsheet, in the real world its quite another thing entirely.

I would say residential apartment investment is substantially more risky than shopping malls.

Hey beagle, the media just said ‘the project looks good on a spreadsheet but in reality a lot of the assumptions made need to play out in reality’

Same commentator said the interest deductibility long term is no given

[Beagle]

Btw new dwellings are not subject to the interest non deduction rule and can still deduct interest on borrowings. Did you not know that or are you being duplicitous

I was simply referring to the fact that the unit I looked at buying if mortgaged would not enjoy interest deductibility. I wasn't referring to KPG's situation...but I think you knew that already. You must be really "impressed" that in real inflation adjusted terms KPG's share price has been going backwards for the last two decades, let alone comparing it with the property index which it has been woefully underperforming. That's quite an "achievement" in this booming market.

Original investors in RYM in mid 1999 have made over 55 times their money in just over two decades, (I got some of that), whereas over that same timeframe KPG investors have seen their shares go from 93 cents ($1.48 in 2021 real inflation adjusted terms) to $1.17, a loss in value of 21% in real inflation adjusted terms against a backdrop of the housing index more than quadrupling over that timeframe. Inflation calculator is here, have a play with it and draw your own conclusions. https://www.rbnz.govt.nz/monetary-policy/inflation-calculator/

I think its crystal clear that over the long term KPG has been an absolute disaster as a property investment, (sort of okay if all anyone cares about is dividend yield). Two possible explanations present for this incredibly woeful long term underperformance. Investing in shopping malls is the worst possible asset class by a country mile and / or management are completely incompetent.

I'll leave you guys in peace which is, I am sure, what you really want...if people think it must be good buying because its at a discount to NTA or that this BTR thing is a game changer for KPG, and you trust management to deliver then good luck to you because I think its clear you are going to need it.

[LaserEyeKiwi]

Congrats Habits on your portfolio. I too invested in residential property many years ago and built-up a large portfolio which enabled me to retire in my 40s. Sure there can be issues with Tenants now and again. Understand that a lot of people don’t like taking on large mortgages but overall it has been very ,very easy. Most tenants are good people. The key is picking the right tenants, doing proper reference checks and credit checks. Most of our properties are now worth four or five times what we paid for them. When we started buying people were saying the same things the knockers are saying now, “they’re too expensive, how can you cope with all the tenant problems, interest rates will skyrocket,”I have heard it all.

At the end of the day there is one simple fact “there is only limited supply of land” and like it or hate it our population is going to keep growing.

So going back to KPG I think it’s going to be a game changer for them in a positive way with residential towers at Sylvia park. The ability to take the lift down with bars, restaurants and shopping at your doorstep. A train station right there is why I think it’s going to be a gold mine. I currently have a small position in KPG and do agree with Beagle regarding the risk regarding the current net asset value. The two large shopping centres that they are selling to fund this have been on the market for some time with no announcements made.

Delta is a game changer so I would imagine that anyone looking to purchase these assets would want these at a very attractive price considering the risks. So until they have concluded the sale and we can get some clarity on the future with COVID I won’t be adding to my portfolio.

FYI they updated the mall sales process on the call yesterday - it’s in the “advanced stages” and lockdown caused some minor delay but proceeding as scheduled. In other words the sale is basically done with a few small steps left to complete before announcement is made.

[LaserEyeKiwi]

Hey beagle, the media just said ‘the project looks good on a spreadsheet but in reality a lot of the assumptions made need to play out in reality’

Same commentator said the interest deductibility long term is no given

was asked on the call yesterday - immaterial to project apparently as this will be funded out of company issued debt and cash so they aren’t relying on interest free deductibility (just like any listed industrial/commercial/retail/hotel property company have interest deductibility on their assets currently). But they did say that would of course be advantageous if it resulted, and have had discussions with government about BTR sector.

[Rawz]

Correct me if I am wrong but isnt this model widely used in Europe? Big property corporates build to rent and are happy to lease a place to a tenant for LIFE. Good for the property company because they have multi decade long term views. Good for tenants as they dont face the risk of being kicked out. There are a lot of people living in NZ that will never own their own home but can happily pay rent.

If Jacinda gets another term I suspect the screws on mum and dad property investors will tighten even further, many will decide to call it quits and sell up. The KPGs of the world will need to step in a be the countries landlord alongside more professional property investors that are already in the market.

This is just the start and KPG are the leaders. I think these apartments near shopping malls and major transport links will be highly sort after and attract premium 'working professional' type tenants.

I own a rental in the CBD and the building manager is completely hopeless, body corporate not much better. Everything moves so slow when a complaint is made by a tenant. If the entire apartment tower is owned and managed by one single entity it will be far better for tenants, and if a place is great for tenants there will be demand for it.

[LaserEyeKiwi]

Correct me if I am wrong but isnt this model widely used in Europe? Big property corporates build to rent and are happy to lease a place to a tenant for LIFE. Good for the property company because they have multi decade long term views. Good for tenants as they dont face the risk of being kicked out. There are a lot of people living in NZ that will never own their own home but can happily pay rent.

If Jacinda gets another term I suspect the screws on mum and dad property investors will tighten even further, many will decide to call it quits and sell up. The KPGs of the world will need to step in a be the countries landlord alongside more professional property investors that are already in the market.

This is just the start and KPG are the leaders. I think these apartments near shopping malls and major transport links will be highly sort after and attract premium 'working professional' type tenants.

I own a rental in the CBD and the building manager is completely hopeless, body corporate not much better. Everything moves so slow when a complaint is made by a tenant. If the entire apartment tower is owned and managed by one single entity it will be far better for tenants, and if a place is great for tenants there will be demand for it.

indeed, bizarre it has taken this long to arrive in New Zealand. Figures from yesterdays presentation:

12983

[LaserEyeKiwi]

I was simply referring to the fact that the unit I looked at buying if mortgaged would not enjoy interest deductibility. I wasn't referring to KPG's situation...but I think you knew that already. You must be really "impressed" that in real inflation adjusted terms KPG's share price has been going backwards for the last two decades, let alone comparing it with the property index which it has been woefully underperforming. That's quite an "achievement" in this booming market.

Original investors in RYM in mid 1999 have made over 55 times their money in just over two decades, (I got some of that), whereas over that same timeframe KPG investors have seen their shares go from 93 cents ($1.48 in 2021 real inflation adjusted terms) to $1.17, a loss in value of 21% in real inflation adjusted terms against a backdrop of the housing index more than quadrupling over that timeframe. Inflation calculator is here, have a play with it and draw your own conclusions. https://www.rbnz.govt.nz/monetary-policy/inflation-calculator/

I think its crystal clear that over the long term KPG has been an absolute disaster as a property investment, (sort of okay if all anyone cares about is dividend yield). Two possible explanations present for this incredibly woeful long term underperformance. Investing in shopping malls is the worst possible asset class by a country mile and / or management are completely incompetent.

I'll leave you guys in peace which is, I am sure, what you really want...if people think it must be good buying because its at a discount to NTA or that this BTR thing is a game changer for KPG, and you trust management to deliver then good luck to you because I think its clear you are going to need it.

don’t disagree with you that besides dividends it wouldn’t have been a great experience being a long term investor in KPG. I have only been building a position over the last couple of years, so am more focused on future returns than what has been achieved in the past. But yes you are right it is fair to keep in mind past management performance when evaluating the company. So far I am happy with the way they are pivoting the company by maintaining a healthy leverage ratio, and reducing risk with the exiting of assets in earthquake prone areas, and also now creating a large 3rd sector (BTR) to reduce exposure from the current two (Office & Retail).

[Waltzing]

Its not a performer at the moment and MR B is right the chart is simply going nowhere for several decades but it is a trade.

[Beagle]

don’t disagree with you that besides dividends it wouldn’t have been a great experience being a long term investor in KPG. I have only been building a position over the last couple of years, so am more focused on future returns than what has been achieved in the past. But yes you are right it is fair to keep in mind past management performance when evaluating the company. So far I am happy with the way they are pivoting the company by maintaining a healthy leverage ratio, and reducing risk with the exiting of assets in earthquake prone areas, and also now creating a large 3rd sector (BTR) to reduce exposure from the current two (Office & Retail).

Fair enough, good luck mate.

[peat]

From BusinessDesk

A key factor in Kiwi's decision is whether the government will keep its promise to exempt new builds from the tax changes to residential property set to kick in from Oct 1


Initially I'm like 'why wouldnt they' but then I thought about it ;+)

and this article raises the point so maybe there is some doubt about it.

[winner69]

indeed, bizarre it has taken this long to arrive in New Zealand. Figures from yesterdays presentation:

12983

It's mainly because NZ has never been into high rise council flats type of stuff

[LaserEyeKiwi]

From BusinessDesk

A key factor in Kiwi's decision is whether the government will keep its promise to exempt new builds from the tax changes to residential property set to kick in from Oct 1


Initially I'm like 'why wouldnt they' but then I thought about it ;+)

and this article raises the point so maybe there is some doubt about it.



that is the exact opposite of what management said on the call yesterday, Which is that the BTR development will be progressing regardless of what the government decides to do tax wise for new builds.

[winner69]

Credit due to Clive and his team for doing something different but I hope they hasn’t fallen into the institutional imperative trap

[winner69]

BTR = the new Projects.

we all know what happened to those "Our house to bauhaus" projects turned out round the world. All demolished.

"Bauhaus to Our House" Tom Wolf.

That book is quiet cool ….and appropriate to this thread

[Waltzing]

lost the book i think along with "Liars Poker" , but still got "The Painted Word", different authors of course.

well no fooling w(n) then....

looking forward to "Musk to Mars"

[winner69]

Went to an art show in London a few years ago …an artist Michael Cox was portraying social housing (tower block apartments) and it’s beauty or lack of

I got this print on the cheap

Hope new blocks in AKL are as beautiful

[Beagle]

Beautiful... lol... I love your dry humor mate.
These absolutely horrendous New Lynn apartments https://www.bing.com/images/search?view=detailV2&ccid=V4bToOYA&id=275DB8DAD877A2E19B9017A847CD252492E18BD1&thid=OIP.V4bToOYAKhplXmjS2dk2lQHaIS&mediaurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR.5 786d3a0e6002a1a655e68d2d9d93695%3frik%3d0YvhkiQlzU eoFw%26riu%3dhttp%253a%252f%252falucobond.com.sg%2 52fwp-content%252fuploads%252f2015%252f02%252f13.jpg%26e hk%3dR3HxAMQp%252bnonuDv3tnhv7%252ft%252bnOK7Bin8A IcGCY7RD6Y%253d%26risl%3d%26pid%3dImgRaw%26r%3d0&exph=700&expw=625&q=images+of+new+lynn+apartments&simid=608005298674277588&FORM=IRPRST&ck=9D196DDE35C94B22B6B9A3761E48DADC&selectedIndex=4&qpvt=images+of+new+lynn+apartments&ajaxhist=0&ajaxserp=0 went up a few years ago and to the best of my knowledge is the highest apartment block presently in New Lynn (10 levels of slums) and without doubt the ugliest. It has only two redeeming features. 1. Really, really close to New Lynn Transport hub and Lynn mall shopping center and 2. Reasonably close to the New Lynn Police Station so they can try and keep this slum and its tenants under some sort of control.

KPG thing that's proposed looks even worse.

[winner69]

Beautiful... lol... I love your dry humor mate.
These absolutely horrendous New Lynn apartments https://www.bing.com/images/search?view=detailV2&ccid=V4bToOYA&id=275DB8DAD877A2E19B9017A847CD252492E18BD1&thid=OIP.V4bToOYAKhplXmjS2dk2lQHaIS&mediaurl=https%3a%2f%2fth.bing.com%2fth%2fid%2fR.5 786d3a0e6002a1a655e68d2d9d93695%3frik%3d0YvhkiQlzU eoFw%26riu%3dhttp%253a%252f%252falucobond.com.sg%2 52fwp-content%252fuploads%252f2015%252f02%252f13.jpg%26e hk%3dR3HxAMQp%252bnonuDv3tnhv7%252ft%252bnOK7Bin8A IcGCY7RD6Y%253d%26risl%3d%26pid%3dImgRaw%26r%3d0&exph=700&expw=625&q=images+of+new+lynn+apartments&simid=608005298674277588&FORM=IRPRST&ck=9D196DDE35C94B22B6B9A3761E48DADC&selectedIndex=4&qpvt=images+of+new+lynn+apartments&ajaxhist=0&ajaxserp=0 went up a few years ago and to the best of my knowledge is the highest apartment block presently in New Lynn (10 levels of slums) and without doubt the ugliest. It has only two redeeming features. 1. Really, really close to New Lynn Transport hub and Lynn mall shopping center and 2. Reasonably close to the New Lynn Police Station so they can try and keep this slum and its tenants under some sort of control.

KPG thing that's proposed looks even worse.

That block probably leaks like a sieve

But Kiwi will build water proof blocks so no worries

[Beagle]

That block probably leaks like a sieve

But Kiwi will build water proof blocks so no worries

About 20 years ago we swapped a couple of cheap bare second rate no sea-view sections on Waiheke Island for a couple of top floor apartments off the plans in this block a few hundred meters away in New Lynn. https://www.bing.com/images/search?view=detailV2&ccid=Ih4jJql3&id=748C70F61886B59F710D2F79465B9F9763F4E47A&thid=OIP.Ih4jJql3PYM8CP9Lxjb48wHaFj&mediaurl=https%3A%2F%2Fi.pinimg.com%2Foriginals%2F 82%2F99%2Fd4%2F8299d4dab6a67ed2662b50500c50d7b6.jp g&exph=525&expw=700&q=images+of+new+lynn+apartments&simid=607996502579565226&form=IRPRST&ck=9399680BF7477656384471F6B7A9C86E&selectedindex=7&qpvt=images+of+new+lynn+apartments&ajaxhist=0&ajaxserp=0&cdnurl=https%3A%2F%2Fth.bing.com%2Fth%2Fid%2FR.221 e2326a9773d833c08ff4bc636f8f3%3Frik%3DeuT0Y5efW0Z5 Lw%26pid%3DImgRaw%26r%3D0&vt=0&sim=11

They were okay-ish when new and at least tenants had access to onsite swimming pool, tennis court and gymnasium so we didn't feel too much like slum landlords. Didn't take long for the ultra cheap fit out to age quickly and we had so many problems with tenants we were very pleased to get out with our shirts still on our backs. Not long after that the whole thing had to be re-roofed and reclad due to leaks...cost apartment owners a fortune. The majority of my clients who have bought apartments anywhere have experienced water ingress issues sooner or later....in fact its almost always just a question of when, not if. Hard to put those odds on unknown water ingress remediation costs into a spreadsheet eh ;)

[winner69]

I’m not an Aucklander so silly question …..is Sylvia Park a ‘desirable’ area to live? What type of tenants will KPG attract? Would they pay ‘fair and reasonable’ rents?

[troyvdh]

A question...has PFI performed better for shareholders than KPG over the past 2 decades,.

[Waltzing]

"Sylvia Park a ‘desirable’ area to live?"

you obviously never drove down that road every often then?

:cool:

well you had to see the area before it was built and used to go down that road often as back way to Parnell.

Its not Parnell put it that way.

[Rawz]

Not sure how to explain the Sylvia park area. It’s basically surrounded in commercial/ light industrial and motorways. Outside of that is residential which is blue collar working class type I guess?

However it is central enough and with the train station right there, supermarket, restaurants, shops, bars etc it will attract premium tenants. KPG will build premium apartments. Just need to look at that 7 green start (or whatever) office tower they built that ANZ bank took naming rights on. They build the best.

Those photos of apartments Beagle post were built buy developers looking to make money by selling. KPG looking to make money by renting. So cannot compare imo

[Beagle]

A question...has PFI performed better for shareholders than KPG over the past 2 decades,.

30 June 1999 they were 74 cents, now $2.98 so yes, they have more than quadrupled in price.

[Beat the Bank]

Sylvia Park is not in a suburban area like New Lynn is. The local suburbia is low socio economic, eg Otahuhu and Mt Wellington, Panmure. It will rely on being a community of its own with shops, food, entertainment and gym built in - and being a transport hub, easy to get to and from for work with one or no car. It should appeal to workers and those to whom a mall is a recreation facility. No local bubble walk for the family without getting in a car or train.

[HCR20]

Beagle is reasoning forward, and from his position of not liking KPG. NZ does have a terrible history of building apartments however, given the cost of housing it is inevitable that apartments will become a mainstay of housing in NZrs future. This is particularly the case in areas such as New Lynn where there is limited land supply but good transport links and access to entertainment and so on.

Good to see KPG giving it a go. Given they own a lot of shopping malls this kind of approach makes a lot of sense.

[HCR20]

No local bubble walk for the family without getting in a car or train.


Except for Mt Wellington itself, Panmure basin, and the Rotary walk to Bucklands Beach

[Shareguy]

Wow . Government overturns lease agreements to force landlords to reduce the rent to a “fair” amount and the shares go up.

Justice Minister Kris Faafoi says the law change would require landlords and tenants to agree on a "fair" amount of rent during Covid-19 restrictions. If unable to agree, they would be required to go to arbitration.
https://www.stuff.co.nz/business/126517363/law-change-to-encourage-landlords-and-tenants-to-share-financial-burden-of-covid19?cid=app-iPhone

[winner69]

On the other hand it seems that interest deductibility on new residential rental developments not going to be an issue.

[Beagle]

News only broke on this after the market closed. KPG on the front line of the effect of this, I would think.

[winner69]

News only broke on this after the market closed. KPG on the front line of the effect of this, I would think.

Property Council lady said she knows of one landlord who has provided rent relief of over $180 million alone.

Jeez …hope that’s not KPG

[Shareguy]

I heard 4 pm. Fair reduction and what I’m hearing has been 50 percent so this is going to be huge for a lot of the property companies.

For the government to override an agreed legal document is unbelievable. What’s next I wonder..

[Habits]

Wow . Government overturns lease agreements to force landlords to reduce the rent to a “fair” amount and the shares go up.

Justice Minister Kris Faafoi says the law change would require landlords and tenants to agree on a "fair" amount of rent during Covid-19 restrictions. If unable to agree, they would be required to go to arbitration.
https://www.stuff.co.nz/business/126517363/law-change-to-encourage-landlords-and-tenants-to-share-financial-burden-of-covid19?cid=app-iPhone

Is this even relevant anymore with level 4 lockdowns all but ruled out completely... should have been during first lockdown 18 months ago imo in terms of the general market. Some commercial landlords refuse assistance unless it is genuine and not for handouts. Am pretty sure that KPG already treated all of their mall tenants equitably over that time

[Beagle]

Is this even relevant anymore with level 4 lockdowns all but ruled out completely... should have been during first lockdown 18 months ago imo in terms of the general market. Some commercial landlords refuse assistance unless it is genuine and not for handouts. Am pretty sure that KPG already treated all of their mall tenants equitably over that time

I think they're looking at the impact on all alert level's above 1.

[Habits]

I think they're looking at the impact on all alert level's above 1.

It is quite stupidly sick how the govt handed out the 2020 wage subsidy assistance, then Cindy names and shames The Warehouse, followed by mandated "forced" rent discount regardless of whether or not the landlord can afford it or if the tenant benefits from pentup demand. We are being governed by school children

[Waltzing]

10 yr moving up. Be interesting to see if it hits the CP's in A NZ...

how will the Billy T James 3 Waters government take over effect development of new suburbs and projects for large scale commercial property developers.

Any impact on costs and speed of development?

[Habits]

Im sorry but connecting BTJ and this govt is bloody insulting to the memory and stature of the man... laurel and hardy govt yes. If nothing else I would hope they speed up infrastructure development, they have already given Drury fast track RC

[DazRaz]

So if a commercial landlord has to drop rents during a lock down by over 30% they could then become eligible for a government subsidy.

[Shareguy]

So if a commercial landlord has to drop rents during a lock down by over 30% they could then become eligible for a government subsidy.

Yes they can claim the wage subsidy but not resurgent subsidy. My understanding is that a lot of landlords have reduced by 50 percent, including myself.

[fungus pudding]

Yes they can claim the wage subsidy but not resurgent subsidy. My understanding is that a lot of landlords have reduced by 50 percent, including myself.

What dictates that you 'have to' drop rents? Is it in the lease - is it a voluntary discount (as I gave my tenants) or it just a bad debt if the tenant doen't pay? What if she doesn't pay because she can't?
(What percentage of commercial landlords have wages to pay anyway?)

[Beau]

So if a commercial landlord has to drop rents during a lock down by over 30% they could then become eligible for a government subsidy.

Yes fully agree with that Commercial rents were excluded from claiming but now they should be entitled to Resurgence payment / Wage subsidies. But who would know whether they would include Commercial rentals after all they are running a business trying to get by like any other. Why should Government get involved when it should be up to individual situation to sort after all some tenants are doing nicely at the moment and not disputing that a lot aren’t.

[Waltzing]

"BTJ and this govt is bloody insulting to the memory and stature of the man"

well you mean this add was really no where near good enough for a BTJ skit?

a really poor version of a BTJ skit then? like in the muppets ... Booo.. terrible terrible...

Add not up to the standard set by BTJ? Ok where can i get those reruns. Ask for some reruns on Jones?

Point Taken.

[Habits]

Stan and Ollie movie from 2 years ago was a good one,

[Habits]

Does KPG want to stay a teenie-bopper all of its life, the price cannot get into the twenties. That is fine with me it is only paper gains unless of course I am forced to sell to fund other shares or a "new deck"

[fungus pudding]

Last time I went to a big mall was to collect something I ordered online pay-and-collect. The item had to be shipped from another location, as the shop closest to me did not stock it. For my trouble my car received a ding in the car park. So next time it will definitiely be an online courier delivery and no visit to the mall.
There's always been a price to pay for such dangerous living as going to a shop.

[Beagle]

Yes fully agree with that Commercial rents were excluded from claiming but now they should be entitled to Resurgence payment / Wage subsidies. But who would know whether they would include Commercial rentals after all they are running a business trying to get by like any other. Why should Government get involved when it should be up to individual situation to sort after all some tenants are doing nicely at the moment and not disputing that a lot aren’t.

To me it seems the operation of a commercial property(s) is a legitimate commercial business so if turnover has dropped by more than 30% my read on it is that commercial property landlords should be able to claim the resurgence support and the wage subsidy for employees if the turnover is down by more than 40%. (This should not be misconstrued as professional advice, people should consult their own advisor to double check, no liability is accepted for anyone who acts on this post).

KPG down today is not a surprise. I think its now crystal clear Auckland will be in lockdown level 3 or worse for quite some time to come so the impact on KPG in FY22 in tandem with forced Govt intervention regarding rent concessions will be far worse than FY21. Basically property owners are wide open to left leaning political intervention which may not end where it currently lies which makes it a very tough sector going forward.

I can foresee the Govt mandating zero rent for hospitality business's in lockdown as a possible next move as the screams for help from the hospitality sector get ever more repetitive and shrill.

SP action could get pretty interesting if we go back into lockdown level 4.

[Beau]

To me it seems the operation of a commercial property(s) is a legitimate commercial business so if turnover has dropped by more than 30% my read on it is that commercial property landlords should be able to claim the resurgence support and the wage subsidy for employees if the turnover is down by more than 40%. (This should not be misconstrued as professional advice, people should consult their own advisor to double check, no liability is accepted for anyone who acts on this post).

KPG down today is not a surprise. I think its now crystal clear Auckland will be in lockdown level 3 or worse for quite some time to come so the impact on KPG in FY22 in tandem with forced Govt intervention regarding rent concessions will be far worse than FY21. Basically property owners are wide open to left leaning political intervention which may not end where it currently lies which makes it a very tough sector going forward.

I can foresee the Govt mandating zero rent for hospitality business's in lockdown as a possible next move as the screams for help from the hospitality sector get ever more repetitive and shrill.

SP action could get pretty interesting if we go back into lockdown level 4.

Thanks Beagle / Agree should be the case .
On Government site / Resurgence payment / Eligibility Income that is received passively - such as interest and all dividends, and all forms of residential and commercial rent is excluded.

[Beagle]

Thanks Beagle / Agree should be the case .
On Government site / Resurgence payment / Eligibility Income that is received passively - such as interest and all dividends, and all forms of residential and commercial rent is excluded.

Thanks Beau appreciate you looking into that, must admit nobody has asked me that question before. Seems odd that someone / (a company like KPG) running a bunch of commercial properties with all the work that entails, (I presume all the well paid executives of KPG do actual work), is not considered to be in business but charities are eligible...go figure, that seems bizarre ? https://www.ird.govt.nz/covid-19/business-and-organisations/resurgence-support-payment/eligibility

Yet another example of the Govt's bias against property owners ?...you folks be the judge.

[Habits]

"SP action could get pretty interesting if we go back into lockdown level 4."
And not only the sp action ... the public see these lockdowns are the result of govt screw ups, them not being prepared. Remember the catch cry "short and sharp" 5 day lockdown

[Shareguy]

At a stroke of a pen this government has overturned what was a legally binding agreement. We should all be worried .. what’s next. Can’t see any chance of Auckland going back to level 4 this time as this would not go down well and would be an admission that Auckland perhaps should of stayed in level 4 a bit longer in the first place. After all the gangs are out selling to customers currently, not so easy under level 4.

[Waltzing]

" Govt's bias against property owners"

Its an evil... ownership...private enterprise...

[LaserEyeKiwi]

Good news for retail stocks: government says Auckland could drop to level 2, but with the border control around Auckland remaining in place. I think this signals an intent to drop to level 2 soon, but in a way that keeps Covid ringfenced to just Auckland (and so doesn’t create the impression that they are endangering rest of country by letting Auckland exit level 3 lockdown)

I would guess Oct 11th 11.59pm will be end of level 3.

[LaserEyeKiwi]

Kiwi Property extends Sylvia Park landholding1/10/2021, 8:54 am GENERALKiwi Property advises it has agreed to acquire 385 Mt Wellington Highway, next to Sylvia Park Lifestyle in Auckland, for $27.5 million. Settlement is scheduled to take place on 24 June 2022.
The 7,144 sqm property, which was originally developed as the Hertz building and is currently occupied by the City Impact Church, will be acquired with vacant possession. The high profile site has the potential to accommodate a range of uses, including showroom, office and large format retail.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said: “This strategic acquisition opens up a range of exciting opportunities to the west of Sylvia Park, as we continue to evolve the asset into a world-class mixed-use centre.”
https://www.nzx.com/announcements/380196

[winner69]

Market doesn’t seem to have embraced all the recent news and share price a bit weak.

Property sector per se over priced at the moment relative to 10 year govt bonds so we could see further weakness. It seems the touted KPG discount to NTA is here to stay ….something that’s essentially seen by the market as meaningless …… but gives shareholders some comfort / hope ;)

[LaserEyeKiwi]

Short term is all about Auckland lockdown (despite the minimal impact on KPG) - with government just announcing retail will reopen under “level 3 (step 2)”, which could be as soon as next week - I imagine stock price will react positively and investors will start focusing on the long term prospects.

[Rawz]

Short term is all about Auckland lockdown (despite the minimal impact on KPG) - with government just announcing retail will reopen under “level 3 (step 2)”, which could be as soon as next week - I imagine stock price will react positively and investors will start focusing on the long term prospects.

Market is supposed to be forward looking no? Would have thought step 2 already priced in.

I gave up on my KPG holdings a month or so back. Like W69 says it is apparent the discount is here to stay. I also realized I had more risk appetite and decided to gain property exposure through OCA and am thinking of adding SKC and AIA. I like the idea of investing in companies with large property holdings but also have a business generating cash (casino's, airport).

[fungus pudding]

Market is supposed to be forward looking no? Would have thought step 2 already priced in.

I gave up on my KPG holdings a month or so back. Like W69 says it is apparent the discount is here to stay. I also realized I had more risk appetite and decided to gain property exposure through OCA and am thinking of adding SKC and AIA. I like the idea of investing in companies with large property holdings but also have a business generating cash (casino's, airport).

or better still - tenants.

[LaserEyeKiwi]

Market is supposed to be forward looking no? Would have thought step 2 already priced in.

I gave up on my KPG holdings a month or so back. Like W69 says it is apparent the discount is here to stay. I also realized I had more risk appetite and decided to gain property exposure through OCA and am thinking of adding SKC and AIA. I like the idea of investing in companies with large property holdings but also have a business generating cash (casino's, airport).

but KPG is generating significant cashflow at present, whereas casinos and airports aren’t….?

[LaserEyeKiwi]

or better still - tenants.

Vast majority of KPG tenants are generating normal cashflow - the majority of tenants are government departments, corporate offices, supermarkets etc, and half of their speciality retail tenants are trading (because they are outside Auckland). This is why KPG are paying their upcoming dividend as planned because cashflow is still strong.

[fungus pudding]

Vast majority of KPG tenants are generating normal cashflow - the majority of tenants are government departments, corporate offices, supermarkets etc, and half of their speciality retail tenants are trading (because they are outside Auckland). This is why KPG are paying their upcoming dividend as planned because cashflow is still strong.

Forget about 'cash-flow'. Even 'normal cashflow' can mean a loss and often does. It is revenue, income or profit that matters.

[winner69]

Jeez 10 year govt bonds hit 2.36% yesterday. A year ago they were under

And some economists saying OCR could go to 2.0% next year

Could see the 10 year go over 3%

This could lead to a 25% fall in listed property stocks (from current overvalued levels)

Doubt whether KPG's big discount to NTA will soften a blow of that size

Interesting times ahead

[RTM]

Jeez 10 year govt bonds hit 2.36% yesterday. A year ago they were under

And some economists saying OCR could go to 2.0% next year

Could see the 10 year go over 3%

This could lead to a 25% fall in listed property stocks (from current overvalued levels)

Doubt whether KPG's big discount to NTA will soften a blow of that size

Interesting times ahead

Do you think this will just apply to KPG Winner ?

[winner69]

Do you think this will just apply to KPG Winner ?

If it happen the whole sector will see the 'adjustment'

[Beagle]

Its REALLY tough to know where to hide from higher interest rates and rampant inflation but I know one thing from my previous analysis on KPG...over the long term these shares and returns from them have a profoundly shocking track record of keeping pace with inflation and the rest of the property sector.
Latest Govt announcement out does not specifically provide special treatment for the build to rent sector so interest deductibility for new build to rent is limited to the first 20 years like any other new residential build.

[Waltzing]

they will get sold off but trade in a range as the increase yields and rate go up. Yo Yo.

perhaps not this stock but GMT and ARG are better bets and always have been.

Top in these stocks has probably already been reached for a while.

[Biscuit]

Its REALLY tough to know where to hide from higher interest rates and rampant inflation but I know one thing from my previous analysis on KPG...over the long term these shares and returns from them have a profoundly shocking track record of keeping pace with inflation and the rest of the property sector.
Latest Govt announcement out does not specifically provide special treatment for the build to rent sector so interest deductibility for new build to rent is limited to the first 20 years like any other new residential build.

Yes, most shares will see price pressure from rising interest rates. The build-to-rent model could be adversely affected by proposed changes to consent process making it easier for smaller scale residential development to expand. KPG probably can load debt on other assets to get tax deductibility for interest?

[fungus pudding]

KPG probably can load debt on other assets to get tax deductibility for interest?

What on earth do you mean by that?

[Biscuit]

What on earth do you mean by that?

Well, they don't just own residential property.

[Beagle]

Yes, most shares will see price pressure from rising interest rates. The build-to-rent model could be adversely affected by proposed changes to consent process making it easier for smaller scale residential development to expand. KPG probably can load debt on other assets to get tax deductibility for interest?
Normally the "purpose test" precludes that sort of creativity for most investors.

[fungus pudding]

Well, they don't just own residential property.

They probably don't own any residential property. But that doesn't tell me what you mean by 'KPG probably can load debt on other asetts to get tax deductibility for interest.'
Any mortgage interest for purchasing commercial property will be deductible for them - what they use for security is totally irrelevant. As a company surely they are subject to the same tax laws as you or I are. So I'm trying to work out what you mean. Where do 'other asetts' come into it?

[Rawz]

Fungus pudding the tax man sniffing out tax dodgers lol

[fungus pudding]

Normally the "purpose test" precludes that sort of creativity for most investors.

What sort of creativity? What 'purpose test'? Interest paid by a property investor is a cost, so deductible if borrowing is to purchase income producing real estate (excluding residential).

[Biscuit]

What sort of creativity? What 'purpose test'? Interest paid by a property investor is a cost, so deductible if borrowing is to purchase income producing real estate (excluding residential).

I think you are chasing your tail a bit here FP.

[LaserEyeKiwi]

Not sure what the issue is here - as beagle said new residential builds allow for interest to be fully deducted for 20 years no problem. And yes KPG can issue bonds any time it wants against its existing $3.2 Billion in commercial/retail assets, and has large existing bank credit lines along with ample cashflow.

also it is rather unlikely that a future National Party government won’t reverse that residential interest deductibility rule long before the 20 year period is up (for those that want there to be interest bearing debt against those BTR units in perpetuity.

[fungus pudding]

I think you are chasing your tail a bit here FP.

I simply asked what you meant by KPG probably can load debt on other assets to get tax deductibility for interest? It makes no sense to me.

[Beagle]

Most corporates borrowing when you read the fine print is for "general corporate purposes" so in 20 years time once the initial exemption period runs out in my opinion there may need to be some apportionment of those borrowing costs. I don't want to get into technical area's of the application of tax laws on here or speculate on how or why KPG might apportion interest costs as that's 20 years away.

I went down to New Lynn today to pick up a prescription from the chemist. One bank, one Chemist and one supermarket were open in the whole shopping center. It was like a morgue.
KPG will be getting seriously affected by this longest ever lockdown, anyone who thinks otherwise is an Ostrich with their head in the sand.

[Aaron]

Jeez 10 year govt bonds hit 2.36% yesterday. A year ago they were under

And some economists saying OCR could go to 2.0% next year

Could see the 10 year go over 3%

This could lead to a 25% fall in listed property stocks (from current overvalued levels)

Doubt whether KPG's big discount to NTA will soften a blow of that size

Interesting times ahead

That is the secondary market 2.36% still well below 6%. From .5% in Sept 2020 last year to over 2% now. Is NZ govt 300% more risky? Surely Adrian Orr can print up some dosh and start buying if it gets too high?

Is this the end of a long term interest rate cycle as Ray Dalio tells us.

If I knew the adjustment to higher interest rates was going to be quick I should get out now and buy back in later. That said it could be another 80-90 years before interest rates reach their peak again. Not sure I have that much time so maybe should focus on the shorter term interest rate cycles.

So many questions, in need of some guidance Winner69. Time to sell up and wait till yields improve? Or buy and hold?

[LaserEyeKiwi]

Most corporates borrowing when you read the fine print is for "general corporate purposes" so in 20 years time once the initial exemption period runs out in my opinion there may need to be some apportionment of those borrowing costs. I don't want to get into technical area's of the application of tax laws on here or speculate on how or why KPG might apportion interest costs as that's 20 years away.

I went down to New Lynn today to pick up a prescription from the chemist. One bank, one Chemist and one supermarket were open in the whole shopping center. It was like a morgue.
KPG will be getting seriously affected by this longest ever lockdown, anyone who thinks otherwise is an Ostrich with their head in the sand.

well management aren’t concerned at all, and that’s likely because of everything I laid out below in a post from August (the vast majority of tenants by revenue are still paying KPG 100% of their rent). Speciality stores in Auckland unable to open yet are the minority of revenue, and are still paying rent, albeit some will be getting temporary relief from KPG. Regardless of the minor immediate impact on KPG, this is a soon to pass situation - just as you have rightly pointed out in the HLG thread, which is precisely why the share price has been barely impacted since going into lockdown, even with interest rate rises. On top of that KPG is well on its way to diversifying even further away from retail with BTR & Drury.


Reposting and updating some info that I shared a couple of weeks back:

- Less than half of KPGs tenants are speciality retail stores - and they all are getting more financial support from government than they did during last years lockdown (wage subsidy + lump sum resurgence payments),

- The rest of KPGs tenants are office tenants (most of who are carrying on as normal working from home), government departments and essential stores that remain open (supermarkets, medical etc) - none of whom will require rent relief.

- KPGs retail assets south of Auckland will be reopening fully on Wednesday (initially for click and collect and takeaway food operations), further reducing likelihood of rent relief to those speciality businesses - and if Level 2 arrives next week then even better.

- The income from “regional malls” like Northlands in Christchurch & The Plaza in Palmerston North (currently listed as “held for sale’) is not actually accounted for in KPG annual guidance. KPG management has said the longer these assets remain on their books, then the higher profits will be in the short term. So important to keep in mind that those regional malls are reopening fully shortly and have and will continue to be generating cashflow while they remain unsold, which will help counteract any rent relief payments that may occur in the Auckland assets. This is in addition of course to all of the continued uninterrupted cashflow being generated from KPGs commercial office assets nationwide, along with the cashflow from the large essential large anchor tenant stores (supermarkets etc obviously).

I think Auckland will likely be in level 4 for another few weeks at least, but I think the market has learnt that this is transient and a relatively minor concern long term for KPG. Especially as retail post lockdown has proved very resilient - if not outright booming - there have been no waves of retail bankruptcies, there have been no drop in retail rental yields (they have actually increased rents), there has in fact been more investment in retail assets across New Zealand.

This is the reason KPGs share price has essentially just seen a blip lower in this latest outbreak (remember it dropped to 83c last year when everyone was freaking out).

12899

[Beagle]

KPG v ARG - a 5 year perspective.
KPG 5 years ago ~ $1.50, today $1.15
ARG 5 years ago ~ $1.00, today $1.61

LEK tells us it will be different going forward. The dog believes a lot can be learned looking at the big picture of the last 5 years and thinks not much will change going forward in terms of their relative future performance.

Is KPG a good place to hide from the rapidly increasing rate of inflation ? Consider this. On 30 June 1997, more than 24 years ago KPG's share price was $1.15 exactly the same as it is today.
Do you know any other property investment that hasn't gone up at all in the last 24 years ?

By way of stark contrast another property investment is worth 55 times its price over the same time. Original investors in the RYM IPO. I leave you good folks to judge for yourself which business model and management have worked better for their investors but the way I see it is that
The long term picture clearly defines KPG as a profoundly epic fail as a property investment.

Some will have you believe it will be different going forward. Some people still believe in the tooth fairy.

[LaserEyeKiwi]

KPG v ARG - a 5 year perspective.
KPG 5 years ago ~ $1.50, today $1.15
ARG 5 years ago ~ $1.00, today $1.61

LEK tells us it will be different going forward. The dog believes a lot can be learned looking at the big picture of the last 5 years and thinks not much will change going forward in terms of their relative future performance.

Is KPG a good place to hide from the rapidly increasing rate of inflation ? Consider this. On 30 June 1997, more than 24 years ago KPG's share price was $1.15 exactly the same as it is today.
Do you know any other property investment that hasn't gone up at all in the last 24 years ?

By way of stark contrast another property investment is worth 55 times its price over the same time. Original investors in the RYM IPO. I leave you good folks to judge for yourself which business model and management have worked better for their investors but the way I see it is that
The long term picture clearly defines KPG as a profoundly epic fail as a property investment.

Some will have you believe it will be different going forward. Some people still believe in the tooth fairy.

lol ok Beagle agree to disagree.

[Entrep]

Thank god you sold right Beagle

[Waltzing]

"Ostrich with their head in the sand"

Kiwi in the Dark...

ARRRR G...

[fungus pudding]

"Ostrich with their head in the sand"

Kiwi in the Dark...

ARRRR G...

Interesting. Do any of those three lines relate to anything?

[LaserEyeKiwi]

Excellent news with this mornings new Covid framework announcement!

- retail will be open under every alert level
- more than doubling of resurgence payments to impacted businesses
- increased hardship support for minimum wage workers, meaning even a couple both working 40 hours on minimum wage will be getting extra payments if needed.
- enforced vaccination requirements to enter many establishments mean confidence for people to patronize premises

[LaserEyeKiwi]

The Spice must flow!

KPG retail properties will all be open November 9th.

[winner69]

Jarden says property sector been a disappointment of late. Media report

Property stocks outperformed the index in October, falling just 0.6%, even as bond yields climbed. Low-interest rates have been a positive for the sector as they ensure the cost of borrowing for investment is kept low. Despite this, today Jarden analysts said the sector’s performance had been “disappointing through the lower interest rate cycle” and interest rates moving higher the analysts trimmed 3% to 5% from their target prices for stocks in the sector.

[Waltzing]

money moving out of REITS as bond yield rise.

[Waltzing]

central hamilton might as well have been a ghost town this afternoon... malls hardly a sole..

not quite tumble weed..and looks like work will commence on the new concert venue.

[winner69]

Precincts comments about rent holidays and some tenants going broke etc etc spooked the market …and the worry about steep interest rate rises not helping either

Close today 114 … 52 week low coming up next week I fear

[Waltzing]

Yes a Rabbit out of a Hat is required for Auckland... ARG under 1.50 will be a steal to NTA but not if OCR's hit 3. Fear that 1,70 was a sell and wont be seen again for a long time.

These stocks could now be DIV trades.

[LaserEyeKiwi]

Queues already forming outside of Sylvia Park as Aucklanders want there first chance to get into the new JD Sports superstore at midnight tonight.

https://www.nzherald.co.nz/nz/covid-19-delta-outbreak-people-already-lining-up-outside-auckland-shopping-mall/JEDF6GUFUYI3KXMQVFOKYCBQHA/

Pretty great advertising promotion from JD here.

[SPC]

Given that the products these types of store sell, the country of manufacture and eyewatering margins applied I suspect the real cost of the freebie to the retailer is closer to $10...

[Waltzing]

Pretty bleak looking inside centre place today.

not quite empty...hamilton cbd really looks bleak..

really auckland should have been released weeks ago. Business has just got mugged and the bill for all this just ends up back with business in the next 5 years anyway while the non private sector lives off the debt.

women personal trainer who votes labour wanted the gymn opened weeks ago with limited numbers of only vaccinated athletes.

its criminal the smart money will move out to other countries. Forget this overnight, not likely its a lesson for private investors that NZ is not a place that prioritizes business.

[winner69]

Mall REITs: Survive and Advance

And a bit about US consumer behaviour these days

https://seekingalpha.com/article/4467877-mall-reits-survive-and-advance

[winner69]

Share price creeping slowly down to $1.00

[Waltzing]

w(n) you put the kiss of ... on it...

got to be a buy at that although MR B still would not touch it with a long pole.

Well freedom day for Central North Island WED DAY.

Clear skies get out there people..

[LaserEyeKiwi]

Share price creeping slowly down to $1.00

nah - its very clearly in a very tight few cent trading range for months:

13217

[winner69]

Nice chart LEK ....but seems to be heading south to me ….as per my arrow.

I did say slowly ...and $1 is on the cards

[Rawz]

If it went to anything below $1.05 id be back in.

[Beagle]

Bringing up a 6 month chart the trend certainly looks ominous. Quite aside from that my previous clearly articulated opinion of management remains.
This is not a good place to try and hide from the effects of inflation as the level of returns and NTA over the last two decades in inflation adjusted terms show this company and its management up as total failures. Investing here long term will lead to very serious underperformance compared to any other listed property company in my opinion.

I put it to you folks the discount to NTA is an illusion. Take 30-40 cents per share off NTA for the negative DCF cost of the systematic handbrake of ongoing management incompetence for a start.

[Biscuit]

...... Investing here long term will lead to very serious underperformance compared to any other listed property company in my opinion....

:ohmy: not looking too bad compared to oca though...

https://www.directbroking.co.nz/DirectTrade/dynamic/chart.aspx?key=TWSxQ9LamJIzV1uJrZO2uA2qtWm5JHIppLP HctqeNOd6hRodRMs1DyMePJuh5cg6bwW0C6H%2fYqz7KfoNHQb QOyIKO1IUNhVSi%2fyfiIX7E6qHRIAPNCqlPrYjcEwku9HYlsq Dz1wGhvW76uuW6VPKIexYyO5sJVEl5SETam6xGVQYxPCgT%2f% 2b4B10PXve8ERALYRpamO4ZhkpucTCV553tbjbX8UZolEddNae bI0Z%2fyz3nWYcITzBQ2W0H2sM2XjUlz5EUwayZX%2bMu1LAe% 2f5z7fKSOvIm6lxNjiAtDaUCV1z7uHIvUl8BnwXI0upmWwuS1s 3pl0%2bxqoFAeCYFM%2fr6xshJX44uRYZ3eFoBjJqATnwU%3d

[Beagle]

3 months is not long term.

[Biscuit]

3 months is not long term.

No, and I don't necessarily disagree with some of your criticism of KPG. Long term, historically, KPG have been quite cyclical. They've done pretty well in the good times and then been knocked right back in the bad times. Their sp grew quite well from 2000 up until the GFC and was then knocked back to where it was 10 years prior. After the GFC, the sp was growing reasonably well right up to covid when it was knocked right back below where it had been 20 years ago. Arguably, its sp is recovering post covid albeit with a tepid bounce to this point. So, its a property company that weirdly behaves like a cyclical company. Not then a good investment if we are about to go into a recession. But are we? Are we not about to burst out of covid into the sunlit uplands of retail therapy, international travel and business expansion? Shouldn't we expect KPG to do quite well in that environment as it has in the past?

If you compare KPG sp with say GMT, their performance is pretty much identical historically right up until covid. KPG's recovery from covid is delayed/muted compared to GMT, presumably because of the greater effect of covid on retail. Are you better to buy the company whose sp has recovered or the company whose sp is about to recover?

[winner69]

KPG heading to $1 ....maybe even lower

I've always found the chart chart below useful - Listed Property stocks as per NPF and 10 Year Govt stock relationship (62% correlation is pretty strong)

Currently it's showing listed property stocks (collectively) are about 25% to 30% over valued

So 25% off KPG share price is $0.85 ........but heck they are so out of kilter valuation wise v peers lets be generous and say the impact of a rerating of property stocks might hurt them so much and say only 12% down ...... hey presto KPG $1.00

What a load of crap eh ..... this time things are different ......but I have faith and confidence in my analysis

[Beagle]

Gosh you make it sound like spring has broken out in rural canterbury, the lambs are bleating to their mothers, the lush green grass is everywhere, a land of milk and honey where dairy has broken through $9 kilo and rural utopia has arrived. Sounds absolutely wonderful...I'd get on the next plane down there if I could and probably buy a house there too.

Alas my friend I can reliably tell you that the mood in the wider Auckland region where its ~ 2 million inhabitants have been treated like caged animals for so long they can't remember is very very different. Somber doesn't even begin to describe it.

What you have nicely embraced with your comparison between GMT and KPG is the transition toward online retail. GMT serve online retail and can barely get enough warehouses built. KPG malls are not going to go back to 2019 level's of activity anytime soon. The bounce-back we experienced this time last year isn't going to happen in physical stores.
Last year we bounced back into a covid free environment, that was utopia. This time we're opening up into an epidemic environment are people are going to be FAR more careful about where they go. That's how I see it anyway...but I do understand from your point of view in your part of the world things must look very different.

You have to have lived this soul destroying endless groundhog day existence to know what its effect has been on people. Its literally impossible for me to explain it to you. Are we headed for a recession ? Yes I think we are.

P.S. Just saw Winner's chart above, its looks ominous. At the risk of being excessively dogmatic its impossible for me to overstate how serious it is that KPG's directors and management are really making no attempt to keep their dividends at pace with inflation. In fact quite the opposite, they keep going down over the years. Listening into the last call, its clear they have no plan whatsoever to fix this other than a simple build it and they will come. Food for thought. How's that been working out for them in the last decade ?

PPS Yes watching OCA's share price over the last few months has also been a sobering experience.

[Justin]

how about mck？

[Biscuit]

......What you have nicely embraced with your comparison between GMT and KPG is the transition toward online retail. GMT serve online retail and can barely get enough warehouses built. KPG malls are not going to go back to 2019 level's of activity anytime soon. .........

Betting against major trends is never going to work out well, that's for sure. I'm not gregarious and have never liked malls but isn't that something people want, a shopping destination? Not all the evidence suggests mall retail is doomed:

Shopping Malls, Dismissed as Dead, May Be Making a Comeback | Cities | US News (https://www.usnews.com/news/cities/articles/2021-07-28/shopping-malls-dismissed-as-dead-may-be-making-a-comeback)

[fungus pudding]

Betting against major trends is never going to work out well, that's for sure. I'm not gregarious and have never liked malls but isn't that something people want, a shopping destination? Not all the evidence suggests mall retail is doomed:

Shopping Malls, Dismissed as Dead, May Be Making a Comeback | Cities | US News (https://www.usnews.com/news/cities/articles/2021-07-28/shopping-malls-dismissed-as-dead-may-be-making-a-comeback)

Nothing attracts people like other people. Add in the 'need' to get out of the house occasionally. Online shopping will kill conventional retail just like television was going to spell the end of movie theatres.

[winner69]

Chances are share price will break out of that tight trading range shown above tomorrow …. to the downside

[LaserEyeKiwi]

Chances are share price will break out of that tight trading range shown above tomorrow …. to the downside

Earnings result next week - I would say that would be the big move catalyst. Property revaluation and dividend confirmation inbound - could that lead to a break lower rather than than higher? Never say never I suppose. Bear in mind the stock price is already sitting well below the current $1.36 NTA per share value, and that NTA is likely heading higher next week.

[Grimy]

Lynn Mall was quiet this morning (admittedly before 10am) and I asked the staff member at Farmers how business had been since reopening. She said it had been quite steady. By 11am the place was looking a lot busier with the carpark reasonably full. Mitre 10 just around the corner didn't have a spare space in the carpark.

[Waltzing]

Hamilton busy today, traffic volume up and malls busier obviously everyone wearing masks in centre place, movies open.

Streets and shops in the centre place area looked pretty back to normal day.

One hopes the management understand there share price has gone nowhere in a decade and MR B's future predictions dont come to pass.

[LaserEyeKiwi]

One hopes the management understand there share price has gone nowhere in a decade and MR B's future predictions dont come to pass.

KPG from 2009-2019 had paid out 76c per share in dividends and increased the share price from 95c on April 1st 2009 to $1.48 on April 1st 2019 for a total return over that period of 136%. And that was despite the Christchurch & Wellington earthquakes causing significant costs to the business in terms of unexpected capex costs & lost income.

(The return from 2009 to 2019 would have been 156% if you had used the ATH share price from Sep 2019, but I use Apr 1st opening price for consistency as the start of the financial year)

Even looking at the most recent result: after Covid hammered the share price amid unfounded fears about retails future (and a one-off dividend cancellation) the returns from 2011 Apr 1st to 2021 Apr 1st period is 94%.

[Waltzing]

Ok you laser eyed computational investor...

Share price 2003 , 1.03, SP today 1.12.

This might be what MR B is Barking about?

[Rawz]

I used to be a believer in this stock. But sold out because of the woeful growth as Beagle and others pointed out.

Funny thing is i transferred sale proceeds mostly to OCA and they doing much worse lol

[LaserEyeKiwi]

Ok you laser eyed computational investor...

Share price 2003 , 1.03, SP today 1.12.

This might be what MR B is Barking about?

In a recent annual report KPG noted the annual return had averaged 9.2% since it listed. Most of that is from dividends of course, but thats what has undoubtedly has been the vast majority of the returns for shareholders rather than the share price.

[winner69]

Earnings result next week - I would say that would be the big move catalyst. Property revaluation and dividend confirmation inbound - could that lead to a break lower rather than than higher? Never say never I suppose. Bear in mind the stock price is already sitting well below the current $1.36 NTA per share value, and that NTA is likely heading higher next week.

Now 112 - close at that and that trading range is (if it ever existed) is no more

Next weeks announcement now has to be a 'bigger mover catalyst' than it was going to be

Heading to $1

[Rawz]

Now 112 - close at that and that trading range is (if it ever existed) is no more

Next weeks announcement now has to be a 'bigger mover catalyst' than it was going to be

Heading to $1

W69, you'd be a buyer at $1 ay? Pretty good value there

[winner69]

W69, you'd be a buyer at $1 ay? Pretty good value there

Nice round number --- often round numbers act as support / resistance

But if 5 year govt stock goes up more 90 cents on the cards

Survey of Expectations out 3pm today - that could be a good guide

[Waltzing]

W(N) , says a dollar.

Did that beat down MR B or did he not give a range.

Charting according to O Neil which was always a book at ones side taught one to draw the line under the bottom channel not the top. Although the charts from that era are incredibly complex. Lotus 123 1.0 with the French graphic addon was a pretty mean fast charting solution when it first came out. You had to get the Addon from france of course and i bought it back...to amsterdam.

[Beagle]

In a recent annual report KPG noted the annual return had averaged 9.2% since it listed. Most of that is from dividends of course, but thats what has undoubtedly has been the vast majority of the returns for shareholders rather than the share price.

I call complete B.S. on that.


Ok you laser eyed computational investor...

Share price 2003 , 1.03, SP today 1.12.

This might be what MR B is Barking about?

31 March 1994 the share price was $1.18.
https://www.rbnz.govt.nz/monetary-policy/inflation-calculator/
To keep pace with general inflation (CPI) the share price according to the RBNZ inflation calculator should be $2.11 so in real inflation adjusted terms its ~ half what it was 27 years ago.

But wait there's a LOT more. How bad is that relative to say an investment in the housing market. House price gains since then off the same RBNZ calculator means anyone investing in housing has seen their $1.18 value climb to $7.89 !

KPG as a property stock has been a complete failure ! Sorry mate i don;t have price targets for uninvestable stocks.

[Waltzing]

It's bouncing .5 ...

some investors cry... but the pros just laugh...

trading range 1.10 to 1.23

when a stock continues to pay a DIV is not bankrupt.. but doesnt increase its NPAT or Div it can stay in a channel and then it moves from an investment stock to a trade as Guy Adami would say, its a range trade.

[LaserEyeKiwi]

I call complete B.S. on that.



31 March 1994 the share price was $1.18.
https://www.rbnz.govt.nz/monetary-policy/inflation-calculator/
To keep pace with general inflation (CPI) the share price according to the RBNZ inflation calculator should be $2.11 so in real inflation adjusted terms its ~ half what it was 27 years ago.

But wait there's a LOT more. How bad is that relative to say an investment in the housing market. House price gains since then off the same RBNZ calculator means anyone investing in housing has seen their $1.18 value climb to $7.89 !

KPG as a property stock has been a complete failure ! Sorry mate i don;t have price targets for uninvestable stocks.

Your calling BS on a factual statement on an NZX submitted annual report document? (It was page 35 of the 2018 Annual report citing 9.3% long term average total return per annum for KPG)

Your residential property figure return is a compounded figure (its mostly the capital value increasing) so not at all comparable to an investment return in a company unless you include all dividends reinvested - KPG return with dividends reinvested would be several hundred percent, not as good as property of course, but nothing to sneeze at.

Yes residential property has been a phenomenal return, which i duly participated in. Any penny invested in any other investment class was usually pretty crap return compared to NZ residential property - doesn’t mean we should have all invested 100% in residential property (unless you could see the future with certainty of course).

Just like dividend returns from KPG or dozens of other NZX listed dividend payers have returned far better than a bank savings account interest rates over the same period, I likewise wouldn’t have advised everyone with a bank savings account to go 100% into listed dividend payers either. Property vs shares vs banks savings accounts have entirely different risk profiles of course, and each can be part of a diversified investment and/or income portfolio.

[winner69]

Your calling BS on a factual statement on an NZX submitted annual report document? (It was page 35 of the 2018 Annual report citing 9.3% long term average total return per annum for KPG)


I see they have stopped showing such returns now ......hmmm

The 9.3% ap probably assumed dividends were reinvested ....always helps TSR returns

[winner69]

Number of people fleeing Auckland (migrating) ever increasing.

And with no immigrants coming in from overseas it looks like there might not be many punters going to Sylvia Park and Lynn Mall soon

[Rawz]

Number of people fleeing Auckland (migrating) ever increasing.

And with no immigrants coming in from overseas it looks like there might not be many punters going to Sylvia Park and Lynn Mall soon

W69 you stirrer- trying to get a reaction out of poor ole mate LEK :p

You saying Auckland's population is going to decrease going forward? LOL

Bill Gates says covid deaths may drop to flu levels by mid 2022. Covid has had a good run but time we start looking past it.

https://www.bloomberg.com/news/articles/2021-11-18/gates-says-covid-deaths-may-drop-to-flu-levels-by-mid-2022

[winner69]

W69 you stirrer- trying to get a reaction out of poor ole mate LEK :p

You saying Auckland's population is going to decrease going forward? LOL

Bill Gates says covid deaths may drop to flu levels by mid 2022. Covid has had a good run but time we start looking past it.

https://www.bloomberg.com/news/articles/2021-11-18/gates-says-covid-deaths-may-drop-to-flu-levels-by-mid-2022


Not a trend yet but .....

Stats NZ said this last month - In the wake of the COVID-19 pandemic, New Zealand’s population growth slowed down with Auckland recording a population decline for the first time ever, Stats NZ said today.

My geography knowledge of Auckland not the best but the catchment areas where KPG malls are seemed to be worst affected and places like Rodney booming

[Rawz]

'First time ever', 'in the wake of the covid-19 pandemic'.

Its a small blip on a long term trend that will always continue upwards. Auckland will always grow as it is the engine room of the economy. There are a lot of corporate and industrial jobs that will only ever be in Auckland.

Ive recently moved from central auckland suburbs to the eastern beaches. But will still travel to Sylvia park with the family for an outing (shopping + lunch). Its a destination mall. And a 30min drive is nothing for us aucklanders, we are use to it.

Dont see an issue.

The only issue for KPG is its terrible nta growth over the years.

[Beagle]

Not a trend yet but .....

Stats NZ said this last month - In the wake of the COVID-19 pandemic, New Zealand’s population growth slowed down with Auckland recording a population decline for the first time ever, Stats NZ said today.

My geography knowledge of Auckland not the best but the catchment areas where KPG malls are seemed to be worst affected and places like Rodney booming

I've never been keener to leave Auckland permanently. Somewhere nice and quiet by the sea in the Bay of Plenty would be nice.
By the time we get around to it there will probably be no buyers left for our current mansion.

[dibble]

Number of people fleeing Auckland (migrating) ever increasing.

And with no immigrants coming in from overseas

I find that odd given MIQ is chugging out a few thousand a fortnight, most of whom Id wager are not kiwis returning from a short holiday.
If the maths is true I wonder who's leaving and I wonder how they count the pop of Akl between censuses.
All quite questionable.

Long term trend, Akl pop will never decrease without a catastrophe, therefore nor will house prices and nor will people stop shopping. So quite a canny move building a bunch of apartments full of shoppers on top of your shopping mall.

Not the happiest of holders but will probably ride this sluggish train a bit longer.

[winner69]

…..
Auckland will always grow as it is the engine room of the economy. There are a lot of corporate and industrial jobs that will only ever be in Auckland. .

Engine room of the economy …..fact or fallacy?

Not much real stuff actually made / produced in Auckland ….lot of burger flippers and baristas and they mainly do that for the locals …unproductive locals who spend a lot of the day in traffic jams.

I’m sure the primary sector would say they were the engine room of the economy

But then again I’m not an Aucklander

[dibble]

Engine room of the economy …..fact or fallacy?

I’m sure the primary sector would say they were the engine room of the economy

r

Who do you think earns more, dairy farmer from putaruru or a middle manager in Fonterra's gleaming new near-waterfront HQ?
Who knows what Theo Thingy did with his 5 years of CEO pay but fair to say that's 35-40m that was happily sucked from rural NZ.

Might not be the engine room in terms of hard work but it is ticket-clipper central and those are the people whose kids go to Silvia Park (not Theo obviously)

[Rawz]

Engine room of the economy …..fact or fallacy?

Not much real stuff actually made / produced in Auckland ….lot of burger flippers and baristas and they mainly do that for the locals …unproductive locals who spend a lot of the day in traffic jams.

I’m sure the primary sector would say they were the engine room of the economy

But then again I’m not an Aucklander

Common mate without Auckland and all our tax receipts all your roads would have pot holes in them and you would be experiencing power cuts on and off.

Does the south island have internet down there yet? Someone send them a fax with the wifi password :lol:

[LaserEyeKiwi]

Excellent result:


KPG reports 164% profit growth, delivers on strategy


22/11/2021, 8:30 am
• Net profit after tax: $143.2m (+164.1% on the prior comparable period (pcp))
• Investment property fair value movement: +$93.6m (+2.8%)
• Net tangible assets per share: $1.42 (+6 cents per share (cps))
• Net rental income: $94.0m (+11.5% on pcp)
• Operating profit before tax [Note 1]: $62.5m (+8.0% on pcp)
• Adjusted funds from operations [Note 1]: 3.06cps (+31.6% on pcp)
• Gearing: 30.7% (FY21 31.2%)
• Interim dividend: 2.75cps

Kiwi Property today announced a robust financial result for the six months ended 30 September 2021, reporting an uplift in all key operating metrics on the prior comparable period, including growth in income, profitability, asset values and interim dividend, despite the impact of COVID-19.

Net profit after tax was $143.2 million, up 164.1% on the same time last year, underpinned by a $93.6 million increase in the fair value of the company’s investment properties. Operating profit before tax rose 8.0% to $62.5 million, driven by an increase in net rental income, which grew 11.5% to $94.0 million.

Kiwi Property’s mixed-use, office and other properties were worth $3.5 billion as at 30 September 2021, up 2.8%, highlighting the strength of the company’s portfolio. Office was once again the highest performing of the asset classes recording a fair value gain of 4.9% to $1.1 billion. Kiwi Property’s mixed-use portfolio, including Sylvia Park, LynnMall and The Base, also experienced a valuation uplift, climbing 2.5% to $1.7 billion.

Kiwi Property Chief Executive Officer, Clive Mackenzie said the company’s solid half-year performance was particularly pleasing given the financial headwinds caused by the pandemic.

“Kiwi Property’s financial position and diversified property portfolio have remained resilient, despite the impact of COVID-19. The opening of the Sylvia Park Level 1 expansion had a positive impact on sales, driving increases in both income and operating profit. We’re operating in a challenging market and the full financial impact of recent lockdowns won’t be known until the second half of our financial year. We enter that period in good shape though, well placed to tackle whatever comes next.”

Resilient tenant portfolio

Recent COVID-19 lockdowns have placed a number of businesses under significant pressure. Kiwi Property is committed to sharing a fair proportion of the financial impact of the pandemic and supporting its small and medium sized tenants, in particular, to successfully navigate the pandemic. A $7.4 million rent relief provision was recorded in the first half of the financial year and a similar cost is expected for the second half [Note 2].

Kiwi Property’s customer-centric approach has enabled the company to minimise vacancy, maintain productive shopping centres, and helped safeguard the long-term performance of the company’s assets. At the half-year, Kiwi Property’s assets were 99.8% occupied, with a robust weighted average lease expiry of 5.2 years and rental growth of approximately 3.0%.

Delivering on strategy

“Over the past six months we’ve made significant progress on our mixed-use ambition; breaking ground on new developments, launching a new asset class and identifying new funding streams,” said Mackenzie.

“Despite the volatile macro-economic climate, our evolution into a creator of integrated retail, office and residential communities has more momentum than ever,” he added.

Build-to-rent

Kiwi Property has begun construction of New Zealand’s first major build-to-rent development, marking an important milestone in the delivery of the company’s mixed-use strategy. The $221 million, 295 apartment complex will be located at Sylvia Park in Auckland, accelerating the site’s evolution into an integrated retail, office and residential community. The development has a target stabilised net yield of approximately 4.5% and 10 year property internal rate of return of over 8.0%.

“Build-to-rent is poised to become an important part of our portfolio, further diversifying our asset base, unlocking growth and promoting valuation uplift. With our large mixed-use landholdings, including Sylvia Park and LynnMall, we’re in a unique position to deliver build-to-rent at scale in this country. Based on current plans, more than 1,200 residential apartments could potentially be added to Sylvia Park in the next decade,” said Mackenzie.

LynnMall

Resource consent has been obtained for a 25 level mixed-use development at LynnMall, which will integrate a compelling combination of ground floor retail, three commercial office levels and a 19 floor build-to-rent tower.

Located on LynnMall’s south west corner, the proposed mixed-use development is expected to become the tallest structure in west Auckland, making it a distinctive and iconic landmark. Construction of the development could begin as early as 2022, pending funding and approval.

Sustainability

Kiwi Property continues to make substantive progress on its sustainability journey, with the Global Real Estate Benchmark (GRESB) awarding the company a score of 80 (out of 100) for its Environmental, Social and Governance (ESG) performance in 2021, a strong result for a first time participant. This achievement places Kiwi Property among an impressive group of real estate organisations and sets a solid platform for further progress.

In addition, the company has supported Waikato-Tainui and the Waikato District Health Board to establish the region’s largest vaccination centre at Te Awa, The Base. More than 50,000 vaccinations have been administered at the facility since it opened in July.

Dividend and outlook

Kiwi Property will pay an interim dividend of 2.75 cents per share for the period ended 30 September 2021. Despite the expected cost of COVID-19 rental abatements, the company continues to target a total dividend of no less than 5.30 cps [Note 3] for the 2022 financial year, up from 5.15 cps the year before.

Outlook

Kiwi Property Chair, Mark Ford said “Kiwi Property took a number of important steps forward in the delivery of its strategy over the past six months. Our priority is to maintain this pace of execution, while continuing to unlock additional growth and development opportunities. COVID-19 will invariably cause challenges in the months ahead, but we will tackle them head-on, as we continue striving to create long-term value for our shareholders and other stakeholders.”

[winner69]

Excellent result:

Hope it does something to the share price eh

NTA up 6 cents to $1.42 ….suppose that’s good

[SPC]

Beagle put that bone down and pay attention!

[LaserEyeKiwi]

EPS for the 6 months was 9.12cps.

[winner69]

EPS for the 6 months was 9.12cps.


And 5.76cps of that were property revaluations

[winner69]

Often when starting to look through Annual and Interim Reports I look at the photos of the top brass and say to myself ‘would I trust these guys looking after my money’

Didn’t get very far into the latest KPG report

ps: at least Chair had a tie on

[NZSilver]

Pretty good result, improvement on operating profit including impairment for rent abatement. I like the projects they have planned whihc will boost earning and therefore div long-term. Probably will get a little boost in shareprice but I doubt it will be much. Just steady as she goes

[Beagle]

Often when starting to look through PayPal Annual and Interim Reports I look at the photos of the top brass and say to myself ‘would I trust these guys looking after my money’

Didn’t get very far into the latest KPG report

ps: at least Chair had a tie on

I thought the numbers are pretty lame. Better off swimming with the tide than against it http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GMT/382671/359011.pdf

[LaserEyeKiwi]

I thought the numbers are pretty lame. Better off swimming with the tide than against it http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/GMT/382671/359011.pdf

Why would anyone pay well over twice the share price for the same dividend payout per share?

KPG paying 2.75cps interim dividend - KPG is $1.14 share price
GMT paying 2.75cps interim dividend - GMT is $2.49 share price

That’s a horrible value and dividend yield on GMT.

Also GMT is trading at 100% its NTA value, while KPG trades at a 25% discount currently.

[Beagle]

Why would anyone pay well over twice the share price for HALF the dividend payout per share?

KPG paying 2.75cps interim dividend - KPG is $1.14 share price
GMT paying 1.375cps interim dividend - GMT is $2.49 share price

That’s a horrible value and dividend yield on GMT.

Also GMT is trading at 100% its NTA value, while KPG trades at a 25% discount currently.

In a word "Growth" Growth in NTA over the years and growth through developments.

GMT up ~ 100% in the last 5 years KPG down 20%. Bring up a comparison chart for yourself if you don't believe me.
As I said earlier, you can either swim with the tide or swim against it.

[LaserEyeKiwi]

In a word "Growth" Growth in NTA over the years and growth through developments.

GMT up ~ 100% in the last 5 years KPG down 20%. Bring up a comparison chart for yourself if you don't believe me.
As I said earlier, you can either swim with the tide or swim against it.

GMT share price has only grown 56% since 2007 and paid pitiful dividends. That’s pretty pathetic growth when you were just the other day pointing out how good residential property growth has been over the same period.

total shareholder return (including reinvested dividends) actually favors KPG over GMT over that timeframe.

[Beagle]

GMT share price has only grown 56% since 2007 and paid pitiful dividends. That’s pretty pathetic growth when you were just the other day pointing out how good residential property growth has been over the same period.

total shareholder return (including reinvested dividends) actually favors KPG over GMT over that timeframe.
KPG were $1.63 in mid 2007 (29/6/2007) so I find your statement hard to believe.

[Waltzing]

if you bought GMT in 2017 and then doubled your money.

GMT has been the goto SP capital gain in this recent time frame.

It was bought as a defensive stock as ARG was.

They should be priced on future NTA but they arnt.

Other companies pay little in the way of DIV but are valued on other metrics.

EBOS, FPH, and the big techs.

[Norwest]

Why would anyone pay well over twice the share price for the same dividend payout per share?

KPG paying 2.75cps interim dividend - KPG is $1.14 share price
GMT paying 2.75cps interim dividend - GMT is $2.49 share price

That’s a horrible value and dividend yield on GMT.

Also GMT is trading at 100% its NTA value, while KPG trades at a 25% discount currently.

GMT has a Lower AFFO and Lower LVR which you need to take into account.

[WAIKEN]

Shares are often valued subjectively
My best gains have always come from looking at black sheep objectively and not worrying about why other market participants may have mispriced them Eg Buying
MET at around half of NTA.
OCA post initial covid scare plunge
STU earlier this year with no debt and reaping the benefits of a building boom
ALF at 0.50 when all the benefits re NZL were in the public domain
CDL at 0.78 which was a substantial discount to true NTA as book value of land is well under the independent valuation hidden in the notes
MCK Still under half NTA
EVO Which has doubled in value for me and will go higher. Why? The major stakeholders pedigree. Many posters never grasped that the company became a totally new entity when the useless board was sacked, capital was injected and they tilted to Australia
Numerous examples on the ASX
It is a waste of energy defending stocks we love and attacking stocks we hate.
I could never convince Beagle of EVOs potential in the past and not even now when its path is opening up. Likewise it is of no avail to try to convince him that KPG will move towards NTA and the diversification into residential investments is inspired.

[Beagle]

Shares are often valued subjectively
My best gains have always come from looking at black sheep objectively and not worrying about why other market participants may have mispriced them Eg Buying
MET at around half of NTA.
OCA post initial covid scare plunge
STU earlier this year with no debt and reaping the benefits of a building boom
ALF at 0.50 when all the benefits re NZL were in the public domain
CDL at 0.78 which was a substantial discount to true NTA as book value of land is well under the independent valuation hidden in the notes
MCK Still under half NTA
EVO Which has doubled in value for me and will go higher. Why? The major stakeholders pedigree. Many posters never grasped that the company became a totally new entity when the useless board was sacked, capital was injected and they tilted to Australia
Numerous examples on the ASX
It is a waste of energy defending stocks we love and attacking stocks we hate.
I could never convince Beagle of EVOs potential in the past and not even now when its path is opening up. Likewise it is of no avail to try to convince him that KPG will move towards NTA and the diversification into residential investments is inspired.
54 posts in 7 years ? Please don't be offended but this place would be like a morgue if we all "contributed" the same amount as you.
Its through the process of robust debate and comparison that others gain value from this site.
What you see as a waste of time, others see as gleaning important information about the nuances of comparing different sector players.
Good luck with your EVO shares.

[fungus pudding]

54 posts in 7 years ? Please don't be offended but this place would be like a morgue if we all "contributed" the same amount as you.
Its through the process of robust debate and comparison that others gain value from this site.
What you see as a waste of time, others see as gleaning important information about the nuances of comparing different sector players.
Good luck with your EVO shares.

Out of interest I checked and found I've made 5,500 over more than a decade. Not one single one of them any use to anybody at all.

[Beagle]

Out of interest I checked and found I've made 5,500 over more than a decade. Not one single one of them any use to anybody at all.

I don't know about that mate.

[fungus pudding]

I don't know about that mate.

Alright - there might have been one a few years back...........

[WAIKEN]

Hi Beagle
You are allowed to be wrong about stocks. To err is human, to forgive divine
You were wrong about EVO even when Chris Scott had poured in millions and his expertise when the price was in ICU.
I hold stocks for 5 to 10years so unlike you I don't tend to monitor them on a daily basis or post about them.
Hopefully we can have another pleasant exchange before KPG reaches its potential or is taken over in 5 years time.
Good luck with your self appointed position as watch dog of this share forum.

[dibble]

...and back to KPG, from a few posts back some figues on "build to rent":

"...The $221 million, 295 apartment complex ...target stabilised net yield of approximately 4.5% and 10 year property internal rate of return of over 8.0%."

My mathematomator suggests that costs around $1m per apartment if you include a bit for land. Which suggests a sales price of well over $1m, say 1.2m (for 20% margin) and thus rent of $54k pa AFTER various landlord costs (60k or 1200pw gross?). You could play with rent increase and valuation variables to get 8% IRR but for an apartment above a shopping mall in the middle of a rather dreadful industrial part of Auckland, that seems a big ask even in these crazy housing times.

[Beagle]

Hi Beagle
You are allowed to be wrong about stocks. To err is human, to forgive divine
You were wrong about EVO even when Chris Scott had poured in millions and his expertise when the price was in ICU.
I hold stocks for 5 to 10years so unlike you I don't tend to monitor them on a daily basis or post about them.
Hopefully we can have another pleasant exchange before KPG reaches its potential or is taken over in 5 years time.
Good luck with your self appointed position as watch dog of this share forum.

Nobody is right 100% of the time. I'm too hard on myself and expect that I'll be right at least 90% of the time. That's probably unrealistic in this Covid environment.
Regarding your second point I am not wrong. Firstly EVO have destroyed vast amounts of shareholder capital in the last 5 years. On an adjusted basis their share price was $8.40 on 30/11/2016. Secondly since Chris Scott was allocated a significant discounted entitlement at 8 cents on 17/5/2019 (a discount of about 25% to the market price at the time if my memory serves me correctly) ordinary shareholders have seen the share price decline from $1 to the current price of just under 90 cents. With the paucity of dividends in 2.5 years since that event how on earth can you call that a success ? I'd rather not say how much my portfolio is up since May 2019...but lets just say I am very content.
Regarding your last comment what I will say is there's probably 20-30 people on here who post a lot...without them people like you would have almost nothing to read.

Food for thought - If all you ever read in any particular thread was shareholders pumping each others tyres about how good the company was how would that be of any value to anyone ?

[NZSilver]

I was interested in this mornings result as it was going to help me determine if I sold my holding which I'm slightly underwater on (ave $1.23 purchase price last year). Post result I'm definitely holding and am tempted to buy a few more. They have had a but of a tough time but I believe sentiment towards retail is the big contributor to the lack luster share price performance (even thought he business is doing relatively well especially considering macro conditions). At these prices with these results it's a certain but slightly contrarian hold for me with NTA backing/debt levels and underlying earnings cf SP providing quite a low risk here. This will take time to play (several years) and is going to need increased divs, some of their growth plays to perform and overall a place for traditional retail (albiet smaller) to be proven long-term. Yield wise I would like it to be higher 5.5-6% and I think that would really help it's cause.

[Beagle]

https://www.rnz.co.nz/news/business/451687/landlords-show-willingness-to-negotiate-retail-rents-as-vacancy-rates-increase

[Waltzing]

yep , its all over CNBC Asia..RBNZ expected. more pain coming... next cycle ... on the other side...

[winner69]

I was interested in this mornings result as it was going to help me determine. ……

Yield wise I would like it to be higher 5.5-6% and I think that would really help it's cause.

Be that desired 5.5%/6.0% mark when share price gets to 90 cents

Be patient.

[Waltzing]

90 cents

now on what basis? not saying it cant happen.. 10 YR of 3.5 to 5.5?... what if inflation backs off in 2023 - 2024.

these property investment stocks are priced as if the market for property is overvalued and the risk to the down side where as rental revenue will adjust but lag inflation.

Mixed use really means building Mini towns.

[NZSilver]

Let's pick this conversation back up in 10 years and see how it's all looking then.

[Waltzing]

5 years...

off topic ... Vive La France.


A strident supporter of Dick Tonks used to sing out across the Whanganui river KKKUUUUEEEE every time he won a sculling race.

[Habits]

Of the 20 nz stocks that I follow, kpg was one of two to be up... property stock ryman down 3.8 percent. We're holding kpg not rym

[LaserEyeKiwi]

KPG were $1.63 in mid 2007 (29/6/2007) so I find your statement hard to believe.

I would be interested to discover why almost every source I look at only has share prices records going back to 2008/2009 (including KPG website). I can’t find any specific corporate action then (that came later in 2014 when it converted from trust into a company). KPG was 95c in 2009 (obviously suffered a massive drop during the GFC, just like GMT did).

I’m not doubting your figure (as I can see it on google finance on its “MAX’ chart length, but can’t dig into the detail) - what site did you use?

For anyone who held 1 share in 2008 worth $1.63, it would today be worth $2.59c in shares if all dividends were reinvested. Now based on using that $1.63 figure I would suspect that GMT had a better return if one also reinvested returns (don’t know for sure haven’t got the figures but reasonable to assume). However not sure that means its the better investment today going forward given the big discount to assets and superior dividends and earnings from operations from KPG. In the end it comes down to how one thinks the massive projects KPG are now embarking on will succeed or not.

Personally I think the divestment of some retail (KPG said today on the earnings call that at least one of the centers will sell this financial year and talked about the Northlands sale just being held up by some minor settlement details delayed by covid), and the big surge into Build to rent, additional new office towers, and the fast tracking of Drury (now at ministerial sign off level - also mentioned on call that work can proceed pretty much the next day after that is signed off), is creating an excellent diversified property company.

So GMT took more than a decade to regain its 2007 share price - with the stock basically spending 10 years in a flat dead zone with no growth - what happened there that led to the big surge in share price? Was it a change in management?

[LaserEyeKiwi]

...and back to KPG, from a few posts back some figues on "build to rent":

"...The $221 million, 295 apartment complex ...target stabilised net yield of approximately 4.5% and 10 year property internal rate of return of over 8.0%."

My mathematomator suggests that costs around $1m per apartment if you include a bit for land. Which suggests a sales price of well over $1m, say 1.2m (for 20% margin) and thus rent of $54k pa AFTER various landlord costs (60k or 1200pw gross?). You could play with rent increase and valuation variables to get 8% IRR but for an apartment above a shopping mall in the middle of a rather dreadful industrial part of Auckland, that seems a big ask even in these crazy housing times.

KPG already own the land (Sylvia Park, LynnMall, Drury Town Center, The Base, plus any of the office assets they may wish to repurpose in future). They have plans for 1200 apartments on existing Sylvia park land alone. As well as additional office towers as well. There is a HUGE amount of land that is car parks they can use.

Have you seen the concept images - they look pretty good, and most young people indeed will love to have a wide assortment of retail & dining options on their door step. My wife and I are no longer “young” - but we have already decided that if we have to move to Auckland for whatever reason (work most likely) we would love to live in one of these.

[Beagle]

I would be interested to discover why almost every source I look at only has share prices records going back to 2008/2009 (including KPG website). I can’t find any specific corporate action then (that came later in 2014 when it converted from trust into a company). KPG was 95c in 2009 (obviously suffered a massive drop during the GFC, just like GMT did).

I’m not doubting your figure (as I can see it on google finance on its “MAX’ chart length, but can’t dig into the detail) - what site did you use? In the start menu on my computer there's a site called "Money" I presume its a MS Money site but is usually good for historical share prices. I say usually because when I enter all for KPG it goes right back into the 1990's which is how I did my analysis on how badly its performed since then. Unfortunately for reasons unknown there is no All time period for GMT so I can only see back 5 years on that.

For anyone who held 1 share in 2008 worth $1.63, it would today be worth $2.59c in shares if all dividends were reinvested. Now based on using that $1.63 figure I would suspect that GMT had a better return if one also reinvested returns (don’t know for sure haven’t got the figures but reasonable to assume). However not sure that means its the better investment today going forward given the big discount to assets and superior dividends and earnings from operations from KPG. In the end it comes down to how one thinks the massive projects KPG are now embarking on will succeed or not. Agree with you on that point. My note of caution is that management have been spectacularly unsuccessful so far. I put a lot of stock in historical performance.

Personally I think the divestment of some retail (KPG said today on the earnings call that at least one of the centers will sell this financial year and talked about the Northlands sale just being held up by some minor settlement details delayed by covid), and the big surge into Build to rent, additional new office towers, and the fast tracking of Drury (now at ministerial sign off level - also mentioned on call that work can proceed pretty much the next day after that is signed off), is creating an excellent diversified property company. I think they said they were going to the Environment court ? I've seen a client go there and spend 7 figures and walk away empty handed

So GMT took more than a decade to regain its 2007 share price - with the stock basically spending 10 years in a flat dead zone with no growth - what happened there that led to the big surge in share price? Was it a change in management?Hard for me to comment without having access to chart data going back that far for them.
What I can say is I think Covid has really supercharged the already strongly growing trend towards online shopping and consequent demand for industrial space for fulfillment centers. The yields on the build to rent are nothing special and based on projections that they're not disclosing. Mark my words. Just wait for the unbudgeted repairs and maintenance and widespread meth contamination problems from tenants. They might make something of Drury, time will tell.

Each to their own mate. I think we've debated this to its logical conclusion for now.

[Habits]

Back in the 2000s a friend of mine owned a supermarket which had a huge carpark attached to it. I told him about an aussie report where companies were making bucks from setting up petrol stations. He took that idea to their BOD and what do you know, two years later they started doing the same. I am not suggesting kpg set up a gas station but the idea ofmaking better use of under utilised, high amenity land.

[winner69]

KPG NTA up 4.4% ….I see ARG managed.a 7.2% increase in NTA …hmmmm

Probably doesn't mean much but interesting

[Rawz]

KPG NTA up 4.4% ….I see ARG managed.a 7.2% increase in NTA …hmmmm

Probably doesn't mean much but interesting

Just further evidence of poor nta growth vs kpg's peers. Im sure there are many reasons for it but its still locked into the history books as poor growth.

[Entrep]

From Craigs:


Retained the Overweight rating on KPG post the interim result with a slightly reduced price target at NZ$1.26 reflecting the impact of recent rental abatements and a lift in the risk free rate to 2.9% (previously 2.5%). Despite the cost of Covid rental abatements (c$15m estimated for FY22e), management retained the FY22e cash dividend guidance of no less than 5.3cps. The stock remains the cheapest in the property sector last trading at 4.7% cash yield (sector 3.8%) and 81% P/NTA (sector average 96%). While the short term earnings growth will be hindered by a portfolio mix recycling away from higher yielding assets it is a still positive move for the longer term. In addition quality retail is still performing well outside of lockdown and we feel that KPG’s high quality retail portfolio is being undervalued by the market. Overweight rating retained with KPG last at NZ$1.15 (+1%)…

[dibble]

KPG already own the land (Sylvia Park, LynnMall, Drury Town Center, The Base, plus any of the office assets they may wish to repurpose in future).

True but i presume they have to account for land somehow from an accounting angle (even if leased from itself?), so its probably fair to say the total ave cost of that tranche of apts might be about $1m which feels alarmingly high for a professional big scale outfit huge. (unless you're suggesting it is $221m for 1200 apts?).

Yes, the pix I saw were better than expected but if rent is above e.g. 1200pw that's a rather different target market than I expected for the area but each to their own. I imagine they've done the research. But if you find yourself moving to Akl might i politely suggest you at least compare living above a shopping centre to living by the beach nearer town, probably cost the same.

[Teatree]

Median Auckland rent is $600 have to be pretty special to command that sort of price

[Grimy]

IKEA moving into Sylvia Park has to be a positive step to keep drawing customers into the area.

[LaserEyeKiwi]

Yes fantastic news!

13275

[Rawz]

Probably take the city impact church building?

[LaserEyeKiwi]

Ok this is quite interesting - KPG actually sold the land to IKEA, and will be building a Large Format Retail center next door to IKEA as well:


KPG signs sale and purchase agreement with IKEA

2/12/2021, 11:11 am

Kiwi Property has reached a conditional agreement with IKEA to sell the retailer 3.2 hectares of land at Sylvia Park. The parcel of land is located on Te Ahoterangi Rise, immediately adjacent to the east of the shopping centre.
Kiwi Property Chief Executive Officer, Clive Mackenzie, says the agreement is an important step towards Kiwi Property’s ambition of having an IKEA presence at Sylvia Park.

“Kiwis have been eagerly awaiting the arrival of IKEA and we’re pleased to be working with them on that journey. Sylvia Park is already New Zealand’s favourite shopping centre, and we’re focused on finding innovative ways to make it even better,” says Mackenzie.

Mirja Viinanen, Chief Executive Officer and Chief Sustainability Officer for IKEA New Zealand says, “Our intention has always been for IKEA to enter the New Zealand market in a good way, which has included identifying the best locations for future stores and customer meeting points. That is why IKEA is working in partnership with Kiwi Property Group, with their proven mixed-use and retail expertise.”

Kiwi Property today also announced its intention to develop a complementary 6,430 square metre large format retail centre, directly adjacent to the land conditionally sold to IKEA, opening-up a range of exciting opportunities.

Kiwi Property Projects Director – Sylvia Park and BTR, Greg Tolley added “New Zealand’s first major build-to-rent project and the new office building at 3 Te Kehu Way are already under construction at Sylvia Park. With the addition of the proposed Large Format Retail centre, we’re continuing to take the asset from strength to strength.”

[LaserEyeKiwi]

Probably take the city impact church building?

Its on the other side (east side) and given the size of the land transferred (almost 10% of KPG’s Sylvia Park land) and with KPG building a new large project next to it - I assume it is the area I have circled in Red on the image below that is the location:

13277

[Waltzing]

what's the height limit on those zones. How high can they go..

[winner69]

So KPG book a profit (assumption) on sale of land ....maybe help Ikea build a store? .....don't collect any rent from Ikea ...... but benefit overtime from zillions of customers descending on cool meeting points and spending money

That's how I see it anyway

[Habits]

Potentially smart move by kpg, if IKEA were to setup in a different location it would have drawn millions of customers away from sylvia.

[Rawz]

KPG management actually deserve a lot of credit for Sylvia park and its growth. Odds on now that the Drury development will be just as good.

If only they could get rid of those pesky regional malls that have been a drag on nta

[Waltzing]

how many story's can be built in that zone.. can SP build up into the sky?

[Rawz]

how many story's can be built in that zone.. can SP build up into the sky?

I think the new ANZ office tower is 6 or 8 stories? Maybe thats max

[Waltzing]

they are building Mixed use at SP... how many storey are they?

starting to sound like a better story than OCA.

[Grimy]

"The 7,450 square metre, six-storey development will target a 6 Green Star rating and has been designed with the flexibility to accommodate a range of tenants, including health and medical services."
From their April announcement regarding the planned mixed use office block at Sylvia Park.

[Waltzing]

The IKEA development is showing some real imagination on managements part.

[Biscuit]

The IKEA development is showing some real imagination on managements part.

But imagination on the part of KPG's management or IKEA's ?

[Rawz]

I am actually surprised that a multinational retailer would want to own property vs lease. All that capital tied up

[Beagle]

they are building Mixed use at SP... how many storey are they?

starting to sound like a better story than OCA.

That looks like Beagle bait to me lol.

Who knows what the future holds but a price comparison chart since OCA listed tells an interesting story. One is up 70% in the last 4.5 years and the other down 20%. Sorry mate, there are no prizes for guessing which is which ;)

[winner69]

I am actually surprised that a multinational retailer would want to own property vs lease. All that capital tied up

So was I, esp if it turns out they are a fizzer and pack a sad and leave.

Suppose KPG could buy back at half price or less

[Habits]

So was I, esp if it turns out they are a fizzer and pack a sad and leave.

Suppose KPG could buy back at half price or less

Will be a raging success. Am glad i do not live in the area, traffic already heaving. Did they give an expected opening date

[Teatree]

Well i'm confused. Can't understand why kip would sell their land rather than build something and rent it out. And why does a retailer want to own land?

[LaserEyeKiwi]

For those wondering why IKEA wants to own land - this is their way. They are extremely vertically integrated - they even own a huge amount of Forrest assets (including in NZ) which they use to manufacture their wood products out of. And they own plastic recycling plants to make their 100% recycled plastic products.

[Scrunch]

For those wondering why IKEA wants to own land - this is their way. They are extremely vertically integrated - they even own a huge amount of Forrest assets (including in NZ) which they use to manufacture their wood products out of. And they own plastic recycling plants to make their 100% recycled plastic products.

Seems a lot like KPG had a choice of doing a deal that would have IKEA in the immediate area of town, or letting some other bit of Auckland have a huge anchor tenant. From LaserEyeKiwi's comments it doesn't seem like build to rent was going to be an option, although it was probably proposed. The decision was made by KPG to ensure that IKEA was in their part of Auckland. A sensible move IMO, and if they keep a good relationship with IKEA they may also have the inside running on other deals with them.

[fungus pudding]

For those wondering why IKEA wants to own land - this is their way. They are extremely vertically integrated - they even own a huge amount of Forrest assets (including in NZ) which they use to manufacture their wood products out of. And they own plastic recycling plants to make their 100% recycled plastic products.

Nobody would query McDonalds for wanting to own their land and buildings where possible. Obviously some, such as airports are leased. .

[fungus pudding]

Well i'm confused. Can't understand why kip would sell their land rather than build something and rent it out. And why does a retailer want to own land?


Some analysts consider McDonalds as a property owning company who sells burgers to avoid managing thousands of different tenancies. Whatever they are - the fact is they own many thousands of prime real estate sites in major cities throughout the world - and there is no doubt it has made a massive contribution to their success and their ability to grow.

[winner69]

Goodness gracious me .... has the world gone mad or something ....KPG share price 122.5 ....not going to a buck after all

Back to where it was last May

Listed property seems to be back in favour

What is KPG's NTA again ...remind me

[Baa_Baa]

Goodness gracious me .... has the world gone mad or something ....KPG share price 122.5 ....not going to a buck after all

Back to where it was last May

Listed property seems to be back in favour

What is KPG's NTA again ...remind me

Chart showing a breakup through the 200MA ... and a breakout of a massive, over a year long descending triangle pattern bounded by the quadruple bottom at $1.12

Edit: 1,131,288 shares through in 3 trades off market after close. Someone wants in.

[Waltzing]

unless immigration picks up news articles at the weekend predicted an OVER SUPPLY of housing in central and south auckland to the upper Wai WAKA in 2 years time.

Phew we still have some and hopefully onwards and upwards back to 1.50 over the next 24 months or less.

[Habits]

Chart showing a breakup through the 200MA ... and a breakout of a massive, over a year long descending triangle pattern bounded by the quadruple bottom at $1.12

Edit: 1,131,288 shares through in 3 trades off market after close. Someone wants in.

Of course been too long in the teens doldrums... I do hope that those who mocked have taken the chance to acquire a share or two before any sudden upswings :)

[777]

ARGOSY ARG.NZ 6 Up 3.9%
GOODMANPROP GMT.NZ 2 Up 0.8%
Investore IPL.NZ 6 Up 3.2%
KiwiProperty KPG.NZ 3.5 Up 3.0%
PRECINCT PCT.NZ 3.5 Up 2.2%
PROPINDY PFI.NZ 12 Up 4.1%
Stride SPG.NZ 1 Up 0.5%

Todays movements.

[Habits]

Of the 4 cos kpg, gmt arg and pfi all up between 4 and 8 percent over last 5 trading days. Xmas coming early for REITs

[LaserEyeKiwi]

Nice nice nice nice.

Was hoping the share price would actually stay down until after I had a chance to re-invest the upcoming dividend being paid on Friday though.

I’ll take this action regardless.

[LaserEyeKiwi]

NTA is $1.42

I wonder though if the amount of the IKEA land sale and/or the pending Northlands Mall sale has leaked.

[NZSilver]

nearly back to my buy in of $123 - choice

[troyvdh]

oops sorry

[troyvdh]

Seriously ...given covid why would anyone invest in retail entities.
Given that IKEA has arrived....
Look at what happened in the states.

[LaserEyeKiwi]

Seriously ...given covid why would anyone invest in retail entities.
Given that IKEA has arrived....
Look at what happened in the states.

Because retail is booming? (Coivd has concentrated discretionary spending away from Travel/hospitality towards retail).

Also the fact that KPG is developing a huge amount of non-retail assets to add to its commercial & mixed use portfolio (like the forthcoming large Build-to-rent complexes & the Drury Town Center).

Plus KPG was (until last week) trading at a 20% discount to NTA and pays a decent dividend.

Also KPG poised for cash windfalls from the divestment of two large malls (Northlands in Christchurch & The Plaza in Palmerston North), alongside the unexpected cash that came from the IKEA land sale.

[Habits]

Have you looked at the northlands and plaza values LEK. The resi RE market in chch has returned so with any luck so has commercial. What would the land at sylvia park be worth for 3.5ish hectares. 6m per hectare one thinks which is only 600 per sqm... due to its intensive dev potential and high retail yield it would be cheap at 10 times the price

[LaserEyeKiwi]

Have you looked at the northlands and plaza values LEK. The resi RE market in chch has returned so with any luck so has commercial. What would the land at sylvia park be worth for 3.5ish hectares. 6m per hectare one thinks which is only 600 per sqm... due to its intensive dev potential and high retail yield it would be cheap at 10 times the price

There was an interesting reply during the KPG Q&A from the earnings call a few weeks ago where they were talking about a previous delay to a pending sale of one of the malls due to a change in composition of the bidding coalition, and the wording was something to the effect that it meant the terms of the finalized deal were being renegotiated but emphasize that it could mean a higher price was now achievable.

I have no idea on pricing for the malls or the IKEA specific land sale, but there are perhaps motivating factors for KPG in all these deals which may mean KPG is somewhat happy to take slightly less than maximum achievable value. In the case of Northlands/Plaza part of the diversification away from retail in those “seismically questionable” (my term) areas is probably a factor which favors speed over going for every last penny, while for the IKEA deal it meant attracting a huge number of consumers to KPG’s currently most valuable property, rather than going to a rival location (even if technically IKEA is immediately adjacent rather than in your property - those people will highly likely also be spending at other sylvia park shops, including the new set KPG is going to build right next to IKEA)

[Waltzing]

doubt they will special div more like pile the money into future development projects to keep debt levels down. Or have they already funded the projects with low interest packages.

[mike2020]

Northlands is booming. It has a lot of support outside the mall as well as a pack n save and countdown connected. I think its probably better to shop than Riccarton.

[NZSilver]

Having IKEA next to Sylvia was a very sharp move and will be hugely beneficial to the tenants there, which benefits KPG rental returns and therefore shareholders. A special DIV would be handy though...

[Waltzing]

if treasury are right and growth continues for the next 5 years probably due to the massive stimulation of debt and HOUSE prices wont decline...

well it says the NZX is still the place to be...all funded on debt of course but will they increases taxes? Dont think, cause that will now lose them votes.

Grant Robertson's $6b Christmas present - NZ Herald (https://www.nzherald.co.nz/nz/politics/grant-robertsons-6b-christmas-present/ZLZOUH23C6OCLTKXADEDWUZZWM/)

[Habits]

Coaster ride continues down today, up tomorrow I bet

[Waltzing]

oh dear... i can hear barking in the distance.... fading over the hills and valleys..

[LaserEyeKiwi]

Hopefully the drop lasts until Monday when I can reinvest the upcoming Friday dividend, then heads back upwards I would be happy.

Alternatively if the stocked halved in value and kept paying the same dividend I would also be happy.

[LaserEyeKiwi]

Going to enjoy seeing that dividend arrive today (although I wont be able to use my dividend funds to buy up more KPG until next week, so hopefully the stock remains subdued here for a few more trading days)

[winner69]

oh dear... i can hear barking in the distance.... fading over the hills and valleys..

Hey waltzing ….you’ve changed your name.

How did you do that?

[Waltzing]

Vince insisted, admin did it.

with the new Variant here Vince also realises no one is going anywhere and random posting from Ex Pats will continue.

[Waltzing]

S Park looked packaged on the TV 1 News. wonder what the foot traffic numbers were yesterday..

[Habits]

Good point Waltzing man... will be a very happy new year for some retailers

[fungus pudding]

Good point Waltzing man... will be a very happy new year for some retailers

And customers. Best shoplifting day of the year

[Habits]

And customers. Best shoplifting day of the year

"Dont try it"
Moral J Fernando

(Sorry teaman Merrill for butchering your quote)

[Habits]

Up 2.5 cps on good volume (I think). Nearly making it to the big time of $1.20 each.

Edit: light volume 912k vs 3 month avg 1.55m

[Habits]

Here is an update for KPG central city mall

"In early 2022, TGH (Tainui) and Kiwi Property will produce a master plan for the wider Centre Place precinct, detailing their vision for the central city site."

From the Stuff article 2022: Hamilton's year of the big build | Stuff.co.nz
https://i.stuff.co.nz/waikato-times/news/127401229/2022-hamiltons-year-of-the-big-build

[Waltzing]

Cranes... nothing to fear...yep looks just like a chinese super city in the making not.... but there may be a concert venue where a ballet and an orchestra can perform. Ex pats returning used to certain luxury activities will now and then actually go to a sophisticated venue... well for NZ anyway..


Progress!!! Holders.. progress!! What about the weather... northern europe still has a nicer afternoon C though.

[Habits]

SH1 upgrade nearly finished for 4 lanes of pure joy between their northern big brother.

[Waltzing]

Almost like a modern country...train from hamilton to auckland air port not quite there yet... remember my first train ride from amsterdam in 1983... could not believe how easy it was to travel all over the place... except into eastern europe of course...

still beach is better here by a long way and lucky i got recalled back to surf the mount... too many in the line up these days...

Hamilton could be the new place to be.. global warming seems to have gotten rid of the terrible fog's..cant see it though you can beat the beach of the east coast.

[LaserEyeKiwi]

Here is an update for KPG central city mall

"In early 2022, TGH (Tainui) and Kiwi Property will produce a master plan for the wider Centre Place precinct, detailing their vision for the central city site."

From the Stuff article 2022: Hamilton's year of the big build | Stuff.co.nz
https://i.stuff.co.nz/waikato-times/news/127401229/2022-hamiltons-year-of-the-big-build

Hmmm.. I had kind of neglected the potential of KPG Hamilton holdings. Looks like there is an opportunity for some decent asset growth there as well. I imagine it will include a build-to-rent tower like that already announced at Sylvia Park & LynnMall.

[Habits]

Hmmm.. I had kind of neglected the potential of KPG Hamilton holdings. Looks like there is an opportunity for some decent asset growth there as well. I imagine it will include a build-to-rent tower like that already announced at Sylvia Park & LynnMall.

I like to own the ground under my feet, however nz is or has changed, at least in the city centres from quarter acre pavlova paradise with more accepting of it.

[Waltzing]

"quarter acre pavlova paradise"

had the book... stored away somewhere...

come on Hamilton has got a New Concert venue under construction... coupled with shrinking space in auckland those who are silly enough not to move north or to the Mount or the south island, this is there only option...It not too bad in the central north island... some lakes close by and some of the best mountain biking in RotoVagas....The big lake at Taupo...they are Bumper to Bumper according to the NZ transport agency heading this way..

[Habits]

We have done extremely well in HamMilkton after moving from Bay of Is. Big change but worth it. Back to KPG, which also owns half of the Base retail centre, 5 years ago the centre had astonishing patronage of over 7 million per year. I could not get any updated recent figures

[Waltzing]

"HamMilkton" tankers still out and about in the hills and surrounding districts.

Would be great to know numbers of centre place but the entrances dont have sensors. A new sensor was placed at one of the karapiro lakes parks recently. They are in use in the district.

[NZSilver]

https://i.stuff.co.nz/business/127472372/palmerston-north-cements-its-role-as-a-major-retail-centre?fbclid=IwAR2dOr-JnFeeJTmU21ZLnKxxQEYC9Lti5Hp_2lpvJSe_DkW33yKCPeu3N kg

[winner69]

ANZ doom and gloom saying OCR going to 3% put a dampener on KPG ….share price tumbling 2.5% to 116

[Waltzing]

Yep the cyclical looks to be here doesnt it which actually means selling all retail except maybe celtic art and buying banks and oil and gas.

even ARG might get hit with future government contracts for some builds going to non listed entities.

Several builds in the WakaToo may not have gone to tender or been managed away from listed companies such as ARG but handed to political allies.

Would be interesting to see the tender processes for government hut occupations in WakaToo.

[Aaron]

ANZ doom and gloom saying OCR going to 3% put a dampener on KPG ….share price tumbling 2.5% to 116

What do you expect? interest rates are the inverse of asset prices, hasn't 30 years of falling interest rates given you enough time to amass some wealth.

[LaserEyeKiwi]

6%+ dividend yield and a 19% discount to NTA - If I wasn’t already at max exposure limit I would be thinking about buying more.

With the recent IKEA land sale, along with the looming finalization of at least one of the two regional mall sale negotiations, the gearing ratio is going to be well under 30%, with currently over $3.5 Billion in assets and $1.15 billion in debt (thats before the cash from the IKEA sale, and what will come from the mall sale).

Interest rate rises will have minimal impact on KPG in terms of operating profits with this sort of debt-to-asset profile (vs other property companies with high gearing ratios)

[Waltzing]

LEK it wasnt for the long term chart over a 20 year period it would be a BUY.

Hamilton central almost empty yesterday afternoon.

It might well be an opportunity when OCR's hit highs. Last time it hit a high was back in 2007. Interest rates were at an all time high since 2000.

With property prices where they are may be the RBNZ would like to have rates a LOT higher then they are.

With there new T1 coming at 16 for NZ banks one wonders what that is going to do to lending when they finally apply the new T1.

Sorry MR and MRS business we havnt got a loan for you right now we are putting more earnings back into T1.

It may only have a small impact on GDP and it wont effect borrowing for COMP PROPS but it may crimp home and small business loans even more than present.

The think about RBNZ versus RBA policy and you see which country is set up for growth.

[Waltzing]

Yellon saying inflation expectations expect to mitigate later in 2022 early 2023.

D Guppy expecting a 2 handle on the US ten year.

Might see a cyclical turn around in this sector in 2023.

[Waltzing]

sub 1.10 ? getting close, next summer a golden summer or will inflation snuff it out.