Property Shares

[Kiwi]

Advice please. I'm thinking of buying shares in a Listed Property company for a dividend return and hopefully some share growth. Can someone advise me why I shouldn't be buying Precinct Property, as it's to me it looks like it has some impressive buildings with long term tenants and future expansion plans with the new Commercial Precinct development in the Auckland CBD. Had some thoughts on Stride Property as well but confused over the demutualization plans. Any advice is welcome.

[Mickey]

Advice please. I'm thinking of buying shares in a Listed Property company for a dividend return and hopefully some share growth. Can someone advise me why I shouldn't be buying Precinct Property, as it's to me it looks like it has some impressive buildings with long term tenants and future expansion plans with the new Commercial Precinct development in the Auckland CBD. Had some thoughts on Stride Property as well but confused over the demutualization plans. Any advice is welcome.

Hi Kiwi - have a look through this thread as a starter for 10 - I've found it quite helpful

http://www.sharetrader.co.nz/showthread.php?2157-Listed-Property-Trusts

[fungus pudding]

Hi Kiwi - have a look through this thread as a starter for 10 - I've found it quite helpful

http://www.sharetrader.co.nz/showthread.php?2157-Listed-Property-Trusts

I like LPTs and hold ARG, GMT, KPG, PCT, PFI, and STR. I like them all and buying a spread gives the benefit of exposure to different sectors. e.g KPG for retail, PFI for industrial/wholesale, PCT for office. They are all PIEs. Augusta is not a PIE if that's important to you.
They should all show reasonable growth as well as steady income - keeping in mind everything carries a risk.

[Kiwi]

Many thanks Mickey and Fungus Pudding, always good to hear other investors opinions.

[dagoldtoof]

Look up MFL NZ....Very happy to have been invested with this superannuation company..Apart from a bad patch 2007 2009 all is good...

[dagoldtoof]

Thinking again I guess MFL has now been overtaken by Kiwisaver....However my returns with MFL over a long period have been very good in a era where many of these companies just disappeared or fraud or returns were shameful...

[Lewylewylewy]

As always, I mention VHP. Investments in hospital property with massively long average lease - something like 16 years or so. Growth very good, dividend very good. PIE.

[Jerry]

Reviving a sleeping thread... VHP's property manager has muddied the waters as to the profitability for shareholders. I'm unsure whether KPG is a good 'hold' in a market downturn as it depends on retail shopping for income from it's properties. Whaddya think?

[percy]

In any retail downturn it is usually poorly located stores that suffer the most.
KPG's Sylvia Park [Auckland] and Northlands Mall [ChCh], are prime Malls with very strong retailers.
A case of the weak getting weaker and the strong getting stronger.
In Nelson you see this happening with Richmond getting stronger and Nelson Central getting weaker.
Therefore I would see any retail downturn having little affect on KPG,who usually manage to set their rentals when retail conditions are bouyant.

[Lewylewylewy]

Thanks for the update on VHP. Still looks ok, just an annoyance. Though personally I now use retirement villages as my property play. No PIE, but better returns in growth. Obviously lots of exposure to govt policy risk.

[artemis]

Thanks for the update on VHP. Still looks ok, just an annoyance. Though personally I now use retirement villages as my property play. No PIE, but better returns in growth. Obviously lots of exposure to govt policy risk.

Few months ago Ms Martin (Minister for Seniors) in a speech mentioned the possibility of requiring (aka forcing) retirement villages to include affordable units. Whatever affordable means on the day. Have not heard anything since, but for all we know there is a working group getting ready to recommend it!

[Jerry]

Thanks for the update on VHP. Still looks ok, just an annoyance. Though personally I now use retirement villages as my property play. No PIE, but better returns in growth. Obviously lots of exposure to govt policy risk.
I agree that the retirement villages are a better property investment. They are less indebted than the 'traditional' property companies. I was surprised that their shareprice responded so strongly to the correction in December, though I think that was probably more linked to Aus property news rather than the stock market.

[troyvdh]

Every so many years this question pops up.I could be wrong but I believe in the last 1-2 years boring old PFI had been declared as the best returning property entity for so many years..I believe compounding return of over 9 % .
Best of all the name of the of company has remained the same !!!!
Held since listing ..25 + years.
Cheers.

[troyvdh]

Dear kiwi its been a while..I hope you were prudent re your investments...

[fungus pudding]

Anyone know anything about PMG?

https://www.pmgfunds.co.nz/

Looks okay to me, but difficult to know how active their 'closed shop' secondary market is. Any comments appreciated.

[Lewylewylewy]

I don't know about that, but would like to add that theres are lots of other stocks that can be classed as property stocks. Anything with a high nta that is based in land, such as wine stocks, retirement villages, ports and airports. With landlords being vilified more and more, with left wing govt making additional tenancy laws, these options are becoming more attractive add property plays.

[King1212]

I am in discussion with them...their pacific fund is interesting...7% return. Very diverse portfolio....

[fungus pudding]

I am in discussion with them...their pacific fund is interesting...7% return. Very diverse portfolio....

That's what I'm looking at. It does look interesting. It's open ended so they can keep adding properties to it and issue more shares. Hard to see how or why they would promote a secondary market when they're selling new ones. IOW is there a way out? Doesn't seem like they can be sold on the unlisted share market.

[King1212]

They are buying 2 new commercial properties in Wellington. Which they got it under valuation value. It will bring up to 14 properties. All up post completion. To sell, the manager said there is a secondary market and will take 30 days to sell with 1.5% plus GST fee. However...I see this as a long term investment. I done the research...their properties are diverse. For me...better off join the syndicate rather than buy residential property. Where return only around 3 to 4 % plus your insurance..rates and tenants bull****.

[fungus pudding]

They are buying 2 new commercial properties in Wellington. Which they got it under valuation value. It will bring up to 14 properties. All up post completion. To sell, the manager said there is a secondary market and will take 30 days to sell with 1.5% plus GST fee. However...I see this as a long term investment. I done the research...their properties are diverse. For me...better off join the syndicate rather than buy residential property. Where return only around 3 to 4 % plus your insurance..rates and tenants bull****.

I agree with most of that. I gave up on residential properties donkey's years back. I am in other unlisted syndicates and generally they are good. Low liquidity doesn't concern me as I have no to need or intention of selling. But one day, in a different market, my beneficiaries may well want out. For that reason I have a fair smattering of LPTs. So I'll most likely stick a few bob in and keep my eye on things for a while.
Appreciate your comments.

[King1212]

Yes...long term...for retirement spending.

[Beagle]

Underwriting terms appear not unreasonable as does the yield. Projected NTA as at 30 March 2020 didn't leap out of the PDS statement at me on a brief skim but I have very limited time to apply to this so its probably there, just I haven't noticed it.
Some of their buildings are quite old and I know the Kelston shopping centre has been a dog forever and a day. I think if we get tough economic times small tenants of small buildings are probably less resilient than big corporates or government departments leasing larger buildings off the listed property owners so there's definitely extra risk with smaller tenants.

On the yield front 7% seems reasonable and the closest comparative listed vehicle would be ARG which is also a PIE and on a grossed up basis assuming a 33% tax rate is yielding 6.5% forecast for FY20. ARG have a policy of only paying out sustainable dividends and deduct sufficient to pay incentive fees for lease renewals and repairs and maintenance sufficient to keep their buildings in a good state of repair.

For a half of one percent yield difference you're getting much better diversification with ARG, a proven sustainable dividend yield, generally more substantial sized tenants and the benefits of being listed with easy entry and exit to the shares.

I don't know much about these guys so can't comment further and I tend to stick to what I know and trust and if I need a yield boost to my portfolio there's any number of stocks like AIR, ZEL and HLG to name just 3 paying over 10% so its easy to make up that half a percent with some allocation elsewhere.

Agree 100% that domestic rental properties are a very tough gig especially under the current Govt regime heavily favoring tenants rights and with the widespread proliferation of methamphetamine adding to the already very high risks from tenant damage and with limited scope for capital gains and lack of ability to claim depreciation on the house and now ring fencing of rental losses, landlords look like they're on a hiding to nothing.

[fungus pudding]

Underwriting terms appear not unreasonable as does the yield. Projected NTA as at 30 March 2020 didn't leap out of the PDS statement at me on a brief skim but I have very limited time to apply to this so its probably there, just I haven't noticed it.
Some of their buildings are quite old and I know the Kelston shopping centre has been a dog forever and a day. I think if we get tough economic times small tenants of small buildings are probably less resilient than big corporates or government departments leasing larger buildings off the listed property owners so there's definitely extra risk with smaller tenants.

On the yield front 7% seems reasonable and the closest comparative listed vehicle would be ARG which is also a PIE and on a grossed up basis assuming a 33% tax rate is yielding 6.5% forecast for FY20. ARG have a policy of only paying out sustainable dividends and deduct sufficient to pay incentive fees for lease renewals and repairs and maintenance sufficient to keep their buildings in a good state of repair.

For a half of one percent yield difference you're getting much better diversification with ARG, a proven sustainable dividend yield, generally more substantial sized tenants and the benefits of being listed with easy entry and exit to the shares.

I don't know much about these guys so can't comment further and I tend to stick to what I know and trust and if I need a yield boost to my portfolio there's any number of stocks like AIR, ZEL and HLG to name just 3 paying over 10% so its easy to make up that half a percent with some allocation elsewhere.

Agree 100% that domestic rental properties are a very tough gig especially under the current Govt regime heavily favoring tenants rights and with the widespread proliferation of methamphetamine adding to the already very high risks from tenant damage and with limited scope for capital gains and lack of ability to claim depreciation on the house and now ring fencing of rental losses, landlords look like they're on a hiding to nothing.

Difference in yield is substantial. 7% from Pacific is the amount paid out - so 10.5% equivalent to a 33% margin taxpayer; Arg pays 4.32 or as near as damnit to 6.5%.

[Beagle]

Difference in yield is substantial. 7% from Pacific is the amount paid out - so 10.5% equivalent to a 33% margin taxpayer; Arg pays 4.32 or as near as damnit to 6.5%.
Page 45 of the PDS alludes to 6.03 cents per share projected yield after tax = 5.7% net.

[dibble]

The 7% is gross is my understanding... ie you then have to sort tax out yourself

[mfd]

I'm not sure if the structure is the same, but open ended property funds have been running into trouble in other parts of the world as investors tend to want to cash out when times are tough, leading to forced disposal of properties at the worst possible time, or significant added fees to discourage withdrawals. For example

https://www.moneyobserver.com/news/open-ended-property-funds-hit-sellers-pocket-amid-brexit-concerns

[fungus pudding]

I'm not sure if the structure is the same, but open ended property funds have been running into trouble in other parts of the world as investors tend to want to cash out when times are tough, leading to forced disposal of properties at the worst possible time, or significant added fees to discourage withdrawals. For example

https://www.moneyobserver.com/news/open-ended-property-funds-hit-sellers-pocket-amid-brexit-concerns

I think the difference is those funds pay out to investors on demand, and hold some cash to do so; whereas Pacific must be sold to another investor either through Pacific, if they have buyers, or through a broker who deals in unlisted shares. They do not offer to buy back the shares.

[King1212]

Yup correct....it will take around 30 days to sell your shares....just like the house. But saying that..this is unlisted....therefore the sp not up and down like a yoyo...

[mfd]

I think the difference is those funds pay out to investors on demand, and hold some cash to do so; whereas Pacific must be sold to another investor either through Pacific, if they have buyers, or through a broker who deals in unlisted shares. They do not offer to buy back the shares.

That sounds more sensible, if you don't mind the lack of liquidity. Not for me, but it sounds like you've got a pretty decent moat of more liquid holdings.

[Beagle]

I think with these sort of things you need to have a look at the total return and not get too fixated with yield.
PDS states that in 2014 the value was $1 and five years later they're raising new capital at $1.05.
Few thoughts.
1. If the level at which they are raising funds is representative of the net tangible asset backing of same this is a pitiful performance compared to the NTA growth of say GMT an active property developer and you could very easily make the case the vastly more experienced team at Goodman Property Trust who's shar price has nearly doubled over the same time have added substantially more value through their management and development activities. ARG another example and their share price has climbed 45% over that time. PFI another example and there are many more.
2. The question must be asked, why has the net tangible asset backing apparently gone backwards, (in real inflation adjusted terms) over the last 5 years since the inception of this fund when all the listed companies have done vastly better over the same timeframe ?
3. What does this suggest about the calibre of the management of this company and their property selection processes and criteria ?

To me management have shown woeful underperformance in terms of even keeping the net tangible asset backing the same in real inflation adjusted terms, let alone matching the listed company benchmark. The sum total of management's expertise since this was formed in 2014 so badly underperforms the market this suggests to me they have bought properties primarily for yield with little or no consideration given toward capital growth prospects.

Forecast are one thing, but as a bean counter I have learned to put far more stock on the long term past track record of a company and while the yield has been okay, their track record of lack of growth suggests this is a dead end yield trap to me.

Notes. According to the reserve bank inflation calculator $1.00 in 2014 should presently be worth $1.06 based on general inflation and $1.42 based on housing inflation.
https://www.rbnz.govt.nz/monetary-policy/inflation-calculator thus managements long term track record is most unimpressive.

[King1212]

Yes..I questioned that. They said because the have been growing the assets. Since started 2014.. they raised 2 times and this is the third. Their so of $1.05 is the total assets minus liabilities...so not like listed one..that some time trading multiple of NTA....

Great discussion guys....I am still deciding to join or not....but would like a commercial portfolio....I have rental, enough shares and now looking for steady income source...PMG pacific fund

[Tronald Dump]

I think with these sort of things you need to have a look at the total return and not get too fixated with yield.
PDS states that in 2014 the value was $1 and five years later they're raising new capital at $1.05.
Few thoughts.
1. If the level at which they are raising funds is representative of the net tangible asset backing of same this is a pitiful performance compared to the NTA growth of say GMT an active property developer and you could very easily make the case the vastly more experienced team at Goodman Property Trust who's shar price has nearly doubled over the same time have added substantially more value through their management and development activities. ARG another example and their share price has climbed 45% over that time. PFI another example and there are many more.
2. The question must be asked, why has the net tangible asset backing apparently gone backwards, (in real inflation adjusted terms) over the last 5 years since the inception of this fund when all the listed companies have done vastly better over the same timeframe ?
3. What does this suggest about the calibre of the management of this company and their property selection processes and criteria ?

To me management have shown woeful underperformance in terms of even keeping the net tangible asset backing the same in real inflation adjusted terms, let alone matching the listed company benchmark. The sum total of management's expertise since this was formed in 2014 so badly underperforms the market this suggests to me they have bought properties primarily for yield with little or no consideration given toward capital growth prospects.

Forecast are one thing, but as a bean counter I have learned to put far more stock on the long past track record of a company and while the yield has been okay, their track record of lack of growth suggests this is a dead end yield trap to me.

Notes. According to the reserve bank inflation calculator $1.00 in 2014 should presently be worth $1.06 based on general inflation and $1.42 based on housing inflation.
https://www.rbnz.govt.nz/monetary-policy/inflation-calculator thus managements long term track record is most unimpressive.

Good work Beagle. I'm not sure why you'd chase these unlisted 'opportunities' when it's so easy to get listed property exposure through Smartshares NZ Property ETF. This give diversified exposure to the listed property sector with daily liquidity, daily NTA price, and full transparency of holdings. Performance isn't too shabby either, +33% net of fees and 28% tax in the last 12 months, and +12.8% p.a. (i.e. +43.5% total return) over the last 3 years, also net of fees and 28% tax. I don't hold this fund but if you want property exposure it's well worth a look.

[Beagle]

Yes..I questioned that. They said because the have been growing the assets. Since started 2014.. they raised 2 times and this is the third. Their so of $1.05 is the total assets minus liabilities...so not like listed one..that some time trading multiple of NTA....

Great discussion guys....I am still deciding to join or not....but would like a commercial portfolio....I have rental, enough shares and now looking for steady income source...PMG pacific fund

You make a good point that many of the listed property trusts are trading at quite a percentage premium to NTA at present. That this one isn't and the yield are its strongest selling points.

[King1212]

Yes true....investing property need to see the NTA.....that what interested me with PMG. Our current property market is too high most **** houses are at least 100 to 150k asking price of CV value.n need heaps of works.

[fungus pudding]

You make a good point that many of the listed property trusts are trading at quite a percentage premium to NTA at present. That this one isn't and the yield are its strongest selling points.

Precisely. My ARG, GMT, PFI, PCT and SPG are all way above NTA so not keen on adding to them. Mitchell Mackersy have had a couple of excellent single asset syndicates recently. e.g The Spark building Wellington and Entertainment centre Ch-Ch. (disc: hold both)
http://mitchellmackersy.co.nz/projects/
These were available at between 100k and 200k. Both closed now, but some new ones on the horizon. Pacific might just be best current offering.

[Beagle]

Got this from their Auckland business development manager which may be of considerable assistance in considering this one. I am sure Mat won't mind me sharing.


NTA for the fund when the fund started was 92 cents. Getting registered with the FMA and running a MIS license and employing staff to look after the properties carries significant cost. Since then, NTA has increased to $1.05, thus, there is no dilution in value and investors in this round get full value. Very few industry participants in our sector go to the trouble of attaining a license to provide ‘retail’ funds – rather, you see wholesale offers that affords very little protection for investors and unfortunately the governance and recourse to the directors in ‘wholesale’ offers we see today is poor/non existent. We pride ourselves on trust and transparency and adhering to a SIPO that’s rigid and robust, thus, having a license to operate as a ‘retail’ fund provider makes us stand out.
The new asset was purchased at $56.16m and the valuation stands at $61m. Furthermore, Cap rates are compressing across the board and I would expect strong performance in the near term. First and foremost, our investors are seeking reliable yield first and capital preservation and growth come second.
NTA in the REITs has been exceptional of late. The global search for yield as pushing asset prices up everywhere and fund managers/large institutions need to keep pace with their Asset allocations. We are receiving high levels of enquiry from fund managers at present for 3 main reasons:
Our yields are better
We are not just another equity that trades on sentiment and is volatile – we only trade at the FMV of the assets which provides capital protection to investors that don’t want wild swings in value but rather a steady income stream that behaves like direct property should (A defensive investment class). Interestingly, we are seeing the REITS do exactly the same thing as they did prior to the GFC – increase leverage to assist ROI. Doing this works well until they get a run on selling by large intuitional investors and liquidity and capital erosion happens very quickly.
Our properties are value add. We buy properties that we can add value to over time. REITS typically buy new shiney A grade buildings that very little value can be added and Mr Market only allows either rental income growth or compressing cap rates to add value. Yes, some of our buildings are old/B grade but that’s what makes us different. As investors in the fund, we want to own assets that overtime we can enhance and add value to. Further, In recessions, A grade buildings lose more tenants to B grade/more affordable rent comparisons. We buy on Location and are not afraid to roll our sleeves up and do the hard yards to extract value. Smaller tenants do involve more work but they are much more easy to replace than a large tenant holding landlords at gun-point for want of a better term at rent review time.
Often comparing to REITS investors talk about liquidity – in my opinion and experience, when you have a diversified portfolio of bonds, cash, equities and fixed interest products, nearly all portfolios are instantly ‘liquid’. When things go bad/recessions, history reflects investor behavior tends to go back to bricks and mortar. Selling your income stream is not normally what investors do in times of uncertainty, thus, as we are 100% invested in Direct Property, our investors don’t compare us to REITS as we have vastly different characteristics and trade like direct property should – low levels of volatility and steady, reliable income. As a business that has been doing this for 27 years we have the experience and expertise to position our funds for the uncertain future.



Thanks

Best Regards

Mat

[King1212]

Thank u beagle!

[Arthur]

Underwriting terms appear not unreasonable as does the yield. Projected NTA as at 30 March 2020 didn't leap out of the PDS statement at me on a brief skim but I have very limited time to apply to this so its probably there, just I haven't noticed it.
Some of their buildings are quite old and I know the Kelston shopping centre has been a dog forever and a day. I think if we get tough economic times small tenants of small buildings are probably less resilient than big corporates or government departments leasing larger buildings off the listed property owners so there's definitely extra risk with smaller tenants.

On the yield front 7% seems reasonable and the closest comparative listed vehicle would be ARG which is also a PIE and on a grossed up basis assuming a 33% tax rate is yielding 6.5% forecast for FY20. ARG have a policy of only paying out sustainable dividends and deduct sufficient to pay incentive fees for lease renewals and repairs and maintenance sufficient to keep their buildings in a good state of repair.

For a half of one percent yield difference you're getting much better diversification with ARG, a proven sustainable dividend yield, generally more substantial sized tenants and the benefits of being listed with easy entry and exit to the shares.

I don't know much about these guys so can't comment further and I tend to stick to what I know and trust and if I need a yield boost to my portfolio there's any number of stocks like AIR, ZEL and HLG to name just 3 paying over 10% so its easy to make up that half a percent with some allocation elsewhere.

Agree 100% that domestic rental properties are a very tough gig especially under the current Govt regime heavily favoring tenants rights and with the widespread proliferation of methamphetamine adding to the already very high risks from tenant damage and with limited scope for capital gains and lack of ability to claim depreciation on the house and now ring fencing of rental losses, landlords look like they're on a hiding to nothing.

It appears that they do have some plans for value add. Take the "dog" Kelston Mall. They have a renovated Countdown, a McDonalds and a Mobil Station. There is a plan to make it more of destination by increasing services rather than retail. There is a medical centre, a pharmacy and there is soon to be a childcare centre. Think of the synergy of being able to drop of the child at the centre, do the shopping, pick up the prescription, fill the car up and grab some takeaways all in one place. It is also in an area where the population is predicted to grow strongly. They have another fund that specialises in standalone Childcare Centres they run at $3-5 million each, so it is possible that they have added $2 million in value to Kelston by adding one, before any synergy gains from the surrounding businesses. Maybe the mutt will turn out to be a pedigree afterall.

[Beagle]

Have to say the premium to NTA that most of the listed REIT's are trading at makes them a less than compelling proposition at current prices.

That said I feel compelled to post a concluding cautionary remark in this thread after reflecting upon the woeful NTA performance since its inception 5 1/2 years ago. $1.00 to $1.05 in 5.5 years in the N.Z. property market really marks this fund as a real standout underperformer.

Really with most properties having regular rent reviews to at least CPI and given the dramatic compression in the market capitalisation rates over the last 5 years upon which commercial property valuations are assessed its almost inconceivable how a funds original investors in 2014 at $1 could now only be looking at NTA of $1.05. It almost beggars belief how poorly this has performed.

The Reserve Bank inflation calculator, (google it) has general inflation and a number of other basis upon which inflation is measured. If you choose the property index you will see that since this funds inception to date the NZ property index is up 42%. If this fund had of matched that index the NTA would presently be $1.42.

The Auckland business manager can make whatever excuses he likes but the degree by which this fund has underperformed both the listed sector and the N.Z. property index is really breathtaking bad. It suggests to me that property selection has been based solely on yield with little or any regard for total shareholder return over time.
It may also suggest that leases do not have adequate rent review clauses, property management fees are too high relative to the market average or that execution of renovations and extensions has been very badly managed and or there have been bad cost blowouts.

Okay so the listed REIT's are trading at sizeable premium's to NTA and as mentioned above are certainly not compelling buying at present. Those looking to purchase something at NTA need to consider all other options and look at their long term track record.
Here's one https://www.oystergroup.co.nz/direct-property-fund Have a look at their track record of NTA growth.

Worth noting that the exit fee from the Oyster property group for investors to sell their stake if they choose too is just a notional $2 fee.
Exit from this fund is 1.5% plus GST which based on say a $200K investment is $3,000 + GST = $3,450. Ask yourself if simply matching one internal shareholders interest to sell with an incoming expression of investment interest should attract a fee of $3,450 or is $2 more reasonable ? What does this suggest about the reasonableness or lack thereof of their other property fees and whether this explains their woeful lack of NTA growth ?

If NTA is going backwards in just inflation adjusted terms with this fund when cap rates are firming so nicely, what happens when cap rates stop firming ?

Over nearly 40 years as an accountant I have learned from experience to put a lot of weight on a companies track record measured over no less than a 5 year period so one can make a proper assessment over a decent period of time and measure things up reasonably accurately. Projections are one thing, track record is far more important.

If one must buy an interest in commercial property at this point in the property cycle, (I personally do not think this is a good idea) with commercial capitalisation rates already having firmed up to level's "unseen in over 50 years", (comment made to me by John Bayley, owner of Bayley's a few months ago), one is best to look at perhaps buying an interest in a well established and well performing fund on the secondary market. I have provided an example of one that may merit further investigation above.

This 7% looks like a real yield trap to me with mostly very old properties. Past performance, (or lack thereof in this case) is no guarantee of future performance but I have learned it is the best guide we have got. Over and out from me on this one. Caveat Emptor and DYOR.

[King1212]

Thanks...been told that the raising is fully subscribed...n will close on 25sept..no extension.

[Arthur]

Thanks for your thoughts Beagle. Wise words, but a little harsh I feel as most of the properties have been recently added. Offer costs have sucked cash and hopefully will slow down now. The average age of the portfolio is maybe two years. Overall the older buildings have increased in valuation and rent. Alderman Drive for example the bought for 7.4 in 2016 and it is now valued at 10.3. Farmers in Whangarei is up 27% in a couple of years and the rent is up a similar amount. They have had a couple of misses as well. Two years in Kelston Mall has been value destructive at this stage. Will their plan work? If they lose Countdown (there are several in the area) things will get messy. Vickery Street only has a year or so on the lease. I am also very wary of their short term funding and leverage. If the property market does go tits up the listed sector has a long way to fall, my estimates are that this fund is actually slightly safer and offers a higher yield. Liquidity will be an issue though, with listed you can get out, it is just that you could lose 60% along the way.

[King1212]

No ..they won't lose countdown...it is like mini mall for locals. It is an income investment....provide steady distribution quarterly...... better than term deposit and one should prepares to invest in at least10 years. Liquidity is an issue..takes 30days to sell your shares however it is not like listed bon ...one day could drop 10-50 %..up n down like a yo yo....they said...once these acquisition completed....they will concrete on adding values on exiting properties...

[King1212]

On recent update...kelston mall childcare center will complete early Nov 2019 and Vickery street..Alto packing is agreed to renew the lease to another 6 years...for me..it is better to get in this fund as my initial plan is to buy a rental. but rental is a headache now...low yield... maintenance.. rates .. interest...after the rent received and minus expenses...need to top up at least $100-150 a week.

This one work well for me...no hussles...net distribution allow me pay mortgage interest rate at 3.6% for 2 years...

[Kelvin]

Anyone investing in the Goodman Property Trust retail offer? I’m wondering why there’s so many KYC requirements - investors have to provide certified copies of ID and proof of address. I don’t recall any other share offers requiring such documentation.

[King1212]

Anti money laundering acts....

[tim23]

Anyone investing in the Goodman Property Trust retail offer? I’m wondering why there’s so many KYC requirements - investors have to provide certified copies of ID and proof of address. I don’t recall any other share offers requiring such documentation.

Yes I am but I think its because of their trust status.

[GTM 3442]

Anti money laundering acts....

For existing shareholders? That just sounds nuts.

[Ggcc]

For existing shareholders? That just sounds nuts.
Get used to it. I have been back to banks numerous times for a trust where I have given them Information I had already given to them before. Not only that but loan applications we had for the trust were incorrectly processed by the bank three times in a row. They needed to so much information, as to where all my money came from and what was my source of income, am I owning anything overseas? We just need to become a cashless society and filling our information would become so much easier.

[fungus pudding]

For existing shareholders? That just sounds nuts.

I received a request the other day from an Augusta managed property syndicate I have been in for more than 10 years. I was asked to provide a bank statement or deposit slip or similar with my name showing. I pointed out that I had happily receiving monthly distributions for years, and they certainly would have heard from me if I hadn't. But not good enough. They said this was a requirement --- blah- blah - blah. Not being in the mood to drag it out I meekly did as they asked, but it was pure nonsense.
Interestingly, I have checked with two friend who hold a slice of the same syndicate, but neither has had such a request. Guess I'm just lucky.:D

[Beagle]

Anyone investing in the Goodman Property Trust retail offer? I’m wondering why there’s so many KYC requirements - investors have to provide certified copies of ID and proof of address. I don’t recall any other share offers requiring such documentation.

I am a trustee for my Mum's holding and am not investing. I note at balance date their last recorded net tangible asset backing is just $1.57.
For professional reasons I simply cannot recommend further investment at such a premium to NTA. I think very high quality industrial property is presently priced almost as though its in "an asset bubble" Even allowing for some further compression in cap rates since balance date I think its highly likely their current NTA as at 30 Sept is slightly south of $1.70. As for the documentation requirements, that sounds seriously over the top.

[fungus pudding]

I am a trustee for my Mum's holding and am not investing. I note at balance date their last recorded net tangible asset backing is just $1.57.
For professional reasons I simply cannot recommend further investment at such a premium to NTA. I think very high quality industrial property is presently priced almost as though its in "an asset bubble" Even allowing for some further compression in cap rates since balance date I think its highly likely their current NTA as at 30 Sept is slightly south of $1.70. As for the documentation requirements, that sounds seriously over the top.

Therefore your course of action should be to recommend the immediate sale of your mum's shares. (Bet you don't :scared:)

[Beagle]

All the property companies I follow are trading at a material premium to last reported NTA with high quality industrial property the most in favour. PFI for example is also trading at a 30% premium to NTA. The drop in cap rates over the last 6 months may have more of an impact on NTA than I am estimating. GMT has been an exceptional performer over the years. I'll have a look at the premium to NTA in due course when they announce their half year result and discuss it with my Mum. While I wouldn't recommend adding at the current level that doesn't automatically follow that its a sell.
There is such a thing as hold, (which over a very long period of time has proved to be a very successful strategy). Who really knows where this lowest interest rates in 100 years really ends up going too ? and I note that very high quality industrial property is a very safe asset class.

OCR set to fall to 0.5% soon could have further future positive implications for yield shares on the NZX. http://www.sharechat.co.nz/article/85ff7d1a/deepening-business-gloom-likely-to-push-annual-gdp-below-1.html

[GTM 3442]

Get used to it. I have been back to banks numerous times for a trust where I have given them Information I had already given to them before. Not only that but loan applications we had for the trust were incorrectly processed by the bank three times in a row. They needed to so much information, as to where all my money came from and what was my source of income, am I owning anything overseas? We just need to become a cashless society and filling our information would become so much easier.

Maybe I'm just used to it being done well. . .

I currently have banking, Broking, and investing accounts in about half a dozen countries. Apart from the US WBEN8 form every so often, there's generally nothing more than an annnual "keep your details up to date" email and a " your passport has just expired, please send a notarized copy of the new one" email.

But never anything from the company I'm actually investing in.

So yeah, it just sounds nuts. And, to be honest, peculiarly New Zealand.

[Kelvin]

It is nuts. By buying my GMT shares on-market I never had to complete any identity checks (apart from the initial sign up with ANZ securities at the time)

Yet now I have to see a JP to get my documents checked and certified. This was never required with recent Share purchase plans from Infratil or Arvida

[GTM 3442]

My experience is that New Zealand generally isn't very good when it comes to issues of identity verification. Or anything even slightly out of the ordinary.

G*d alone knows what nonsense GMT and the custodians are going to come up with between them. It's tempting to just sell up, chuck the proceeds in the iShares NZ ETF and go to the beach.

[Chickens]

In case anyone else is wondering, I sought clarification from Computershare who have confirmed that Goodman Bond Holders are not eligible for the Goodman Retail Unit Offer.

I wonder if the stringent Anti Money Laundering requirements will adversely affect participation in this offer.

[fungus pudding]

In case anyone else is wondering, I sought clarification from Computershare who have confirmed that Goodman Bond Holders are not eligible for the Goodman Retail Unit Offer.

I wonder if the stringent Anti Money Laundering requirements will adversely affect participation in this offer.
I can only speak for myself but it puts me in the can't be bothered catergory.

[jg8512]

It is nuts. By buying my GMT shares on-market I never had to complete any identity checks (apart from the initial sign up with ANZ securities at the time)

Yet now I have to see a JP to get my documents checked and certified. This was never required with recent Share purchase plans from Infratil or Arvida

i'm with you Kelvin. Plain nuts.
the Act of Parliament the form refers to was from 2009. so why the change in requirements now ??? Some over-zealous and cautious lawyer driving huge amount of burden on shareholders. the company should have shown some common sense and told the lawyer to find a new lemon pip to squeeze.

[RTM]

I like LPTs and hold ARG, GMT, KPG, PCT, PFI, and STR. I like them all and buying a spread gives the benefit of exposure to different sectors. e.g KPG for retail, PFI for industrial/wholesale, PCT for office. They are all PIEs. Augusta is not a PIE if that's important to you.
They should all show reasonable growth as well as steady income - keeping in mind everything carries a risk.

PFI....one of my quiet achievers.
https://www.nzx.com/announcements/343097
"Colliers International marketed the property, which has been sold for a gross sales price of $33 million. The property was last valued in December 2018 at $28 million." Seems like a huge increase in 9 - 10 months. Wonder what it cost them ?....i.e. what is the profit ? Probably pretty significant, but I guess a bit meaningless as they are just going to invest into another property is same market.

[macduffy]

PFI....one of my quiet achievers.
https://www.nzx.com/announcements/343097
"Colliers International marketed the property, which has been sold for a gross sales price of $33 million. The property was last valued in December 2018 at $28 million." Seems like a huge increase in 9 - 10 months. Wonder what it cost them ?....i.e. what is the profit ? Probably pretty significant, but I guess a bit meaningless as they are just going to invest into another property is same market.

Unless, of course, you credit them with the ability to invest particularly astutely in that market?

[Beagle]

GMT rights issue substantially oversubscribed. People super keen to throw heaps more money at the company, (despite egregious paperwork requirements), at $2.10 when the last reported net tangible asset backing of the company is just $1.57. Hmmmmm...We live in interesting times.

[RTM]

Unless, of course, you credit them with the ability to invest particularly astutely in that market?

No….I don't think they are particularly astute. Just a good property company. As such while they might replace the property with one more in line with their strategy, they will be buying on the same market as anyone else. And relying on time to do its job. Up or down. I'm OK with that. I don't expect miracles.

[Kelvin]

I was allotted less than a third of my GMT rights issue application