KPG - Kiwi Property Group Limited

[bull....]

yep if bonds have fallen a % or 2 by then i think over a $1 is not unreasonable. the gap to nta at 30% is far to large at this stage implying the market believes property prices will keep falling to close the gap between stock price and nta

[RTM]

Luckily for KPG resi rents have risen strongly over the previous two years to make their BTR more viable. I found Staircase rents out 1 bedroom apts in Ellerslie for $640pw with less amenity than whats going to be available at Sylvia.

Well done.

Do you really think it is luck ? I hope they are a bit more professional than relying on luck.

[bull....]

big crossing right on the open this morning.

[winner69]

big crossing right on the open this morning.

They forgot to process Friday in extended session

[kiwikeith]

I visited the Plaza in Palmy last week. It seems to be trading well. There are no empty shops and lots of people in there. Unlike the rest of Palmy - the other side of the square and broadway seem a wasteland. I do wonder when kiwi will finish their civil works on their carpark. It seems to have been under repair ever since Churchill died. It must be costing customers who cannot get into the carpark when it is full.

[bull....]

I visited the Plaza in Palmy last week. It seems to be trading well. There are no empty shops and lots of people in there. Unlike the rest of Palmy - the other side of the square and broadway seem a wasteland. I do wonder when kiwi will finish their civil works on their carpark. It seems to have been under repair ever since Churchill died. It must be costing customers who cannot get into the carpark when it is full.

premium stuff they own.
anyway stock price to NTA gap should start to close from now on till when rates start to fall next yr i reckon. probably most reits will esp the large gap ones

[dibble]

premium stuff they own.
anyway stock price to NTA gap should start to close from now on...

Perhaps. Hopefully not due to NTA decreasing further. I feel we're out of the woods on that front but Im usually wrong about everything.

[LaserEyeKiwi]

I visited the Plaza in Palmy last week. It seems to be trading well. There are no empty shops and lots of people in there. Unlike the rest of Palmy - the other side of the square and broadway seem a wasteland. I do wonder when kiwi will finish their civil works on their carpark. It seems to have been under repair ever since Churchill died. It must be costing customers who cannot get into the carpark when it is full.

Having stopped by Palmerston north a few times over the last few years as lunch stopovers on road trips, I have to say the Plaza is the only attractive place to shop & eat that we could find in the central city bordering the square. Also has good parking of course. Everywhere else was pretty dire.

[bull....]

Perhaps. Hopefully not due to NTA decreasing further. I feel we're out of the woods on that front but Im usually wrong about everything.

NTA may drop still a little but a 25% gap between current stock price and current NTA seems excessive pessimism too me. historically i dont think its ever been that large on average

[LaserEyeKiwi]

Dividend payout today. Nice xmas present, liking these quarterly distributions vs the old 6 monthly ones.

[bull....]

sylvia park jam packed boxing day sales.

[bull....]

bullish momentum on this. nz10yr big falls again today 4.4% makes kpg yield very tasty for income people

[bull....]

Hodgetts said Kiwi Property is focused on offering great amenities for tenants and so the Sylvia Park building has a gym, a co-working space and a rooftop deck and barbecue area

https://www.oneroof.co.nz/news/will-build-to-rent-save-kiwi-renters-from-australian-style-nightmare-44653

[LaserEyeKiwi]

Hodgetts said Kiwi Property is focused on offering great amenities for tenants and so the Sylvia Park building has a gym, a co-working space and a rooftop deck and barbecue area

https://www.oneroof.co.nz/news/will-build-to-rent-save-kiwi-renters-from-australian-style-nightmare-44653


Thanks for sharing that

[Baa_Baa]

6.4m volume, $5.38m, and one 4.9m/$4.1m trade .. on market. Serious, something up?

[bull....]

ACC increasing there holding to over 10%

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KPG/425229/411452.pdf

[winner69]

ACC increasing there holding to over 10%

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KPG/425229/411452.pdf

Got to do something with that premium dosh ……and trade with it eh

Taken them nearly 3 years to get that extra 1% so wouldn’t read too much into it myself

The power of the float eh bull

average price of those transactions 92.6 cents

[winner69]

Hope they can find a replacement whose just as fantastic

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KPG/425852/412191.pdf

[LaserEyeKiwi]

Hope they can find a replacement whose just as fantastic

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KPG/425852/412191.pdf

I hope they can get by without a replacement at all. Not sure they really need a GM Digital for this business.

GM digital is one of 7 “officer” positions, and as of the last annual report the 7 highest paid people (presumably the 7 officers) earned a minimum of $500k + equity incentives.

[Sideshow Bob]

I hope they can get by without a replacement at all. Not sure they really need a GM Digital for this business.

GM digital is one of 7 “officer” positions, and as of the last annual report the 7 highest paid people (presumably the 7 officers) earned a minimum of $500k + equity incentives.

None of Argosy, Vital or Stride have a senior manager specifically responsible for digital on their senior management teams.

Maybe that is why KPG perform so well?

[LaserEyeKiwi]

The fact they didn’t mention an acting GM of digital or a search for replacement give me hope they aren’t going to fill that roll. The $500k salary would contribute 0.5% increase to the annual dividend if it was redirected there.

[bull....]

sold some land ?

Fans tip second Costco Wholesale store site, retailer won’t confirm or deny
“The second Costco warehouse has been earmarked to open in South Drury, 2026 at the earliest but exciting times ahead for sure,” that public group says

https://www.nzherald.co.nz/business/fans-tip-second-costco-wholesale-store-site-retailer-wont-confirm-or-deny/FMQ7Z2VJZZBNNIOGY7L7WN7QAQ/

[Baa_Baa]

And the first BTR’s come on soon. This is cheap as. Happy loading up in the high 7/low 8’s

[ralph]

And the first BTR’s come on soon. This is cheap as. Happy loading up in the high 7/low 8’s
Certainly the falling knife days are well over for this one & this year is apparently going to be the year when property companies bounce back ,keep loading up baa baa on the Q T

[LaserEyeKiwi]

“It wont happen overnight, but it will happen” - some ad tagline, I don’t remember what exactly, but applies to KPG.

- Actual bank interest rates on lending are already past their peak and falling (despite what ANZ analysts want to think), lower interest costs will help most companies, but particularly property cos.

- Actual bank term deposit rates are also already past their peak and are now starting to be cut, lower term deposit costs will make high dividend paying stocks (like KPG) look more attractive to those chasing yield.

- As noted by Baa Baa, BTR 1 at Sylvia Park starts being populated in this first half year, and will start generating income for KPG for a property that has already been paid for (eg KPG cost of capital for this project is already in company previous financials in the form of interest on cash paid for construction work the majority of which was completed in previous reporting periods).

- Drury: Minimal earthworks costs remain for stage 1, and superlot sales to housing companies are going to turn Drury from a capex expense to a cash generator in the near term. Something like a Costco site announcement would be icing on the cake.

- Asset sales. KPG remains committed to “de-risking” its portfolio, and that primarily means selling all its assets south of Hamilton. The Plaza mall in Palmy was on the market, but is quietly sitting there at present while EQ issues are negotiated. KPG had a buyer for its one remaining Wellington Office block, but that deal failed to be completed (which may or may not have a silver lining, the price was too low IMO).

[Aaron]

Not everyone's a fan of KPGs new town in Drury.

https://www.stuff.co.nz/business/350183036/apartment-mogul-joins-mayor-blasting-rapacious-money-grubbing-fringe-developers

Mark Todd's criticism may involve a conflict of interest as he is competing with them in a way, but Wayne Brown is not a fan either, only because the council maintains the infrastructure.

What they are suggesting as an alternative is cramming more people into the same amount of area. Perhaps they could look at cutting immigration as most of it is into Auckland.

I like Wayne Brown he seems to be focused on his job and being practical and not frivolous with public money. His critique of the holiday highway in the herald this morning might indicate why projects keep blowing out. Although it might be that Wayne does not have a good knowledge of the challenges faced by the road builders I don't know enough about road construction to comment.

[LaserEyeKiwi]

Not everyone's a fan of KPGs new town in Drury.

https://www.stuff.co.nz/business/350183036/apartment-mogul-joins-mayor-blasting-rapacious-money-grubbing-fringe-developers

Mark Todd's criticism may involve a conflict of interest as he is competing with them in a way, but Wayne Brown is not a fan either, only because the council maintains the infrastructure.

What they are suggesting as an alternative is cramming more people into the same amount of area. Perhaps they could look at cutting immigration as most of it is into Auckland.

I like Wayne Brown he seems to be focused on his job and being practical and not frivolous with public money. His critique of the holiday highway in the herald this morning might indicate why projects keep blowing out. Although it might be that Wayne does not have a good knowledge of the challenges faced by the road builders I don't know enough about road construction to comment.

Developer not a fan of competing developers projects!

I’m shocked, ha ha ha.

Love the bit where he says Auckland should develop around railway stations, and then says he doesn’t care if Drury has a railway station.

Auckland council dropped opposition to Drury development, it’s a done deal no matter who complains.

[Habits]

Developer not a fan of competing developers projects!

I’m shocked, ha ha ha.

Love the bit where he says Auckland should develop around railway stations, and then says he doesn’t care if Drury has a railway station.

Auckland council dropped opposition to Drury development, it’s a done deal no matter who complains.

What a dick this guy Mark Todd is, refers to others as money grubbing whilst charging over 4million for a roof over head, an apartment is a box in the sky

[SPC]

No problem, let's make sure KPG get mayor Brown along to an opening at Drury, maybe around election time would be a weak point of he still has an attitude problem, that should balance the ledger.

[Rawz]

Bit of a dumb argument by Mark Todd. There are a lot of jobs in Manukau/Wiri/Takanini etc. Look at FPH plans to build a new complex in Karaka was it?

The people living in Drury will live/work/play in South Auckland. Most wont work in the CBD towers. And if by chance they do they can train in.

[Habits]

Mark Todd can't shift his tacky apartments, oh damn
http://emaillink.oneroof.co.nz/ls/click?upn=u001.E0c5GLY8dIAJSIj6m8TnlBXTUAP46bs62E-2BhmGCsACQ0VK6emfMADporn9l74yBTg832yzlNoZfHy28cuHF sVOSDTCOnrHOEp4zhsp-2BtdI3jOHZda9xd7ATS-2BFXe35vpVxSUtFLOASLGs7b86jAC-2FGOurY7DWCFAA2t-2FMA-2Br5bI-3DIXb-_gApagrHKPF4mHLuYbrscPccOFjUiD2iNgwAervIuHW2hHKLwF XHTpfPtSbAUlDipIfn8lkykQRMCtDLjaTXkIkp1eo2LtQRG8OR E6konEgicGlSPJAvOFRKcK1XIX1IV1xdVYDd71ctqyYN6itQNC 16QSqatodUEowlcBc2ZcUkySMs4IjhX8-2BlCsRiXqAC67J-2FE2LHpCq8atol3JSrvrw-3D-3D

[SPC]

Meanwhile KPG can offer the same new build quality close to all amenities with BTR, no crazy off the plan fomo pricing and turn key property management built in.
Why would you buy from Mark when you can lease with certainty?

[troyvdh]

Have you guys read C Lees opinion about property in general.

Woof woof...gnarl.

[bull....]

New Zealand May Allow Foreigners to Buy Build-to-Rent Homes
https://www.bloomberg.com/news/articles/2024-02-23/new-zealand-may-allow-foreigners-to-buy-build-to-rent-homes

[LaserEyeKiwi]

Nice move:

https://www.nzx.com/announcements/427017

Kiwi Property leases 12% of Resido to Urban Rest

28/2/2024, 10:12 am GENERAL

Kiwi Property today announced it had signed a deal with leading Australian flexible accommodation provider, Urban Rest, to rent 12% of the new Resido build-to-rent development at Sylvia Park.

Urban Rest will occupy and manage 34 of Resido’s 295 apartments and make them available to the friends and family of Resido residents, as well as corporate clients seeking accommodation in Auckland. The agreement will remain in place for at least the next three years, with the option of a two-year extension.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said the Urban Rest deal highlighted Resido’s appeal and placed the development in a strong position ahead of its scheduled opening in May 2024.

“We’re counting down to the launch of Resido and are looking forward to bringing large-scale build-to-rent to the New Zealand market. The complex features a fantastic range of services and amenities and is ideally located next to Sylvia Park.
“It’s great to be working with Urban Rest on this exciting partnership, enabling even more customers to enjoy the Resido experience while securing guaranteed rental income for 12% of the property.”

David Whelan, Founder and Chief Executive Officer of Urban Rest, said Sylvia Park was an exciting addition to the company’s portfolio of apartments, houses, and boutique hotels.

“As Urban Rest's first venture into the New Zealand market, we see tremendous potential here, especially given the strong corporate demand for accommodations in Auckland.

“We’re looking forward to expanding our New Zealand footprint with the inclusion of Sylvia Park. The development is ideally located in the geographical center of Auckland and easily accessible by train, bus, or road. With Sylvia Park and its range of shopping and entertainment options right next door, we believe customers will love staying at the property.”

[bull....]

Nice move:

https://www.nzx.com/announcements/427017

Kiwi Property leases 12% of Resido to Urban Rest

28/2/2024, 10:12 am GENERAL

Kiwi Property today announced it had signed a deal with leading Australian flexible accommodation provider, Urban Rest, to rent 12% of the new Resido build-to-rent development at Sylvia Park.

Urban Rest will occupy and manage 34 of Resido’s 295 apartments and make them available to the friends and family of Resido residents, as well as corporate clients seeking accommodation in Auckland. The agreement will remain in place for at least the next three years, with the option of a two-year extension.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said the Urban Rest deal highlighted Resido’s appeal and placed the development in a strong position ahead of its scheduled opening in May 2024.

“We’re counting down to the launch of Resido and are looking forward to bringing large-scale build-to-rent to the New Zealand market. The complex features a fantastic range of services and amenities and is ideally located next to Sylvia Park.
“It’s great to be working with Urban Rest on this exciting partnership, enabling even more customers to enjoy the Resido experience while securing guaranteed rental income for 12% of the property.”

David Whelan, Founder and Chief Executive Officer of Urban Rest, said Sylvia Park was an exciting addition to the company’s portfolio of apartments, houses, and boutique hotels.

“As Urban Rest's first venture into the New Zealand market, we see tremendous potential here, especially given the strong corporate demand for accommodations in Auckland.

“We’re looking forward to expanding our New Zealand footprint with the inclusion of Sylvia Park. The development is ideally located in the geographical center of Auckland and easily accessible by train, bus, or road. With Sylvia Park and its range of shopping and entertainment options right next door, we believe customers will love staying at the property.”

smart stuff by kpg

[Bjauck]

New Zealand May Allow Foreigners to Buy Build-to-Rent Homes


https://www.bloomberg.com/news/articles/2024-02-23/new-zealand-may-allow-foreigners-to-buy-build-to-rent-homes Obviously housing supply is an issue. However I would have thought building supplies costs, development land supply, zoning, and approval costs and delays would have been the problem rather than lack of potential buyers or lack of capital being invested into NZ residential properties. We have such expensive residential land already that opening up residential land to even more foreigners surely is not the solution.

Encouraging local investors to build new houses rather than beating up the price of existing houses surely would be the way to go through land supply reforms as previously mentioned and through tax and other incentives such as reduced CGT and reduced stamp duties on new developments. Well it would be if we had stamp duties and cgt, so instead the government suggests increasing the number of foreign buyers (with access to foreign capital?) to make everything in NZ more expensive…..

[LaserEyeKiwi]

More details on the urban loft deal with Kiwi:

“Urban Rest is advertising a one bedroom Resido place at $254/night and two bedrooms for $381/night. A communal lounge area, elevator, rooftop terrace, gym and co-working hub are offered by the Sydney business”

“Urban Rest, founded in 2017, is advertising places in Adelaide, Brisbane, Canberra, Melbourne, Sydney, Dublin and London.”

[dibble]

Meanwhile KPG can offer the same new build quality close to all amenities with BTR, no crazy off the plan fomo pricing and turn key property management built in.
Why would you buy from Mark when you can lease with certainty?

I imagine many pondering an apartment purchase who also saw that recent TV series investigating NZ apartment quality may have suddenly gone a little tepid on the idea.

And even if you're lucky enough to buy in a solid rot free building, general maintenance alone costs a fortune. Perhaps better to rent and invest in a scaffolding firm.

[Baa_Baa]

I imagine many pondering an apartment purchase who also saw that recent TV series investigating NZ apartment quality may have suddenly gone a little tepid on the idea.

And even if you're lucky enough to buy in a solid rot free building, general maintenance alone costs a fortune. Perhaps better to rent and invest in a scaffolding firm.

Oh the cynicism drips from your post. You think KPG are going to build sh1t BTR apartments and feck their future as a leader in BTR?

Get a grip, I'll bet KPG have this whole thing absolutely nailed done to the minute detail and BTR, Drury especially, will be a massive success.

[SPC]

I think you need to re-read that post again Baa B

[dibble]

Settle down. It was a reference to buyers not renters.

[Bjauck]

I imagine many pondering an apartment purchase who also saw that recent TV series investigating NZ apartment quality may have suddenly gone a little tepid on the idea.

And even if you're lucky enough to buy in a solid rot free building, general maintenance alone costs a fortune. Perhaps better to rent and invest in a scaffolding firm.
MET had issues with leaky buildings. Hopefully KPG have learnt from others’ mistakes and have a quality product. They are not cheap tariffs! I added to my holding yesterday. Go Drury!

[bull....]

leaky buildings now a day are generally only from shoddy workmanship. Anyway wonder if kpg will get more demand from trust owners when tax rate goes up to 39% as trust investing in kpg will only pay 28%

[Bjauck]

leaky buildings now a day are generally only from shoddy workmanship. Anyway wonder if kpg will get more demand from trust owners when tax rate goes up to 39% as trust investing in kpg will only pay 28% Many trusts I think distribute to beneficiaries, and the income is taxed at the beneficiaries’ rates. However DYOR. The NZ tax system however does need an overhaul.

[LaserEyeKiwi]

https://www.nzx.com/announcements/427680

14980

[winner69]

https://www.nzx.com/announcements/427680

14980

No pay rise again …don’t they care about the cost of living crisis

[LaserEyeKiwi]

No pay rise again …don’t they care about the cost of living crisis

Wouldn’t expect one between earnings releases? Just have to stick with our lowly 8% gross yield for now.

[LaserEyeKiwi]

In other news, Government yesterday introduced legislation to allow foreign investors to invest in build-to-rent developments.

This means KPG has a lot more potential partners to work with (or to sell to if it wanted to at some point)

[mfd]

No DRP suggests they are happy with leverage and dividend is sustainable, good news.

[LaserEyeKiwi]

No DRP suggests they are happy with leverage and dividend is sustainable, good news.

Yes good point. Cashflow should be very strong for the next 12 months, as BTR 1(Resido) starts generating cash in Q2, while capex spending is entering a rather low phase with BTR 1 finished and stage 1 Drury earthworks also mostly done.

[LaserEyeKiwi]

OH MY GOODNESS - I MISSED THIS LAST WEEK!

Only just saw this now, how did anyone else not post this??? : https://www.nzx.com/announcements/427035



Vero Centre sale update

28/2/2024, 3:46 pmGENERAL

Kiwi Property is in advanced negotiations for the conditional sale of the Vero Centre in Auckland for a small discount to book value. An additional announcement will be made outlining further details if, and when, an agreement is reached.

Kiwi Property has disclosed this information following market enquiries about the proposed transaction, in line with its continuous disclosure obligations.


The Vero Centre is the 2nd largest income generating asset in the KPG portfolio with a book value of $467 Million, and generates approximately $25m in net rental income.

If a sale is completed - assuming somewhere around $425m-$450m price - this will radically reshape KPGs balance sheet. Huge move.

[kiwikeith]

OH MY GOODNESS - I MISSED THIS LAST WEEK!

Only just saw this now, how did anyone else not post this??? : https://www.nzx.com/announcements/427035

The Vero Centre is the 2nd largest income generating asset in the KPG portfolio with a book value of $467 Million, and generates approximately $25m in net rental income.

If a sale is completed - assuming somewhere around $425m-$450m price - this will radically reshape KPGs balance sheet. Huge move.

Yes it seems that KPG is moving in the direction of less property investor and more property developer.

[bull....]

Yes it seems that KPG is moving in the direction of less property investor and more property developer.

no more to a town centre owner eg sylvia park model. so selling of property that doe not fit the model i guess

[winner69]

Hey Laser .."is this just a rave to potential investors ….or something new included?

[LaserEyeKiwi]

Hey Laser .."is this just a rave to potential investors ….or something new included?

Presume you are referring to the Resido-focused release? Can’t see too much new, but fleshing out the details about the current rental market somewhat - although perhaps including something’s that have previously only been detailed on conference calls, like the mention on the last page of the presentation about potentially selling a portion of Resido to a capital partner.

https://www.nzx.com/announcements/427841

[LaserEyeKiwi]

6 month property re-valuation: An increase!


Kiwi Property valuations hold firm despite headwinds

4/4/2024, 9:56 am GENERAL

Kiwi Property today announced its draft valuations for the six months ended 31 March 2024, recording a 0.1% or $3.6 million increase in the fair value of its property portfolio, which was expected to be worth $3.2 billion at the end of the period.

Kiwi Property Chief Executive Officer Clive Mackenzie said: “It’s encouraging to see the value of our diversified property portfolio holding firm, despite the slow economy and high interest rate environment.

“The sustained performance of assets such as Sylvia Park and The Base is a testament to their resilience and highlights the merit of our mixed-use strategy. While the market has seemingly priced-in further write-downs of our property portfolio, based on the latest valuations, those concerns may be overdone.”

The draft valuations are expected to result in the following movements through the period:
• Mixed-use portfolio: +0.8% or +$16.0 million, underpinned by stable capitalisation rates and robust trading.
• Office portfolio [Note 1]: -1.9% or -$16.2 million, due to continued headwinds in the office sector.
• Retail portfolio: -0.4% or -$0.6 million, with valuations flat in aggregate.
• Other properties: +3.1% or +$4.5 million, reflecting the continued progress of earthworks at Drury.
• Net tangible asset backing per share: $1.17. No change.

Kiwi Property’s draft asset valuations are subject to final independent audit, finalisation of year-end book values and will be confirmed in the company’s annual results for the year ended 31 March 2024, due to be released on 27 May 2024.

ENDS
Note:
1. Includes assets held for sale.
Contact us for further information:

Campbell Hodgetts
Head of Communications and Investor Relations
campbell.hodgetts@kp.co.nz

[kiwikeith]

6 month property re-valuation: An increase!

Interesting that KPG saw no real change to property values over the last 6 months while ARG saw a 3% decline in the last 6 months. (5.4% decline over the last 12 months for ARG.)

[Habits]

6 month property re-valuation: An increase!

Its a great result by the KPG team. But was this on a like for like basis, the Drury comment implies not

[kiwikeith]

I was in Palmy on the afternoon of Anzac day. The Plaza appeared to be doing a roaring trade. Loads of people in there and not much else to do in Palmy. I know the Plaza will be eventually sold by KPG and it should be a good investment if it gets syndicated out as it dominates the retail landscape in the city. The rest of the square and Broadway is mostly a ghosttown.

Separately, I read the article saying some Auckland rental properties are getting 80 applications. I guess the thousands of immigrants streaming into Auckland will underpin the vibrant rental market for some time. Should bode well for KPG's residential rental business coming up to launch very soon.

[LaserEyeKiwi]

This is encouraging news, this is the 2nd executive position they have eliminated recently - I think it shows they are serious on cost control.

https://www.nzx.com/announcements/430356

“Kiwi Property today advised that Ian Passau, GM Development, will be leaving the company following a restructuring of its development function.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said: “Ian has made a huge contribution to Kiwi Property over the past seven and a half years, leading major initiatives such as the Sylvia Park galleria expansion, the construction of our Resido build-to-rent scheme and the successful upzoning and commencement of development at our Drury landholding.“

“Unfortunately, given our focus on cost reduction and with no new development projects commencing in the short term, we’ve been forced to make some tough decisions. I want to thank Ian for everything he has done for the business and we wish him all the best for the future."

Ian will remain at Kiwi Property until mid-August 2024.”

[Rawz]

No new development projects? what about Drury?? when does that kick off?

[LaserEyeKiwi]

No new development projects? what about Drury?? when does that kick off?

Stage 1 earthworks finishing up - in the near term the focus for Drury is selling the land superlots to residential developers to release capital.

[winner69]

Share price continues to fall …….and divies not covering capital loss

Suppose Kiwi now just a hoping like anything things get better on day stock …and some say hope is not a good strategy

[LaserEyeKiwi]

Share price continues to fall …….and divies not covering capital loss

Suppose Kiwi now just a hoping like anything things get better on day stock …and some say hope is not a good strategy

“Continues to fall”

KPG has been trading in a range between high 70s to high 80s for the last 6 months (77c low was in Oct).

Earnings at month end, unlikely to be anything between now and then that would move the stock out of that range, unless there is a shock interest rate move, or if the Vero Centre deal is announced.

[Sideshow Bob]

Share price continues to fall …….and divies not covering capital loss

Suppose Kiwi now just a hoping like anything things get better on day stock …and some say hope is not a good strategy

https://www.nzx.com/announcements/429056

Kiwi Property today announced its draft valuations for the six months ended 31 March 2024, recording a 0.1% or $3.6 million increase in the fair value of its property portfolio, which was expected to be worth $3.2 billion at the end of the period.

NZX says NTA is $1.17 per share.

[winner69]

“Continues to fall”

KPG has been trading in a range between high 70s to high 80s for the last 6 months (77c low was in Oct).

Earnings at month end, unlikely to be anything between now and then that would move the stock out of that range, unless there is a shock interest rate move, or if the Vero Centre deal is announced.

This is what ‘continues to fall’ looks like

Crude but bestei can do on phone

[Rawz]

This is what infallible ‘continues to fall’

Crude but bestei can do on phone

that chart basically follows the rise of the 1year term deposit rate of 2.20% to today of 6%

[LaserEyeKiwi]

This is what infallible ‘continues to fall’

Crude but bestei can do on phone

Sure, and here’s the 6 month chart:

15087

[LaserEyeKiwi]

KPG’s Build-to-rent complex at Sylvia Park (Residio) featured in a one news item on the 6 o’clock news tonight.

https://www.1news.co.nz/2024/05/04/build-to-rent-homes-scheme-builds-momentum-with-law-change/

https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/c36aa56e-2544-4c22-95e3-f4c97c386586https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/d25e6b30-7ca2-496f-b072-4889e3941e5e

[Baa_Baa]

KPG’s Build-to-rent complex at Sylvia Park (Residio) featured in a one news item on the 6 o’clock news tonight.

https://www.1news.co.nz/2024/05/04/build-to-rent-homes-scheme-builds-momentum-with-law-change/

https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/c36aa56e-2544-4c22-95e3-f4c97c386586https://www.sharetrader.co.nz/blob:https://www.sharetrader.co.nz/d25e6b30-7ca2-496f-b072-4889e3941e5e

A good watch, bodes well for the future, can't build em fast enough to meet demand!

[percy]

A good watch, bodes well for the future, can't build em fast enough to meet demand!

Reminds me of what people were saying a few years about retirement villages.?

[Baa_Baa]

Reminds me of what people were saying a few years about retirement villages.?

A few years ago, was before the arse fell out of the property market. We're moving on now, finally, with inflation falling, unemployment rising, OCR stalled and on the verge of declining, listed property sector investments imo present the best forward opportunity and I'm loading up while the prices are good. KPG is one of my fav's.

Yeah, plenty of other substantial companies/funds piling into the BTR market as well. Good that KPG is a first mover in BTR and will satisfy early demand. Drury is truely inspiring, particularly the wrap around commercial, retail and community spaces.

Very happy to be invested in KPG and accumulating at a massive discount to NTA, while also enjoying quarterly gross dividends at 8.5%. Also encouraging in this dire property market that KPG early April recording a 0.1% or $3.6 million increase in the fair value of its property portfolio, which was expected to be worth $3.2 billion at the end of the period.

[percy]

"Yeah, plenty of other substantial companies/funds piling into the BTR market as well."


Next up a build to rent retirement villas.?

[winner69]

This is encouraging news, this is the 2nd executive position they have eliminated recently - I think it shows they are serious on cost control.

https://www.nzx.com/announcements/430356

“Kiwi Property today advised that Ian Passau, GM Development, will be leaving the company following a restructuring of its development function.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said: “Ian has made a huge contribution to Kiwi Property over the past seven and a half years, leading major initiatives such as the Sylvia Park galleria expansion, the construction of our Resido build-to-rent scheme and the successful upzoning and commencement of development at our Drury landholding.“

“Unfortunately, given our focus on cost reduction and with no new development projects commencing in the short term, we’ve been forced to make some tough decisions. I want to thank Ian for everything he has done for the business and we wish him all the best for the future."

Ian will remain at Kiwi Property until mid-August 2024.”

Hope Ian got a very generous redundancy payment ….probably was on a decent salary and 7 years service

[kiwikeith]

Hope Ian got a very generous redundancy payment ….probably was on a decent salary and 7 years service

I am sure he was on a decent salary. I hope he did not get a generous redundancy payment. Anyone who works corporate development should be well aware that it is not a function that is guaranteed to last forever. As a shareholder I will be happy when Kiwi reverts back to being more of a property investor rather than property developer.

I do wonder if any Aucklanders on this site have been along to have a look at KPG's Resido BTR properties. Any feel for the supply/demand dynamic?

[Baa_Baa]

[snip] As a shareholder I will be happy when Kiwi reverts back to being more of a property investor rather than property developer.

I do wonder if any Aucklanders on this site have been along to have a look at KPG's Resido BTR properties. Any feel for the supply/demand dynamic?

They're getting there, imo it's more about a rebalance rather than B&W property investor vs property developer. I trust that they will continue with their strategy to develop the properties disclosed, and that returns margins to investors, but also investment in the long term rental returns. Either way, KPG have a substantial portfolio and continue to reward investors with 8.5% gross dividend returns, while also reshaping their strategy and portfolio. Impressive imo.

You don't have to be an Aucklander to have had a look at the new BTR properties, they are classy accomodation and as KPG said just this week, demand is strong. Just a matter of completing them and filling the property with happy renters.

[SPC]

A yeild of 8.5% calculated on a heavily depressed share price of 82c that is...(6.8c p/share). Not complaining.

[kiwikeith]

Any comment on KPG's property portfolio revaluation of $175.9m or the 3.30cps final div? I'm probably a tad concerned that online trading may well impact their mall tenants in the not too distant future. So, is the revaluation fair?

Disclosure: Holding.

I am not sure how the online trading will pan out. I, myself, am getting fed up with the online shopping. So much of the stuff coming out of china is such low quality. (Golf tees that break after one hit, golf glove too small, thermal vest too tight and low quality, cotton sports socks so thin that you might as well not have any socks etc etc) OK I was refunded the money on the golf glove but still nothing beats being able to touch and feel the product especially clothing before buying,

[LaserEyeKiwi]

OH MY GOODNESS - I MISSED THIS LAST WEEK!

Only just saw this now, how did anyone else not post this??? : https://www.nzx.com/announcements/427035



The Vero Centre is the 2nd largest income generating asset in the KPG portfolio with a book value of $467 Million, and generates approximately $25m in net rental income.

If a sale is completed - assuming somewhere around $425m-$450m price - this will radically reshape KPGs balance sheet. Huge move.

Super interested on whether this eventuates, hopefully we get an update during earnings.

For context, if KPG sold Vero centre and used the proceeds to pay down debt, then the KPG gearing ratio would fall in the ballpark of 1000 basis points, from ~35% to ~25%.

Alternatively they could maintain the current gearing ratio and instead implement a large capital return by way of a one off special dividend or a large buyback program.

Or another option is they simply sit on the cash for the moment safe in the knowledge that they have plenty of cash for future Drury stage 2 development, or for the big LynnMall mixed use development, or for BTR 2 & 3 at sylvia park - all of which are currently planned for later in the decade.

[blackcap]

A yeild of 8.5% calculated on a heavily depressed share price of 82c that is...(6.8c p/share). Not complaining.

I got in at 81.5 and 81 the other day. The yield like you say is astounding and there is plenty of room for Capital Gain.

[bull....]

Super interested on whether this eventuates, hopefully we get an update during earnings.

For context, if KPG sold Vero centre and used the proceeds to pay down debt, then the KPG gearing ratio would fall in the ballpark of 1000 basis points, from ~35% to ~25%.

Alternatively they could maintain the current gearing ratio and instead implement a large capital return by way of a one off special dividend or a large buyback program.

Or another option is they simply sit on the cash for the moment safe in the knowledge that they have plenty of cash for future Drury stage 2 development, or for the big LynnMall mixed use development, or for BTR 2 & 3 at sylvia park - all of which are currently planned for later in the decade.

would a sale mean div 's would be reduced ?

[LaserEyeKiwi]

would a sale mean div 's would be reduced ?

Depends on what they would do exactly with the proceeds.

Vero generates ~$25m Net operating income annually, which is about 14% of KPG total (excluding asset sales).

If they collect $450m cash from a sale and use that all to reduce debt, at their current 5.5% average cost of debt that would save ~$25m in interest costs.

So under that scenario it is a straight wash - they lose $25m in net rental income, but they also reduce annual interest paid by the same amount.

In the short to medium term, the two latest asset completions at sylvia park of 3 Te Kehu way (medical services focused office tower) & BTR 1 will generate annual net rental income approaching $20m once fully occupied, which will offset the bulk of any loss of Vero net income, albeit not for another 12-24 months.

KPG intends dividend payout ratio between 90-100% of AFFO, and it was 92% of AFFO in the first half of this year, so a bit of a buffer there as well.

There are other options though, including returning it to shareholders as a special dividend either partly or fully (maximum of 28c per share if all $450m is returned to shareholders) or as a share buyback perhaps. I think they would probably want to keep gearing ratio in current band at least or lower, so wouldn’t expect it all to be returned to shareholders.

If it happens, a cash windfall of ~$450m for a company with a current market cap of $1.28 billion that is trading over 31% below its NTA provides a lot of intriguing possibilities.

[bull....]

Depends on what they would do exactly with the proceeds.

Vero generates ~$25m Net operating income annually, which is about 14% of KPG total (excluding asset sales).

If they collect $450m cash from a sale and use that all to reduce debt, at their current 5.5% average cost of debt that would save ~$25m in interest costs.

So under that scenario it is a straight wash - they lose $25m in net rental income, but they also reduce annual interest paid by the same amount.

In the short to medium term, the two latest asset completions at sylvia park of 3 Te Kehu way (medical services focused office tower) & BTR 1 will generate annual net rental income approaching $20m once fully occupied, which will offset the bulk of any loss of Vero net income, albeit not for another 12-24 months.

KPG intends to payout between 90-100% of AFFO, and it was 92% of AFFO in the first half of this year, so a bit of a buffer there as well.

There are other options though, including returning it to shareholders as a special dividend either partly or fully (maximum of 28c per share if all $450m is returned to shareholders) or as a share buyback perhaps.

If it happens, a cash windfall of ~$450m for a company with a current market cap of $1.28 billion that is trading over 31% below its NTA provides a lot of intriguing possibilities.

cheers , debt reduction would be prudent hopefully

[SailorRob]

Saw someone post about incredibly attractive yield so I took a look... 8% is hardly incredible, but the old 100 second look and we can see some problems

They struggle to do 100 mil from ops even though they have expanded the balance sheet a lot, pay out 72 and then find another 200 from somewhere to but more crap with.

Whats the point?

This company doesn't make much money - pays most out and borrows more but doesn't make any more cash.

Nothing attractive here, like all this other crap, net income way higher than cash just from BS revalues.

Looks like a 7.5% real cash return with any reinvestment coming from debt. You're paying 1.3 billion for a goose that struggles to lay 100 mil and uses plenty of debt to do so.

Not road kill but like most of the NZX a massive yawn from me.

Anyone wants some cash on BRK vs this through 2034 holler

[Sideshow Bob]

Liquidate. NTA at $1.17.

[blackcap]

Liquidate. NTA at $1.17.

Yes, if trading at large discounts to NTA, the most prudent option the board has is to liquidate and return funds to shareholders.

Unless of course the NTA is a figment...

[Snoopy]

Yes, if trading at large discounts to NTA, the most prudent option the board has is to liquidate and return funds to shareholders.

Unless of course the NTA is a figment...

......which it is from a unit holder investment perspective. It doesn't matter if the NTA is accurate from a building cost replacement perspective, if investors are not prepared to swallow the low return on assets that the rent streams based on those 'fully valued assets' imply. Such assets are set to be 'forever discounted' from a listed sharemarket perspective.

SNOOPY

[SailorRob]

......which it is from a unit holder investment perspective. It doesn't matter if the NTA is accurate from a building cost replacement perspective, if investors are not prepared to swallow the low return on assets that the rent streams based on those 'fully valued assets' imply. Such assets are set to be 'forever discounted' from a listed sharemarket perspective.

SNOOPY


Correct.

This is where I agree 100% with your use of LT3000 hong kong property write up.

[blackcap]

......which it is from a unit holder investment perspective. It doesn't matter if the NTA is accurate from a building cost replacement perspective, if investors are not prepared to swallow the low return on assets that the rent streams based on those 'fully valued assets' imply. Such assets are set to be 'forever discounted' from a listed sharemarket perspective.

SNOOPY

Well its not a building cost replacement NTA is it. It is the current market valuation NTA and thus my question to Directors. Why are you not liquidating and returning funds to shareholders. Or is the market valuation not accurate? And if so, why have the auditors not queried these valuations?

[Rawz]

Well its not a building cost replacement NTA is it. It is the current market valuation NTA and thus my question to Directors. Why are you not liquidating and returning funds to shareholders. Or is the market valuation not accurate? And if so, why have the auditors not queried these valuations?

The market value (both of the properties and the KPG entity) are correct

[LaserEyeKiwi]

I see some of our fav commentators doing their frequent flybys.

I’ll patiently sit and collect my 9% divi return while waiting out the inevitable capital appreciation as we eventually see the property & interest rate cycle leave its trough.

In the mean team will be happy for any positive surprises that come along, most likely from Drury superlot sales and the Vero Centre sale perhaps actually happening.

[SailorRob]

I see all the nags doing their frequent flybys.

I’ll patiently sit and collect my 9% divi return while waiting out the inevitable capital appreciation as we eventually see the property & interest rate cycle leave its trough.

In the mean team will be happy for any positive surprises that come along, most likely from Drury superlot sales and the Vero Centre sale perhaps actually happening.


Laser,

I very strongly recommend learning to read a cash flow statement. Many online resources to help you. Then look over the last 10 years of them and piece together the numbers.

Where are the dividends coming from....

[LaserEyeKiwi]

Laser,

I very strongly recommend learning to read a cash flow statement. Many online resources to help you. Then look over the last 10 years of them and piece together the numbers.

Where are the dividends coming from....

I assure you I can read a cashflow statement, I would be in a lot of trouble if I couldn’t.

I’ve spend hundreds of hours studying the company over the last few years and am fully aware of its cashflow and capital shifts over the last 15 years, the reasons behind them, and the changes the company has made (and continues to make) to its portfolio to not repeat the unfortunate situations they found themselves in previously (mostly due to seismic events, with a pandemic cherry on top).

I can understand how someone doing a quick look over the last decade of KPG financials would form an unfavorable opinion on the company prospects, but once you dig in you can see the future looks significantly different for the company than the past, and based on the current share price it represents a good opportunity (in my opinion at least)

Not sure where you are going with the “where are the dividends coming from” line, as dividends paid are less than funds generated from operations. Recent debt taken on was to fund now completed capital projects that are or will soon generate diversified rental income (BTR 1 - 300 apartments, & 3 te kehu way - medical services focused office tower) or to progress work on assets that will generate high capital gains when sold (Drury earthworks on stage 1 superlots).

Like all listed property companies, the bottom line net income has been heavily skewed by large negative asset re-valuations (which have zero impact on actual company operational profits).

[Baa_Baa]

I see all the nags doing their frequent flybys.

I’ll patiently sit and collect my 9% divi return while waiting out the inevitable capital appreciation as we eventually see the property & interest rate cycle leave its trough.

In the mean team will be happy for any positive surprises that come along, most likely from Drury superlot sales and the Vero Centre sale perhaps actually happening.

Agree, happy to receive the quarterly dividends while Drury comes online and property divestments continue. Have been increasing this as % of my portfolio when around the low 80's or below.

[Rawz]

Hey LEK, did Sailor ever pay you that $200k bet he made? The one where he said dividends were not covered by cashflows but then Snoopy proved they were.

One of STr funny moments lol

[SailorRob]

I assure you I can read a cashflow statement, I would be in a lot of trouble if I couldn’t.

I’ve spend hundreds of hours studying the company over the last few years and am fully aware of its cashflow and capital shifts over the last 15 years, the reasons behind them, and the changes the company has made (and continues to make) to its portfolio to not repeat the unfortunate situations they found themselves in previously (mostly due to seismic events, with a pandemic cherry on top).

I can understand how someone doing a quick look over the last decade of KPG financials would form an unfavorable opinion on the company prospects, but once you dig in you can see the future looks significantly different for the company than the past, and based on the current share price it represents a good opportunity (in my opinion at least)

Not sure where you are going with the “where are the dividends coming from” line, as dividends paid are less than funds generated from operations. Recent debt taken on was to fund now completed capital projects that are or will soon generate diversified rental income (BTR 1 - 300 apartments, & 3 te kehu way - medical services focused office tower) or to progress work on assets that will generate high capital gains when sold (Drury earthworks on stage 1 superlots).

Like all listed property companies, the bottom line net income has been heavily skewed by large negative asset re-valuations (which have zero impact on actual company operational profits).

Ok good post, you're not an idiot.

You can make a case that purchasing at current prices COULD generate a real 10% return from actual cash earnings which is average, but those paying higher prices earlier.... No thanks.

So if you're happy with 10% and understand that to generate more cash they have to invest more money and the returns on reinvested capital will be sub optimal or just market rates then I have zero argument.

[SailorRob]

Hey LEK, did Sailor ever pay you that $200k bet he made? The one where he said dividends were not covered by cashflows but then Snoopy proved they were.

One of STr funny moments lol

Snoopy proved nothing. Wasn't about them being covered by cash flows, debt is a cash flow.

[SailorRob]

I assure you I can read a cashflow statement, I would be in a lot of trouble if I couldn’t.

I’ve spend hundreds of hours studying the company over the last few years and am fully aware of its cashflow and capital shifts over the last 15 years, the reasons behind them, and the changes the company has made (and continues to make) to its portfolio to not repeat the unfortunate situations they found themselves in previously (mostly due to seismic events, with a pandemic cherry on top).

I can understand how someone doing a quick look over the last decade of KPG financials would form an unfavorable opinion on the company prospects, but once you dig in you can see the future looks significantly different for the company than the past, and based on the current share price it represents a good opportunity (in my opinion at least)

Not sure where you are going with the “where are the dividends coming from” line, as dividends paid are less than funds generated from operations. Recent debt taken on was to fund now completed capital projects that are or will soon generate diversified rental income (BTR 1 - 300 apartments, & 3 te kehu way - medical services focused office tower) or to progress work on assets that will generate high capital gains when sold (Drury earthworks on stage 1 superlots).

Like all listed property companies, the bottom line net income has been heavily skewed by large negative asset re-valuations (which have zero impact on actual company operational profits).

Take my hat off to you doing hundreds of hours of work, but if instead you'd spent those hundreds of hours on a decent company with good economics and located outside a banana republic, your net worth would be far better off.

These companies are average at very best, if you can get cheap enough it compensates.

All you can do is earn a pittance on invested capital and to earn more you need to put more up.

[Leemsip]

Just love the way SR approaches everyone from a base position of scorn and superiority. Aside from this trait, he has some good points, particularly on this thread about the difficulty in finding something on the NZX with serious prospects of out performing.... 8-10% is goodish I guess....

[LaserEyeKiwi]

Take my hat off to you doing hundreds of hours of work, but if instead you'd spent those hundreds of hours on a decent company with good economics and located outside a banana republic, your net worth would be far better off.

These companies are average at very best, if you can get cheap enough it compensates.

All you can do is earn a pittance on invested capital and to earn more you need to put more up.

Actually agree with this to some degree. I have made most of my money from large wins on US based names over the last 20 odd years. (I would be far richer if I hadn’t taken wins far too early however). Still have most of my portfolio in US names, but also want a decent amount in NZ equities, but as you say slim pickings on NZX.

[SailorRob]

Just love the way SR approaches everyone from a base position of scorn and superiority. Aside from this trait, he has some good points, particularly on this thread about the difficulty in finding something on the NZX with serious prospects of out performing.... 8-10% is goodish I guess....


Come on... There is also some pity in there as well.

Yes the high quality companies are priced accordingly. And you're right 10% is pretty good depending on the rate of inflation over time.

[SailorRob]

Actually agree with this to some degree. I have made most of my money from large wins on US based names over the last 20 odd years. (I would be far richer if I hadn’t taken wins far too early however). Still have most of my portfolio in US names, but also want a decent amount in NZ equities, but as you say slim pickings on NZX.


Yes and it sounds like you've done the work and are under no illusions at all. You will have your head around the future earnings from recent investments etc and if earnings are stable and predictable then 10% is pretty damn good.

Excuse my ignorance but it looks like they do 100 from operations like clock work but despite putting MANY hundreds more back into the business (actually over a billion over last decade), they still only generate 100. What am I missing?

And then if they do 100 and you're paying 1300 for it... Not the best return?

[winner69]

Great recycling of capital.

And delivered a property level return from inception of 11.0%. …over 20 years I assume

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/BNZ/431169/418516.pdf

[Rawz]

Great recycling of capital.

And delivered a property level return from inception of 11.0%. …over 20 years I assume

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/BNZ/431169/418516.pdf

this is the link you want https://www.nzx.com/announcements/431170

LEK are you happy?

[bull....]

exceptional . glad its be used to pay debt down in this environment and they will save heaps of int cost with the debt reduction

[RTM]

“….. delivers a property level return from inception of 11.0%.”

Exactly what does this mean ? Anyone know ? If they’ve owned it for 10 years….and made just 11% over that time period…sounds pretty mediocre. Does this include all the rent, rates, finance charges, maintenance etc etc.
Sorry if this is a dumbass question, but wondering if this is good or not ?

[Rawz]

“….. delivers a property level return from inception of 11.0%.”

Exactly what does this mean ? Anyone know ? If they’ve owned it for 10 years….and made just 11% over that time period…sounds pretty mediocre. Does this include all the rent, rates, finance charges, maintenance etc etc.
Sorry if this is a dumbass question, but wondering if this is good or not ?

i was wondering the same. if i was to have a guess it would be rents - costs + capital gain= 11% p.a. since inception

[percy]

i was wondering the same. if i was to have a guess it would be rents less costs + capital gain= 11% p.a. since inception

Yes.p.a.
A good result.

[RTM]

i was wondering the same. if i was to have a guess it would be rents - costs + capital gain= 11% p.a. since inception

Thanks, yes, I am hoping that to, but we shouldn’t have to guess.
Sloppy imo.

[winner69]

Maybe it isn’t 11% pa …you’d think they would have said 11% pa if it was

Maybe LEK can confirm it is ‘11% pa’

Or maybe it is just 11% which ties in with SailorRobs thinking yesterday inndispatches discussion with LEK

I don’t know so don’t ask me but one hopes it 11% pa

[LaserEyeKiwi]

this is the link you want https://www.nzx.com/announcements/431170

LEK are you happy?

$459 million???

YES.

1.9% discount to Sep 2023 value???

YES.

Let us hope it is smooth sailing for this deal to completion.

[Balance]

So what?

Shareholders in KPG do not benefit from whatever the company does - I came to that conclusion years ago when I confronted the managers about their continuous capital raising (always favoring institutions) to award themselves with ever bigger management fees and rewards. They had the cheek to argue with me that they were better than that!

There is zero alignment of interests between the management and shareholders.

Compare and contrast with Goodman and you can see the difference.

[LaserEyeKiwi]

Maybe it isn’t 11% pa …you’d think they would have said 11% pa if it was

Maybe LEK can confirm it is ‘11% pa’

Or maybe it is just 11% which ties in with SailorRobs thinking yesterday inndispatches discussion with LEK

I don’t know so don’t ask me but one hopes it 11% pa

No that is not a “since inception” figure.

It was purchased in 2001.

The earliest annual report on NZX is 2015 and at that stage it had a capital value of $323m.

Annual net income + realised gain on sale would reasonably equate to 11% per annum ballpark.

[LaserEyeKiwi]

This transaction (if completed) will represent the majority of KPGs remaining de-risking strategy.

Their remaining standalone office portfolio (ASB north wharf in Auckland & Aurora Center in Wellington) are combined worth less than this sale, and worth not much more than KPGs build-to-rent asset.

[LaserEyeKiwi]

No that is not a “since inception” figure.

It was purchased in 2001.

The earliest annual report on NZX is 2015 and at that stage it had a capital value of $323m.

Annual net income + realised gain on sale would reasonably equate to 11% per annum ballpark.

$236m was the original cost I think.

So the capital gain over 23 years equates to 4.94% GAGR. Add annual net income on top of that.

[RTM]

“Vero Centre, a flagship office asset in the company's portfolio, is being sold at a discount of 1.9% to its last year's September valuation, but at a property-level return of 11% from inception, Kiwi Property said in an exchange filing.”

From a Reuters report. I’m still confused as to what it means.

[SailorRob]

“Vero Centre, a flagship office asset in the company's portfolio, is being sold at a discount of 1.9% to its last year's September valuation, but at a property-level return of 11% from inception, Kiwi Property said in an exchange filing.”

From a Reuters report. I’m still confused as to what it means.

It means they flogged it to some idiot who paid far too much and most all the return came from capital appreciation rather than cash generation from the net rent.

The buyer is now holding the nuclear waste.

[SailorRob]

$236m was the original cost I think.

So the capital gain over 23 years equates to 4.94% GAGR. Add annual net income on top of that.

What's your estimated total then, around 8%? Sounds about right to me.

[LaserEyeKiwi]

What's your estimated total then, around 8%? Sounds about right to me.

Its 11%, like KPG said today.

Net operating income last year for the building was $25.4m, which is a 5.5% return on the $459m sale price. But $25.4m is a 10.75% return on the original $236m build cost.

So including capital gain & net operating income, 11% sounds entirely plausible for an average annual return over 21 years.

[LaserEyeKiwi]

It means they flogged it to some idiot who paid far too much and most all the return came from capital appreciation rather than cash generation from the net rent.

The buyer is now holding the nuclear waste.

The sale price is $85m below the peak building value from 2 years ago. That’s how bad the office building market has collapsed post-pandemic & in the current high interest rate environment.

The buildings new owners (IF the sale is completed) will likely do ok as interest rates decrease as the interest rate cycle reverses.

[winner69]

These property companies always throw out return % that sound great but they never seem to end as solid shareholder returns

Like Morningstar data says $1,000.00 invested in Kiwi in 2014 is now worth $997.42 …..and that’s with dividends reinvested

Could mean anything but will $10,000 invested today be worth $25,937 in 10 years

[SailorRob]

Its 11%, like KPG said today.

Net operating income last year for the building was $25.4m, which is a 5.5% return on the $459m sale price. But $25.4m is a 10.75% return on the original $236m build cost.

So including capital gain & net operating income, 11% sounds entirely plausible for an average annual return over 21 years.

Yep that's pretty bloody good to be honest.

[LaserEyeKiwi]

These property companies always throw out return % that sound great but they never seem to end as solid shareholder returns

Like Morningstar data says $1,000.00 invested in Kiwi in 2014 is now worth $997.42 …..and that’s with dividends reinvested

Could mean anything but will $10,000 invested today be worth $25,937 in 10 years

No argument that it’s been severe underperformance over the last decade.

But as I have mentioned before, the outgoing chair last year at the AGM finally put it all in black and white as to why that was: many hundreds of millions of dollars went into seismic strengthening and repairs for assets in the lower North island and the South Island, for which there was zero return in terms of upward valuations, but was required to simply keep the assets producing an income (and which in turn meant they could be subsequently sold).

Which is why KPG spent the last half decade divesting as many of those assets as possible south of Hamilton. It in no way wants to be exposed to that sort of capital spend program again.

Pre 2018 they owned 3 malls & 3 office towers south of Hamilton. They have since sold 2 of the malls and 2 of the office towers. They had a conditional offer on the last office asset last year (Aurora centre, a sale that did not complete), while the last mall (the Plaza) had interest, but is now undergoing seismic strengthening before attempting to sell again (which really drives home the seismic issue).

The 2 office towers & 2 malls were sold for a total $420.2m
The remaining office tower & mall left to be sold are currently valued at a total of $256m

[bull....]

yep kpg of the future is what it is about now , a totally different beast. stockland in aus likes the town centre approach as well saying it offers resilence in a portfolio

[SailorRob]

No argument that it’s been severe underperformance over the last decade.

But as I have mentioned before, the outgoing chair last year at the AGM finally put it all in black and white as to why that was: many hundreds of millions of dollars went into seismic strengthening and repairs for assets in the lower North island and the South Island, for which there was zero return in terms of upward valuations, but was required to simply keep the assets producing an income (and which in turn meant they could be subsequently sold).

Which is why KPG spent the last half decade divesting as many of those assets as possible south of Hamilton. It in no way wants to be exposed to that sort of capital spend program again.

Pre 2018 they owned 3 malls & 3 office towers south of Hamilton. They have since sold 2 of the malls and 2 of the office towers. They had a conditional offer on the last office asset last year (Aurora centre, a sale that did not complete), while the last mall (the Plaza) had interest, but is now undergoing seismic strengthening before attempting to sell again (which really drives home the seismic issue).

The 2 office towers & 2 malls were sold for a total $420.2m
The remaining office tower & mall left to be sold are currently valued at a total of $256m


Thats a huge lesson in risks that can just come out of nowhere. Who would have picked that.

[Baa_Baa]

Thats a huge lesson in risks that can just come out of nowhere. Who would have picked that.

More important to me is that they have recognised those vulnerabilities, completely changed their property investment strategy and are executing on it successfully. There is literally nothing about the KPG past that is part of the KPG long term future. I've bought into the future, we'll see how that goes. Meanwhile, 8%+ yield paid out in quarterly dividends are welcome capital to grow my share or invest elsewhere.

[SailorRob]

More important to me is that they have recognised those vulnerabilities, completely changed their property investment strategy and are executing on it successfully. There is literally nothing about the KPG past that is part of the KPG long term future. I've bought into the future, we'll see how that goes. Meanwhile, 8%+ yield paid out in quarterly dividends are welcome capital to grow my share or invest elsewhere.


Yes but what are the next vulnerabilities that they nor us have recognised, this goes for any company.

They have mitigated the last risk that smashed them - good - but what else is out there?

My comment was nothing specific to KPG, just that these risks can come out of nowhere.

[Baa_Baa]

Yes but what are the next vulnerabilities that they nor us have recognised, this goes for any company.

They have mitigated the last risk that smashed them - good - but what else is out there?

My comment was nothing specific to KPG, just that these risks can come out of nowhere.

I get that, but if you did a risk analysis on all of the reliable dividends payers that most mum and dads invest into, you'd not invest at all. They're all going to be wiped out by earthquakes, tsunami, flooding, climate change etc. Likelihood = unlikely/rare, Consequence = major/devastating. But people don't do this analysis, it's too scary.

It's another example of folks who invest their money for the reliable and sustainable income and don't really care or even think about how that income is generated, all they care about is the income still comes in. Maybe also that their capital isn't decimated in the process, but even then, that income is precious, for many investors.

[SailorRob]

I get that, but if you did a risk analysis on all of the reliable dividends payers that most mum and dads invest into, you'd not invest at all. They're all going to be wiped out by earthquakes, tsunami, flooding, climate change etc. Likelihood = unlikely/rare, Consequence = major/devastating. But people don't do this analysis, it's too scary.

It's another example of folks who invest their money for the reliable and sustainable income and don't really care or even think about how that income is generated, all they care about is the income still comes in. Maybe also that their capital isn't decimated in the process, but even then, that income is precious, for many investors.


Yeah man that's bloody harsh but I think you're right.

And we're led to believe that the market is hyper efficient and absorbs and prices everything instantly.

[whatsup]

Yes.p.a.
A good result.

Percy, your the one to go to.
I think if I remember correctly that when Kiwi was set up all those years ago that it was a mixture of the ex Unity Property guys ( Unity went bust in the 87 crash ) and a Canadian enterprise who early on bought into and largely funded what has turned into the Shortland St property.
Shortland Property Group then went onto develope the Mt Wellington property shopping centre which in its early years had a very rocky start as was discussed at the Shortland Property AGMs at great length and wisdom.
My how things can change, now the shopping centre is the jewel and the office investment has had its day !!
Can you enlighten us if possible.

[percy]

Percy, your the one to go to.
I think if I remember correctly that when Kiwi was set up all those years ago that it was a mixture of the ex Unity Property guys ( Unity went bust in the 87 crash ) and a Canadian enterprise who early on bought into and largely funded what has turned into the Shortland St property.
Shortland Property Group then went onto develope the Mt Wellington property shopping centre which in its early years had a very rocky start as was discussed at the Shortland Property AGMs at great length and wisdom.
My how things can change, now the shopping centre is the jewel and the office investment has had its day !!
Can you enlighten us if possible.


Sorry I only really got interested in them a couple of years ago when a friend was telling me he held them and liked their outlook.
Only bought a small holding for the wife.
I did work at Northlands Mall in Christchurch while KPG owned it.Was not impressed with them or a previous owner FBU.
But as you point out Sylvia Park is an outstanding success and Drury looks exciting.
I am sitting on a bit of cash at present and finding it hard not to spend it on KPG,HGH or SCL.

[whatsup]

Jan 2020 @ $1.55 to todays .84 , says it all !

[percy]

Jan 2020 @ $1.55 to todays .84 , says it all !

https://en.wikipedia.org/wiki/Kiwi_Property_Group#:~:text=Kiwi%20Property%20was% 20established%20in%201992%20as%20the,which%20held% 20a%20total%20portfolio%20of%20nine%20properties.

[LaserEyeKiwi]

Been looking at what the conditional $458m sale means for KPGs debt profile. Yesterday they said cash would be used to pay down debt (which would take gearing down to a fantastically healthy 25%).

As at the last report, Sep 30th 2023, they had $1,105 million in debt. This was split as follows:

$605m in bank debt
$500m in bonds

The bonds have a lower average interest rate, so the $458m will likely all go towards the outstanding bank debt, which would bring it down to ~$150m range.

However there will likely have been somewhere north of $100m in capex between Sep 30th 2023 and the deal closing (most of that towards finishing BTR1) , so bank debt may still remain above $200m perhaps post transaction.

So presuming they put all the cash towards reducing debt, that should be somewhere above $725m post deal, with a gearing ratio around 27.5%

[Sideshow Bob]

https://www.nzx.com/announcements/431745

• Net rental income: $184.9m (-9.2%)
• Operating profit before tax: $108.2m (-16.5%)
• Net loss after tax: $2.1m (+99.1%)
• Adjusted funds from operations: $99.8m (-14.3%)
• Net tangible assets per share: $1.17 (-5.1%)
• Full-year dividend: 5.70 cps (No change)

Kiwi Property released its annual results for the year ended 31 March 2024 (FY24) today, announcing a solid underlying operational performance and progress on key aspects of its mixed-use strategy.

Financial performance

Kiwi Property recorded net rental income of $184.9 million in FY24, down 9.2% on the year before, due to the sale of non-core assets such as Northlands and Westgate Lifestyle in recent periods. Operating profit before tax was similarly affected, declining 16.5% to $108.2 million, while adjusted funds from operations (AFFO) decreased 14.3% to $99.8 million. When viewed on a like-for-like [1] basis to enable a more accurate comparison of Kiwi Property’s underlying performance, net rental income rose 5.8% in FY24, demonstrating the company’s ability to grow revenue from its remaining assets.

Kiwi Property continued to drive leasing spreads in FY24 despite the challenging economic conditions, with total rental movement up 4.4% and new leases rising 5.3%. Leasing spreads on new office leases rose 18.7%, underpinned by success at Vero Centre over recent months.

Sales performance

The Base Te Awa and LynnMall achieved sales uplift of 13.1% and 1.8%, respectively, in FY24, fuelled by the opening of new stores such as JD Sports and JB Hi-Fi. Sylvia Park sales were flat for the year following several periods of significant growth, but remain well ahead of pre-COVID levels. The company’s specialty gross occupancy cost ratio was flat at 13.0%, reflecting the high productivity and value of Kiwi Property’s tenancies.

Asset values stabilising

The fair value of Kiwi Property’s asset portfolio increased by 0.1% or $3.3 million in the second half of FY24 and finished the year 2.4% down overall. The company’s property portfolio was worth $3.2 billion on 31 March 2024 [2,3].

The Sylvia Park Precinct [4] posted a fair value uplift of 1.5% in the last six months of the financial year, driven by rental growth and a marginal firming of capitalisation rates, while Kiwi Property’s CBD office portfolio declined in value by 2.0% or $16.4 million, underpinned by macroeconomic headwinds facing the asset class. The decrease in valuations contributed to a net loss after tax of $2.1 million in FY24.

According to Kiwi Property Chief Executive Officer, Clive Mackenzie, “the resilient valuation of our mixed-use portfolio highlights the strength and defensive characteristics of these flagship properties. By continuing to drive sales, grow rents and diversify our income streams, we will encourage valuation uplift as the economy stabilises and capitalisation rates improve.”

Progressing mixed-use

Construction of Kiwi Property’s 295 apartment build-to-rent (BTR) complex, Resido, is nearly complete, with two of the development’s three buildings already finished and the final set to open on 4 June 2024. Resido’s launch is a key milestone on Kiwi Property’s mixed-use journey and will bring residential accommodation to Sylvia Park for the first time. The company expects to move towards full occupancy within the next 12-18 months.

In February 2024, Kiwi Property announced it had leased 12% or 34 of the Resido apartments to leading Australian flexible accommodation provider, Urban Rest. The deal delivers guaranteed income from day one, helping to de-risk the project, while simultaneously providing an endorsement of BTR’s potential in New Zealand.
Also at Sylvia Park, 3 Te Kehu Way is now 96% leased, with ASB recently signing an agreement to rent over 1,700 square metres of floor space in the building. The bank joins corporates such as ANZ and IAG, which also have a presence at Sylvia Park, attracted by its amenities, location, and sustainability credentials.

Strict cost control

Kiwi Property undertook several initiatives during FY24 to reduce costs and enhance business efficiency. First among these was the implementation of the company’s new Yardi enterprise IT system, which has unlocked a range of efficiency gains and assisted Kiwi Property in achieving a 9% reduction in employee headcount.
The full financial benefit of these and other cost-saving initiatives is expected to be realised from FY25, including an approximately $2.9 million decrease in people-related costs [5]. The company’s aim is to reduce management expenses as a percentage of net rental income (including property management revenue) to FY22 levels.

Recycling capital

Kiwi Property remains focused on reducing gearing, with asset recycling an important aspect of its capital management agenda. On 16 May 2024, the company announced the conditional sale of the Vero Centre to a Hong Kong China-based institutional investor for $458 million, subject to Overseas Investment Office approval. Presuming the transaction settles, the funds raised will be used to repay bank debt, reducing gearing to around 27% on a pro forma basis and providing headroom to pursue new opportunities.

Continued progress on ESG

The company’s commitment to sustainability continued in FY24, resulting in several ESG highlights. Kiwi Property increased Sylvia Park’s on-site renewable energy capacity, with the addition of a new solar array that contributed to the generation of over 1,300,000 kWh of power across the precinct in FY24. 3 Te Kehu Way received New Zealand’s first 6-Green Star Design & As Built NZ v1.0 Built rating, while a successful pilot of the NABERS shopping centre rating tool, saw Sylvia Park obtain an indicative 6-Star NABERS Energy rating.

Changes to the Kiwi Property Board

Jane Freeman has signalled she will step down as a director of Kiwi Property at its upcoming annual shareholder meeting, bringing a close to her nine-year governance career with the company. The search for a new director is in its final stages, with an appointment expected to be announced shortly.

Kiwi Property Chair, Simon Shakesheff, said, “Jane has made a significant contribution to the board for almost a decade, including leadingthe Remuneration and Nominations Committee. We’ve benefitted greatly from her digital and customer experience expertise, and we wish her all the best for the future.”

Dividend and guidance

Kiwi Property will pay a final dividend of 1.425 cents per share for the fourth quarter of FY24 on 21 June 2024 taking the full-year dividend payment to 5.70 cents per share. Looking ahead, the company today also confirmed its dividend guidance at 5.40 cents per share for FY25 [6], a 5.3% reduction on the year before; primarily driven by the financial impact of the legislative change removing its ability to claim tax depreciation on commercial buildings.

“We’ve been unable to offset the reduction in AFFO caused by the removal of building depreciation and as a result, have lowered the dividend guidance for FY25. We remain committed to delivering dividend growth from FY26, fuelled by Resido rental income, additional revenue from a fully leased 3 Te Kehu Way and Drury land sales, among other things,” said Shakesheff.

FY25 Outlook

According to Mackenzie, Kiwi Property is well-positioned to benefit from a range of macroeconomic trends facing New Zealand heading into the new financial year.
“The shortage of housing, fuelled by record migration and declining building consents, is driving demand for quality rental accommodation, creating opportunities for Resido. In parallel, low online shopping penetration and a limited amount of new retail space look set to benefit established retail destinations such as Sylvia Park, LynnMall and The Base. Against this backdrop, we will remain focused on strategic execution and delivering for our shareholders in FY25 and beyond,” Mackenzie concluded.

[winner69]

Jeez the KPG narrative and accounts even more confusing than what Oceania produce.

But they say ‘solid results’ so suppose it’s a good report

No pay rise for punters though

I’ll wait for LEK’s summary

[777]

No pay rise for punters though


But a reduction for the next period announced.

[LaserEyeKiwi]

About to dive into the reports, but from the summary some quick thoughts:

- As expected, Vero sale will reduce gearing down to ~27% range. Excellent stuff.
- Like-for-like net rental increase of 5.8%, very nice.
- Focus on cost control with reduction in headcount is appreciated.
- The removal of building depreciation finally shows its teeth, unfortunately resulting in that guided 5.3% divi reduction for current financial year, before the new revenue sources kick in to increase dividends again next year.

All in all a bit of a non-news event so far, with the main event being the Vero sale already announced.

[LaserEyeKiwi]

Reminder that the earnings call is available online at 10am:

A live webcast for analysts, investors and media is scheduled for 10:00 am (NZT) on this date and can be viewed online at: https://edge.media-server.com/mmc/p/nzqutjd3

[LaserEyeKiwi]

Jeez the KPG narrative and accounts even more confusing than what Oceania produce.

But they say ‘solid results’ so suppose it’s a good report

No pay rise for punters though

I’ll wait for LEK’s summary

Personally I would have preferred they didn’t drop the dividend by such a minor amount, instead they should have maintained the dividend and just paid out the extra single digit millions (at maybe ~105% of AFFO), knowing that revenue is increasing over next 12 months as BTR & 3 tekehu way tenant up, and the likelyhood of the Vero sale brings in almost half a billion in cash.

Not that I will particularly notice the 5% divi reduction, but I think it just sets a bum note when its a temporary issue of such a small amount.

[kiwikeith]

I thought they may have mentioned how the renting out of apartments at residio was going - but no mention so I guess not going as well as hoped.

[Habits]

Agreed 100 percent LEK. Shoppers are paying more to the lessees, who are paying more to KPG. But KPG wants to pay less to the shareholders who fund the operation and carry the risk
MASSIVE BUM NOTE

[Rawz]

Agreed 100 percent LEK. Shoppers are paying more to the lessees, who are paying more to KPG. But KPG wants to pay less to the shareholders who fund the operation and carry the risk
MASSIVE BUM NOTE

As a shareholder you'd only be robbing yourself to pay yourself a full dividend...

[LaserEyeKiwi]

I thought they may have mentioned how the renting out of apartments at residio was going - but no mention so I guess not going as well as hoped.

They just completed 3 of the 4 buildings two weeks ago (2 of the towers & the residents pavilion building), and since then they have started doing tours and started formal applications to lease, they have 12 apartments under tenanting applications already (some complete, others still processing), in addition to the 36 apartments already leased to Urban loft on a 3 year contract. 4th and final building to be finished next week. They expect to reach full occupancy over next 12-18 months. Expected IRR on resido has increased slightly. This was discussed on earnings call.

[kiwikeith]

They just completed 3 of the 4 buildings two weeks ago (2 of the towers & the residents pavilion building), and since then they have started doing tours and started formal applications to lease, they have 12 apartments under tenanting applications already (some complete, others still processing), in addition to the 36 apartments already leased to Urban loft on a 3 year contract. 4th and final building to be finished next week. They expect to reach full occupancy over next 12-18 months. Expected IRR on resido has increased slightly. This was discussed on earnings call.

Thanks for that Lasereye. They are going to reduce the dividend to 5.3c. Still not a bad yield. With a share price of 83 cent it still gives a dividend yield of 6.4% after tax.

[LaserEyeKiwi]

The herald speculating about when the KPG BTR project at NewLynn mall will start: https://www.nzherald.co.nz/business/property-insider-150m-victoria-lane-apartments-finished-new-250m-indigo-hotel-to-open-in-august/SG5LXY2PZBFWPB5PBWZC44LC4U/

I don’t think it will be anytime soon, considering they recently let go of their head of development because there was literally no new projects for him to work on.

Personally i hope they would consider potentially partnering with simplicity living on future BTR projects.