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Bling_Bling
01-12-2004, 06:36 PM
Have you guys notice that all the property stocks are rallying?

APT, CNZ, ING, TTP, MGP, CDI, PFI, URB, KIP

Can this rally continue?
How come interested rate rise have not affected these property stocks?

cdt18
01-12-2004, 07:08 PM
Rally caused by raid on CNZ by KIP methinks.

Bling_Bling
01-12-2004, 07:25 PM
The funny thing is that with interested moving up for the last few months hav not slow down the rise in these property stocks.

Halebop
01-12-2004, 07:25 PM
I suspect we are now appraching the "wacky" end of the property cycle. Will it end in tears?

Bling_Bling
01-12-2004, 07:34 PM
Me thinks the NZ property market is a hard one to pick. On the one hand our economy is strong and will continue to stay strong as long as the commodity prices are strong. But on the other hand, we are seeing a slow down on net migration into NZ and the property is artificially cropped up by wealth foreign investors and traders.

"She's a tough one mate"

01-12-2004, 10:00 PM
HALEBOP I certainly hope so

Steve
02-12-2004, 12:30 PM
quote:Originally posted by ENIGMA

HALEBOP I certainly hope so


Enigma, you are hoping to see tears?! :(

02-12-2004, 04:07 PM
Halebop Really bigtears buckets of them from the owners of residential properties.

troyvdh
02-12-2004, 04:16 PM
Enigma,why would that be then.

Bling_Bling
02-12-2004, 05:04 PM
Enigma, you must have sold out your properties recently and underweight in your portfolio... LOL

Me think this property market will only drop a little and not see the crash like before. NZ economy is in good shape and interest rates have leveled off.

02-12-2004, 06:26 PM
TROYVDH I want a very nice cheap residential property in NZ within 2.5 years

02-12-2004, 06:30 PM
Bling_Bling Over weight listed NZ property trusts otherwise Zilch in NZ

troyvdh
02-12-2004, 10:00 PM
Enigma, having been in this MKT (ChCh) for some 30 yrs the opportunity for that to occur exists everyday....don't just get sucked into the swathe of polly brick palaces that are undoubtably due to hit the MKT in the near future.

02-12-2004, 10:37 PM
Troyvdh That is why Iwant the general market down a lot preferably more than 20%

Bling_Bling
03-12-2004, 08:23 AM
I really dont think the residential market will come down too much. The apartment market on the other hand is stuffed.

Here is my reason why I think the residential and commercial market will still healthy.

1. NZ economy stay strong
2. Global commodity prices to stay strong
3. Interest rate have flattened and may come down next year
4. NZ is still seen as the country to live, while the rest of the world is in chaos
5. Our clean green image is still alive an well - if only the know the truth...LOL

But, on the other hand.

1. NZers are too highly leveraged
2. Average income has not gone up the same rate as property prices
3. Small population
4. Net migration for inbound slowed

nelehdine
24-12-2004, 10:57 PM
Had an early Xmas present today, an offer on a small retail shop $2500 above my asking price here in Blenheim. A 40% return on my equity since August last year !! Very nice !! Need the bulk of the equity for a land purchase but bgt a number of PFI and KIP today ... never thought I would buy any listed property shares as I'm more of a DIYer when it comes to commercial property but I think the CNZ moves by KIP could be the fore-runner to lots of action in this sector in 2005. Also like the portfolio AMP Office Trust have put together over the last 12mths and will try and add some of these at 90c next week or early in the New Year.

Mr_p_yu
24-12-2004, 11:41 PM
Hey, how's the earthquake I hear in NZ?

Gave you and your cows a bit of a scare I hope! Also hope a few of them fell into some holes as well!

You should also learn to kiss my ass, cause I think that will be your full time profession soon, HAHA!

duncan macgregor
25-12-2004, 08:40 AM
PU, a message of good cheer on xmas day from septic tank land i suppose. Best wishes my friend hope you see the light macdunk.

troyvdh
25-12-2004, 06:08 PM
A few weeks back I heard that some industrial land (Waterloo Rd here in ChCh)sold for $200 psm, a year ago it went for $115 psm.I suspect that correspondingly property shares will soon gain momentum-more so than the 10 % (for example) that PFI have indicated re revaluation.

Hold PFI

nelehdine
26-12-2004, 06:24 AM
Sorry to disappoint you Mr F Yu , but dairying is on a high at the moment , payout this season will be highest since 2000, farm prices still climbing, and commodity prices at record levels. The only worry is your pathetic USD , all you idiots in Septicland living on borrowed money, your reality will come soon ...

Bling_Bling
26-12-2004, 08:24 AM
quote:Originally posted by MoSteph

I think it's an opportune time for property companies to be looking offshore, capitalising on the strong dollar and extricating themselves levelling/declining NZ market. Some stocks are moving this way (like ttp), but the market doesn't seem to like it much, which I find somewhat curious. Any ideas?


I agree.

TTP has done the right thing buying into the HK property market. With Macau focus turning into the Vagas of Asia and Disneyland opening in a couple of years, things are looking onthe up for HK as the tourist center for China.

nelehdine
26-12-2004, 09:30 AM
MOSteph ... I don't think the managers of the listed trusts such as KIP,PFI and APT have the mandate to start investing off-shore, most are designed to give Kiwi investors an easy entry into parts of the property market it is hard to gain an exposure to as an individual. Anyone can buy their own residential investment, but buying part of the nearest office block or shopping mall is a little more difficult !! I think there would be a stampede for the exits if these companies started buying high-rises in Shanghai or Hong Kong. If you want exposure to Hong Kong I suggest you buy shares in the local co's such as New World, Hong Kong Land, or Sun Kung Hai and then prey the USD doesn't keep falling as the HKD is pegged to the greenback.

nelehdine
26-12-2004, 09:32 AM
I think "pray" would be better than "Prey" sorry !!

nelehdine
26-12-2004, 09:34 AM
Sun Kung Hai ... possibly should be Sun Hung Kai ?? will check out and confirm ...

nelehdine
26-12-2004, 09:41 AM
Yep ... SHK Sung Hung Kai , 2nd biggest property co in HK.

biker
26-12-2004, 03:35 PM
quote:Originally posted by MoSteph

I think it's an opportune time for property companies to be looking offshore, capitalising on the strong dollar and extricating themselves levelling/declining NZ market. Some stocks are moving this way (like ttp), but the market doesn't seem to like it much, which I find somewhat curious. Any ideas?

Lots of negative sentiment and sellers in TTP at the moment with its move offshore and shareholders subject to the foreign investment fund tax implications.My view is that at 38 cents and plenty available around that level,they are good buying and I'm accumulating with a 2year plus,view.Like an excellent new season first growth wine-unpalatable at the moment,but worthwhile waiting for it to mature.:)

biker
26-12-2004, 03:46 PM
To put some numbers on it, I would be happy to see 45c end of 05,55c end of 06 and 70c to $1 plus, end of 07.

nelehdine
29-12-2004, 04:19 PM
375,000 KIP specialled near the close at 111 +2 on the day ... could be a hot sector for 2005 ...
KIP will be at the forefront of any moves.

Disc: Hold KIP & PFI

nelehdine
01-01-2005, 12:06 PM
Just a thought out of left-field ... this awful summer we're having will be doing KIP's shopping mall business no harm what-so-ever. Who wants to wander around CBD's getting drenched with the kids when you can be in a nice warm covered mall with abundant covered parking.

It is pouring down here in Blenheim at the moment, the grass outside is as green as a well manicured bowling green, not the usual brown colour at this time of the year. 2005 won't be a great vintage for the SavBlanc , very watery if this carries on !!!

Disc: hold 12500 KIP

troyvdh
01-01-2005, 03:02 PM
with all due respect N (and I have 2 kids) the thought of going to a mall for something to do is somewhat depressing to say the least.As I have posted in the past the fact that shopping is now considered a form of entertainment is a very sad development.

Halebop
01-01-2005, 03:20 PM
Well I'm not a big fan of shopping but when I'm looking for something I actually want (Like a new PC say) I find the process very entertaining but then I do most of my scoping in the calm and serenity of my study at home.

Having said that the fact that shopping is considered a form of entertainment is probably more a reflection of the relative economic parity being enjoyed by woman than any fundamental shift in cultural values. Expect more of the same as universities are over represented by the fairer sex!

Mr_p_yu
01-01-2005, 06:48 PM
Hello, dumb dine,

Happy 2005 everyone except dumb dine, cow dunk, and rmbbrave (*****, I suspect?). Ha, Blenheim, what a farmers village, I had to look on the map to find that dump.

You should stop ramping yourself (you might fall back to the ground one day, may be very soon...). Hey, if you don't like me, well, you will just have to take it up your back side, you piece of ugly sh*t.

Don't give up your farming day job, mate!(as they say)

Major von Tempsky
02-01-2005, 06:06 AM
Invest off-shore?
But where?
The US and Australia are equally stuffed as NZ on their current a/c-balance of payments, their dollars will be goung down like NZ and the US even faster because of its budget deficit and relatively slow growth.
China and Hong Kong are both out on currency arguments because they are pegged to the US. Do you go into China on a pure growth story?
Euroland has very low growth - do you go into Euroland on a pure currency play? But the Kiwi has been fairly much level pegging the euro.The UK has been doing better than Euroland - maybe the UK?
Japan has low growth, zero interest rates, low dividends - Japan on a pure ciurrency play?
It's not that easy to pick a target.

nelehdine
02-01-2005, 07:57 AM
That's great Mr F Yu, what an informative post ... keep it coming in 2005, your posts are rivetting ..... NOT !!!

What an absolute wan%$# !!!

duncan macgregor
02-01-2005, 08:18 AM
One has to ask why an obvious low life is allowed to continue with obscene toilet wall postings on what is supposed to be an informative site for investors. Sharetrader get your act together or watch the site degenerate further. MACDUNK

nelehdine
02-01-2005, 08:23 AM
Agree MacDunk the sooner we can ban this lowlife the better !! All because he didn't like a negative post on PRG !! Probably one of the worst performing stocks of the last 18mths. Never mind the fact that he loves PRG and it has cost him stacks of cash is all he deserves !!

Sky Tower
02-01-2005, 02:27 PM
On 2005 picking the right sectors and particularly the correct stocks within that sector will be important. There will be alot of action in the property sector in 2005.

The stock that stands out for me is APT AMP Property Trust - they have acquired a stunning portfolio of CBD buildings in New Zealand, mainly in Auckland and Wellington.

They portfolio includes in Auckland the PWC Tower, IAG House, ANZ Centre, and Quay Tower (Air NZ's current head office - although they are leaving).

In Wellington their portfolio includes No 1 and No 3 The Terrace (Treasury), State Insurance Centre (aka BNZ Centre), Mobil on the Park, HP Tower, 125 The Terrace, and Pastoral House

The one thing I dont like about KIP is the management contract (fees) that exist within that company which according to a certain columist in the NZ Herald amounted to $7.7 million to the y/e 30th June 2004 yet the management company incurred expenses of $1.76 million - which does seem excessive

nelehdine
02-01-2005, 05:09 PM
I like the AMP portfolio as well, although it is very one dimensional. Retail and Industrial have outperformed office by a comfortable margin for quite a long time ( 10yrs at least ), I doubt that will change in 2005. KIP has an awesome NZ portfolio with a great level of diversity in both geographical terms and property type. One one big hole in the portfolio is an large Auckland Shopping Precinct which the Sylvia Park development is designed to plug ( the next Botany Downs ?? ). Their 2004 Annual Report sets out their portfolio really well. The jewels in the crown are obviously the following.

1. Vero Centre , Auckland ( NZ's newest,tallest office tower )
2. Majestic Centre ( Wellington's tallest office block )
3. Northlands, Chch ( NZ's largest indoor shopping complex )
4. North City, Wgtn ( The capitals only decent shopping mall ... nb Westfield are currently upgrading Queensgate in L Hutt )

A great portfolio and the Net Asset Backing was $1.17 in the 2004 report so the shares are still trading at a discount.

Added spice of 19.90% stake in CNZ acquired at $1.15 which again is probably below NAB , especially as CNZ management rights could be worth up to $40m

Picked by Goldman Sachs as one of their 5 stocks for 2005 !!

Good solid buying at $1.11 IMHO.

Sky Tower
02-01-2005, 05:19 PM
Agreed. But would you buy KIP (the offeror) over the CNZ (the offeree) ?? and whats with this management contract?

nelehdine
02-01-2005, 05:31 PM
I'm buying KIP to hold for many years and yes while there might be a short term gain from CNZ , if a takeover ensues KIP is still the place to be for a long term investor.

CNZ is the one of the only listed property stocks that manages their own portfolio. They have indicated they may well outsource this to an external manager ( AMP,Colonial etc ). The manager would pay big bucks for this contract and CNZ have indicated they would return most of the money straight to shareholders ( very nice for KIP with its 20% ). Estimates as high as 13cps have been mentioned.

Bling_Bling
02-01-2005, 08:42 PM
I find that interesting that there are no listed company with exposure to the residential property market. With the booming residential property market there would be some interest from investors.

duncan macgregor
03-01-2005, 07:05 AM
The big downside of property stocks that never gets a mention here is natural disaster. Wellington sits over a fault line, Auckland has its volcanoes. We in NZ are at a higher risk than lets say London or Sydney. To be successfull, it is a must in business to take into account every possibility that the unexpected can be expected to happen sooner or later. It must come when the unexpected rears its ugly head. The chance that it can happen and you will lose the lot is a slim but realistic chance. macdunk

nelehdine
03-01-2005, 07:15 AM
Wouldn't do Trustpower much good if all their wind-turbines east of Palm.Nth were suddenly lying flat on the ground due to an earthquake either MacDunk ..... come on you can't be serious that we should be thinking about Auckland's volcanoes suddenly erupting when we are making investment choices !!

duncan macgregor
03-01-2005, 07:59 AM
NELEHDINE, At least you are thinking about it.
A bigger chance of that happening than you winning lotto and i bet you buy a ticket now and then. CHEERS MACDUNK

nelehdine
03-01-2005, 08:14 AM
As I've mentioned before Bling Bling, anyone can slowly buy surely put a residential investment portfolio in place ... pretty difficult to put a Botany Downs or Vero Centre in your portfolio !! I think a listed residential investment company is a non starter ... no certainty of cashflow, tenants can up-sticks with 3 weeks notice, can trash the place and disappear overnight, R&M is far higher on residential than commercial, rates paid by landlord rather than tenant, terrible yields on anything decent ... the list goes on. Residential property investment IMHO is not a suitable investment for a listed company ... better off for individuals to do it for themselves.

Steve
03-01-2005, 11:36 AM
Didn't TTP get landed with some residential properties in Auckland & Christchurch when flogging off the Finance Centre?

Does that count for listed residential property exposure?!

SEC
03-01-2005, 12:23 PM
quote:Originally posted by Bling_Bling

I find that interesting that there are no listed company with exposure to the residential property market. With the booming residential property market there would be some interest from investors.


Doesn't that give you a clue on how bad an investment residential property is?

The only way such a listed company could ever make money would be from the capital gains made after selling rental properties.

As every landlord knows, net cashflow from rentals is lousy (and negative in many cases), tax losses are usually made, and the return on investment is shïte until the property is sold.

Even if the residential property trust made money from buying and selling property for capital gain, the returns would be very cyclic and the capital gains would be taxed.

Compare this to a 5+% return after tax for most listed commercial property trusts in good and bad times.

SEC

croesus
03-01-2005, 01:20 PM
Nele is right...residential is for the middle classes, though to be fair better then giving your money to fund managers or insurance companys.

I consider AIA a property co with a twist....

Query do WHS own or lease their premises?

Steve
03-01-2005, 01:58 PM
I think WHS own some and lease some. There are WHS sites occaisionaly marketed by Bayleys.

zac
03-01-2005, 04:21 PM
Was not Olly Newland's listed investment Company set up for investing in residential property? (before going belly up).

troyvdh
03-01-2005, 05:47 PM
My instinctive response is bollocks, actually after further consideration that is also my considered opinion.
To be fair can those who have contributed to this discussion give some indication of their experience thus far in the residential mkt.

Mine ? 30 yrs in Chch.Average return (dunno really)but sure as hell in excess of 15-20 % per year....

Lawso
03-01-2005, 05:47 PM
I don't think so, zac. Olly headed Landmark which specialised in CBD and some retail properties (incl. a shopping centre in Hamilton if I remember correctly). Landmark of course collapsed post-'87. In his personal capacity Olly has always favoured residential and continues to have a substantial portfolio in this sector.

Onthemoney
03-01-2005, 06:25 PM
Hasn't Olly Newland recently written a book about the 'up and coming' property crash?

Steve
03-01-2005, 07:00 PM
Yes he has and when getting tv coverage launching it, he made the comment that he has cashed up his residential portfolio and was waiting to get some bargins on re-entry after the crash.

Onthemoney
03-01-2005, 07:02 PM
Crash we are still waiting.....[B)]

zac
03-01-2005, 07:05 PM
Anyone considering investing in residential property needs to decide at the outset whether they are a speculator, developer, or investor. I have been all three at different times and have found that each approach requires a very different strategy. I have seen more than a few investors come a cropper because they believed they could be developers. As in all trading buying right is the key to success.

Onthemoney
03-01-2005, 07:10 PM
'Developers' ask Matthew Ridge

Steve
03-01-2005, 07:14 PM
quote:Originally posted by Onthemoney

'Developers' ask Matthew Ridge


True, but as Matthew said - he was led into being a developer through bad advice![xx(]

YEAH RIGHT!

zac
03-01-2005, 07:15 PM
Ridge is a good example of a gung-ho investor/developer who believed everything he was told by agents flashing phony costings; gets other people to do all the work on charge up (GST excluded by everybody it seems), and finds that the bottom line at wash-up is a bright shade of red.

Onthemoney
03-01-2005, 07:15 PM
Or greed

Onthemoney
03-01-2005, 07:18 PM
And who are the poor b a s t a r d s who miss out....

Steve
03-01-2005, 07:33 PM
Although he said that there was nothing more he could do, at the end of the day there was nothing stopping Mr Ridge from paying out the creditors from his own pocket even though there was no personal guarantees made to them.

IE:while there may be no legal reason to pay those who are loosing out, there is certainly a moral issue...

Onthemoney
03-01-2005, 07:35 PM
Shrouded by limited liability I say....

Steve
03-01-2005, 07:45 PM
yes from a legal view, but that does not necessarily prevent him from making a 'personal' payment in the moral view...

Onthemoney
03-01-2005, 07:47 PM
Have to agree Steve.... Doubt this will happen

Steve
03-01-2005, 07:55 PM
Neither do I, but what made me laugh at the time was his insistance that he had done ALL he could for those at the end of the food chain...

Onthemoney
03-01-2005, 08:07 PM
He obviously doesn't value his own integrity. NZ is a small place.....

Sky Tower
04-01-2005, 04:48 PM
I still believe there is going to be much activity in this sector in 2005. If you only wanted to invest in one stock in this sector whether you would choose APT (for the reasons I mentioned above) or whether you would chose KIP (as an entry into the KIP/CNZ play). Which stock will do better in 2005?

Onthemoney
04-01-2005, 04:53 PM
Look at their history woudn't touch them with a barge pole.... Better to own your own....

nelehdine
04-01-2005, 05:48 PM
dnicholls, On AMP Office I agree they have put together a very nice portfolio, lots of "trophy" office blocks and I do think they got the State ( BNZ ) and Mobil buildings in Wellington at a good price. What in particular do you like about them ?? Low mgmt fees ?? , You see office yields falling leading to big positive revals ?? , At 91c you might be buying $1 in value ?? Dividend yield is exceptional ?? Don't like KIP's exposure to retail ?? I'm thinking of adding some AMP to my PFI & KIP ( preferably at 90c rather than 91c ) just wondering what your thoughts were.

PS. Did you know they are doing an SPP at max 89c in Feb or March ? Only need to buy a few now at 90c and you might get the free option to buy apile more at 89c in a few weeks time !!

Onthemoney
04-01-2005, 06:12 PM
KIP that is....

troyvdh
04-01-2005, 07:04 PM
At the risk of being reptitive I would really appreciate if all of you property gurus could tell the rest of us your personal investments in these property entites....at least it will add some depth to the discussion....

biker
04-01-2005, 07:27 PM
quote:Originally posted by dnicholls

I still believe there is going to be much activity in this sector in 2005. If you only wanted to invest in one stock in this sector .................... Which stock will do better in 2005?




TTP

duncan macgregor
04-01-2005, 07:44 PM
The thing i notice in the property cycle is that it is a property cycle. Dont get caught at the top thinking it lasts forever. Buy at the bottom get out fast near the top. It is near the top right now, better options elsewhere. Investors like me will be back in a few years and make a killing, but right now its goodbye from me to you. MACDUNK

Tim
04-01-2005, 08:26 PM
Why invest in property stocks which give good dividends with little or no growth. Better off with telecom.

nelehdine
04-01-2005, 09:16 PM
Hi Tim, I hold TEL as well, I think KIP and PFI will have a good year in 2005. Divs and capital appreciation of 15% is my target. I disagree with Macdunk that we are at the peak of the property cycle, vacancy are falling, replacement costs ( bare land, steel, concrete, labour ) are all rising ( this will make existing properties more valuable ) NZ represents excellent value for investors with yields still in the 8-10% level ... try and get that sort of return on a govt bond in Europe or Japan or on a skyscraper in Tokyo or London.

duncan macgregor
04-01-2005, 10:39 PM
NELEHDINE, I dont care about about JAPAN or LONDON. I expect of myself to make 20pc plus dividends in a bull, and bear markets on average, and double my money every four years. Property the way i lever it makes a lot more than that.
Property is a fools way to riches, most people get greedy and stay to long. Dont get greedy understand what happens, history repeats look it up todays market is tomorrows history.
macdunk

marcus_milo
04-01-2005, 11:30 PM
quote:Originally posted by Tim

Why invest in property stocks which give good dividends with little or no growth. Better off with telecom.

Cash flow!

marcus_milo
04-01-2005, 11:36 PM
quote:Originally posted by duncan macgregor

NELEHDINE, I dont care about about JAPAN or LONDON. I expect of myself to make 20pc plus dividends in a bull, and bear markets on average, and double my money every four years. Property the way i lever it makes a lot more than that.
Property is a fools way to riches, most people get greedy and stay to long. Dont get greedy understand what happens, history repeats look it up todays market is tomorrows history.
macdunk

Interesting comment. Many people have got rich investing in property, i.e. De Roos, Robert Kiyosaki, Robert Jones. Some very rich people would say being a retail investor in the sharemarket is also a fools way to get rich.

My 5 cents worth.

nelehdine
05-01-2005, 08:24 AM
MacDunk, I agree 20% + in a bull market is what most investors would expect. I have 18 stocks in my NZ portfolio ( worth about $200k ), KIP and PFI are a combined 12% weighting amongst those. I think for a long term portfolio a few listed property trusts are not a bad choice, especially if the dividends help pay for a few of life's luxuries along the way. If your interested the portfolio is made up of

AIA.AIR,CAV,CEN,DPC,FPA,FPH,FBU,GPG,HBY,KIP,NOGOC, POT,PGG,PFI,SKC,SKY & TEL
( largest stock by weighting AIA, smallest DPC )

nelehdine
05-01-2005, 05:51 PM
KIP +2 to 113 ... good start to the year, almost 2% under the belt already !!!

Sky Tower
05-01-2005, 06:17 PM
Im still pondering this one. Still deciding whether I want exposure to this sector (I always limit myself to about 5 stocks) and whether its going to be KIP or APT. Still doing my research. But I do see further takeover activity in this year this year (mind you who doesnt)

Lawso
06-01-2005, 07:22 AM
Hi Nele

Thanks for posting the info about your NZX portfolio. As I've said on another thread, there are few things more interesting than other people's money.

But 18 stocks worth a total of about $200k!! Aren't you spreading too thinly? That's an average of about $11k worth of each stock. How can you keep track of them all? And why would you bother, given that each is worth comparatively little, in the context of your total investments.

True, you're not badly hurt when CAV, e.g., loses over 100cps in the year. (I've still got 18,000 of the little blighters - luckily sold some @ around 540 - so their decline in '04 has hurt what would otherwise have been a stellar year for me.) On the other hand, tho' your list of holdings is impressive, you have not profited as much as you would have if you had concentrated more of your funds in the likes of NOG, FBU and HBY. [Sorry, far be it from an amateur like me to teach anyone to such egs, but chacun a son gout, as the Frogs say.]

This year I'm planning to get my NZX holdings down to 12 stocks, with none (excl. the dogs) worth less than $20k. That means buying more DPC and STU and will probably get out of FTX. As a bondholder already, I'm looking forward to the Vector IPO. In property, I hold PFI, KIP and MGP and am also in an Australian Unity fund that invests in Aussie LPTs. They're not spectacular but steady earners and my preferred method of investing in property.

Cheers and all the best for 2005.

OldRider
06-01-2005, 07:56 AM
The following link is to a spreadsheet updated monthly, on an Australian forum, giving comparisons
of Australian Property trusts.

Raptor is the poster who does the work, may be useful to any who are looking into this area.
http://www.lainie.com.au/sharesguru/LPT-Sorted.xls

nelehdine
06-01-2005, 09:09 AM
Agree Lawso , 18 is probably too many and I should reduce the number and get my exposure to my favourite stocks up. Having said that with a dairy farm investment that dwarfs any other I have , mucking around with a few shares by selling a few smaller holdings and buying a few more shares in my larger stocks isn't really going to make me any better off .... Fonterra are by far the biggest factor in my annual income !! ( lets hope they don't over-pay for National Foods !! ) having said that my top 5 holdings are almost 50% of my portfolio and a few smaller holdings such as AIR,DPC,GPG,FPH are less than 10% combined. So it's not as "spread" as it may seem.

06-01-2005, 04:04 PM
nelehdine they can just sit and block the other take over offer and then where is NFD back in play for fonterra again?

nelehdine
06-01-2005, 04:09 PM
If I was Fonterra I'd be selling in the market at 630+ ... a ridiculously high price. Remember Danone sold out at 410 and you'd think they would have had an idea of fair value !! ??

06-01-2005, 05:34 PM
nelehdine Danone only sold because fonterra was blocking any benefit for them and San Miguel is not likely to accept any shares unless they can get 90% which is impossible unless the offer fonterra heaps more than it is worth to them. Bonlac might be key to this one if my memory is correct.

Bling_Bling
07-01-2005, 09:10 AM
How much are farm land going for these days?

nelehdine
07-01-2005, 01:51 PM
About $30k/ha. for good converted dairy land in Sth Canterbury !!, probably more in Waikato and Taranaki.

nelehdine
07-01-2005, 02:03 PM
KIP +3 to 115 ... what a great start to 2005 !!!

nelehdine
07-01-2005, 02:54 PM
KIP now trading at 1.16 +4 ... 116/118
A takeover for the aggressor ???? Someone like General Property Trust in Australia could really add some value to the KIP portfolio, a 3 GPT for 10 KIP offer would be worth $1.25 ???

Disc: Hold KIP and GPT

Shamrock
07-01-2005, 11:49 PM
KIP gave a definite buy signal today with the close at 115...

KIP has finally broken through its significant historical resistance of 113c (it had not closed above 113 in 7 years, and has tested 113 on numerous occasions)

Had been in a 101c-113c trading range for two years...now continuing an uptrend

On Balance Volume has been steadily rising

Others have alluded to the fundamental reasons to buy this stock, now there are good technical reasons too

nelehdine
08-01-2005, 08:02 AM
Thanks for that Shamrock , no close above 113 in seven years, that's quite an eye opening statistic, I thought KIP was having a good week, I didn't realise it was quite so significant.
Cheers

Dontpet
08-01-2005, 05:07 PM
I've been enjoying watching NAP and CDL do some climbing too:D! I hope all this rain is encouraging people to move from their campers into a hotel somewhere[}:)].

DISC: Yeah, I own some of both

madmike
08-01-2005, 06:26 PM
quote:Originally posted by nelehdine

Thanks for that Shamrock , no close above 113 in seven years, that's quite an eye opening statistic, I thought KIP was having a good week, I didn't realise it was quite so significant.
Cheers


i hear that kip want ot increase debt/equity ratio from 35% to 40% but needs shareholder ok. me thinks the friday jump was due to this announcement. now what would they need the extra 5% for....buy out cnz...lets say 1.25c per share but i think the cnz board would say 1.30c given that they believe that the mgmt rights of say 15c to 17c haven't been built into the current share price (ie 1.10-1.12 share price before kip's raid plus15-17c equals $1.30)
what ya think nele!!!!???

nelehdine
09-01-2005, 08:24 AM
I think KIP want to increase their risk/reward ratio by leveraging the portfolio. They have stated that they view debt as cheaper than equity which is great for existing holders ... no more discounted placements to institutions !! I don't know what they might be thinking regards CNZ , certainly gives them a lot more exposure to Wellington which is probably the tightest office market at the moment and the one with the most upwards rent pressure. At 115c they got a great deal, those who sold to them in the stand are probably wishing they had held on !! bit like those ( like me ) who sold to Tubby and the market during the WRI partial takeover !! . THis sector will certainly see some action this year, consolidation and size is crucial to extract the extra value. Trust like NAP just aren't big enough, they have some nice assets, someone like APT and KIP could mount a joint bid and split the spoils between them, makes sense to me. Anyway I think there is no harm keeping a healthy exposure to the sector this year, the downside risk is minimal due to rising asset ( and replacement ) values, interest rates are very near if not at their cyclical peak, and the corporate activity is definetly bubbling under the surface.

Bling_Bling
09-01-2005, 05:02 PM
I have been sniffing around the listed property stocks.

What do you guys think of TTP and CDI?

Sky Tower
09-01-2005, 06:08 PM
TTP: Not much. CDL: Like the shareholder discount [:p]

nelehdine
09-01-2005, 09:23 PM
BB ... have just read the annuals on TTP and CDL. TTP looks like a real gamble to me , a real hotchpotch of a company, no real strategy, sold their really good Sydney property in George Street because they thought it was the peak of the market .... what a load of rubbish, their banker probably game them no choice. Compared to the big NZ and Aussie trusts they are not in the same ballpark if you want a stake in a quality portfolio.

CDL seems to me to be a hotel company with a bit of residential section development thrown in , again a completely difficult kettle of fish to APT,KIP and PFI ... if you want quality commercial property exposure then these 2 aren't in the same league IMHO.

fish
10-01-2005, 07:38 PM
Fully agree with MoSteph.
Have owned ttp for a few years and believe its majority owners want to take it over at the lowest price possibly-an offer of 40 cents was rejected and the net asset value i losely estimate is approx double that reflected by the share price.They are not short of cash and i have just received a cheque from them as they have bought out the remainder of their notes-hence their interest costs are falling and asset values increasing .
they are just about the most undervalued asset on the nzx-and that is how they like it .

Conversely i sold my kip as feel the management rights are sucking too much profit .
disc-hold cnz ttp and cdl-worth having 10000 of these in your portfolio just for the 50% hotel discounts

Onthemoney
10-01-2005, 07:39 PM
You have seen the light fish with KIP. Would agree that TTP is worth a look again....

biker
10-01-2005, 08:16 PM
Thank you to the obliging sellers who let me pick up some more TTP today at 38c.Always a pleasure buying undervalued assets;and they are getting more undervalued as time goes by. Eventually something's gotta give.

Onthemoney
10-01-2005, 08:17 PM
biker the only worry is - When will they reach their full value. I have been in and out for a while.

biker
10-01-2005, 08:24 PM
Hard to say how long they will be overlooked by the market but I'm in no real hurry on this one as I think the medium term risk is more on the up than the downside now.

nelehdine
11-01-2005, 07:52 AM
Onthemoney ... what light has fish seen with regard to his KIP holding ??

KIP at 116 , discount to NAV yet a 7Yr high

Disc: Hold KIP

lambton
11-01-2005, 08:11 AM
quote:Originally posted by nelehdine

Onthemoney ... what light has fish seen with regard to his KIP holding ??

KIP at 116 , discount to NAV yet a 7Yr high

Disc: Hold KIP


Because management are real rip off artists lining their own and their bank owner's pockets. Arrogant and touchy about it too if you ever challenge em. Note CEO of KIP would not disclose his salary in Sunday Star Times latest survey. Was he embarrassed that it was too far below what the other Mon Capitans were drawing?

Bling_Bling
11-01-2005, 08:52 AM
quote:Originally posted by lambton


quote:Originally posted by nelehdine

Onthemoney ... what light has fish seen with regard to his KIP holding ??

KIP at 116 , discount to NAV yet a 7Yr high

Disc: Hold KIP


Because management are real rip off artists lining their own and their bank owner's pockets. Arrogant and touchy about it too if you ever challenge em. Note CEO of KIP would not disclose his salary in Sunday Star Times latest survey. Was he embarrassed that it was too far below what the other Mon Capitans were drawing?






You have a point there. This goes for most property managed trust.

lambton
11-01-2005, 12:34 PM
Yeah Bling bling but these Kippers and Chips guys are unusually greedy even for property managers.

Daniel B
11-01-2005, 03:42 PM
What does everyone think of MPG? Good or no good?

I got some Fin Reports and it looks ok to me, but i'm not much of an analyst

Thanks,
Daniel

Onthemoney
11-01-2005, 04:14 PM
Nele

2 things

1. The management company (Kiwi) getting a percentage of total assets for doing absolutely nothing. This puts pressure on those working within to accumulate assets or revalue

2. Their treatment of their customers (tenants) ask them

That pretty much sums it up....


OTM

Bling_Bling
16-01-2005, 02:57 PM
An interesting article by Bryan Gaynor on KIP.

http://www.nzherald.co.nz/index.cfm?c_id=3&ObjectID=10006683

nelehdine
14-02-2006, 07:39 PM
No post for over 1yr on LPT's, KIP and PFI ( and probably MGP though I don't follow ) at multi year highs, big revals either announced or coming. Those who ignore this sector as "boring and low return" might like to chart these two stocks over the last 12/24mths, add in the divi's and I expect they have outperformed the index by quite a margin !!

Disc: hold KIP and PFI ( plus 1/2 doz similar stocks in Australia )

Lawso
14-02-2006, 08:38 PM
PFI chairman Peter Masfen said in yesterday's profit announcement that over the past five years the company has produced an annualised total return (dividend + share price gain) of "more than 16%". I believe the s p hit a record high of 120c today following the strong FY'05 result.

As I've posted elsewhere, I've been in PFI since '99 and am enjoying the compounding effect of six years in the DRP. I sold out of KIP last year and have gone quite heavily (by my standards) into MGP, which has a better yield and is much better managed IMO. My other holding in this sector is an Aust Unity fund that invests in Aussie LPTs - Westfield etc. 10kAUD invested early '99 is now worth more than 25k with divs reinvested.

Lawso
14-02-2006, 08:55 PM
Neleh and others interested: You can get a full copy, in glorious technicolour, of PFI's resutls presentation and analysts briefing yesterday, simply by emailing lcr@nzx.com and asking them for it.

The total return from dividend and share price appreciation in '05 is put at 21.5%, cf 19.7% for the whole NZX Property sector index. Total annual return over five years was 16.7% p.a. cf 14.9% p.a. for NZX50 index.

Snoopy
15-02-2006, 10:02 AM
quote:Originally posted by nelehdine


CDL seems to me to be a hotel company with a bit of residential section development thrown in , again a completely difficult kettle of fish to APT,KIP and PFI ... if you want quality commercial property exposure then these 2 aren't in the same league IMHO.


I've never considered myself any great expert on listed property, although I do follow it in passing in the media. Am posting here in the hope of gaining some enlightenment from you property types!

Have been looking at the hotel sector recently as a consequence of owning shares in SKC. Was trying to understand a bit better the dynamics of SKCs latest hotel expansion in Auckland. That is why I started looking at 'the competition' from CDL (now MCK) hotels.

I have come to the view that the quality of commercial property can be ranked as 'retail property', 'industrial & office property' and 'hotel property' in that order. My observation is that the market agrees with me, as hotels tend to trade at a large discount to NTA even in this current boom property market. Why is this?

In theory hotel operators are at the cutting edge of NZs biggest growth industry - tourism.

However, hotel operator owners have to spend their own money doing up their properties. Whereas in the case of commercial or retail it is the tenant who pays for office and shop fit out. Also when new hotels come onto the market that raises the standard of buildings and fittings. That means existing hotel owners are always playing 'catch up'. 'Catch up' in this case means a continual upgrade of carpet and interior fittings so that the 'short term tenants' that hotels are chasing have the impression that where they are staying is 'fresh'. The existing hotel operators cannot afford to put themselves at risk of being blacklisted by the fashion police (reef fish travel agents).

In summary, hotels are the 'airline owners' of the central city. Just like airlines, hotels require a high capital commitment and are always being undercut at the margins by competitors trying to fill space at any price. After all, when you have to pay the staff anyway, the incremental cost of filling 'one more room' is next to nil. That in turn breeds a culture of price discounting, just as in the airline business.

Some say established hotels are protected as business propositions by their unique downtown locations.

Perhaps no more land is being created. But above cities there is generally a surplus of air space. A competitor can generate a lot of extra room space from a very small footprint of land by simply building upwards. Thus the 'rarity value' of having a valuable central city site is not the barrier of entry to competition that it might otherwise be.

Because of the high fit out costs of a hotel, the buildings are not easily and economically convertible to alternative uses, like office or retail. Hotel operators are trapped in a high ongoing cost capital intensive fickle market. As a buisiness proposition, operating a chain of hotels stinks.

Would anyone like to refute my biased and superficial views?

SNOOPY

discl: don't hold any listed pure property investments

duncan macgregor
15-02-2006, 11:07 AM
SNOOPY, i dont hold any listed property shares as i consider they are at the top of the cycle. My thoughts on hotels are that they must be looked on as a business first property owners second. Why is it that the hotel chains buy the property and not lease it?. I think the business side of hotels is not as proritable as owning, and collecting the capital gain at the end. Farms are very similar if you take the actual cost of the farm against potential return its pathetic. It gives a decent living and an excellent capital gain at the end. The price of property moves in cycles and averages out at 10pc in my reasoning. Most people cant save as fast as their house rises in price its a great way to save money. macdunk

nelehdine
15-02-2006, 11:42 AM
Snoopy, check out the GPT website ( GPT.com.au ), for a diversified LPT they are quite heavily into Hotels and Resorts ( Own one of Sydney's best hotels, Ayers Rock resort at Uluru and several of the barrier reef island resorts ) this part of their portfolio makes up about 10% of an $8b portfolio. It does really well, yields on par with office property, and GPT have made noises about increasing the exposure to this portion of their awesome portfolio. One of my favourite property stocks ( along with Westfield and Stockland ).

Disc: Hold 5489 GPT, 1254 WDC & 3025 SGP

Phaedrus
15-02-2006, 12:40 PM
http://h1.ripway.com/Phaedrus/Prop215001.gif

Snoopy
15-02-2006, 01:05 PM
quote:Originally posted by Phaedrus
Image showing NZSE50 outperforming KIP and PFI over the last two years deleted


I concur that no words are needed Phaedrus. Your chart shows why why I haven't been an enthusiastic property investor in the past. I venture to suggest that if you had drawn the same chart over a longer time period the result would have been the same.

SNOOPY

Phaedrus
15-02-2006, 01:17 PM
http://img.photobucket.com/albums/v418/789456/Prop215b001.gif

Lawso
15-02-2006, 01:36 PM
OK Phaedrus. So are you saying that Masfen & Co are lying when they say PFI's total return for 2005 was 21.5% versus NZX50's 10.6% gain? Or are you ignoring yields and just comparing the share price with the index figure?
And what about the five-year comparison - 16.7% total return v. 14.9%?
I continue to be very comfortable with my capital appreciation as a PFI holder. (But don't regret selling out of KIP.)

duncan macgregor
15-02-2006, 01:38 PM
quote:Originally posted by Snoopy


quote:Originally posted by Phaedrus
Image showing NZSE50 outperforming KIP and PFI over the last two years deleted


I concur that no words are needed Phaedrus. Your chart shows why why I haven't been an enthusiastic property investor in the past. I venture to suggest that if you had drawn the same chart over a longer time period the result would have been the same.

SNOOPY


Snoopy ask PHAEDRUS to compare LPC or RBD charts over the period you have been holding to lets take the worst one KIP. I know you might become more enthusiastic then about listed property companies after that. Property is The easiest and best way to make money. The paddock next door has risen in value by 600pc in 11 years just sitting there with the farmer paying the rates for grazing. Try sticking that on a chart and compare it to the market. macdunk

nelehdine
15-02-2006, 03:35 PM
Could we have the chart from 01.01.05 onwards, I think we would all agree that 2003/04 were great years for the NZX, but 2005 not that flash. Does the chart include the 5%+ divs paid out by KIP & PFI ??

Phaedrus
15-02-2006, 03:53 PM
Comparison charts like this vary a lot depending on the start date and the period chosen. Both KIP and PFI out-performed the Index for 2005, for example.
The shorter the time period the better property companies appear. The longer the time period, the less favourable the comparison.
If stock prices are not corrected for dividends, these appear as vertical drops in the plot when they go ex.

troyvdh
15-02-2006, 03:54 PM
re PFI....not only do I suspect that the divs have not been included...dont mean to be picky here but lets not forget the 2.5 % discount (used to be 5%) that is offered to those who partake of the share's in lieu.....

as an aside who know's ...in a few years will there be a NZ50....maybe 40....30......20...?

Lawso
15-02-2006, 06:16 PM
No sensible person would buy any of the listed property stocks for capital growth alone. As Phaedrus's charts show, they have lagged behind the NZX50 on that basis. But for healthy yields + moderate capital appreciation and virtually no downturn risk, it's hard to go past the likes of PFI, MGP, CNZ & even KIP. For example, when I first bought PFI in '99 the price was 78c; today 119 - not spectacular but not to be sneezed at. Now I'm getting great growth through the DRP - might be able to afford one of Metlifecare's fancy apartments (Remuera or St Heliers, approaching $1m each) one of these days[^]

duncan macgregor
15-02-2006, 07:01 PM
The only problem reading the chart is it is comparing apples and oranges. To get it accurate you would have to find out the average dividend on the nse 50 index, then compare that to the property trust dividend, taking into account the rise of the index against the rise in sp of the property trust. PHAEDRUS only gives the percentage rise in prices which is missleading in this situation. When i compare two companies charts over one year i always add the dividend, and allow for drops in price [stop loss triggers] in buy and sell decisions. To compare PFI with KIP you would have to take the dividends, plus any other bits and pieces into account, then you might find a completely different result. macdunk

COLIN
15-02-2006, 08:24 PM
quote:Originally posted by Snoopy


quote:Originally posted by nelehdine


CDL seems to me to be a hotel company with a bit of residential section development thrown in , again a completely difficult kettle of fish to APT,KIP and PFI ... if you want quality commercial property exposure then these 2 aren't in the same league IMHO.


I've never considered myself any great expert on listed property, although I do follow it in passing in the media. Am posting here in the hope of gaining some enlightenment from you property types!

Have been looking at the hotel sector recently as a consequence of owning shares in SKC. Was trying to understand a bit better the dynamics of SKCs latest hotel expansion in Auckland. That is why I started looking at 'the competition' from CDL (now MCK) hotels.

I have come to the view that the quality of commercial property can be ranked as 'retail property', 'industrial & office property' and 'hotel property' in that order. My observation is that the market agrees with me, as hotels tend to trade at a large discount to NTA even in this current boom property market. Why is this?

In theory hotel operators are at the cutting edge of NZs biggest growth industry - tourism.

However, hotel operator owners have to spend their own money doing up their properties. Whereas in the case of commercial or retail it is the tenant who pays for office and shop fit out. Also when new hotels come onto the market that raises the standard of buildings and fittings. That means existing hotel owners are always playing 'catch up'. 'Catch up' in this case means a continual upgrade of carpet and interior fittings so that the 'short term tenants' that hotels are chasing have the impression that where they are staying is 'fresh'. The existing hotel operators cannot afford to put themselves at risk of being blacklisted by the fashion police (reef fish travel agents).

In summary, hotels are the 'airline owners' of the central city. Just like airlines, hotels require a high capital commitment and are always being undercut at the margins by competitors trying to fill space at any price. After all, when you have to pay the staff anyway, the incremental cost of filling 'one more room' is next to nil. That in turn breeds a culture of price discounting, just as in the airline business.

Some say established hotels are protected as business propositions by their unique downtown locations.

Perhaps no more land is being created. But above cities there is generally a surplus of air space. A competitor can generate a lot of extra room space from a very small footprint of land by simply building upwards. Thus the 'rarity value' of having a valuable central city site is not the barrier of entry to competition that it might otherwise be.

Because of the high fit out costs of a hotel, the buildings are not easily and economically convertible to alternative uses, like office or retail. Hotel operators are trapped in a high ongoing cost capital intensive fickle market. As a buisiness proposition, operating a chain of hotels stinks.

Would anyone like to refute my biased and superficial views?

SNOOPY

discl: don't hold any listed pure property investments








A good piece, Snoopy.
Long experience has taught me to stay away from airline stocks, hotel companies, and shares in any company with major exposure to the
tourism industry. There may be short windows of opportunity to profit from selected investments in these areas but, over time, tourism-related listed equity investments seem to suffer from the very fickle nature of that industry. One just needs to look at the c

Snoopy
15-02-2006, 09:55 PM
quote:Originally posted by COLIN


A good piece, Snoopy.
Long experience has taught me to stay away from airline stocks, hotel companies, and shares in any company with major exposure to the
tourism industry. There may be short windows of opportunity to profit from selected investments in these areas but, over time, tourism-related listed equity investments seem to suffer from the very fickle nature of that industry. One just needs to look at the chequered career of Air NZ and its ongoing struggles, for example. Also, BRY really turned to custard when it invested heavily in Thistle Hotels. And, coming up to date, just look at the current fall-off in overseas tourism into NZ - at a time when the world economy is experiencing so many positive trends.


Hey Colin you were meant to rip my argument apart! Not agree with me! I think Warren Buffett has made good the argument against airlines so perhaps I was a bit naughty mentioning that 'a' word. I was aiming for a hotel 'death by association argument' and it looked like it worked on you ;-P.

I remember Mount Charlotte Hotels, as Thistle was called then, as the great turning point for Brierley Investments shares. From memory BRY made a meagre bid that should have been only good enough for a small proportion of the shares. Then the London stock market turned down and BRY found themselves with a lot more hotel shares then they anticipated - the beginning of the end. In theory if BRY had bought only 20-30% of the company they would have been OK, so management says. But even with long hindsight, something stinks about this deal.

If those English hotels were truly earning their cost of capital, BRY should have been OK buying the whole lot. Instead they were nearly brought to their knees! Even in more recent years Brierley in a precarious financial position, has been selling off certain Thistle Hotels. A sell off which has now put BRY in the soundest financial position they have been in for twenty years. Yet from my reading of the BRY annual reports, it doesn't look like the earning capacity of those Thistle Hotels has changed much. My only conclusion is that BRY bought the hotels for too high a price in the first place and later sold then for too high a price! Does the hotel market never learn?

To disprove your point on tourism shares Colin, there is one tourism share that since inception I have done very well out of, even though it has stagnated (share price wise) over the last couple of years. And that is Sky City (SKC). And the other great property based tourism share is of course AIA.

SNOOPY

I.T.Ancient
16-02-2006, 08:09 AM
To summarise then. The only tourism companies worthy of investment are those which can persuade the state to use it's power to deliver them monopolistic advantage.

Snoopy
16-02-2006, 11:07 AM
quote:Originally posted by I.T.Ancient

To summarise then. The only tourism companies worthy of investment are those which can persuade the state to use it's power to deliver them monopolistic advantage.


That is a most depressing thought! Although it is interesting that many people are quite compared to complain about Telecom, but never seem too concerned about the AIA and SKC monopolies!

I think that to make it in the hotel business, you need a distinct sustainable advantage. Perhaps the state might give it to you (SKC) or perhaps it is a local council zoning issue? One thing I did notice about Thistle is that it is not a gloabl brand.

Does this explain why the Thistle hotels have performed relatively poorly over the years? MCK are trying to build a global brand structure. Will it work for them?

SNOOPY

Tyke
18-02-2006, 08:17 AM
For what its worth I my gross return (gross divs and capital) on PFI (the only property stock I have held that long) for the last five years are

Year to 17th Feb
2002 13.45%
2003 11.23%
2004 7.58%
2005 22.1%
2006 19.6%

I don't know whether this will add anything to the debate

Lizard
18-02-2006, 04:30 PM
Snoopy, didn't Bob Jones make similar (scathing) comments about hotels as investments?

Phaedrus, your 3 yr chart favours NZX as it includes a couple of outstanding years. However, my experience on holding 5+ property shares and 8+ NZ shares over the last 4 years is that property stocks outperformed the rest. Your 3 year chart gives about 20.5% compound for the NZX. My 3 year results were 19.2% on the NZ shares and 19.3% on property. Over 4 years, 17.4% on property shares, 15.3% on NZ shares. Dividends were not reinvested - if so, property, with their greater dividend payout over the period, would have performed still better.

The main advantage for property has been a far smaller volatility in performance with standard deviation of 4.16% for property and 14.9% for NZ shares.

However, with yields now substantially lower than when I started, and having been aware of some stagnation in property share prices prior to my entry, I am currently well underweight in property shares and will be cautious in selecting new investments.

troyvdh
19-02-2006, 07:06 PM
come on Phaedrus....be honest...you would love to hold a few PFI....

Snoopy
19-02-2006, 08:28 PM
quote:Originally posted by Lizard

Snoopy, didn't Bob Jones make similar (scathing) comments about hotels as investments?


Don't know Lizard. I put 'Bob Jones' and 'hotels' into google.co.nz and came up with Bob's 2002 novel 'Ogg', Chapter 6. Anyone have a copy lying on the shelf from which they'd like to give us a few quotes?

SNOOPY

Snoopy
19-02-2006, 09:24 PM
quote:Originally posted by Tyke

For what its worth my gross return (gross divs and capital) on PFI (the only property stock I have held that long) for the last five years are

Year to 17th Feb
2002 13.45%
2003 11.23%
2004 7.58%
2005 22.1%
2006 19.6%

I don't know whether this will add anything to the debate


That is a cumulative return of (assuming all dividends reinvested) 98% over five years. Very impressive, although there are other property investments that have done almost of well.

The only pure property investment that I have held over that time was 'Snoopy House Inc' which went up in value by something like 64% in the last three years. And that figure doesn't include any rental income, unlike your PFI shares Tyke!

Now, 'Do I have a bargain for all you property investors out there'!

If you sign a binding contract to buy my house for 58% more than my last registered valuation in three years time you will be 'saving 10%' ( 10% of 64% is 6.4%, 64%-6.4%=58% ). What a deal! Where else could you 'save 10%' and still buy such a great property!

There ends the lesson of selectively extrapolating from statistics to produce distorted expectations of returns.

Earlier in this thread I wrote:

"I concur that no words are needed Phaedrus. Your chart shows why I haven't been an enthusiastic property investor in the past. I venture to suggest that if you had drawn the same chart over a longer time period the result would have been the same."

Perhaps I was a little quick off the mark with the evidence that Phaedrus presented. For a start the NZSE50 assumes that all dividends are reinvested. Both KIP and PFI have paid substantial dividends over the duration of both charts. So what we have here is not an 'apples with apples' comparison. If we go with Tykes figures, and because he is a PFI shareholder I have no reason to doubt his word, there is every chance that PFI has outperformed many blue chip 'pure share' investments since 2002.

Does that make PFI a good investment for the next five years? The answer to that depends on many factors. But based on the return figures Tyke has given us alone, I would guess 'probably not'.

In times of 'low inflation' and 'exchange rate strangled industrial earnings', it is hard to believe that the industrial companies that have PFI as their landlord will double their profits in five years. And those tenant companies will need to double their profits if they are to sustain a doubling in rent payments! Far more likely IMO, is a stagnation in rents, and maybe a decline if certain key tenants go bust. This is the 'reversion to the mean' argument. An argument which has been shown to be a much more accurate predictor of business cycle returns than drawing a trendline on the most recent earnings figures.

What I don't think there is any debate about is that property will provide a better long term return than cash. And shares will provide a better long term return than property, *provided all are ungeared investments* and *provided no-one takes silly amounts of fees from you for managing your share investments*. That doesn't mean it isn't possible to find single example investments that break these general rules- you can. I am speaking from the general long term (ten year plus) viewpoint.

So well done Tyke, although on the basis of your figures alone I wouldn't invest in PFI. Then again if I already owned PFI shares, I'm not saying that I would sell them either!

SNOOPY

discl: Will continue to hold 'Snoopy House Inc.'

Lizard
19-02-2006, 09:41 PM
quote:Originally posted by Snoopy


quote:Originally posted by Lizard

Snoopy, didn't Bob Jones make similar (scathing) comments about hotels as investments?


Don't know Lizard. I put 'Bob Jones' and 'hotels' into google.co.nz and came up with Bob's 2002 novel 'Ogg', Chapter 6. Anyone have a copy lying on the shelf from which they'd like to give us a few quotes?

SNOOPY



Well found! Yes, pages 45-50. I was looking through it last night and couldn't find the spot. A bit lengthy to quote, but he does make the comparison to airlines too...happy to loan it to you...

(Though I'm not sure Bob Jones opinions should be considered gospel...especially his ones on women!)

Halebop
19-02-2006, 11:02 PM
...and material disclosures.

Phaedrus
20-02-2006, 08:37 AM
Snoopy and MacDunk,
So long as a Gross index is used, and if stock prices are properly corrected for dividends, in fact you ARE comparing apples with apples. (Both plots will include dividend yield.)
I am quite willing to check my data if Tyke or anyone else would like to email me their dividend figures. I need the date the stock went "ex" and the actual cents/share paid out.
I must say that I think some of you are grasping at straws though. Any dividend yield however applied is not going to alter the fact that since the NZSE50 Index began, these 2 stocks have under-performed the NZ average by a huge margin.

duncan macgregor
20-02-2006, 09:59 AM
PHAEDRUS, I dont mean to pin prick your good work. I only mentioned that to be super accurate you must take into account other things that must be accountable. Lets take SNOOPIES RBD for instance, a complete dog of a share, or so i have said on numerous occasions.
If you take it over a period of eight years you come up with a chart that shows its a dog. Lets reinvest the dividends on the way through then do it again on a chart you will come up with a share that might beat the bank. To come up with a proper chart that gives the whole picture becomes to complicated with fundamental analysis to be worth the trouble. macdunk

Snoopy
20-02-2006, 01:15 PM
quote:Originally posted by Lizard


Yes, pages 45-50. I was looking through it last night and couldn't find the spot. A bit lengthy to quote, but he does make the comparison to airlines too...happy to loan it to you...


Thanks for the offer Liz, but I managed to make my way over to the library. Here is what Bob Jones, under the guise of 'Mr Upton' says about hotels.

"Not a lot of public entities actually own hotels which in itself tells you something. Those that exist are all financial horror stories requiring constant capital injections just like airlines.
Public company boards are particularly susceptible to the 'next year will be better' mythology fed to them from their executives. And in respect of periodic profit flushes the same situation applies as with airlines. If suddenly Hong Kong or Seattle becomes a good thing for hotels, instantly everyone is there building bigger and brighter ones. Overnight a very good thing turns into a very bad thing.

Talk to hotel owners and you will find they live on eternal optimism. Always they'll explain about next year, how the new marketing plan, the new chain alliance, the new wing, the refurbishing plan will make them come right. But with hotels next year never comes. In an unfettered competitive environment, hotels like airlines are programmed to lose money and over any sensible period of assessment, say ten years, they all do.

Tourism activities- airlines, hotels, travel agencies; even the trivial ones, guiding, jetboat operators or whatever -are highly addictive. The players become captivated by what they are doing. When assessed over any period of time they never make any money but the owners don't care that much. They become satisfied with mere survival so long as they can carry on. And of course, once involved, they're locked into their financial predicament compensated only by their addiction.

Some major players - the big names, Sheraton and the like - are in fact awake to the realities. Consequently they no longer own hotels. Basically they're a franchise operation, renting their name, offering a pooled marketing service and clipping the actual hotel owners ticket for a piece of their turnover, only they are not hoteliers as everyone assumes but hotel provisioners. They all started out as hotel owners but eventually they woke up. Generally the actual hotel owners wouldn't swap place with them as they love owning their hotels so much. Owning a hotel is a highly addictive pursuit and for some affluent individuals an ego gratifying hobby.
Hotel owners envisage themselves in a sparkling chandaliered hotel lobby; greeting celebrities, politicians and the like when they arrive. The cruel reality is that the owners spend most of their time in backyard financial crisis meetings.

You can always tell when a hotel is in one of its periodic crisis phases when suddenly all of its staff appear mentally deficient. There's a reason for that, which is that they actually are. Under pressure the proprietor has cut wages to the bone and can only attract humanities dregs. As with most things, cost-cutting forced on a business simply compounds the problems, and never more so than in a service industry that resorts to employing morons. The owners struggle on , periodically changing managers, becoming caught up in a fool's gold from each new manager: new wings, refurbishing, redesign, rebranding and new marketing strategies, and always always believing that once these things are done all will be well. They never are. Relief only comes with the owner's death.

The plight of resort hotels is worse. Every tropical hotel complex dealing in cheap low profit package tours for the low income sector was once a top glamour hotel, perhaps a decade earlier. As soon as they enjoyed a glimmer of success, brighter hotels were instantly built furthe

Lizard
20-02-2006, 06:21 PM
Nice typing! (Are you planning to read the rest of the book!?!)

For some reason, I was always put off looking closely at CDL (MCK) after that...though looking at the reuters chart, that may have been my loss!

Snoopy
20-02-2006, 07:56 PM
quote:Originally posted by Lizard

Nice typing! (Are you planning to read the rest of the book!?!)


I may do at some point in the future. Left the book on the library shelf today after extracting what I wanted. I have some other reading priorities that I have to get through. Looks to be quite a good (in an entertaining way) read, albeit long - 400 pages!


quote:
For some reason, I was always put off looking closely at CDL (MCK) after that...though looking at the reuters chart, that may have been my loss!


Yes, I have to admit to 'discovering' CDL hotels rather late myself. I did a review of this company on the focus investment group earlier this year (see other channel). With hindsight it looks like a well run business. No chart is needed to convince me of that!

The question is, can we learn anything from our failure to invest in CDL/MCK Lizard?

One possibility is that on a statistical basis, CDL/MCK actually *was* a poor investment that just 'got lucky', glowing in a wake of America's Cup and Lord Of The Rings fever. IOW on a risk adjusted basis, without the benefit of hindsight, we were correct not to invest.

CDL cetainly had their problems with their Hotel in Sydney. It was only the booming apartment market in Sydney that handed them a 'get out of jail free' card on that. If they hadn't been able to sell their Sydney hotel off as apartments so easily, I wonder what would have happened?

Love or hate Sir Bob Jones, I think you have to acknowledge that he has spent a lifetime in the property business. And you couldn't do that without coming up with at least a few observational truths. Let's assume Bob is right and investing in any hotel at full price is crazy. That doesn't mean you shouldn't invest in a hotel at *any* price. If you could buy into a hotel at say 'half price' (or half the asset backing the share) would that be a good deal? Perhaps it could have been. I think that 5 years ago CDL hotels was indeed trading at close to 'half price'.

Furthermore CDL has focussed more in recent years on the domestic market (including conferences), at the expense of relying mostly on overseas tourists. Maybe the diversifiaction away from being a 'pure tourism asset' has worked for them, at least in this time of high domestic confidence (over the last five years). Their property development subsidiary, CDL Investments, has also had a good few years. But that may not last either.

Was CDL Hotels as good a buy as it appeared in 2001? The charts will say 'yes', but that doesn't prove it was! Still, interesting to reflect.

SNOOPY

discl: never held CDL/MCK

Snoopy
20-02-2006, 08:29 PM
quote:Originally posted by Snoopy


Some major players - the big names, Sheraton and the like - are in fact awake to the realities. Consequently they no longer own hotels. Basically they're a franchise operation, renting their name, offering a pooled marketing service and clipping the actual hotel owners ticket for a piece of their turnover.


With reference to BIL International and their UK hotels, this is exactly what they are doing. Over the years various Thistle Hotels have been sold off. BIL are indeed on their way to becoming the 'master hotel franchise operator' that Sir Bobert sees as a viable business model.


quote:
The plight of resort hotels is worse. Every tropical hotel complex dealing in cheap low profit package tours for the low income sector was once a top glamour hotel, perhaps a decade earlier. As soon as they enjoyed a glimmer of success, brighter hotels were instantly built further along the beach and usurped their fleeting place in the sun. And the new players are ultimately doomed to the same fate when a younger, stronger lion looms on the scene as it inevitably does.


There is a bit of 'deja vu' here regarding BIL and Molokai. I believe that one of these derelict hotels does exist on Molokai. Of course there is less risk of a new hotel being built 'down the beach' because, in this instance, BIL owns most of the island (as I understand it). However, in these days of cheap air travel (it is still relatively cheap in historic terms) 'down the beach' can mean the next island 300 miles away, so I doubt if BIL can remain complacent.

Despite that, it appears the profits to be derived from Molokai in the future weill come from property development and sales to private buyers as much as any revived hotel operation.

In summary, I don't think the hotel development plans of BIL International tie in with Sir Bobert's global vision of 'hotel owners doom'.

SNOOPY

discl: hold BRY

Tyke
21-02-2006, 03:09 PM
Phaedrus, here are the dividends as you requested. In compliling this list I discovered that I has missed one out in my calculations ans as a result the return for the year to Feb 2005 was 27. 4% rather than 23.7%

However this is basically irrelevant for me. I own stock in this company as it suits my circumstances and style of investing which is to own a portfolio diversified across sectors, markets and currencies. In that context I am more than happy with the performance from PFI


quote:Originally posted by Phaedrus

Snoopy and MacDunk,
So long as a Gross index is used, and if stock prices are properly corrected for dividends, in fact you ARE comparing apples with apples. (Both plots will include dividend yield.)
I am quite willing to check my data if Tyke or anyone else would like to email me their dividend figures. I need the date the stock went "ex" and the actual cents/share paid out.
I must say that I think some of you are grasping at straws though. Any dividend yield however applied is not going to alter the fact that since the NZSE50 Index began, these 2 stocks have under-performed the NZ average by a huge margin.

Lawso
28-02-2006, 02:06 PM
PFI up 3c yesty, a further 1c today, to record 124. Pretty spectacular for a normally sluggish stock. No reason I know of except for going ex-div next Monday, but that's only 2.16cps.

Lizard
28-02-2006, 02:27 PM
Possibly just a few sellers out of CHP at current price, scouting for another property stock. Similar thing happened during the CNZ takeover.

Lawso
28-02-2006, 03:06 PM
Fair enough, Lizard. But for DRP reasons I want the price to (temporarily) fall! - the lower the price the more shares they give us[:o)]

duncan macgregor
28-02-2006, 03:35 PM
quote:Originally posted by Phaedrus

Snoopy and MacDunk,
So long as a Gross index is used, and if stock prices are properly corrected for dividends, in fact you ARE comparing apples with apples. (Both plots will include dividend yield.)
I am quite willing to check my data if Tyke or anyone else would like to email me their dividend figures. I need the date the stock went "ex" and the actual cents/share paid out.
I must say that I think some of you are grasping at straws though. Any dividend yield however applied is not going to alter the fact that since the NZSE50 Index began, these 2 stocks have under-performed the NZ average by a huge margin.


I think PHAEDRUS if you do your chart again you will find out that the property companies were not dogs after all compared to the index. macdunk

Snoopy
03-03-2006, 08:58 PM
Just doing some background reading on BT Group plc Annual Report 2005and found the the following note on United States Generally Accepted Accounting Principles. I think it is of interest to property investors. I believe the NZ rules are similar to the UK rules in this instance

From p113

------

(a) Sale and Leaseback of Properties

Under UK GAAP, the sale of BT's property portfolio is treated as a fixed asset disposal and the subsequent leaseback is an operating lease.

Under US GAAP, the transaction is regarded as financing and the land and buildings are recorded on the balance sheet at their net book value., an obliagtion equivalent to the cash proceeds is recognised and the gain on disposal is defered until the properties are vacated by BT.

(To convert accounts from NZ GAAP to US GAAP) rental payments paid by BT are reversed and replaced by a finance lease interest charge and a depreciation charge.

------

Why is this of interest? It measn that companies that set out to square up their balance sheet by selling off properties and leasing them back (RBD, BRY come to mind) are effectively not allowed to do it if they were operating in the US!

SNOOPY

karen1
21-07-2012, 07:01 AM
In today's Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10821019

Should holders be wary/watching closely?

percy
21-07-2012, 04:07 PM
In today's Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10821019

Should holders be wary/watching closely?

For Goodman unit holders it is positive that management are looking after unit holders' best interests.
For PGC it looks as though "the trust" has gone out of Perpetual.Losing major client will mean Perpetual is a "dead duck".

karen1
21-07-2012, 06:36 PM
Thanks Percy

Billy Boy
23-07-2012, 03:27 PM
Bill English was saying this morning that he expects the current
global volatility to carry on for at least a decade.
So (IMO) divvy stocks are going to be the fashon to come.
I hold GMT, DNZ, ARG,. These are the shares I have held for about
3 years now. Price has gone up & down and it don't matter coz
those divvy's kept comming in. I get 8% - 10% on originial PIE, investment.
My strategy is to sell down most other stocks and beef up on LPT's.
They have never let me down
BB

karen1
23-07-2012, 03:41 PM
Cheers BB, just wasn't sure if I saw an alarm bell in that article, but as Percy said good that GMT are looking after holders. And likewise, I have held GMT for a few years, and enjoy the divs!

fungus pudding
23-07-2012, 04:13 PM
Bill English was saying this morning that he expects the current
global volatility to carry on for at least a decade.
So (IMO) divvy stocks are going to be the fashon to come.
I hold GMT, DNZ, ARG,. These are the shares I have held for about
3 years now. Price has gone up & down and it don't matter coz
those divvy's kept comming in. I get 8% - 10% on originial PIE, investment.
My strategy is to sell down most other stocks and beef up on LPT's.
They have never let me down
BB


Yep. they're not bad things. I'm a property investor, and the only shares I bother with are LPTs. I hold DNZ, Arg, Aug, Pfi, KIP, GMT and Ano. Just thought I'd buy a bunch rather than another building. They provide excellent extra income, especially as they are PIES. To date the capital growth hasn't been too flash - but it's such easy money, not having to deal with councils, valuers, tenants, insurance companies etc, that I'm not complaining at all.

Billy Boy
24-07-2012, 09:15 AM
Hey !!!! (light bulb , light bulb )

Maybe they should make Mighty River Power, and the other SOE's
all, :-
PIES
:t_up:
cheers BB :)

Anna Naum
24-07-2012, 11:18 AM
JB Were makes changes to ratings in REIT space

New Zealand: Real Estate: REITs - No growth in sight; lowering coverage view to Cautious

· No rental or valuation growth in sight: After incorporating revised Jones Lang LaSalle (JLL) sector forecasts and specific stock adjustments, we forecast EPU and DPU for NZ REITs to remain flat over the next few years with the only bright spots being premium Auckland CBD office and retail. There is similar message on valuations with no material cap rate contraction expected in FY13.
· NZ REITs fully valued: Following its rerating NZ REITs are trading in line with its long run average cash yield and slightly above its long run average to reported NTA. Moreover, our GS ECS Research team expects the current spread over long bonds to narrow to our target level (300bp) in 12 months.
· NZ REIT coverage view lowered to Cautious from Neutral: This reflects a full sector valuation and no positive short term catalysts. In particular, our analysis suggests the next key sector drivers, being higher net rentals and strong property valuations, are unlikely to emerge in a noticeable way for NZ REITs in the next 12 months. We revise our NZ REITS 12-month target prices by -6% to +3%, and our FY12-15 EPS estimates by up to -/+3%.
· Retain Buy on DNZ: DNZ remains our preferred NZ REIT reflecting a solid tax paid yield, above average DPU growth, and supportive realizable NTA, which in turn creates opportunities for accretive portfolio and capital management initiatives.
· GMT down to Sell from Neutral: We downgrade GMT to Sell, driven by likely further share price headwinds from a low NTA with limited net absorption in Auckland industrial coupled with GMT’s relatively high land bank holding costs.
· KIP up to Neutral from Sell: We upgrade KIP to Neutral, underpinned by a tax paid yield of 6%, attractive exposures to prime Auckland CBD office and retail, plus issues surrounding problematic properties seem well understood.

Billy Boy
24-07-2012, 12:51 PM
Tks Anna
For most people the Q. still remains. " Got $100K what do I do with it"
Banks. About = too, or slightly < all up inflation. Not counting tax
Finance Coys's. Too risky and not much better than Banks for the good ones.
Bonds. Not liquid enough, and devalued by inflation and tax.
Rental housing, Running about 4% - 5% Profit on average (Yes arguable). Reasonably inflation proof. And not about to fall over coz of Europe. Shortage now and shrinking.
Cost of new ?, very expensive. Mainly coz of Land, Local Body compliance and GST.
Share Market. Yoyo stuff, Not for the inexperenced.
Big worry ahead, INFLATION. We will not be immuned as we will import it, Mainly
underlying inflation. It's happening now !! CPI inflation will come later.
LPT,s. Will go up and down both in S/price and Divs, But will be there at the end.
Now I have made a few statements above. Please rip my post apart or add other
angles.

BB:)

fungus pudding
24-07-2012, 01:03 PM
Tks Anna
For most people the Q. still remains. " Got $100K what do I do with it"
Banks. About = too, or slightly < all up inflation. Not counting tax
Finance Coys's. Too risky and not much better than Banks for the good ones.
Bonds. Not liquid enough, and devalued by inflation and tax.
Rental housing, Running about 4% - 5% Profit on average (Yes arguable). Reasonably inflation proof. And not about to fall over coz of Europe. Shortage now and shrinking.
Cost of new ?, very expensive. Mainly coz of Land, Local Body compliance and GST.
Share Market. Yoyo stuff, Not for the inexperenced.
Big worry ahead, INFLATION. We will not be immuned as we will import it, Mainly
underlying inflation. It's happening now !! CPI inflation will come later.
LPT,s. Will go up and down both in S/price and Divs, But will be there at the end.
Now I have made a few statements above. Please rip my post apart or add other
angles.

BB:)

Sorry, can't help. nothing there to rip apart. :)

Anna Naum
24-07-2012, 01:08 PM
Agree BB re part of portfolio, think SOE's will be the new LPT's for the next few years personally. Look at model they use to justify pricing, it is about as corrupt as you can make it and not call it a casino!!

Justification for pricing based on replacement value of assets that they reprice on a regular basis. So it is the marginal cost of the next KW that determines the price for the total asset base.

With RMA act stopping nearly all new development at the low end of the cost curve you are left with the likes of wind as being the basis for new cost generation.....and its expensive. Sure at some stage govts will have to change the model that they allow for the price rise justification but that is years away.....look at Telecom it was listed for many years before the govt turned on its former child.

Billy Boy
24-07-2012, 01:40 PM
Yes anna, good points
I have just posted on the Mighty River thread re: depreciating assets
The graph relating to the expenditure on maintainance will grow.
I personally am watching , with interest, Electric Solar Power.
I have a friend in the N/Island who is installing 8 Pansonic pannels.
Each one cost about $800.00 and will generate 180 watts of electricity.
Now on a good day 12 panels will boil you electric jug. The surplus
(when not being used) goes back into the National Grid and you are
credited. So for about 12K you could be power cost free.
I should hear from my friend any day now
BB

Anna Naum
24-07-2012, 01:51 PM
BB very interested in what your mate is doing on power generation, son very keen for me to install so any leads appreciated.

Billy Boy
24-07-2012, 03:00 PM
Anna FYI
http://www.kmsolar.co.nz/solar-panels/perlight-plm-190w24.html (http://www.kmsolar.co.nz/solar-panels/perlight-plm-190w24.html)

CJ
24-07-2012, 03:02 PM
The surplus (when not being used) goes back into the National Grid and you are credited. What feed in rate do they get?

Billy Boy
24-07-2012, 08:48 PM
You have to buy at retail
and sell at wholesale. except for meridian
who gives you dollar for dollar.
thats what it used to be. rules might have changed by now
bb

Snow Leopard
30-07-2012, 08:03 PM
I make no guarantees about the accuracy of this but this is my crib sheet of market price, NTA and dividends.



Code
Price
NTA
Dis %
DPS
Yield %










ARG
$0.870
$0.884
1.58%
$0.060
6.90%


DNZ
$1.520
$1.540
1.30%
$0.090
5.92%


GMT
$1.010
$0.935
-8.02%
$0.065
6.44%


KIP
$1.075
$1.060
-1.42%
$0.066
6.14%


NPT
$0.575
$0.538
-6.88%
$0.040
6.96%


ANO
$0.990
$0.883
-12.12%
$0.050
5.09%


AUG
$0.715
$0.735
2.72%
$0.040
5.59%


PFI
$1.160
$1.079
-7.51%
$0.070
6.03%


VHP
$1.250
$1.018
-22.79%
$0.077
6.16%



LPTs are obviously in at the moment

best wishes
Paper Tiger

PS I have my paws on the first five

777
30-07-2012, 09:01 PM
I hold 3 through 8.

Bought most though at well below current prices so actual yield very good.

They are meant to provide me with cash flow in retirement. Hopefully a growing one.

Nice chart PT.

Snow Leopard
30-07-2012, 10:56 PM
My most recent buying was DNZ.

But in my book (which I have nearly finished colouring in) they are all fully or over-priced and I am more likely to consider selling than buying.

best wishes
Paper Tiger

If I had to buy one it would be ARG.

777
31-07-2012, 07:59 AM
I think though, that with interest rates are where they are now, they will all attract investors. As interest rates increase then hopefully their will be an NTA increase and dividend increase to support continuing investing.

fungus pudding
31-07-2012, 08:05 AM
I hold 3 through 8.

Bought most though at well below current prices so actual yield very good.

They are meant to provide me with cash flow in retirement. Hopefully a growing one.

Nice chart PT.


I have 650k in LPTs, from which my annual income is 40,600. My marginal tax rate is 33%, so 40,600 equates to 60,900 of income. Given that I know nothing about the sharemarket, I can't see where I could possibly get a similar return. I'm only up 3% after a good few yeares, but was well down after GFC, so they've recovered well. If you want income in retirement, you could just keep buying these and reinvest the dividends. -keep stacking up that income, is my motto - My other income is from commercial buildings, so this is just a few more eggs in the same basket. Foolish many would say, but it suits me.

voltage
31-07-2012, 08:30 AM
FP, I do follow your comments, you seem to be very wise and experienced. Interesting I have been looking to join the auckland property market but cannot get my head around paying over 400000 for a 2 bed unit in a good area that may rent for early $400 per week. Take off costs - low yield. Compare with property trust may have better growth but much lower yield and more hazzle.
I would add Ryman as a property trust specialising in retirement area with good growth prospects.

fungus pudding
31-07-2012, 08:46 AM
FP, I do follow your comments, you seem to be very wise and experienced. Interesting I have been looking to join the auckland property market but cannot get my head around paying over 400000 for a 2 bed unit in a good area that may rent for early $400 per week. Take off costs - low yield. Compare with property trust may have better growth but much lower yield and more hazzle.
I would add Ryman as a property trust specialising in retirement area with good growth prospects.

I wouldn't bet on long term growth from residential property. By any measure it's overpriced. I cut my teeth (too long ago) on residential stuff, but wouldn't go anywhere near it under current conditions. Don't forget - the biggest contributor to current prices being so high relevant to income, is the current low interest rates. Property prices and interest rates are opposite ends of the see-saw. One day they'll climb. It will happen to commercial stuff as well, but to a lesser degree. Res. property can sure have its headaches. No matter how well you screen tenants, you're still likely to strike the odd bad one; and they can cost a fortune. And don't forget, when looking at budgets, to allow heaps for maintenance. I know many landlords and without fail they underestimate their R+M expenditure. Good luck. And thanks for your comments. I might be experienced (aka - old), but have a long way to go before I get the wisdom badge. :D

voltage
31-07-2012, 09:25 AM
You are right about R&M, I own a few rentals, new carpet, repaints, reroof and repairs do happen and kill any profits. it is the capital gain where you make the money.

fungus pudding
31-07-2012, 10:11 AM
You are right about R&M, I own a few rentals, new carpet, repaints, reroof and repairs do happen and kill any profits. it is the capital gain where you make the money.

It was once. To invest in res. prop. with current returns means you are betting on capital gains continuing. That's a massive gamble, and not one I would take. My personal philosophy, for what it is worth, is to treat capital gain as a bonus, and just keep stacking up income. I've never really been a flick-over merchant, and have always bought for income. I never made a practise of selling, apart from when I exited from flats and houses. And in the last few years sold some stuff to eliminate all mortgages, simply because I can't be bothered with commercial activity anymore. It's possible to become financially independent by compounding your spare income. The problem with capital gain is you can't spend it. I'm sure you've heard of, or know, some oldies who are well off on paper, but have nothing to live on. Yes - you can sell the odd assett, but then you haven't got it of course. if you take the approach of income stacking, by the time you feel like retiring you can have a very satisfactory income. When concentrating on capital gain, you can't have your cake and eat it too; by stacking income - you can. Grab a copy of Bob Jones' book, Jones on property and read chapter 19 'Good cash flows keep deals well oiled'. Then read it again and again until what he is talking about sinks in. But it's important to work out what you, personally, want. Would you be happier with an extra million or two on paper? In cash? Or a perpetual passive income of 100 -200k a year - inflation protected? (Don't take too much notice of the numbers - there's no limit.)

voltage
31-07-2012, 10:23 AM
Thanks FP for your comments. I suppose many of us have instilled in us probably from the high inflation days and from property seminars the advantages of gearing into property. Interesting how many of these property gurus are now bankrupted. You are quite right capital gain is the bonus and where I live in Rotorua with low growth population I do not see any gain in value. I am too now thinking of getting rid of debt and focus primarily on income where you can get a better return without the hassles.

fungus pudding
31-07-2012, 11:11 AM
Thanks FP for your comments. I suppose many of us have instilled in us probably from the high inflation days and from property seminars the advantages of gearing into property.

Advantages, or disadvantages. Never forget, gearing works both ways. If you have 100% equity in something and it drops 10%, that is all you have lost. But if you have 10% equity against 90% borrowed, then a 10% drop wipes you out. Not something to be too negative about, but be conscious that gearing carries a risk. The future of the world economy is simply unknown - less certain than ever, and I can't see how NZ house prices can rise much more. It's difficult for me to fathom how a family on an average income, can purchase an average priced property with an avarage sized mortgage. There's simply no way they can pay more without large general wage increases, and that just aint gonna happen! Dropping real estate prices in America wiped out heaps of investors iin the last few years.
For all that, I see Ollie Newland predicting median house prices in Auckland to hit $1 million in the near future. I can't see that at all.

POSSUM THE CAT
31-07-2012, 11:59 AM
Fungus Pudding maybe has some he wants to sell?

troyvdh
31-07-2012, 12:24 PM
Dear fungus....I agree with about gearing.However not so your other comments.
Without intending to appear somewhat a "know all" it does frustrate me when folk talk about the "NZ house market"-in my mind there are many many many "markets" i.e. location-which city and where,flats,constuction type,batches etc.
I have always been loathe to accept one explaination re the wisdom of investing in houses.You say (and your probably right) that how a family can afford.......so what do these families do then......rent perhaps ????.
Fungus ...can you imagine if those tens of thousands of folk (often elderly) had not been sucked in by those flashy ****er types with there glossy pamphlets had in stead bought the place next door ?.
Ah hhh your probably thinking what about all those who got caught in those property buying schemes that eventually fell over....but hold on if folk seriously understood the principle " of it sounds to good to be true......" many would not have been caught.
Ive been in res. property for more than 30 years-nothing really flash....Ive a mix of properties.A block of flats bought 20 years or so now is debt free and returning about 18 % on purchase price p.a.
What does also intrigues me is peoples perception/expectation of what making money involves.For example many folk have seen there houses increase (at times) by as much as 20-30-40-50 %.....then a following period where there is no change or perhaps a small drop. Now you and I probably agree that such an increase over a period years ..be it 4-5-8...that this is an acceptable return and that a long term view is required.

I also doubt that many people understand the scale of this "leaky home" fiasco.The CHCh earthquake .....say $20 billion...I read estimates of the "leaky" issue between $20-$40 billion !!!!!!!!!...whats more they are still being built,bought and sold !!!!!!

Another consideration that I believe needs to be made is the "lag" extending now for probably a few years where house building numbers have stalled...and will be needed to be made back up.

I also may have quite a different philosophy about investing....sure handling tenants can be a pain....but if it was easy...everyone would be doing it.Also making money aint rocket science....and currenty in todays world I believe that if your managing to hold what youve got ...your doing alright.
cheers.

fungus pudding
31-07-2012, 01:01 PM
Dear fungus....I agree with about gearing.However not so your other comments.
Without intending to appear somewhat a "know all" it does frustrate me when folk talk about the "NZ house market"-in my mind there are many many many "markets" i.e. location-which city and where,flats,constuction type,batches etc.
I have always been loathe to accept one explaination re the wisdom of investing in houses.You say (and your probably right) that how a family can afford.......so what do these families do then......rent perhaps ????.
Fungus ...can you imagine if those tens of thousands of folk (often elderly) had not been sucked in by those flashy ****er types with there glossy pamphlets had in stead bought the place next door ?.
Ah hhh your probably thinking what about all those who got caught in those property buying schemes that eventually fell over....but hold on if folk seriously understood the principle " of it sounds to good to be true......" many would not have been caught.
Ive been in res. property for more than 30 years-nothing really flash....Ive a mix of properties.A block of flats bought 20 years or so now is debt free and returning about 18 % on purchase price p.a.
What does also intrigues me is peoples perception/expectation of what making money involves.For example many folk have seen there houses increase (at times) by as much as 20-30-40-50 %.....then a following period where there is no change or perhaps a small drop. Now you and I probably agree that such an increase over a period years ..be it 4-5-8...that this is an acceptable return and that a long term view is required.

I also doubt that many people understand the scale of this "leaky home" fiasco.The CHCh earthquake .....say $20 billion...I read estimates of the "leaky" issue between $20-$40 billion !!!!!!!!!...whats more they are still being built,bought and sold !!!!!!

Another consideration that I believe needs to be made is the "lag" extending now for probably a few years where house building numbers have stalled...and will be needed to be made back up.

I also may have quite a different philosophy about investing....sure handling tenants can be a pain....but if it was easy...everyone would be doing it.Also making money aint rocket science....and currenty in todays world I believe that if your managing to hold what youve got ...your doing alright.
cheers.

Of course there are markets within markets, but I was making a general comment. not writing a book. Prices cannot rise if nobody has money to buy. The same applies to rent. Good to hear you have an unencumbered block of flats, although return on historic purchase price is irrelevant. You are entitled to a good return on its current value - and you won't get it out of that property. Sell it to someone who believes history always repeats, at current going yield - and at least double your income with commercial or industrial stuff. However the point I was trying to make is that current res. investors are buying at a loss. i.e. the return will not cover the real costs if true maintenance is included. (and it matters little whether money is borrowed or not - your own capital would be earning just sitting in a bank). So if res. prop. is losing money, (needs propping up) then the investor is simply buying capital gain. Many of them will be sorely disappointed. And I will stress that my comments apply to the foreseeable future - not recent past. Then again, I haven't got a crystal ball. Pity; and believe it or not, I've been wrong before!

Joshuatree
12-03-2015, 11:17 AM
Our Estate has some Precinct shares Cant find a thread on them .. Any one taking up the entitlements?Current yield re 5.3%.

777
12-03-2015, 11:23 AM
If they are still above 1.15 next Wednesday I will. They must be a little concerned at the price at the moment. Not to get the money will mean another source of finance needed. Can't remember if they are underwritten and who by.

Joshuatree
12-03-2015, 11:34 AM
Thanks 777.
News to me; if one doesn't take up their rights and some Instos or who ever , competes in a book build for the untaken rights and pays a little more; that extra amount comes back to us(not saying it will happen here).

Beagle
12-03-2015, 12:19 PM
If they are still above 1.15 next Wednesday I will. They must be a little concerned at the price at the moment. Not to get the money will mean another source of finance needed. Can't remember if they are underwritten and who by.

Yes its underwritten, not sure by who. $174m capital raise explains the wind being sucked out of the listed property trust sector in the last few days.

fungus pudding
12-03-2015, 12:54 PM
Why on earth wouldn't you? I took up my entitlement, but first sold the equivalent number at 119.5 because I don't want any more than I have. A painless exercise which made just over $500 for two minutes on a computer.

see weed
18-05-2015, 01:46 PM
Just emailed John Key, to say if we buy property shares and sell after 2 years, then we don't have to pay CG tax. Yeeee Harrrrrr :t_up:.

fungus pudding
18-05-2015, 03:51 PM
Just emailed John Key, to say if we buy property shares and sell after 2 years, then we don't have to pay CG tax. Yeeee Harrrrrr :t_up:.

Nobody pays or will pay CGT. It is income tax they pay.

Billy Boy
19-05-2015, 09:42 AM
gearing up are ya Fungus ????
1970's wearing a different suit.!!
BB

Lewylewylewy
28-10-2016, 12:49 PM
Is it just me, or does it look like Augusta has bought into NPT so they can force them into contracts with Augusta to relinquish their assets?!

http://www.sharechat.co.nz/article/b78fd8a0/augusta-seeks-to-oust-npt-board-after-rebuff-over-management-contract.html

777
28-10-2016, 12:52 PM
Is it just me, or does it look like Augusta has bought into NPT so they can force them into contracts with Augusta to relinquish their assets?!

http://www.sharechat.co.nz/article/b78fd8a0/augusta-seeks-to-oust-npt-board-after-rebuff-over-management-contract.html

Bullies. Am a shareholder in both and hope NPT shareholders tell them to take a hike.

777
13-12-2016, 08:25 AM
KPG are now in on the act. NPT management support their proposal over AUG's.

beetills
13-12-2016, 03:48 PM
Blackstones in the USA are listing in the US in January.
They own 50000 single homes that they rent out .
Be interesting to see how they go.

fungus pudding
13-12-2016, 04:13 PM
KPG are now in on the act. NPT management support their proposal over AUG's.

Good for both companies so they say, but not sure what is in for KPG holders.

Out to lunch
13-12-2016, 04:41 PM
During KPG's capital recycling of their properties they have been keeping a hold of managing the property ie 205 Queen and Centre Place. Now Majestic and North City?
Pretty good RoE on property management!

Lewylewylewy
14-12-2016, 05:33 AM
With the risk of falling property prices, getting rid of property in favor of highly profitable management contacts is good risk management and profit taking.

Out to lunch
14-12-2016, 08:51 AM
Diversifying revenue streams is great but I wouldn't say theyre cashing in on property price risk - they're going to invest the cash right in to Sylvia Park and probably make it worth a billion dollars soon (incl adjoinings and SP lifestyle)

If they keep holding the management contracts for their property disposals we will have to call them Kiwi Property Management Group, but I think that acronym is already taken hehehe

Lewylewylewy
07-04-2017, 10:59 AM
Argh NPT :(

I hold a very small parcel of these back when I thought it would be a good idea to buy REITS as a long term hold with a big spread in case there was a problem with one of them. I now know to trust my own judgement, keep my stocks to justa few companies, bigger holdings, but still agile (liquid) stocks.

It's annoying that I have these, but can only get rid of them at a loss or wait to see which big boy ends up walking on them by request of the weak management. What a dumb situation to be in.

Augusta want to basically ransack them and bully everyone else into transfering the value into NZX:AUG. KPG figured they'd do the same, but offer less of a rip off. I agree with AUG that the management need to be shown the door, but not for the same reasons AUG want to do it.

I think I'll be voting for the KPG deal because I hold some KPG as well and it will stop AUG bullies buying the deal at a later date, by purchasing the majority share.

Terrible. Can I sell my shares to AUG for 68c each, please? :(

777
07-04-2017, 11:22 AM
I wonder if Francis is simply p****d off that he didn't get their offer accepted at the beginning and now is using Augusta shareholders money to buy more NPT to satisfy his own ego. Augusta is acting like a bully and nobody likes bullies. Should they fail then they are going to have a large holding in NPT which they will want to get rid of and that will drive the price down and mean a loss for AUG shareholders.

I hold all three involved companies and will vote for the KPG deal. They appear more professional.

Jenny Ruth
12-03-2024, 08:07 AM
Hi all. The latest column published on my Substack, Just the Business, this morning looks at the proposal to internalise Goodman Property Trust's management contract. The headline is: Goodman proposal is a $500m “vote of confidence in NZ”
And you can find it here:
https://justthebusinessjennyruth.substack.com/p/goodman-proposal-is-a-500m-vote-of