Listed Property Trusts

[Waltzing]

Winner(N) ,not all COMP Prop stocks are equal.

It will be interesting to see which ones confirm to this theory.

[Snoopy]

As I've shown before pretty strong correlation between NPF share price (I use as a proxy for the listed property stocks) and 10 Year Govt stock. Statistically 10 Year Govt stock yield accounts for about 50% of the prevailing NPF share price. Eliminate outliers like early days of covid and more recent data points the Rsqrd value is .87 - very strong correlation

On this basis listed property stocks are about 25% overvalued

NPF has never been so 'overvalued' - now even more 'overvalued' than they were in the despair created in the yearly days of covid in 2020 when they got to being about 20% 'undervalued'

My conclusion p somethings got to give in next month or two.


I have had a look at the update of your correlation chart between NPF share price (post 1232) and 10 year government yield Winner. I am wondering if selecting NPF as a proxy for property is messing with your correlation because of the very low interest rates we have at the moment. My post 1152 exposes the very wide difference between income paid into the NPF fund and income paid out by the NPF fund. If you then go to my discussion of this difference, my post 1157, from which I quote below.......




NPF Fund Income Stream



TickerIssuer
No. of Constituent Shares Held
Declared Dividends (CY2021) cps
Declared Imputation Credits (CY2021) cps


NPF (Collective Entity) ETF ETF earnings$5.785m+$0.808m


NPF (Collective Entity) ETFSmartshares NZ Property ETF110.887m1.64 + 1.840.393+0.415$3.859m+$0.896m



One thing I have not taken account of -so far- is the running cost of the NPF fund. Over the financial year ending 31st March 2021 these amounted to 0.54% of the funds value. But was this a one off charge at the end of the financial year? Or was 1/12th of the charge paid monthly? Or 1/365th of the charge paid daily?

Take off 0.54% of the 31st December NTA figure.

0.0054 x 110.887m x $1.52825 = $0.915m

0.54% on the value of assets does not sound a lot. But it has reduced the NPF's distributable fund earnings by nearly 20% - ouch!

Certain constituents of the NPF fund have raised capital during the year. NPF would have put proportionate money into those capital raisings to maintain representative shareholdings. These constituents were: Precinct Properties (PCT), Vital Healthcare Property Trust (VHP), Stride Property and Stride Investment Management Stapled Securities (SPG).


.....then you will see that 'fund management fees' have reduced distributable income by 20% in total. In your post 1232 you speculate that NPF is overvalued by 25%/30%. That means the share price of NPF on 28th March of $1.41 should have been between 99c to $1.06.

Back in 7-8% yield days for property shares, a fund charge on constituent asset values of 0.54% would have reduced NPF distributable income by only around 10%. This means the NPF yield -in relative terms- has reduced more -as rental yields fall-, than the constituent company yield reduction of the underlying investment assets. This is by virtue of the fact that the NPF fund charges on ''asset values", not on a percentage of income received. The reduction in distributable profit at NPF is around 0.6% percentage points of any constituent published yield. That fee figure increases as a proportion of the distributable income as yield rates go lower.

On top of this there is another 'downstream effect'. The relevant figure for property investors is the 'Gross equivalent PIE yield' of the investment. If the net yield of NPF was 5.5% then the 'Gross equivalent PIE yield' is 5.5%/0.72 = 7.6%. However if the net yield of NPF is only 3.5%, then the 'Gross equivalent PIE yield' is 3.5%/0.72 = 4.9%. Thus when your net dividend returns fall two percentage points from 5.5% to 3.5%, then your 'Gross equivalent PIE yield' falls 2.7 percentage points (from 7.6% to 4.9%).

What we have here is a 'double blow': An extra 0.6% net fall in actual yield percentage points with an attached concomitant 0.7% fall in largely phantom gross equivalent yield percentage points. These are 'extra charges' that apply only in low interest rate times on a managed fund like NPF. But note there are no such extra charges on the underlying constituents that make up NPF. This means when we see NPF priced on a gross yield of 3.5%, the Gross equivalent PIE yield of the underlying constituents is likely to be : 3.5%+0.6%+0.7%= 4.8%.

If your investment in NPF pays you a yield of 3.5%, when the underlying constituent yield is 4.8%, then you have been cheated out of ( (3.5%/4,8%= 0.73 => 1 - 0.73= ) 27% of your income via the NPF fund fee structure. By co-incidence (or is it?) Winner's chart says the NPF share price is 25-30% too high in the current interest rate climate. But if we accept:

(i) the NPF share price is driven by yield, AND
(ii) looking at property yields in general through an NPF lens has reduced the underlying property yield by 27% when interest rates are low

THEN the NPF 'dot' on winners graph is where we would expect it to be, because NPF doesn't represent where the underlying market yield rent is any more, when interest rates are low. IOW there is no 25% over-valuation of NPF right now. If you reposition the NPF dot to reflect 'underlying gross equivalent market yield', then it is right where it should be.

SNOOPY

[LaserEyeKiwi]

I have had a look at the update of your correlation chart between NPF share price (post 1232) and 10 year government yield Winner. I am wondering if selecting NPF as a proxy for property is messing with your correlation because of the very low interest rates we have at the moment. My post 1152 exposes the very wide difference between income paid into the NPF fund and income paid out by the NPF fund. If you then go to my discussion of this difference, my post 1157, from which I quote below.......



.....then you will see that 'fund management fees' have reduced distributable income by 20% in total. In your post 1232 you speculate that NPF is overvalued by 25%/30%. That means the share price of NPF on 28th March of $1.41 should have been between 99c to $1.06.

Back in 7-8% yield days for property shares, a fund charge on constituent asset values of 0.54% would have reduced NPF distributable income by only around 10%. This means the NPF yield -in relative terms- has reduced more -as rental yields fall-, than the constituent company yield reduction of the underlying investment assets. This is by virtue of the fact that the NPF fund charges on ''asset values", not on a percentage of income received. The reduction in distributable profit at NPF is around 0.6% percentage points of any constituent published yield. That fee figure increases as a proportion of the distributable income as yield rates go lower.

On top of this there is another 'downstream effect'. The relevant figure for property investors is the 'Gross equivalent PIE yield' of the investment. If the net yield of NPF was 5.5% then the 'Gross equivalent PIE yield' is 5.5%/0.72 = 7.6%. However if the net yield of NPF is only 3.5%, then the 'Gross equivalent PIE yield' is 3.5%/0.72 = 4.9%. Thus when your net dividend returns fall two percentage point from 5.5% to 3.5%, your 'Gross equivalent PIE yield' falls 2.7 percentage points (from 7.6% to 4.9%).

What we have here is a 'double blow': An extra 0.6% net fall in actual yield percentage points with an attached concomitant 0.7% fall in largely phantom gross equivalent yield percentage points. These are 'extra charges' that apply only in low interest rate times on a managed fund like NPF. But note there are no such extra charges on the underlying constituents that make up NPF. This means when we see NPF priced on a gross yield of 3.5%, the Gross equivalent PIE yield of the underlying constituents is likely to be : 3.5%+0.6%+0.7%= 4.8%.

If your investment in NPF pays you a yield of 3.5%, when the underlying constituent yield is 4.8%, then you have been cheated out of ( (3.5%/4,8%= 0.73 => 1 - 0.73= ) 27% of your income via the NPF fund fee structure. By co-incidence (or is it?) Winner's chart says the NPF share price is 25-30% too high in the current interest rate climate. But if we accept:

(i) the NPF share price is driven by yield, AND
(ii) looking at property yields through an NPF lens has reduced the underlying property yield by 27%

then the NPF 'dot' on winners graph is where we would expect it to be, because NPF doesn't represent where the underlying market yield rent is any more, when interest rates are low. IOW there is no 25% over-valuation of NPF right now. If you reposition the NPF dot to reflect 'underlying gross equivalent market yield', then it is right where it should be.

SNOOPY

great post! What an eye opener!

Very absurd they are charging such a huge fee for doing essentially nothing.

[Waltzing]

who says that today a commercial listed company has return 7-8 gross DIV to be investable.

As MR B points out most contracts have provision for inflation and income for Commercial Property increase lag inflation?

Sometimes there appears to be short term dips in the SP handles when the 10 Yr moves but the demand for land to put things on seems to drive the SP slowly back up.

Was never expecting the SP handles on these to devalue another 25 percent and those hits to "ADJUSTED" Retained Earnings Accounts may not eventuate.

what is this .... worse than a LAMBDA...

( (3.5%/4,8%= 0.73 => 1 - 0.73= )

[winner69]

So those running NPF are a pack of cheating thieves taking money from trusting punters so using NPF as a comm property proxy is flawed

OK so did the same exercise for ARG, KPG and PFI v 10 Year Govt

ARG - correlation reasonably strong - - ARG currently about 15% over priced
KPG - correlation reasonably strong --- KPG currently about 7% under priced
PFI - correlation much higher than ARG and KPG - currently about 35% over priced

Won't bother do any more but it seems to that collectively listed property stocks are on average over priced at the moment - as you would expect variance amongst the individual stocks will prevail

Better buy KPG

[Waltzing]

"KPG"

yes ... ah... well maybe not...nice shopping centre ....

20 cents off ARG would be perfect and it will move up to near 2 later in the decade.

[LaserEyeKiwi]

So those running NPF are a pack of cheating thieves sousing NPF as a comm property proxy is flawed

OK so did the same exercise for ARG, KPG and PFI v 10 Year Govt

ARG - correlation reasonably strong - - ARG currently about 15% over priced
KPG - correlation reasonably strong --- KPG currently about 7% under priced
PFI - correlation much higher than ARG and KPG - currently about 35% over priced

Won't bother do any more but it seems to that collectively listed property stocks are on average over priced at the moment - as you would expect variance amongst the individual stocks will prevail

Better buy KPG

KPG is the only one I hold.

[Waltzing]

"KPG is the only one I hold."

contrarian ....

investor of conviction.:eek2:

[winner69]

Good post Snoopy below and your comments re yield are pretty eye watering.

However back to my analysis you sort of said it was OK using NPF as a proxy for listed property stocks with if your IF and THEN.

My analysis is about NPF share price and 10 Year Govt and I assume the share price is closely tied to reported NTA which I assume is the value (share price) of the individual components of the fund. .... yield not part of the analysis. Then again my assumptions might be totally wrong.

I've tested whether NPF is a reasonable proxy by doing the exercise on their top 5 holdings ...... individually their share prices all have strong correlations to 10 Year Govt.AS expected they have different under/over priced values at the moment ......but if you run the analysis on the weighted average of these top 5 you get come to the same conclusion I get with just using NPF - in that on this basis listed property stocks collectively are over priced.

It seems most have not readjusted from recent highs at covid times and the low interest rates to a level that reflects the current rates

[winner69]

Snoopy made me do some work today but was only filling in time between races .... good betting day :t_up:

I've now got lots of charts like this

They all look much the same ..... it's true .....as 10 Year Govt stock interest rates go up property companies share prices go down (nearly all the time) ......and vice versa

Most of the charts show that currently share prices haven't fully adjusted from low interest rates in 2020 (covid) to the current increasing interest rates

Spooky eh

no worries? This time is really different .... great yields ..... don't fight the Fed ...or whatever

[Waltzing]

Winner(n) your a calculating machine..

Only buy these when rates are low.. or the price crashes under the strain.

They should break lower soooon....

what goes up , usually comes down ..:t_up: :t_down:

[LaserEyeKiwi]

"KPG is the only one I hold."

contrarian ....

investor of conviction.:eek2:

I believe KPG has more value locked up in its undeveloped assets than its NTA implies, so the discount I think is even bigger than the current deep discount to NTA suggests. And getting paid a 6% dividend while I accumulate and wait for the share price to eventually catch up to my expectations is fine by me.

[Snoopy]

So those running NPF are a pack of cheating thieves taking money from trusting punters so using NPF as a comm property proxy is flawed

OK so did the same exercise for ARG, KPG and PFI v 10 Year Govt

ARG - correlation reasonably strong - - ARG currently about 15% over priced
KPG - correlation reasonably strong --- KPG currently about 7% under priced
PFI - correlation much higher than ARG and KPG - currently about 35% over priced

Won't bother do any more but it seems to that collectively listed property stocks are on average over priced at the moment - as you would expect variance amongst the individual stocks will prevail


No I am not saying concentrating on NPF as a proxy for investing in property is flawed. The alternative path, looking at individual shares (thank you for tackling this BTW) has its own issues, because special situations within companies can produce results that are atypical to the property sector in general. I think your instinct for using NPF as a proxy for property is probably the best strategy, all things considered. My point was you may be able to refine your analysis of NPF by giving the graph data points a tweak, depending on the level of underlying share-held company yield rates they represent (more on this later in another post).



My analysis is about NPF share price and 10 Year Govt and I assume the share price is closely tied to reported NTA which I assume is the value (share price) of the individual components of the fund. .... yield not part of the analysis. Then again my assumptions might be totally wrong.


The share price is merely a present day cumulative representation of the sum of future cash flows is it not? At least that is how I understood was the way these commercial property valuers came up with their asset valuations. So whether you focus on 'asset value' or 'rent yield' are really two alternative snapshots of the same phenomenon.

Your comparative statistic, being the ten year government bond rate, is of interest to me. Ten years is enough to go beyond the traditional business cycle. So by choosing ten years, that says to me you are prepared to look through much of the ups and downs of the business cycle. It seems more logical to compare 10 year interest rates to 'asset values' than 'rent yield'. Because although I said before 'asset value' and 'rent yield' are two alternative snapshots of the same picture, this isn't quite true. Because 'asset value' is a less 'today news influenced' and more 'multi year focus' version of the rent yield picture. I guess what I am saying is that 'asset value' is less volatile than 'yield', and that makes your comparison graph more valid.



I've tested whether NPF is a reasonable proxy by doing the exercise on their top 5 holdings ...... individually their share prices all have strong correlations to 10 Year Govt. AS expected they have different under/over priced values at the moment ......but if you run the analysis on the weighted average of these top 5 you get come to the same conclusion I get with just using NPF - in that on this basis listed property stocks collectively are over priced.

It seems most have not readjusted from recent highs at covid times and the low interest rates to a level that reflects the current rates.

Should the share prices of these property companies be adjusting down though, as interest rates rise? The superficial answer is, of course they should. But I wonder if the market is looking through the current interest rate rises, and seeing a more divided and less international trade focussed global economy. An economy where recession is on the horizon in Europe, causing interest rates to be reduced and short circuiting the current FED policy of raising interest rates. IOW Winner your graph is right and the ten year interest rate is too high relative to NZ listed property prices. But the correction you forecast will be 10 year interest rates reducing to match current listed property market values. Not current property values reducing to better match up with 10 year bond rates.

SNOOPY

[Habits]

I believe KPG has more value locked up in its undeveloped assets than its NTA implies, so the discount I think is even bigger than the current deep discount to NTA suggests. And getting paid a 6% dividend while I accumulate and wait for the share price to eventually catch up to my expectations is fine by me.

Agreed and thnx for reinforcing

[Waltzing]

well LEK it would be perhaps time to take a closer look at these new development and that means some reading and site visits.

Certainly have to take the assets seriously.

While winner() hates the effect the 10 Y has on SP's it could simply be a buying OPPO for when rates turn around or Normalise and rents dont decrease and NTA doesnt get hit either.

It surely going to make for a very interesting few years in this sector.

[Habits]

well LEK it would be perhaps time to take a closer look at these new development and that means some reading and site visits.

Certainly have to take the assets seriously.

While winner() hates the effect the 10 Y has on SP's it could simply be a buying OPPO for when rates turn around or Normalise and rents dont decrease and NTA doesnt get hit either.

It surely going to make for a very interesting few years in this sector.

I haven't heard before of commercial rents "decreasing" especially not in popular high traffic malls. The opposite is that rents are increasing in size because of inflation. Inflation proof income which should balance out higher cap rates applied by valuers.

How fast is the company progressing its BTR residential build. About Drury I wonder if they are affected by the lack of mains water supply in the area. I recall the annual announcement and annual meeting is in May and this should answer lots of intriguing questions from the shaz

[Snoopy]

My point was you may be able to refine your analysis of NPF by giving the graph data points a tweak, depending on the level of underlying share-held company yield rates they represent (more on this later in another post).


Let's run a few numbers to see how a 'fixed' property management fee based on asset values can adversely affect unit holders in a managed fund as yield rates change.
The fund example I will use is NPF. I will use CY2021 figures as my 'base sample data'.

1/ I refer to my post 1151 on this thread, outlining the value of NPF at EOCY2021, which shows the value of NPF at EOCY2021 was $169.463m.
2/ I refer to my post 1157 on this thread, which shows management fees based on 0.54% of the capital value of the fund to be $0.915m.
3/ I refer to my post 1152 on this thread, which shows dividend income paid to fund unit holders during the year to be $3.859m + $0.896m imputation credits.

Looking at the imputation credits:
$0.896m / ($3.859m + $0.896m) = an 18.8% imputation percentage. 28% represents a fully imputed dividend. So overall the dividend paid in the calendar year is 67% imputed.

NPF fund yields

The 'net yield' of this dividend based on the end of year fund value is: $3.859m / $169.463m = 2.28%
The 'gross yield' of this dividend based on the end of year fund value is: ($3.859m+$0.896m) / $169.463m = 2.81%
The 'PIE equivalent gross yield' of this dividend based on the end of year fund value is: ($3.859m/0.72) / $169.463m = 3.16%

If we add back the management fee, equating to a capital reduction of the fund, this is money that would otherwise have been available to unit-holders as a dividend. So the theoretical 'before management fees' income changes to:

NPF fund theoretical pre-fee yields

The 'net yield' of this dividend based on the end of year fund value is: ($3.859m+$0.915m) / $169.463m = 2.82%
The 'gross yield' of this dividend based on the end of year fund value is: ($3.859m+$0.915+$0.896m) / $169.463m = 3.35%
The 'PIE equivalent gross yield' of this dividend based on the end of year fund value is: (($3.859m+$0.915m)/0.72) / $169.463m = 3.91%

This shows in detail the severe damage that what appear to be relatively modest management fees - 0.54% of the funds value - have on unit holders dividend income at EOCY2021 prices. It is reduced by 19.2%.

But what happens with different underlying net yield rates? That is what I will look at next.

SNOOPY

[Waltzing]

"rents are increasing in size because of inflation"

"Inflation proof income"

what could go wrong...:eek2:

[Ferg]

Snoopy

Management fees in these sorts of funds are known to be relatively expensive, especially when it is based on the fund size. It is not isolated to NPF. Apparently that is the cost of "convenience" of someone bundling the investment for you and managing it. Nothing is free.

You will find it gets worse if one reinvests dividends back into that fund over the years due to the compounding effect. You will also find it is pretty bad once you look at the underlying investment(s) in the US smartshare funds.

Also, such fees are not a capital reduction per your post #1267, they are a profit reduction.

Ferg

[BlackPeter]

Snoopy made me do some work today but was only filling in time between races .... good betting day :t_up:

I've now got lots of charts like this

They all look much the same ..... it's true .....as 10 Year Govt stock interest rates go up property companies share prices go down (nearly all the time) ......and vice versa

Most of the charts show that currently share prices haven't fully adjusted from low interest rates in 2020 (covid) to the current increasing interest rates

Spooky eh

no worries? This time is really different .... great yields ..... don't fight the Fed ...or whatever

Not really surprising, but interesting chart. Cheers.

[winner69]

Snoops …we agree and basically on the same wavelength.

Never owned listed property shares in past as had more than enough exposure through direct ownership. That’s not the case now so having a look at listed stuff..

So really was just looking at how these stocks move relative to interest rates …and where they are now in an increasing interest rate environment.

So I’ve proved to myself that over time property share prices do move in line with interest rates ….and that currently share prices are generally higher than where they ‘should be’

But as you know these regression things / models are not an exact science eh …but they do show that interest rates account for 40% to 80% of the prevailing share prices.

Which means that company performance, market sentiment etc etc etc does have some bearing on the share prices at any given time.

See we do agree

Conclusion ….currently I don’t see listed property as a good place ( except for the ‘under priced’ KPG ..lol) but that will change over time.

Retirement stocks as property stocks …..hmmm

[fungus pudding]

Snoops …we agree and basically on the same wavelength.

Never owned listed property shares in past as had more than enough direct exposure through ownership.


That is not possible.

[Snoopy]

Snoopy

Management fees in these sorts of funds are known to be relatively expensive, especially when it is based on the fund size. It is not isolated to NPF. Apparently that is the cost of "convenience" of someone bundling the investment for you and managing it. Nothing is free.


I don't object to 'fees' per se. But if you are charging a management fee, I think there is a concomitant responsibility to 'add value'. The fee charged to manage NPF is not that high in the grand hierarchy of fees in New Zealand. But I think it is too high for a pure index fund with just eight holdings, as is evident by the slashing of their unitholders dividends by nearly 20%, for doing little more than putting some wrapping up paper around eight decently managed fund building blocks. Does it really cost anything like $915k per year to do this? I think the fee should be cut to around one fifth the current level. Around $200k per year should be easily enough money to manage an index fund with just 8 constituent companies.

The other problem with NPF in particular is that, apart from the SMIL part of Stride properties, all their investments are PIEs. So there is no tax advantage for an investor holding a PIE fund such as NPF, when the individual constituents of that fund are PIEs anyway.



You will find it gets worse if one reinvests dividends back into that fund over the years due to the compounding effect. You will also find it is pretty bad once you look at the underlying investment(s) in the US smartshare funds.


The problem with US Smartshares is that they are effectively buying a US managed fund and adding their own fees on top of that. That sounds like 'clipping the ticket', rather than 'adding value' to me.



Also, such fees are not a capital reduction per your post #1267, they are a profit reduction.


I think that depends on your viewpoint. From a fund perspective 'management fees' are a 'business running cost' and a 'tax deductible expense' that are part of the running cost of the fund. But from a fund unit holder perspective, the unit holders could have taken that 'management fee' (which started out as their capital remember) and reinvested it in the eight underlying fund building blocks at 'zero collective management fee cost'. So from a unit holder perspective, I think it is more accurate to regard the 'management fee' as a 'capital reduction in unit holder funds'.

SNOOPY

[Waltzing]

Winner(n) while your charts may show correlation there are other markets dynamics at play surely. Later these other factors may come into play after money leaves these stocks due to the effect of higher yields else where.

There are only so many units on sale. Unless more are issued.

2007 and 8 shows no correlation between yields and the prices. This was a one off for sure but now you have the problem of land increasing in price along with building costs and limited supply.

[winner69]

Winner(n) while your charts may show correlation there are other markets dynamics at play surely.

.

Yes indeed waltzing ……like that’s exactly what I told my mate snoops

[Snoopy]

NPF fund yields

The 'net yield' of this dividend based on the end of year fund value is: $3.859m / $169.463m = 2.28%
The 'gross yield' of this dividend based on the end of year fund value is: ($3.859m+$0.896m) / $169.463m = 2.81%
The 'PIE equivalent gross yield' of this dividend based on the end of year fund value is: ($3.859m/0.72) / $169.463m = 3.16%

If we add back the management fee, equating to a capital reduction of the fund, this is money that would otherwise have been available to unit-holders as a dividend. So the theoretical 'before management fees' income changes to:

NPF fund theoretical pre-fee yields

The 'net yield' of this dividend based on the end of year fund value is: ($3.859m+$0.915m) / $169.463m = 2.82%
The 'gross yield' of this dividend based on the end of year fund value is: ($3.859m+$0.915+$0.896m) / $169.463m = 3.35%
The 'PIE equivalent gross yield' of this dividend based on the end of year fund value is: (($3.859m+$0.915m)/0.72) / $169.463m = 3.91%

This shows in detail the severe damage that what appear to be relatively modest management fees - 0.54% of the funds value - have on unit holders dividend income at EOCY2021 prices. It is reduced by 19.2%.

But what happens with different underlying net yield rates? That is what I will look at next.


The calculations needed to derive the percentage yields in the table below follow the methods outlined in my quoted text above. I wish to look at what happens to unit holder yield rates when rent yields improve. It has probably crossed you. the reader's, mind that if rent yields improve, then the capital value of the buildings being rented will go up. That means the changing scenario I am painting - of static building values and increasing rents - is not realistic. I have some sympathy with that viewpoint. However, I still think it is useful to pause asset revaluation reality, and just see as a exercise what would happen if just the rents, and hence the unit holder dividends in proportion, were to increase. Some of us have been around the market long enough to remember when rental yields really were hitting the heights I am tabulating!

NPF under different property yield scenarios



Net Yield
Net Yield (No Fees)
Gross Yield
Gross Yield (No Fees)
PIE equiv Gross Yield {A}
PIE equiv Gross Yield (No fees) {B}
Percentage Return Difference Lost {B} c.f. {A}


2.28%
2.82%
2.81%
2.35%
3.16%
3.91%
-19.2%


3.5%
4.04%
4.31%
4.85%
4.86%
5.61%
-13.4%


4.5%
5.03%
5.54%
6.08%
6.25%
6.99%
-10.6%


5.5%
6.03%
6.77%
7.31%
7.64%
8.38%
-8.8%


6.5%
7.03%
8.00%
8.54%
9.03%
9.77%
-7.6%




So many percentage figures...... But the column to focus on is the one on the extreme right. That column shows how much of their cash dividend an NPF unit holder is losing by having their listed property holdings professionally managed.

I think there are many disinterested sharemarket investors who are happy to have their 'pension top up worries' outsourced by handing a professional fund manager up to 10% of their dividend income and invest via a fund. But what about 20% of their dividend income? I would venture to suggest that very few NPF unit holders know this is happening, because it has all happened by stealth. The rules determining how the fund is run have not changed. But what has changed is the very low rental yields and the flow on from that into dividend yields that is now commonplace in the listed property market. In a low interest rate market such as we have now, I would describe the NPF running costs as 'crazy high'. In the current economic environment I would describe the NPF fund as 'un-investable' and in desperate need of management reform. Are you listening NZX?

SNOOPY

[LaserEyeKiwi]

Snoops …we agree and basically on the same wavelength.

Never owned listed property shares in past as had more than enough exposure through direct ownership. That’s not the case now so having a look at listed stuff..

So really was just looking at how these stocks move relative to interest rates …and where they are now in an increasing interest rate environment.

So I’ve proved to myself that over time property share prices do move in line with interest rates ….and that currently share prices are generally higher than where they ‘should be’

But as you know these regression things / models are not an exact science eh …but they do show that interest rates account for 40% to 80% of the prevailing share prices.

Which means that company performance, market sentiment etc etc etc does have some bearing on the share prices at any given time.

See we do agree

Conclusion ….currently I don’t see listed property as a good place ( except for the ‘under priced’ KPG ..lol) but that will change over time.

Retirement stocks as property stocks …..hmmm

Would be interesting if you could wrangle CPI/inflation or an NZ property index of some sort into your calculation as well. Given NZ property market value has increased 30% since 2020, would it not make sense that the value of listed property entities would be higher now than 2019, even with similar NZ 10yr rate?

[JeffW]

1/ I refer to my post 1151 on this thread, outlining the value of NPF at EOCY2021, which shows the value of NPF at EOCY2021 was $169.463m.
2/ I refer to my post 1157 on this thread, which shows management fees based on 0.54% of the capital value of the fund to be $0.915m.
3/ I refer to my post 1152 on this thread, which shows dividend income paid to fund unit holders during the year to be $3.859m + $0.896m imputation credits.

Looking at the imputation credits:
$0.896m / ($3.859m + $0.896m) = an 18.8% imputation percentage. 28% represents a fully imputed dividend. So overall the dividend paid in the calendar year is 67% imputed.

NPF fund yields

The 'net yield' of this dividend based on the end of year fund value is: $3.859m / $169.463m = 2.28%
The 'gross yield' of this dividend based on the end of year fund value is: ($3.859m+$0.896m) / $169.463m = 2.81%
The 'PIE equivalent gross yield' of this dividend based on the end of year fund value is: ($3.859m/0.72) / $169.463m = 3.16%


SNOOPY

Very good Snoopy

It doesn't make a lot of difference, but I'm not sure I 100% agree with the last two calculations. In respect of the "Gross Yield" I believe that the lack of effective full imputation is that the fund is effectively distributing tax free income which is effectively the building depreciation claim, so am not sure of the relevance for a PIE

More importantly, but again not making a big difference, I believe the divisor in the last calculation "PIE Equivalent" should not be 28%, but in most instances 33% or perhaps 39% being the shareholders marginal rate, not the Company's one

[Ferg]

Looking at the NPF management fee from the perspective of an investor, NPF generates taxable cash inflows through dividends, incurs a cash outflow on the management fee, and the residual cash is available for distribution. Therefore the management fees are a reduction in profit and dividends, not a reduction in capital. It is an important distinction.

On to more interesting matters. NPF is the 16th largest Smartshare investment at the end of Feb 2022. NTA is -2c vs previous quarter, -17c vs 6 months ago, and -5c vs 12 months ago. Units on issue have gone from 102m 12 months ago to just under 111m at the end of Feb.

Here is a chart showing the fund size and funds flow which shows a slight increase in funds invested in Jan 2022.
13711

NPF has increased by 9m units in 12 months, but if you want to follow the money, then where have investors been putting their SS money in the last 12 months?


Net units increase all funds +379m units
AGG: Global Bonds +92m units
NGB: NZ Govt Bonds +80m
NZG: S&P NZX50 +69m
NZC: NZ Cash +61m
TWF: Total World Fund +46m
ESG: Global ESG Equities +40m


So where have people been withdrawing funds?

FNZ: NZ Top 50 -52m units
NZB: NZ Bonds -17m
DIV: NZ Dividend -9m
TNZ: NZ Top 10 -9m

[Ferg]

And here is the NTA and units for NPF:
13712

[Snoopy]

Looking at the NPF management fee from the perspective of an investor, NPF generates taxable cash inflows through dividends, incurs a cash outflow on the management fee, and the residual cash is available for distribution. Therefore the management fees are a reduction in profit and dividends, not a reduction in capital. It is an important distinction.


Ferg, I do not disagree you your statement above, but I obviously did not make my original point clear. For comparison purposes I am talking about:

a/ the investor who invests with NPF, .....VERSES.....
b/ The investor who does not invest with NPF, but instead buys their own investment portfolio structured to directly and exactly mimic NPF

Put his way, I hope you can see that 'Investor A' pays the NPF management fees, but 'Investor B' does not. I get what you are saying about a capital charge being deducted by management becoming a tax deductible expense inside NPF. But our 'Investor B' never put any money into NPF, not one cent. So from 'Investor B''s perspective they have made a 'capital saving' (not a fee saving) by not putting the fee money into NPF in the first place. Think about this question if my explanation isn't clear: How can NPF charge a fee on capital that was never invested in their fund?

SNOOPY

[Snoopy]

NPF fund yields

The 'net yield' of this dividend based on the end of year fund value is: $3.859m / $169.463m = 2.28%
The 'gross yield' of this dividend based on the end of year fund value is: ($3.859m+$0.896m) / $169.463m = 2.81%
The 'PIE equivalent gross yield' of this dividend based on the end of year fund value is: ($3.859m/0.72) / $169.463m = 3.16%




Very good Snoopy

It doesn't make a lot of difference, but I'm not sure I 100% agree with the last two calculations. In respect of the "Gross Yield" I believe that the lack of effective full imputation is that the fund is effectively distributing tax free income which is effectively the building depreciation claim,


Yes JeffW, I think your explanation that the fund is delivering tax free income is most likely the correct reason for profits not being fully imputed. I am not sure that tax free income is generated by depreciation though, as AFAIK depreciation on commercial property was reinstated as a pandemic measure. That means that over CY2021, depreciation should be included as a normal part of creating the imputation credits of any imputed dividend.



so am not sure of the relevance for a PIE


This is the point I have only recently got myself. Declared imputation credits earned by the property company are of no relevance to PIE unit holders.




More importantly, but again not making a big difference, I believe the divisor in the last calculation "PIE Equivalent" should not be 28%, but in most instances 33% or perhaps 39% being the shareholders marginal rate, not the Company's one


Point taken. The higher your marginal tax rate, the greater the benefit of you holding a PIE. So if you are a 33% marginal rate taxpayer, then the divisor should be (1-0.33) = 0.67, not 0.72. However, I usually take this as 'understood' and assume people know how to correct for their own tax rates. And if shares are owned by a private company created by you, then the tax rate is 28% anyway. This is why I tend to use the 28% tax figure in calculations such as this.

SNOOPY

[Ferg]

Snoopy

The basis on which it is calculated is not in dispute. It is your phraseology that is incorrect.

Investor B achieved a better yield and dividend on their investment by avoiding management fees, not via a capital saving. There is no capital payment, no capital dilution, unit cancellation or capital decay in NPF when NPF pays a management fee. Your definition is "capital reduction in unit holder funds". That is what everyone else calls an expense given the effect is identical. But we don't call expenses such as wages a "capital reduction in shareholder funds" because that is nonsensical. In addition, what the investor chooses to do with the extra dividend is irrelevant - they could "invest" in pork belly futures, #7 on the 3rd at Trentham or a bottle of vino for all I care. The only way capital decay in NPF would occur is if the dividends from the underlying investments add to less than the management fee (much like retained losses). But if it walks like an expense, and quacks like an expense then it is an expense. There is no need to make up new terms and definitions when perfectly adequate definitions have existed for eons. Such new terms only confuse the reader and make your posts less accessible to the lay person.

There is no dispute from me it is a very inefficient method of investing and a poor choice of fund. But that is due to high management fee expenses, not a "capital reduction in shareholder funds" which sounds like a cancelation of units or incurring retained losses.

[Waltzing]

Winner() , it was more a bit of a question in that the dynamics of the market are supply and demand for the actual buildings and the economy of the country.

The question being what do investor think about this demand and the economy and what effect might that have on this class of stock.

Is it not the Investor who decide along with INSTO's of course where it goes. Many here have a firm commitment in their portfolios to hold pies and not trade them.

[JeffW]

Yes JeffW, I think your explanation that the fund is delivering tax free income is most likely the correct reason for profits not being fully imputed. I am not sure that tax free income is generated by depreciation though, as AFAIK depreciation on commercial property was reinstated as a pandemic measure. That means that over CY2021, depreciation should be included as a normal part of creating the imputation credits of any imputed dividend.


SNOOPY

I wasn't as clear as I could be - What I was meaning is that say the Cash Profit was $100, and there was $30 of depreciation, then the tax payable by the company is $19.60 being 28% of ($100-$30), but there is up to $80.40 of cash to distribute, being the $100 cash profit minus $19.60 of tax. So therefore the Imputation Ratio will always be less than 28%. Essentially the "distribution" of the $30 is a tax free distribution - i.e if the entire $80.40 is distributed, the $70-19.60 is a $50.40 fully imputed distribution, and the $30 is in essence a PIE tax free distribution to the recipient

[Snoopy]

I wasn't as clear as I could be - What I was meaning is that say the Cash Profit was $100, and there was $30 of depreciation, then the tax payable by the company is $19.60 being 28% of ($100-$30), but there is up to $80.40 of cash to distribute, being the $100 cash profit minus $19.60 of tax. So therefore the Imputation Ratio will always be less than 28%. Essentially the "distribution" of the $30 is a tax free distribution - i.e if the entire $80.40 is distributed, the $70-19.60 is a $50.40 fully imputed distribution, and the $30 is in essence a PIE tax free distribution to the recipient


IC, so what you are suggesting is that the free cashflow from building depreciation is being distributed by listed property companies as a dividend? Is that normal with property companies? I can't say I would be happy if it were true. I repeat below my rant on this topic on the Argosy thread.



I think Waltzingironman's comment on looking at buildings in terms of their structural life (inferring that is a long time), and the fact that banks see buildings and land as 'bankable' assets comes to the fore here. I have seen multi-story buildings 'stripped to their shells' and repurposed (the old Post Office Administration Building recycled into the new City Council Offices here in Christchurch for example). But that would be a rare success. I think most repurposing is more complex - for example transforming office space into residential apartments with all the associated change in plumbing requirements. Then there is the 'restoration' of the 'Theatre Royal' in central Christchurch. Let's not mince words here. This is a completely new building, built behind the old facade with the original front of house staircase and some interior detailing -like the theatre boxes- put back in. Don't get me wrong. I see that rebuild as 'a good thing', because the original 'Theatre Royal', especially the behind the stage facilities for the performers, was an anachronism. But the point I am making is that, facades apart, very few commercial buildings are 'fit for purpose' with the passing of years. The Christchurch earthquakes simply accelerated the repurposing that was desirable. Thus depreciation for building owners is a 'real thing', because construction and repurposing costs tend to -if anything- go up faster than general inflation. And the 'commercial structural life' for many buildings is rather less than the 'building code structural life' for the same. I guess the saving grace for a business district building is that there will always be a buyer, even if the 'remodeling exercise' to bring a building site 'up to date' starts with the touch point of a wrecking ball.


SNOOPY

[Snoopy]

So those running NPF are a pack of cheating thieves taking money from trusting punters so using NPF as a comm property proxy is flawed.




No I am not saying concentrating on NPF as a proxy for investing in property is flawed. The alternative path, looking at individual shares (thank you for tackling this BTW) has its own issues, because special situations within companies can produce results that are atypical to the property sector in general. I think your instinct for using NPF as a proxy for property is probably the best strategy, all things considered. My point was you may be able to refine your analysis of NPF by giving the graph data points a tweak, depending on the level of underlying share-held company yield rates they represent.




My analysis is about NPF share price and 10 Year Govt and I assume the share price is closely tied to reported NTA which I assume is the value (share price) of the individual components of the fund. .... yield not part of the analysis.


The share price is merely a present day cumulative representation of the sum of future cash flows is it not? At least that is how I understood was the way these commercial property valuers came up with their asset valuations. So whether you focus on 'asset value' or 'rent yield', they are really two alternative snapshots of the same phenomenon.

The question that remains is, "how to tie in the NPF share price with its own dividend yield?", If I look back on your graph Winner...

13653

....your best fit line looks to be showing that a 30c fall in the NPF share price ($1.50 down to $1.20) aligning with the ten year NZ 10 year bond price rising from 1.4% to 2.4%. (or interest rates rising by 100 basis points (absolute) or 70% (relative)).

The NZ 10 year bond rates looked like it bottomed out at about 0.5% in the week ended 20th September 2020. NPF looks to have been priced at around $1.40 at that time. I see NPF closed at $1.41 today (11th April 2022). So effectively we see no reaction to rising interest rates? The NZ ten year government bond rate closed at 3.51% today (11th April 2022). I guess that fits right in with your 'overpriced' March 22nd graph point, Winner? From that graph it looks like the NPF share price should have collapsed to about a buck. Even $1 is 'only' a share price decline of 29%, when working from that low point in 10 year NZ bond indicator rates, a share price fall of 40% would not be out of the question. I am now seeing why you are out of the listed property market!

Here is where my little table kicks in.




NPF under different property yield scenarios



PIE equiv Gross Yield {A}
PIE equiv Gross Yield (No fees) {B}
Percentage Return Difference Lost {B} c.f. {A}


3.16%
3.91%
-19.2%


4.86%
5.61%
-13.4%


6.25%
6.99%
-10.6%


7.64%
8.38%
-8.8%


9.03%
9.77%
-7.6%




My interpretation of this table is that fees disconnected from performance (i.e. based on fund asset values) have reduced the underlying dividend paid by NPF, compared with the mid business cycle point, by -10.6%--19.2%=8.6%. If, instead the fund fees were based on a constant percentage of income based around the mid cycle point, then the dividend yield paid would be 3.91% - 0.106x3.91%=3.5%. (not 3.16%). That is a gain of 3.5%-3.16%= 0.34% percentage points, which might not sound like much. But it corresponds to a rise in dividend payment, as measured by dollars received in the unit holder bank account, of 10.8%

At $1.41, the CY2021 historical PIE equivalent yield of NPF is: [(5.217c)/0.72] /141 = 5.13% (Refer to post 1174, this thread)

So maybe Winner, you should bring those 21st December 2021 (10 year bond rate 2.23%) and 22nd March 2022 (10 year bond rate 3.24%) 'data points' back towards the graph vertical access by about -10.6%-13.4%= 2.8%. And 2.8% of $1.41 is about 4c

[Habits]

"rents are increasing in size because of inflation"

"Inflation proof income"

what could go wrong...:eek2:






Probably something...

Instead of poking fun give us some specifics from the vast knowledge banks of sound financial advices

[Waltzing]

Cater Worth today on CNBC says 10Yr might be approaching its highs.

Winners most hated channel.

If thats the case COMP PROPS might be taking the beating at about this SP Handle range.

"Experts" drips under pressure.

Sri Kumar says the opposite... 10 Yr to go well over 3..

[Habits]

Under Pressure

Bowie song isnt it.

We certainly need some low pressure, weather system in the Y

[Waltzing]

under pressure ....

https://www.youtube.com/watch?v=d5nYX-iuUFk

[LaserEyeKiwi]

Interesting how the market is reacting to the 50 basis point increase in the OCR yesterday - with the commentary reaffirming the previous top target for rate hikes being seen as dovish by the market. Was not expecting the NZ dollar to drop by a sizable amount in the 24 hours following a 50 point hike.

[iceman]

Interesting how the market is reacting to the 50 basis point increase in the OCR yesterday - with the commentary reaffirming the previous top target for rate hikes being seen as dovish by the market. Was not expecting the NZ dollar to drop by a sizable amount in the 24 hours following a 50 point hike.

Another 50 basis points increasingly being forecast for next month as well and that will be far from the end of it !!

[LaserEyeKiwi]

Another 50 basis points increasingly being forecast for next month as well and that will be far from the end of it !!

yes, but all the commentary has been about how these are brought forward increases, rather than additional, so in essence the market is saying that peak interest rates in 2023/24 might be lower than forecast initially. Wholesale swap rates actually dropped on the announcement.

[LaserEyeKiwi]

Weekly update:

13726

[LaserEyeKiwi]

KPG increases dividend guidance on better than expected quarterly performance.


Kiwi Property increases FY22 dividend guidance

19/4/2022, 3:36 pm MKTUPDTEKiwi Property today increased its FY22 dividend guidance, following a stronger than expected fourth quarter.

The company’s diversified asset portfolio proved more resilient to the financial impact of Omicron and the red COVID-19 traffic light setting, with adjusted funds from operations exceeding forecast through the latter stage of the financial year. As a result, Kiwi Property now expects to pay a dividend of 5.6 cents per share (cps) for FY22 [NOTE 1], up 5.7% from the 5.3 cps guidance previously announced. The proposed dividend represents a New Zealand tax-paid yield of 5.21% [NOTE 2].

The resilience of Kiwi Property’s asset portfolio has been highlighted by the rental growth achieved over the course of the year, despite the headwinds caused by COVID-19. Rental income from new mixed-use leases was up approximately 4% in FY22 compared to the year before, with office rents rising by over 8% in the same period. Rent reviews also increased, delivering uplift of almost 4% for mixed-use and more than 4% for office.

Sales across Kiwi Property’s mixed-use properties were strong over recent months, growing approximately 4% through January and February, compared to the year before. Sylvia Park sales rose by over 8% on the prior comparable period, underpinned by the Level One expansion and new athleisure precinct.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said he was pleased by the company’s robust continued performance through the pandemic in FY22.

“We’re delighted to be in a position to increase the dividend guidance. While COVID-19 has invariably caused disruption, we’ve come through Omicron well so far, with rental growth, sales and income exceeding expectations.

“We’re continuing to transition our asset base and deliver on our strategy of creating mixed-use communities at key metropolitan centres, with good progress being made on build-to-rent and the 3 Te Kehu Way office development, in particular. We look forward to maintaining this momentum as we enter our new financial year.”

[LaserEyeKiwi]

Weekly update:

13732

[Habits]

KPG increases dividend guidance on better than expected quarterly performance.

Very positive, thanks for posting LEK. I particularly like "new mixed-use leases was up approximately 4% in FY22 compared to the year before, with office rents rising by over 8% in the same period". Weren't these business sectors supposed to struggle

[winner69]

Weekly update:

13732


Not surprising another down week

Quite a few more down weeks to come if the long term correlation to the govt stock is anything to go by

[LaserEyeKiwi]

Vital Healthcare announces a rights offer for expansion plans:

https://www.nzx.com/announcements/391125

Also updates GEARING, NTA & AFFO/DIVIDEND


Vital’s pro forma debt to gross assets ratio will be 33.8% upon completion of the Offer, the acquisitions and initial development spend announced today and the other transactions announced in calendar year 2022.

The Manager currently estimates that Vital’s NTA at 31 March 2022 was $3.20-$3.25cpu, predominately reflecting property valuation increases from rental growth and mark-to-market gains on interest rate swaps.

The Board reconfirms Vital’s previously released AFFO guidance of at least 11.9 cents per unit and second half FY22 distribution guidance of 2.4375 cents per unit per quarter (9.75 cents per unit on an annualised basis).

[LaserEyeKiwi]

What happened at close yesterday? Was there a rebalancing of some sort? - most of the listed property stocks had a sell off going into the close.

Weekly update:

13756

[winner69]

What happened at close yesterday? Was there a rebalancing of some sort? - most of the listed property stocks had a sell off going into the close.

Weekly update:

13756

Maybe catching uo with realisation that many of these stocks are still overvalued

[Waltzing]

with this government in charge all those leases for listed property stocks are just making a killing!!!

https://www.stuff.co.nz/national/politics/128481505/government-pays-up-to-600k-for-prime-auckland-office-space-to-lie-empty

Winner yes over valued to rising yields but those property stock yields are not going down.

Over valued maybe but the PIE yield will push back and it more likely that money is simply moving internationally and nationally from one yield to another .

[RTM]

What happened at close yesterday? Was there a rebalancing of some sort? - most of the listed property stocks had a sell off going into the close.

Weekly update:

13756

Thanks for keeping an eye on those for us LEK.
Any chance of adding the major Retirement living companies ? OCA, SUM, RYM ? I certainly consider them a property investment as well.
Disc: Hold Vital, Kiwi, Oca & SUM

[LaserEyeKiwi]

KPG now trading with a gross yield above 7.5% using their increased dividend guidance.

Also looks like some in the market are finally waking up to what the potential impact of Drury will be:


Kiwi is due to report its results on May 23 and the analysts note that the successful rezoning of the Drury site, on which Kiwi plans its fourth mixed-use centre, "may also deliver a solid revaluation uplift”

[winner69]

KPG now trading with a gross yield above 7.5% using their increased dividend guidance.

Also looks like some in the market are finally waking up to what the potential impact of Drury will be:



KPG only listed property stock that is 'underpriced' v 10 year govt stock (multi year correlation)

On that basis best value in the sector - BUY BUY BUY

unless on thinks becoming a residential landlord is a dumb idea

[winner69]

Vital VHP had no problem raising $100m plus

Punters still love property

[Waltzing]

It a scare resource in NZ.

10 year may not have sway for more than a year or 2.

[LaserEyeKiwi]

Thanks for keeping an eye on those for us LEK.
Any chance of adding the major Retirement living companies ? OCA, SUM, RYM ? I certainly consider them a property investment as well.
Disc: Hold Vital, Kiwi, Oca & SUM

With the slightly different business model - maybe worth a separate tracking effort perhaps.

[LaserEyeKiwi]

Jarden has a rather low opinion of VHP (Vital) management fees:


His valuation is just $2.67 per unit with a 12-month target of $2.66and that reflects "Vital's relatively very high management cost
impost", he said.

"Incorporating performance fees, Vital's overheads have accounted
for about 25% of net rental income over the last five years,
significantly above its peers.”

Vital's first-half report showed it paid NorthWest $17.7m in base,
incentive and activity fees in the six months ended December, up
from $11.8m in the same six months a year earlier.

NorthWest agreed to restructure its fees in 2019 after an outcry
from unitholders - it paid $11.5m for the management contract in
late 2011 and had collected well over $100m in gross fees by the
time they were restructured.

[LaserEyeKiwi]

Brutal start to the week, 2 day performance:

(Edit: updated with closing prices)
13764

[winner69]

Brutal start to the week, 2 day performance:

(Edit: updated with closing prices)
13764

Brutal indeed

But possibly another 15%/20% to go ---- as per my modelling v govt stock.

Been drifting down since beginning of the year but not as fast as it could have

[winner69]

Govt stock yields still going up …. 10s might even hit 4 in a few months.

[Bob50]

I am tempted - it’s well below NTA and property historically is where you go in high inflation times. However OCR is currently 1.5 and the ANZ is predicting it to raise to 3.5 in the next 12 months. I don’t imagine yield stocks to enjoy that. So sitting on fence currently.
Disclaimer - I already have quite a few.

[Rawz]

My understanding is rates are well above where they should be with current OCR. Because they are following the swaps. OCR doesn’t mean much??

Anyways, if OCR doubles, interest rates won’t

[winner69]

My understanding is rates are well above where they should be with current OCR. Because they are following the swaps. OCR doesn’t mean much??

Anyways, if OCR doubles, interest rates won’t

Yes, it’s all a very confusing world these days.

[Beagle]

Brutal start to the week, 2 day performance:

(Edit: updated with closing prices)
13764

I've made money, Argosy are down the least lol. You aren't kidding about it being brutal.
Might get the truck serviced in case I need to use it soon ;)

[winner69]

Média -

Craigs' McIntyre said real estate had been the “worst-performing stocks on the index today” thanks to interest rates currently being at the front of investors' minds, with the RBA's bigger rate hike than expected.

[Baa_Baa]

Média -

Craigs' McIntyre said real estate had been the “worst-performing stocks on the index today” thanks to interest rates currently being at the front of investors' minds, with the RBA's bigger rate hike than expected.

And it will go on for a while, so look out for the bargains which are coming.

[Arbroath]

Yes, it’s all a very confusing world these days.

Not really. Bonds are pricing the future and have fully priced in an OCR of 3.25-3.50% by mid 2023.

Property stocks aren’t liking the current move but with Argosy and Kiwi yielding around 8% gross I’m happy to hold as by the time the cash rate is 3.5% and we’ve had 12 months for mortgage repricing to sink in I wonder where house prices will be?

It’s quite likely the OCR won’t make it to 3.5% before something goes badly wrong and the RBNZ have to change tack.

[Waltzing]

"RBNZ have to change tack."

isnt that the great thing about markets.

In 5 years time as inflation may swing the other way you may look back and say "i should have been greedy".

[LaserEyeKiwi]

KPG now has a forward gross yield of 8.15% (assuming a 33% tax rate for holders)

[Waltzing]

wait till these companies face taxes on any land held for development.

The paper work is going to be huge.

https://www.stuff.co.nz/business/128519952/wealth-inequality-debate-is-really-an-argument-over-land

[Beagle]

KPG now has a forward gross yield of 8.15% (assuming a 33% tax rate for holders)

That's pretty good. I feel their shares at about $1 are now about fair value but management need to execute and prove they can grow eps to add any value from here. There's a LOT of history behind them that says they can't do that. Just as well going forward its going to be different...or is it ...

[LaserEyeKiwi]

I had missed this audacious proposal by Aire Dekker from Jarden a couple of weeks back (I was on holiday) - with a plan for Stride & KPG to merge assets and split them all up into siloed funds with one management team (including Investore assets, which Stride already manages).

https://businessdesk.co.nz/article/infrastructure/time-for-a-shotgun-wedding-of-kiwi-property-and-stride

[LaserEyeKiwi]

Weekly update:

13774

[winner69]

Thanks for update LEK ...nit getting any brighter is it

All because of interest rates? Maybe -

LPT is NZX Property stocks as per LEK analysis
10 Year Rate 31/12/20 0.92% ....LPT down 16.1% since
10 Year Rate 31/12/21 2.37% ....LPT down 13.9% since
10 Year Rate 29/4/22 3.55% ....LPT down 3.8% since
10 Year Rate 6/5/22 3.81%

I still believe most of the stocks have held up well v the increasing interest rates (not fallen as much s they 'should' have) .... and therefore still quite a way to fall

We'll see what happens eh

[Beagle]

When you look at it like that its amazing how quickly 10 year bond rates have risen. Nearly 300 basis points since the beginning of 2021. No wonder the market in general has been struggling in the last 16 months. One wonders where inflation, interest rates generally and the 10 year rate will be a year from now and its impact on the market and REIT's ?

Listening to Morgan Stanley's top equity strategist on CNBC this morning he shares some interesting insights into this question.
Headline comments. We've come a long way already with the 10 year and the S&P 500 has come down from a forward multiple of 21 times to 17.5 times.
He's cautious on the next 6 months with the Fed tightening several times at 50 bps a time and maybe more to come.
He said a recession is a certainty, no question about it and while the Fed can do a lot about the demand side they can't do anything about the supply side and if there's ongoing supply chain issues due to the war and China trying to maintain a zero Covid policy its going to be very tough for the Fed to reign-in inflation.

He sees the S&P 500 falling to about 3800 as a first step, about 7-8% from here and the forward PE on the S&P 500 being about 16 by year end.
No specific guidance on the 10 year rate but I gathered the direction northward is not done yet.

Got to go all the way back to the late 1980's to find a time when bond prices and share prices have both had such a terrible start to the year. The classic 60/40 equity/bond portfolio has been hammered at both ends. Next 6 months will be tough but we will get through this was his closing comment.

Cash and short term deposits remains my favorite and best performing asset class as it has ever since November 2021. I have held more than a 60% allocation ever since then and I'm in no hurry whatsoever to buy risk assets unless they present as truly compelling opportunities and even then only gradually.

Don't fight the Fed ! I remain very cautious indeed on outlook for the market for the rest of 2022. No question the Fed and the RBNZ for that matter should have taken the "punch bowl" away a lot earlier and 2022 and 2023 is the years where we pay the price for their fiscal largesse.
https://www.rnz.co.nz/news/business/466470/us-makes-biggest-interest-rate-rise-in-22-years

On another topic I see the Nasdaq is having a terrible year to date down 21% but I feel all the No PE and triple digit PE stocks still have a long, long way to fall. People lost the plot when they dispensed with PE's and said they were irrelevant and the widespread pricing of tech stocks using using price to sales methodologies was the cue the bubble was growing too big.
I think a short on the NASDAQ is a very good investment / useful hedge against my equity portfolio. Might look into how I can place such a bet.
Interestingly the NASDAQ could halve from its currently corrected level and still only be back to where it started 2020 at about the 6000 level.
I think the bear market / huge reckoning process for the Nasdaq has only just started. NASDAQ fell over 75% after the dot com bubble at the start of this century so a 21% fall year to date from egregiously bloated level is nothing.

[BlackPeter]

...

Nasdaq having a terrible year to date down 21% but I feel all the No PE and triple digit PE stocks still have a long, long way to fall.
I think a short on the NASDAQ is a very good investment / useful hedge against my equity portfolio. Might look into how I can place such a bet.

Admittedly - not a short on the NASAQ, but on the larger US sharemarket ... but otherwise I found that Beta shares ETF's are doing what they say they do.

So - if you think US shares will drop, then it might pay to look as well into BBUS on the ASX - this is an easy instrument to short US Markets:

https://www.betashares.com.au/fund/us-equities-strong-bear-fund/

Some things to consider:
trading time window (ASX) not well aligned with US markets ... i.e. if you want to time your purchases on the hour, you mihgt be out of luck.

currency hedged US$ to AU$, which may or may not be an advantage if NZ$ are your currency.

No idea about tax treatment of any gains in NZ ... but probably not different to any other USD shorting ....

Just make sure you sell any US shorts before Putin dangles under some Moskva bridge (i.e. make sure your intelligence is better than anybodys) ... I suppose while this would be a golden egg event for any holders of US stocks, it would be as well a black swan event for shorters.

[Beagle]

Thanks B.P. No saying Putin won't lob a low yield tactical nuke into the battle field either. What does Nato do then ? They can't start a full blown nuclear war based on one low yield tactical battlefield nuke. We sure live in interesting times ! I think there's a fund that's been set up to short Kathy Wood's ARK fund which is riddled with no PE and triple digit PE tech stocks. Might look into that as that seems like a good place to start.

Anyway I suppose we better stick to the subject. I like ARG the best of the REIT's and have a moderate position. 21% discount to last years NTA, report date with updated NTA is 18 May and they are close to an equivalent 8% gross yield for 33% taxpayers. Seems like a reasonable place to try and ride out this storm. ~ 50% of their assets are in the favoured industrial class.

[BlackPeter]

...

Anyway I suppose we better stick to the subject. I like ARG the best of the REIT's and have a moderate position. 21% discount to last years NTA, report date with updated NTA is 18 May and they are close to an equivalent 8% gross yield for 33% taxpayers. Seems like a reasonable place to try and ride out this storm. ~ 50% of their assets are in the favoured industrial class.

Agree. Property trusts take at this stage a prominent position on my watchlist ... but so far I didn't bite (based on TA and these things). I suppose as long as interest rates go up markets will punish REITS ... just one of these spot the peak exercises. If I think about it - I probably just need to wait for OCA to turn ( :) ) ... this will be the time when property trusts will start raising as well (at the end they all are REITS, just some in disguise - aren't they?).

[Beagle]

Agree. Property trusts take at this stage a prominent position on my watchlist ... but so far I didn't bite (based on TA and these things). I suppose as long as interest rates go up markets will punish REITS ... just one of these spot the peak exercises. If I think about it - I probably just need to wait for OCA to turn ( :) ) ... this will be the time when property trusts will start raising as well (at the end they all are REITS, just some in disguise - aren't they?).

LOL Yes they are mate but OCA's yield is only 4.2% so that's only about half what you get in some other REIT's. Part of that is down to the fact all of your assets with ARG are working for you as opposed to a 20-30% of OCA's being run ostensibly as a charity ;)
Some people have tried to make the point OCA is a screaming one way bargain that you can't lose but I can't help observing their discount to NTA is not much different to those noted in some other REIT's as detailed by LEK in post #1326.

Nothing is a sure fire guaranteed absolutely certain one way bet on the market is it mate....well maybe now and again it was when it was 38 cents ;)

[winner69]

Weekly update:

13774

All those large discounts to NTA interesting ….esp when some would say that relative to interest rates most of those stocks are still over priced

Makes you wonder if NTAs are ‘calculated’ on an historical basis and don’t seem to fully take into account current and future circumstances

Could NTAs (valuations) fall over the next year or so?

[Snoopy]

ll those large discounts to NTA interesting ….esp when some would say that relative to interest rates most of those stocks are still over priced

Could NTAs (valuations) fall over the next year or so?


dividend yield returns <-> interest rates <-> property valuations

They all interact with each other. But apart from when a real estate investment is liquidated, does the property valuation matter? As long as those ratcheted rent clauses are holding (and being ratcheted to inflation sounds good in today's environment), who cares what the quoted NTA of a particular property company is?

SNOOPY

[fungus pudding]

All those large discounts to NTA interesting ….esp when some would say that relative to interest rates most of those stocks are still over priced

Makes you wonder if NTAs are ‘calculated’ on an historical basis and don’t seem to fully take into account current and future circumstances

Could NTAs (valuations) fall over the next year or so?

Yes they could, but if so they will eventually recover. As long as building replacement costs keep rising, the value of existing buildings will get dragged along with them. Of course improvements are only one factor in a property's value - the other is land. And it's most unlikely land will stop increasing unless demand factors suffer some sort of major calamity; e.g. a war or plague that wipes out a huge % of the population.

[winner69]

dividend yield returns <-> interest rates <-> property valuations

They all interact with each other. But apart from when a real estate investment is liquidated, does the property valuation matter? As long as those ratcheted rent clauses are holding (and being ratcheted to inflation sounds good in today's environment), who cares what the quoted NTA of a particular property company is?

SNOOPY

SO why do so many punters / investors care about discount / premium to NTA

They all can't be stupid

[Beagle]

SO why do so many punters / investors care about discount / premium to NTA

They all can't be stupid

Because people want a bargain and not just at the WHS ;)

[winner69]

Because people want a bargain and not just at the WHS ;)

So KPG is the best bargain of the property stocks

[Beagle]

Good reasons for its dog status just like one of the retirement village stocks. One poorly performing mutt in my portfolio is more then enough ;)

[Aaron]

SO why do so many punters / investors care about discount / premium to NTA

They all can't be stupid

I'm with Snoopy, I don't think the discount to NTA is that important. I may be stupid though.

REITS are bond proxy's aren't they, therefore sustainable dividend yield is more important to me.

For example a $10,000 property on an 8% yield generates $800.00 If you accept a 6% cap rate without the dividend changing the property is now worth $13,333 (800/6%) or a 33% increase in NTA. Makes no difference to me investing for yield.

Conversely if acceptable cap rates rise your NTA can disappear just as easily.

Are we currently starting to accept higher interest rates? Mortgage rates and Govt bonds appear to be rising rapidly, but from what I listen to it is only a matter of time before something breaks and we are back to central bank intervention and focusing on capital gain. Free markets would be good but not possible in this day and age.

I agree with FP though loose monetary policy, financial repression and inflation will push up the price of new builds and rents which drags up the value of existing buildings, while reducing debt, but it doesn't have to be that way. That said no real indication this will ever change so maybe winner is right and we should invest as though yields will always be low and maybe central banks will eventually take interest rates negative.

That said they are negative now aren't they at 6.9% CPI inflation, property trusts are going backwards or losing money in real terms as not many cracking a 7% yield.

Much better than fixed interest though, although with fixed interest you know how much you will get back, property trusts on a 7% dividend yield with the price down 6% already this year AND inflation at 6.9% makes investing interesting.

[LaserEyeKiwi]

I'm with Snoopy, I don't think the discount to NTA is that important. I may be stupid though.

REITS are bond proxy's aren't they, therefore sustainable dividend yield is more important to me.

For example a $10,000 property on an 8% yield generates $800.00 If you accept a 6% cap rate without the dividend changing the property is now worth $13,333 (800/6%) or a 33% increase in NTA. Makes no difference to me investing for yield.

Conversely if acceptable cap rates rise your NTA can disappear just as easily.

Are we currently starting to accept higher interest rates? Mortgage rates and Govt bonds appear to be rising rapidly, but from what I listen to it is only a matter of time before something breaks and we are back to central bank intervention and focusing on capital gain. Free markets would be good but not possible in this day and age.

I agree with FP though loose monetary policy, financial repression and inflation will push up the price of new builds and rents which drags up the value of existing buildings, while reducing debt, but it doesn't have to be that way. That said no real indication this will ever change so maybe winner is right and we should invest as though yields will always be low and maybe central banks will eventually take interest rates negative.

That said they are negative now aren't they at 6.9% CPI inflation, property trusts are going backwards or losing money in real terms as not many cracking a 7% yield.

Much better than fixed interest though, although with fixed interest you know how much you will get back, property trusts on a 7% dividend yield with the price down 6% already this year AND inflation at 6.9% makes investing interesting.

Good summary of what I think is probably a fairly widely held view on how people are valuing REITs dividends etc.

However it doesn’t really account for why there is such a huge variance between the listed property trusts dividend yields here in NZ. Why are people still prepared to take a ~3% yield from Goodman & Vital (basically the same as you can get from a risk free term deposit currently) while holders of Stride & Kiwi get a ~7% yield (and even higher on a forward yield basis).

Expected earnings and dividend growth rates also need to be taken into the equation, likewise any one off gains - either by revaluation of existing assets or from capital gains on sales. Also when it comes to discussing discounts to NTA, there needs to be consideration for what portion of assets are currently in “pre-revenue” stage, eg: brownfield/greenfield development sites that are worth a significant amount but not yet generating income - All things that are not present in bond market calculations.

[Waltzing]

Anyone had a look how the new Logistic HUB for GMT going in south auckland.

Some news and video in the herald today.

GMT has been OVERVALUED for a while perhaps based on land pressures going out next decade.

Markets are forward looking?

[troyvdh]

Not intending to spruik PFI....but isn't any economy dependent on warehouses....In addition how many property entities listed on the NZ exchange ..say over the 3 decades (at least) have retained the same identity.

[LaserEyeKiwi]

Added in a comparison to pre-pandemic level with the extra “Dec 31st 2019” column.

(for the record, NZ 10yr bond was trading at 1.665% back then vs. 3.78% today)

13787

[LaserEyeKiwi]

Buisnessdesk with a piece out today discussing much of what we are haggling about day to day in this thread.

https://businessdesk.co.nz/article/property/is-the-party-over-for-reits?utm_source=Digest&utm_medium=email

mentions ForBars current ratings:

Outperform: Stride, Investore
Neutral: Kiwi, Argosy, Asset Plus
Underperform: Goodman Property

[Raven74]

No mention of PFI?

[LaserEyeKiwi]

Vital Healthcare just reported Q3 results: Earnings up 14.1%, NTA up to 3.23 (+11c), gearing up to 34.1% (+0.9%), 5.6% dividend increase*

(* = note i have not changed dividend yield on table, I use the trailing TTM from NZX site for that, and update it every Friday)

13793
1379413795

[LaserEyeKiwi]

13802

Some large uncorrelated moves almost the property names this week - some names seemingly bottomed out (?), others accelerating their falls.

[LaserEyeKiwi]

Weekly update:

13811

[winner69]

Another down week for property stocks

I reckon many more to come -- on average maybe still more than 20% over priced relative to 10 year govt stock

Many of you think this chart re NPF (proxy for sector) and 10 year govt stock is a load of rubbish and not really meaningful.

But its done good for me .... keeping me out of the sector in spite of the many perceived bargains blah blah.

Just look at the points marked Dec / March / NOW .....not getting any closer to the straight line are they. and NPF has fallen from 153 to 128 (about 18%) and possibly could fall another 20% or more. Over time things do revert to that line and I can't see a big drop in interest rates coming soon

The fall in NPF share price this year is about the same as the sector average as per LEKs table ....that's spooky eh ..... could say the modelling predicted whats happened since December

I'll stick with this 'analysis' ..... might save me a few bob ..... but as baabaa says the time will come one day when there are real 'bargains'

[Beagle]

https://www.theage.com.au/business/companies/views-diverge-over-rate-hikes-impact-on-reits-20220512-p5akvo.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+14 +May+2022

[winner69]

https://www.theage.com.au/business/companies/views-diverge-over-rate-hikes-impact-on-reits-20220512-p5akvo.html?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+14 +May+2022

Thanks for sharing link

One of those articles one reads into what they want to hear eh

Like currently REITs way oversold or REITs facing big headwinds and have more to fall .... wonder which view is going to be right

[Beagle]

Another down week for property stocks

I reckon many more to come -- on average maybe still more than 20% over priced relative to 10 year govt stock

Many of you think this chart re NPF (proxy for sector) and 10 year govt stock is a load of rubbish and not really meaningful.

But its done good for me .... keeping me out of the sector in spite of the many perceived bargains blah blah.

Just look at the points marked Dec / March / NOW .....not getting any closer to the straight line are they. and NPF has fallen from 153 to 128 (about 18%) and possibly could fall another 20% or more. Over time things do revert to that line and I can't see a big drop in interest rates coming soon

The fall in NPF share price this year is about the same as the sector average as per LEKs table ....that's spooky eh ..... could say the modelling predicted whats happened since December

I'll stick with this 'analysis' ..... might save me a few bob ..... but as baabaa says the time will come one day when there are real 'bargains'

Maybe I am thick...the jury is still out on that one lol.... but I find your image confusing.
https://smartshares.co.nz/types-of-funds/new-zealand-shares/nzpropertytrust NPF shows the gross yield as just 3.32%. I presume that doesn't account for the fact the fund is a PIE so for 33% taxpayers that's effectively a gross yield of 3.32 / 0.67 = 4.95% which i presume is before their fees.

I would totally agree that a 4.95% gross return is an insufficient premium above 10 year Govt stock which was 3.7% yesterday, a premium of just 1.25%.

Your methodology of grouping them together as an asset class has the inherent weakness of overlooking the fact that certain companies in the sector have a premium above Govt stock of about 4.5% for 33% taxpayers., examples include KPG and ARG.

I completely agree with you that the yields on some REIT's like GMT (2.6% net) and VHP (3.16% net) offer an inadequate risk premium over Govt stock. Both those companies have a superb track record of executing value accretive developments which in the past has meant they've added considerable value above the yield. I guess investors have to decide for themselves if they'll be able to continue that in a much higher interest rate environment.

I'm happy with a ~ 4.5% premium over Govt stock for safe REIT's like ARG and Utility companies like GNE but that said both are in a confirmed downtrend and I have already got myself a little underwater with recent modest additions to my portfolio on both those stocks so I am cautious going forward but ever watchful for indications of a bottoming process.

[fungus pudding]

Thanks for sharing link

One of those articles one reads into what they want to hear eh

Like currently REITs way oversold or REITs facing big headwinds and have more to fall .... wonder which view is going to be right

Will new building costs rise or fall? See. You've answered your own question.

[winner69]

Beagle - the other beagle had much the same reponse

The 'analysis' is NPF share price v 10 year govt stock at end of each month --- just that, and nothing to do with yields or anything else..... . Statistically the 10 year govt stock rate explains about 55% of the NPF share price. Your discussion was much along the lines of the other beagle and essentially is discussing a complete different approach

I believe that NPF is a pretty good proxy for the sector (there is an sector index on the NZX but one needs to pay to get the info). Doing the same exercise for individual stocks does give different degrees of under/overpricing. KPG remains underpriced, ARG getting close to be about right, PCT slightly over priced and PFI and GMT still overpriced by quite a lot

Never mind. I did say most would find it a load of rubbish but it has done OK for me ... like it gives me a fair idea of the sector as a whole ...... and saved me heaps in not buying the 'bargains' that were going at the beginning of the year

But as baabaa says there will be a time when a lot of these stocks are true bargains

[Snoopy]

NPF Fund Income Stream



TickerIssuer
No. of Constituent Shares Held
Declared Dividends (CY2021) cps
Declared Imputation Credits (CY2021) cps


NPF (Collective Entity) ETF ETF earnings$5.785m+$0.808m


NPF (Collective Entity) ETFSmartshares NZ Property ETF110.887m1.64 + 1.840.393+0.415$3.859m+$0.896m



One thing I have not taken account of -so far- is the running cost of the NPF fund. Over the financial year ending 31st March 2021 these amounted to 0.54% of the funds value. But was this a one off charge at the end of the financial year? Or was 1/12th of the charge paid monthly? Or 1/365th of the charge paid daily? Maybe I am looking in the wrong place. But I find the detail on just how some of these Smartshares funds operate opaque and disclosure very poor.

I will take the 'easy way out' and take off 0.54% of the 31st December NTA figure.

0.0054 x 110.887m x $1.52825 = $0.915m

0.54% on the value of assets does not sound a lot. But it has reduced the NPF's fund earnings by nearly 20% - ouch!



Maybe I am thick...the jury is still out on that one lol.... but I find your image confusing.
https://smartshares.co.nz/types-of-funds/new-zealand-shares/nzpropertytrust NPF shows the gross yield as just 3.32%. I presume that doesn't account for the fact the fund is a PIE so for 33% taxpayers that's effectively a gross yield of 3.32 / 0.67 = 4.95% which i presume is before their fees.

I would totally agree that a 4.95% gross return is an insufficient premium above 10 year Govt stock which was 3.7% yesterday, a premium of just 1.25%.

Your methodology of grouping them together as an asset class has the inherent weakness of overlooking the fact that certain companies in the sector have a premium above Govt stock of about 4.5% for 33% taxpayers., examples include KPG and ARG.


Beagle, you have to go back 20 pages to look at my return analysis on NPF. But the key post I have copied above. From that post you will see that the actual dividends from the constituent entities that make up the NPF fund exceeded the dividends paid out by NPF by 50%. There are several reasons for that. There is the fee grab that I referred to. There is also the fact that at least a couple of the fund constituents had 'cash issues' to raise more capital during the year. There was no corresponding cash issue to existing unit holders in NPF to help fulfill these capital raises. So the money from NPF to retain their relative index ratings must have come out of accumulated funds (meaning less money available to pay NPF's own dividends).

This means when you use a figure of 3.32% for NPF, you should really raise that by 50% to get a measure of the money being generated by the underlying fund constituents. That means when you see 3.32% on Winner's graph,

[Edit: Just to avoid confusion for readers, the Winner graph shows NPF in dollar terms, which is the market valuation of an NPF unit. However, this is representative of a certain yield based on historical payouts, which I believe is the 3.32% that Beagle was referring to]

Think 3.32% x 1.5 = 5.0%

Your PIE return to 33% marginal taxpayers then changes to:

5.0%/0.67 = 7.4%

That is after fund constituent entity fees, but assumes no NPF fees. That I believe is the best way to consider the 'indicative return' presented in that Winner graph. As Winner says, some of the fund constituents produce a total gross return greater than that - others less.

Of course when you make a decision to invest in a particular property trust or company, you are making an individual company investment decision, not a collective one. But as an overall indicator of the yields in the commercial property market, I believe Winners method of using the NPF price as a proxy is the right one.

SNOOPY

[Beagle]

Fair enough guys but I will stick with my focus on yield which is what you'd expect of a 60 year old planning their retirement years. My thinking goes thus: $670K @ 8% gross in a range of shares paying that makes for $53.6K per annum income which on top of super, (now $42.5K gross for a couple) makes for a total annual income before tax of $96.1K.

I would think most couples would be quite comfortable on $96.1K gross income with a debt free home. Split that to get the most effective tax rate and that's $81.3K per annum after tax = $1,563 per week. Most of the retirement material I have read suggests $1,300 per week net gives you a comfortable "choices" retirement lifestyle, maybe that's gone up to $1,400 or so with inflation but I think $1563 would be quite comfortable and allow some luxuries.

$670K saved for retirement if invested well is a lot more attainable than the millions some Kiwisaver providers say you need.
The key is investing well that will give you a sustainable gross return of at least 8% and that's where the right REIT's are very attractive in my opinion.

Snoopy - Yeah I agree mate. Taking 0.54% per annum off the gross return really reduces the attractiveness of that fund. Better off building your own portfolio of 8%+ gross earners.

Winner me ol mate. I really don't have any problem with a REIT or Utility that will pay you about 4.5% gross yield more than 10 year Govt stock. Its not like they're super risky tech stocks or super high PE growth stocks is it !

Once you have $670K in these 8% earners, anything more is play money for life's super luxury items ;)
Might even be able to afford to have several dogs to love in my retirement years, (like some lucky people I know ;) ), now that's something to look forward to ! (Beagle, Golden Retriever and a Chocolate Labrador would be nice)

[GTM 3442]

So LPTs are meant to be proxies for bonds or fixed interest in general.

Bond yields are around 5%, and a 5 year TD is currently (Westpac) 3.8%

If I take Precinct (PCT) with a yield of 4.71% (NZX website) what should the PCT share/unit price be to match the yield from bonds/TDs?

$1.38 doesn't seem too flash.

[Beagle]

I don't follow PCT but I think you will find they are likely to be a PIE (Portfolio investment entity) which means that all distributions are tax free in your hands. 4.77% net yield, (just looked on direct broking website) is worth 4.77 / 0.67 = 7.1% gross to someone on a 33% tax rate.
To get to the magic 8% gross I have been talking about the share price is going to have to drop a fair bit lower.

[Snoopy]

Another down week for property stocks

I reckon many more to come -- on average maybe still more than 20% over priced relative to 10 year govt stock

Many of you think this chart re NPF (proxy for sector) and 10 year govt stock is a load of rubbish and not really meaningful.

But its done good for me .... keeping me out of the sector in spite of the many perceived bargains blah blah.

Just look at the points marked Dec / March / NOW .....not getting any closer to the straight line are they. and NPF has fallen from 153 to 128 (about 18%) and possibly could fall another 20% or more. Over time things do revert to that line and I can't see a big drop in interest rates coming soon

The fall in NPF share price this year is about the same as the sector average as per LEKs table ....that's spooky eh ..... could say the modelling predicted whats happened since December

I'll stick with this 'analysis' ..... might save me a few bob ..... but as baabaa says the time will come one day when there are real 'bargains'

Winner, I have been thinking a bit more about your government 10 year stock rate verses NPF share price diagram.

You have that 'big red' Covid-19 rugby ball that is 'touched down' in the middle of the graph. You say that each dot represents a monthly close. I count seven dots. So I am picking that 'rugby ball' represents March to September 2020. That represents the time that Adrian Orr was pulling all levers to reduce interest rates. We had expectations of a property crash totally undermining the consumer economy. But by the time the end of September rolled around, it was apparent that the property market was not going to crash, and in fact the opposite was happening. But even at the time, we knew those artificially low interest rates were a government construct. Property investors think long term, so they would know that such low interest rates would not be there to stay.

If property investors did not 'believe' these low interest rates, they would be planning their property returns around what would be likely to happen when interest rates returned to normal. Now look back at your chart and lift that red rugby ball off the ground, back up to where your correlation line is. If you do that then all of those data points within the rugby ball cluster quite nicely around your correlation line. How spooky is that?

Now lets extend this idea to what is happening with all of those more recent data point above the correlation line.

Maybe property investors today do not 'believe' that today's high 10 year interest rates will last. After all, growth in China has been slowing for more than ten years and now the great President Eleven seems to believe his 'sheer will of ideology' in the form of lockdowns in China will overcome the biology of Covid-19 omicron. When politics takes on biology, sadly for humankind, biology usually wins. Now Russia looks like it has an unstable leader, that casts a cloud over the economic future of Europe and by extension the rest of the world. So for our longer thinking property investor, the high interest rates implied today are just as fake as the super low interest rates in that first pivotal 'touch down' period after Covid-19 arrived. Thus the reason for your data points of recent times being noticeably above your correlation line is not that the market is wrong. It is just that the property market is forward looking.

SNOOPY

[winner69]

Winner, I have been thinking a bit more about your government 10 year stock rate verses NPF share price diagram.

You have that 'big red' Covid-19 rugby ball that is 'touched down' in the middle of the graph. You say that each dot represents a monthly close. I count seven dots. So I am picking that 'rugby ball' represents March to September 2020. That represents the time that Adrian Orr was pulling all levers to reduce interest rates. We had expectations of a property crash totally undermining the consumer economy. But by the time the end of September rolled around, it was apparent that the property market was not going to crash, and in fact the opposite was happening. But even at the time, we knew those artificially low interest rates were a government construct. Property investors think long term, so they would know that such low interest rates would not be there to stay.

If property investors did not 'believe' these low interest rates, they would be planning their property returns around what would be likely to happen when interest rates returned to normal. Now look back at your chart and lift that red rugby ball off the ground, back up to where your correlation line is. If you do that then all of those data points within the rugby ball cluster quite nicely around your correlation line. How spooky is that?

Now lets extend this idea to what is happening with all of those more recent data point above the correlation line.

Maybe property investors today do not 'believe' that today's high 10 year interest rates will last. After all, growth in China has been slowing for more than ten years and now the great President Eleven seems to believe his 'sheer will ideology' in the form of lockdowns in China will overcome the biology of Covid-19 omicron. When politics takes on biology, sadly for humankind, biology usually wins. Russia looks like it has an unstable leader, that casts a cloud over the economic future of Europe and by extension the rest of the world. So for our longer thinking property investor, the high interest rates implied today are just as fake as the super low interest rates in that first pivotal 'touch down' period after Covid-19 arrived. Thus the reason for your data points of recent times being noticeably above your correlation line is not that the market is wrong. It is just that the property market is forward looking.

SNOOPY

Your last paragraph is probably what the market is thinking about the future rates …..if they right what will share prices look like if rates fall tomaste-te 2% …..suppose we’ll talk yields then

[Rawz]

Some great posts today from all. Lots learnt. Cheers

[Snoopy]

Your last paragraph is probably what the market is thinking about the future rates …..if they right what will share prices look like if rates fall tomaste-te 2% …..suppose we’ll talk yields then


No need to wonder about what ten year bond rates will be in the future. The collective wisdom of property investors has spoken. And the latest point on your graph is telling us the answer. An NPT yield of 3.32%, which translates to a gross property trust yield of 7.4% 'on average' (see my post 1356) is where we are going to end up. 'Place your bets' or start stacking up your property trust acquisitions, based on that 7.4% gross (or 5.0% net) figure.

SNOOPY

[LaserEyeKiwi]

So LPTs are meant to be proxies for bonds or fixed interest in general.

Bond yields are around 5%, and a 5 year TD is currently (Westpac) 3.8%

If I take Precinct (PCT) with a yield of 4.71% (NZX website) what should the PCT share/unit price be to match the yield from bonds/TDs?

$1.38 doesn't seem too flash.

When comparing a 5 year Term deposit to a REIT, you also have to consider that the Term Deposit interest rate will not change over that 5 year period, whereas a REIT will likely have grown their payout/yield annually as they have grown earnings. If a high inflationary environment was to persist, a REIT may have dividends 20-30% higher in 5 years vs the term desposit which will have had zero increase in yield.

[winner69]

When comparing a 5 year Term deposit to a REIT, you also have to consider that the Term Depspit interest rate will not change over that 5 year period, whereas a REIT will likely have grown their payout/yield annually as they have grow earnings. If a high inflationary environment was to persist, a REIT may have dividend 20-30% higher in 5 years vs the term despot which will have had zero increase in yield.

Dont know much the history of yields in this sector but have many (if any) increased divies by 20% to 30% in 5 years

[Beagle]

When comparing a 5 year Term deposit to a REIT, you also have to consider that the Term Depspit interest rate will not change over that 5 year period, whereas a REIT will likely have grown their payout/yield annually as they have grow earnings. If a high inflationary environment was to persist, a REIT may have dividend 20-30% higher in 5 years vs the term despot which will have had zero increase in yield.

One bi annual CPI linked rent review I have recently seen just went up a little over 9%. I doubt anyone has thought about this all that much for decades but I think there's now going to be potentially quite a big difference between market reviews, (which may or may not go up in a similar way to what I've illustrated) and those REIT's who predominantly have CPI reviews.

[Waltzing]

"One bi annual CPI linked rent review I have recently seen just went up a little over 9%"

Time to dig as deep as published information allows on ARG's reports.

[Beagle]

"One bi annual CPI linked rent review I have recently seen just went up a little over 9%"

Time to dig as deep as published information allows on ARG's reports.

Definitely a good question to ask at the annual meeting. Are the majority of your leases market rent review or CPI review ?

[Habits]

Definitely a good question to ask at the annual meeting. Are the majority of your leases market rent review or CPI review ?

It looks like the CPI rent reviews will bounce with CPI sitting around 6 percent at the moment

[Beagle]

Dont know much the history of yields in this sector but have many (if any) increased divies by 20% to 30% in 5 years

If a lease had CPI annual reviews and inflation averaged 6% over the next 5 years the lease rate would go up by 6% compounded 5 times = 33.8% after 5 years so in theory its possible but I sure hope inflation comes down sooner than that !

[mcdongle]

Will higher interest rates have an effect on property values and the NTA of property companies?

[Rawz]

Will higher interest rates have an effect on property values and the NTA of property companies?

I've recently formed the opinion that NTA is much less relevant to REITs than I thought it was. Thanks largely to posts on this thread.

Yield is much more important. As the 10 year govt stock yield increases property companies share price needs to come down so that the dividend yield is of a sufficient premium to the risk free rate.

And if you look at that really cool graph Winner69 put up a couple pages ago it says the property index needs to fall further.

Capitalization rates should increase in these more risky times. Also with increasing interest rates.
However inflation pegged rents should help this.
Overall dont expect much NTA growth.

REITs have had a great run over the many years of falling rates. Time to give some gains back

[Beagle]

I've recently formed the opinion that NTA is much less relevant to REITs than I thought it was. Thanks largely to posts on this thread.

Yield is much more important. As the 10 year govt stock yield increases property companies share price needs to come down so that the dividend yield is of a sufficient premium to the risk free rate.

And if you look at that really cool graph Winner69 put up a couple pages ago it says the property index needs to fall further.

Capitalization rates should increase in these more risky times. Also with increasing interest rates.
However inflation pegged rents should help this.
Overall dont expect much NTA growth.

REITs have had a great run over the many years of falling rates. Time to give some gains back

Agreed but the market is front running a lot of that already with some significant discounts to NTA.

[Waltzing]

ARG are we going to be 115? :t_up:

[LaserEyeKiwi]

Here’s something:

In November 2015, the 10 yr Gov bond was essentially the same that is is today: 3.587%

13822

Here are listed property companies and their share prices vs their NTAs on November 30th 2015:

13821

In case it wasn’t obvious, the last time NZ government 10 year bond was at the current rate, listed property companies traded at a minimum 10% premium to their NTA. (Compare that today where our listed property companies trade at an average 20% discount to NTA)

[BlackPeter]

Here’s something:

In November 2015, the 10 yr Gov bond was roughly in the same ballpark that is is today: 3.60%

Here are listed property companies and their share prices vs their NTAs on November 30th 2015:

13821

In case it wasn’t obvious, the last time NZ government 10 year bond was at the current rate, listed property companies traded at a significant premium to their NTA.

Obviously:
In 2015 everybody expected property prices to rise ... and market priced REITS accordingly (i.e. allowed for a premium vs valuation / NTA).
Today everybody expects property prices to fall ... and market is pricing REITS accordingly (i.e is allowing for a discount vs valuation / NTA).

So - markets used to be forwards looking and still are :) ;

Only interesting questions in this context are in my view
... when will markets expect for property prices to stop the downtrend and start rising again, turning the current discount to NTA into a premium - and
... which event will trigger the trend change?

One factor might be whether we have over the coming years a net immigration gain (increasing pressure on the housing market) or loss (reducing pressure - prices continue to drop) ... but given the history of this and previous Labour governments might we need to wait for the next elections until we can account for immigration gains again. Does not bode well for short term trend changes in the real estate market.

[Rawz]

Here’s something:

In November 2015, the 10 yr Gov bond was essentially the same that is is today: 3.587%

13822

Here are listed property companies and their share prices vs their NTAs on November 30th 2015:

13821

In case it wasn’t obvious, the last time NZ government 10 year bond was at the current rate, listed property companies traded at a minimum 10% premium to their NTA. (Compare that today where our listed property companies trade at an average 20% discount to NTA)

NTA doesnt mean much then?

Wonder what the dividend yields where back then? would be interesting to compare the premiums the market demanded back then compared to now

[Waltzing]

ARG 1.10 next.. image a yield adjusted for inflation in a few years..

nice pivot table there LEK?

Anyone got any old reports stacked away?

Found some old floppy disks in unopened product boxes..from the US special post.

[BlackPeter]

ARG 1.10 next.. image a yield adjusted for inflation in a few years..

nice pivot table there LEK?

Last time I bought ARG (I think 2014) they were around $1. Great buying at that stage ... and sold when they appeared too dear. Maybe we can repeat this experience?

[Waltzing]

YEP was a sale at 1.60-170 but we still hold some at 1.16-17 in one portfolio.

looking to reload at 100-110

KPG 2015 .

> Operating profit before tax of $89.0 million, up $10.3 million, +13.1%
> After tax profit of $115.2 million, up $13.9 million, +13.7%
> Distributable income [NOTE 2] of $79.7 million, up $3.4 million, +4.5%
> Full-year dividend of 6.50 cents per share, up from 6.40 cents per share a year ago
> Property assets of $2,275.8 million, up $145.6 million
> Gearing ratio2 of 33.5%, down from 35.2% at March 2014
> Net tangible asset backing per share of $1.21, up 4 cents per share

[Beagle]

ARG 1.10 next.. image a yield adjusted for inflation in a few years..

nice pivot table there LEK?

Anyone got any old reports stacked away?

Found some old floppy disks in unopened product boxes..from the US special post.

Unless Wednesday's announcement is a negative surprise in some meaningful way the current price looks very good value to me. Unfortunately very good value does not guarantee you it won't go even lower in the short run.

[BlackPeter]

Unless Wednesday's announcement is a negative surprise in some meaningful way the current price looks very good value to me. Unfortunately very good value does not guarantee you it won't go even lower in the short run.

I agree with both of your statements :) ;

[Beagle]

I agree with both of your statements :) ;

I got the exit right at ~ $1.60 but thought $1.30 was a good time to start buying. Fortunately I bought cautiously and have the capability to triple my existing position within maximum self imposed 10% portfolio allocation limits.

Unfortunately I wasn't so cautious with GNE at $2.80 so have very little room to add more if it goes down to Winners $2.50 unless I break that portfolio limit.

[mcdongle]

Last time I bought ARG (I think 2014) they were around $1. Great buying at that stage ... and sold when they appeared too dear. Maybe we can repeat this experience?

This is what i am hoping for......

[LaserEyeKiwi]

Investore reports earnings.

increases income from operation through rent increases and portfolio expansion.

also it’s NTA increased, now putting it in a position as the biggest discount to NTA of the listed names at -35.3%!

13826

[LaserEyeKiwi]

ARG also reports:


Argosy Property Limited (‘Argosy’ or the ‘Company’) has reported its results for the 12 months to 31 March 2022.
Key highlights for the period include:
• Net profit after tax of $236.2 million;
• $163.7 million annual revaluation gain, an increase of 8% on book value;
• Increase in NTA per share to $1.74 from $1.53 at 31 March 2021, a 13.7% increase;
• Net property income for the period of $105.1 million;
• High occupancy (~98.7%) and WALT (5.7 years);
• Strong portfolio leasing and rent review outcomes, including 3% annualised rental growth on rents reviewed;
• 7WQ in Wellington is now 100% leased;
• Our continued focus on sustainability and progressive green developments with 8-14 Willis Street now substantially complete and 105 Carlton Gore Road, and 12-20 Bell Ave underway;
• A full year dividend of 6.55 cents per share, a 1.6% increase over FY21; and
• FY23 dividend guidance of 6.65 cents per share, a 1.5% increase on the prior year;

Another jump in NTA, another listed company with a discount to NTA of over 30%


13827

[winner69]

Big discounts to NTA in sector and getting bigger

They say markets are forward looking - whatever that means in this sector

[BlackPeter]

Big discounts to NTA in sector and getting bigger

They say markets are forward looking - whatever that means in this sector

Probably depends on the size of the time window and the clarity of the crystal ball ... so many parameters to consider :) ;

[Waltzing]

NTA of 170 is just crazzzy .....

what was the SP low again ? 119 odd......

Inflation has at least another 12 months to run.

Well what a result that will completely distort the capital retained earnings accounts.

[LaserEyeKiwi]

Gearing ratios continue to be very healthy for NZ listed property (overseas its frequently 50%+) - which is why there is no sign of rising interest rates impacting there income, with rental income increasing at a faster pace than debt expense.

13828

[Beagle]

Big discounts to NTA in sector and getting bigger

They say markets are forward looking - whatever that means in this sector

ARG just announced NTA of $1.74 but trades at $1.20 = 31% discount 8.27% gross yield
Investore just announced $2.32 but trades at $1.50 last time I looked = 35% discount 7.86% gross yield
Makes other quasi REIT's discounts look not so stunning (looking at you OCA).4.3% gross yield.

They say the market is forward looking...well I would say maybe the market is already fully pricing in a full blown deep recession.
Maybe that recession is not as long and deep as the market presently seems to think ?

[LaserEyeKiwi]

Probably depends on the size of the time window and the clarity of the crystal ball ... so many parameters to consider :) ;

Indeed. Markets obviosuly focused on the near and medium term with some of the most pessimistic market participants expecting 5%+ OCR rates in 12 months time (highly unlikely).

The astute long term investor will be focused on the long term expected interest rates and expected rental income growth rates, and what that translates to for the listed property companies true fundamental value.

[LaserEyeKiwi]

ARG just announced NTA of $1.74 but trades at $1.20 = 31% discount 8.27% gross yield
Investore just announced $2.32 but trades at $1.50 last time I looked = 35% discount 7.86% gross yield
Makes other quasi REIT's discounts look not so stunning (looking at you OCA).4.3% gross yield.

They say the market is forward looking...well I would say maybe the market is already fully pricing in a full blown deep recession.
Maybe that recession is not as long and deep as the market presently seems to think ?

Yup - and with Kiwi’s upcoming report on Monday, we will no doubt see another even larger discount to NTA following thier portfolio revaluation (they are already hovering around -30% discount).

Sooner or later Private equity might start sniffing around some of these names I think. Not sure when that happens given the premium needed for any successful takeover attempt, but if a 20% premium above market price would do it, then names trading at a 35-40% NTA discount trading at very low FFO multiples with very low gearing (more than capable of funding increased debt for a partially debt funded takeover) are getting very ripe for the plucking. maybe not even private equity, but rather other property entities that could increase returns by eliminating the management overhead.

[Canterbury Tales]

I have been surprised how quickly PFI has fallen in the last month, and for that matter Argosy. Mentally I put an entry point for PFI at 2.25 or less, and it seems just around the corner.

As a practical measure, I take no notice of any share price in the last 2 years. It is increasingly clear that the 2020-2021 period was an aberration caused by a combination of Covid and , post July 2020, mistaken central bank behaviour by almost all central banks. (They cut appropriately when Covid struck, and no-one knew whether it was the end of the world or not; but they should have started tightening when equity and housing markets reversed mid 2020, as financial markets made an assessment that the sky had not actually fallen.) Global central banks clearly understand this now, which makes a return to the ultra low rates of 2021 unlikely for the foreseeable future. These revaluations of 2021 should be ignored or else they screw up your mind.

VS Naipaul, in "A Bend in the river" has a wonderful couple of pages describing the psychology of a speculative bubble, especially the difficulty selling in a declining market because you keep thinking back to the highest price and what could have been if only you had sold at the top. You end up holding for far too long. It is much easier to judge value if you ignore the top of the bubble and pretend it didn't occur. I suspect property should be valued at the end of 2019 values adjusted for the change in interest rates (and rents) since then. I think the same about freight companies.

Longer term, I also expect government stock rates to be nearer 4-5% than 0-1%. The unwinding of quantitative easing in the US, combined with continuing large deficits means there is going to be a large amount of government debt for sale and no Fed to buy it (rather, they are unloading.) I can't see this changing for several years. I suspect this means the prices at the end of 2019 are likely to be a roof rather than a floor.

Of course, that just describes modern young people in NZ - roofless and floorless, instead of flawless and ruthless, like back in the day. I can't see any reason why they would want to stay in NZ unless the price of residential real estate drops a lot from late 2019 levels, and it becomes possible to find interesting, globally engaging work. I suspect the valuation of Kiwi Property is more difficult than companies specialising in commercial property as the latter may have got less silly in 2021.
CT

[winner69]

Good to see this sector doing their bit …from GMT

GMT is working to reduce carbon emissions across the whole property lifecycle. Those emissions that cannot be reduced, including the embodied carbon within all new developments, are being offset with a combination of New Zealand and internationally sourced carbon credits.

[Waltzing]

" Statutory profit of $763.8 million before tax (including fair value gains
of $660.4 million from property valuations), up 17.7% on FY21
+ 22.6% increase in net tangible assets, from 212.5 cents per unit at 31
March 2021, to 260.6 cents per unit at 31 March 2022"

GMT crazy stuff ....

"Over 265,000 sqm of new leasing (around 25% of the portfolio), with an
average occupancy rate across the portfolio of 99.4% during the year."

this could be a 3 dollar stock at some point in the future.

[LaserEyeKiwi]

Updated following GMTs report this morning (higher NTA, lower gearing)

13830

[Waltzing]

(higher NTA, lower gearing)

NTA via Discounted modelling is ?

gearing is always going to reduce....

But if we take 10-15% off NTA?

unlikely as land use is congested.

[winner69]

GMT say distribution (divie) is up 3.6% but stress that Total Return (divie plus increase in NTA) is up 25.2%

Seems to imply GMT think investors should be focusing on a growing asset base rather than divies (which didn't keep up with inflation!)

ARG Total Return was 15.3% (divie +1.6% and NTA +13.7%) .... again divie rise less than inflation

[LaserEyeKiwi]

(higher NTA, lower gearing)



Normally the case - but can diverge if there is a change in share count.

[LaserEyeKiwi]

Weekly Update:
13837

[Waltzing]

ARG up on week where Cramer is just whistling Dixie on a 100 BP rate hike; is this the bottom?

A range of 115 to 125

[Rawz]

KPG with its high dividend yield and huge pipeline has to be the best bet?

[LaserEyeKiwi]

KPG with its high dividend yield and huge pipeline has to be the best bet?

Will be a bit clearer after they report Monday morning.

[Beagle]

ARG up on week where Cramer is just whistling Dixie on a 100 BP rate hike; is this the bottom?

A range of 115 to 125

If its not, we're close. 8% gross yield and ~ 30% discount to NTA are serious numbers.
I have more work to do on OCA.

[Waltzing]

And GMT has more in the pipeline according to their FULLYR 2022

A company that has more NTA potential. Not a Yield but a Growth stock?

PLUS

FY23 guidance+ GMT’s capital position remains sound and is forecast to produce strong underlying growth in cashflows− FY23 cash earnings expected to be around 6.9 cpu, up 4% on FY22− Distributions of 5.9 cpu, a 7% increase on FY22, providing for a payout ratio of 85 %

[LaserEyeKiwi]

And GMT has more in the pipeline according to their FULLYR 2022

A company that has more NTA potential. Not a Yield but a Growth stock?

PLUS

FY23 guidance+ GMT’s capital position remains sound and is forecast to produce strong underlying growth in cashflows− FY23 cash earnings expected to be around 6.9 cpu, up 4% on FY22− Distributions of 5.9 cpu, a 7% increase on FY22, providing for a payout ratio of 85 %

I applaud the growth - but its such a pitiful yield - it would take the better part of this decade of similar growth for GMT yield to catch up with a current 5 year term deposit rate (now 4%). GMT has HALF the yield of the best yielding listed property names in NZ, yet it is also trading below its NTA. Why is GMTs return on assets so small??

[Waltzing]

"Why is GMTs return on assets so small?"

Good questions..

Are you referring LEK to low yield?

The market seems to be pricing this stock at a higher P/E because of what ARG is also starting to call land use congestion.

The market seems to have priced its rise from the Low 1's to the Mid 2's on that very basis.

Maybe the market knew years ago that logistics was the back bone of an economy.

You need a banking system but you need that logistic warehouse space built to do the heavy lifting.

[LaserEyeKiwi]

33 Bowen street - sold to private investors in 2019 after getting a big upgrade to 100% NBS EQ rating in 2015 - Ministry of education HQ. Today the building has been deemed to only meet 25% of safety standard using updated EQ seismic rules, Ministry of Education no longer lettting staff in building.

Brutal.

Companies really should be reducing exposure to wellington office towers due to these sort of seismic risk, especially if they have already received a good seismic rating under the new rules (as they could change again in future) .

[Waltzing]

Agreed LEK... unless they do a Tokyo and put them all on big Rollers and springs...

[winner69]

33 Bowen street - sold to private investors in 2019 after getting a big upgrade to 100% NBS EQ rating in 2015 - Ministry of education HQ. Today the building has been deemed to only meet 25% of safety standard using updated EQ seismic rules, Ministry of Education no longer lettting staff in building.

Brutal.

Companies really should be reducing exposure to wellington office towers due to these sort of seismic risk, especially if they have already received a good seismic rating under the new rules (as they could change again in future) .

Seems like one building a week becomes 'unsafe'.... wonder how many more

Worry is if the powers to be in other parts of the country start putting more effort into enforcing NBSs .... betcha many Auckland buildings are 'dodgy' under the new standards

[Waltzing]

Big investment needed in Springing them and then increasing Depreciation rates which are to low already.

Removing depreciation was a big mistake and now they need to create big tax incentives to re engineer before its to late.

Oh hang on that would create more TAX LOOP HOLES!

and get rid of tax reval's in P&L's

who was that accounting genius..

Our buildings are worth 200 Million more this year ... but they might fall down and kill everyone in them any time...

[LaserEyeKiwi]

RBNZ sees 3.9% in June 2023 as new peak for OCR, up from 3.5%.

Using the typical 150-200 basis point spread between OCR and typical 1-2 year mortgage rate from major banks, likely we will see 6.5-7% mortgage rates in 12 months time, as well as term deposit rates of 5%+

The other interesting news from today is it appears all the OCR raises will be front loaded, with 3.4% expected rate by December this year.

[LaserEyeKiwi]

Seems like one building a week becomes 'unsafe'.... wonder how many more

Worry is if the powers to be in other parts of the country start putting more effort into enforcing NBSs .... betcha many Auckland buildings are 'dodgy' under the new standards

Probably not a huge issue, as Auckland is in the “Low” risk seismic zone, so that greatly reduces design requirements when establishing a buildings EQ safety rating.

also the MBIE deadline for Auckland council to identify EQ prone buildings is 2032, and Auckland building owners will have 35 years to bring their buildings up to standard. So not until year 2067. (Hilarious I Know)

13843

[troyvdh]

How many property trusts are buying back there own shares.
I understand that pfi has returned 11 % compounding since inception.

[LaserEyeKiwi]

How many property trusts are buying back there own shares.

Should be a lot more if they truly feel they are undervalued.

[Waltzing]

"term deposit rates of 5%+"

perfect LEK ...

could be a bit of a smash up here in the next year or so but should recover in about Yn?

still PIE should get you a better return than 5 % TD

[LaserEyeKiwi]

Weekly Update:

More red. Stride & Kiwi reported, increasing NTAs (All have now reported, all recorded valuation uplifts). OCR (& peak expected OCR) lifted 0.5%.

property stocks outperformed the NZX by 0.5% this week.

I think still more pain ahead for the low yielding names with bank term deposits soaring well past their gross payout ratios.

13849

[LaserEyeKiwi]

From Interest:


But first, the consumer inflation measure the US Fed watches most closely, the PCE (https://www.bea.gov/news/2022/personal-income-and-outlays-april-2022), dipped slightly in April, 'down' to 6.3% from March's +6.6%. Excluding food and fuel, it recorded its lowest level of the year, down to 4.9%. The same data showed that inflation-adjusted personal incomes were unchanged but consumption expenditures rose. That is the fourth straight rising month. The financial markets like that consumers are continuing their spending a good levels and Wall Street rose strongly to book a better-than-average weekly gain.

[Waltzing]

Looking for a 1.10 on ARG ..and should show some up side in about 3 to 5 years

[LaserEyeKiwi]

Looking for a 1.10 on ARG ..and should show some up side in about 3 to 5 years

One would think a long term (decades) dollar cost averaging & dividend reinvestment plan would work quite well for investing in this sector. Though as one approached the end of their investment plan (maybe diversifying into capital protected assets for retirement, or other intended use for funds) one would want to try and pick the top of the cycle to exit (easier said than done, but seems somewhat more predictable for commercial property sector than others)

[Waltzing]

The peak came and went in a matter of 6 short months...

and really while one knew this was happening in theory it was hard to except as a certainty.

MR B did just that.

5 years till the next big super cycle if they get inflation back under control... IF!

That means a big change to energy supply globally.

[Beagle]

Some of these companies are trading at huge discounts to NTA though and we've seen 50 bps come off long term bond rates and no corresponding bounce back in the share prices. Might engage my sniffer and have a good dig in this sector in next couple of weeks. Been accumulating ARG as you know. Pretty sure there might be another one worth accumulating too while its cheap.

[Waltzing]

"50 bps come off long term bond rates and no corresponding bounce back in the share prices"

YES and in the US markets well under 3.

Could go on for who knows how long.

The trigger is more likely to come some time in the future in the US markets giving a direction for other markets such as NZ.

Actually just rechecked the chart and in Sep/Oct 2019 up at 1.48 ish....

still back in 16 - to late 18 sitting in the 1.10's.

Their performance has increased since then and moving to more commercial.

[BlackPeter]

"50 bps come off long term bond rates and no corresponding bounce back in the share prices"

YES and in the US markets well under 3.

Could go on for who knows how long.

The trigger is more likely to come some time in the future in the US markets giving a direction for other markets such as NZ.

Actually just rechecked the chart and in Sep/Oct 2019 up at 1.48 ish....

still back in 16 - to late 18 sitting in the 1.10's.

Their performance has increased since then and moving to more commercial.




True, however - don't forget: The performance you measure is backward looking, while the market is forward looking.

Mr. Market still might expect a handful of potholes in the road before property go up again (like interest rates rising, industry and customer needs changing, real estate market tanking, EQ-ratings of existing building stock being downgraded). Is he right? I don't know, though they say he always is ...

[Waltzing]

There is a very good reason MR B is buying PIE ARG..

Looks like the big boys KPG , GMT have the balance sheets to go forward with projects but the smaller building companies of 2 share holders are in the for a hard time.

https://www.stuff.co.nz/business/128740312/construction-probably-entering-bust-cycle-with-92-companies-liquidated-this-year

[Rawz]

Some of these companies are trading at huge discounts to NTA though and we've seen 50 bps come off long term bond rates and no corresponding bounce back in the share prices. Might engage my sniffer and have a good dig in this sector in next couple of weeks. Been accumulating ARG as you know. Pretty sure there might be another one worth accumulating too while its cheap.

Who is the other one?? Surely.. no it couldn’t be.. KPG? Na can’t be

[Beagle]

https://www.youtube.com/watch?v=o6PmtQ2rylE Notice how Beagle's don't bark while they're busy digging :cool:

[LaserEyeKiwi]

Weekly update:

Our basket of property stocks was up 2% this week, but still underperformed the NZX50 by 120 basis points (NZX50 was up 3.2% for the week)

Looking at the discount to NTA, the average discount may have bottomed out last week, although it’s too early to tell (one week does not make a trend after all). Will elaborate more in a following post.

13866

[LaserEyeKiwi]

Discount to NTA trend:

13868

[winner69]

Discount to NTA trend:

13868

May have bottomed out. The 10 year govt stock has 'stabilised' the last few weeks a bit low below the highs of early way

where do you see that discount to NTA in say six month times?

[fungus pudding]

May have bottomed out. The 10 year govt stock has 'stabilised' the last few weeks a bit low below the highs of early way

where do you see that discount to NTA in say six month times?

What will the replacement cost of building be next year? That might help with your answer.

[LaserEyeKiwi]

GMT CEO stepping down at end of year.

[Waltzing]

Looks like the auckland drift south for commercial property is gaining steam..

https://www.stuff.co.nz/waikato-times/news/128880708/first-sleepyhead-now-saito--why-auckland-companies-are-moving-south

US 10 yr on the rise again.

[Waltzing]

Here you go LEK.

more news on KPG you probably already know about.

https://www.stuff.co.nz/pou-tiaki/128903210/iwis-big-cbd-plan-30year-vision-to-make-central-hamilton-worldclass

[LaserEyeKiwi]

Weekly update:

Our basket of stocks down on average 1.2% this week, but at least it outperformed the NZX50 which was down 2.5%.

note: KPG, ARG & VHP went ex-div this week (which further emphasizes the relative out-performance this week).

13884

[LaserEyeKiwi]

Here you go LEK.

more news on KPG you probably already know about.

https://www.stuff.co.nz/pou-tiaki/128903210/iwis-big-cbd-plan-30year-vision-to-make-central-hamilton-worldclass

Thanks for sharing - hadn’t seen any renders of the plans before. It’s not on KPG’s near term roadmap which is focused on the new Drury mixed use town centre, and intensifying Sylvia Park & LynnMall with new residential & office towers (and new large format retail stores beside IKEA).

[Waltzing]

LEK though they already released info for more MIX development in HAM CBD around centre place?

lost track, no details yet?

[LaserEyeKiwi]

LEK though they already released info for more MIX development in HAM CBD around centre place?

lost track, no details yet?

Here’s the original announcement from April 1st last year:

https://www.nzx.com/announcements/370146

[Waltzing]

Thanks LEK....

looks like a Long March... 100 year plan.

They are in plan development mode then for the Ham CBD....

Notice that the building actually has some leaks when it rains..

[winner69]

As govt 10 goes over 4.0% listed property stocks plummet even further

Argosy down 3%, Kiwi down 3% etc etc

AS expected .... and more to come I reckon

Dreaming of excess returns one day

[winner69]

Updated my trusty model of NPF v 10 year govt stocked - trusty because its has kept me out this sector for a while now - and share prices have tumbled

The 10 year rate still going up and share prices still going down ..... but listed property stocks are even more over priced than they were a month ago (based on my trusty model)

I hear your comments about markets being forward looking and interest rates are way ahead of themselves and they'll be coming down soon etc etc but at the end of the day share prices continue to fall

So I'll stick to what my trusty model says and stay out in the meantime ..... but dream of future riches some time ..... but maybe some time off yet

[LaserEyeKiwi]

Updated my trusty model of NPF v 10 year govt stocked - trusty because its has kept me out this sector for a while now - and share prices have tumbled

The 10 year rate still going up and share prices still going down ..... but listed property stocks are even more over priced than they were a month ago (based on my trusty model)

I hear your comments about markets being forward looking and interest rates are way ahead of themselves and they'll be coming down soon etc etc but at the end of the day share prices continue to fall

So I'll stick to what my trusty model says and stay out in the meantime ..... but dream of future riches some time ..... but maybe some time off yet

Property stocks outperforming the NZX50 so far today. But nowhere outside of cash is safe from the red.

[LaserEyeKiwi]

Worthy of a mid-week update after just 2 days trading:

- property stocks holding up slightly better than the NZX50
- Multiple names trading well over 30% discount to NTA, with ~35% NTA discounts (!) for IPL & KPG
- At least one Gross Yield now well over 7% (KPG - 7.4%)
- At least one bank now offering a 4% one year term deposit (SBS), with average rate for all banks sitting around 3.5%

13900

[LaserEyeKiwi]

Really more of these companies should be considering share buybacks at these levels. Private equity will be sniffing around as well if this continues.

[BlackPeter]

Worthy of a mid-week update after just 2 days trading:

- property stocks holding up slightly better than the NZX50
- Multiple names trading well over 30% discount to NTA, with ~35% NTA discounts (!) for IPL & KPG
- At least one Gross Yield now well over 7% (KPG - 7.4%)
- At least one bank now offering a 4% one year term deposit (SBS), with average rate for all banks sitting around 3.5%

13900

Cheers for the regular updates.

I guess the table just shows that NTA's are so terrible backward looking, while share prices are made by forward looking markets.

Backward looking NTA's are interesting and used to be accurate, but they are only moderately relevant for the future.

Only question in my view - how cloudy is the crystal ball of the forward looking markets?

I suspect it is as cloudy as anybody elses. Market expects property prices (and with that) NTA's to fall. That's what your table clearly shows. Time will tell how right market expectations are. Normally they are wrong, but we never know in advance how wrong they are.

[LaserEyeKiwi]

Cheers for the regular updates.

I guess the table just shows that NTA's are so terrible backward looking, while share prices are made by forward looking markets.

Backward looking NTA's are interesting and used to be accurate, but they are only moderately relevant for the future.

Only question in my view - how cloudy is the crystal ball of the forward looking markets?

I suspect it is as cloudy as anybody elses. Market expects property prices (and with that) NTA's to fall. That's what your table clearly shows. Time will tell how right market expectations are. Normally they are wrong, but we never know in advance how wrong they are.

No worries - do the updates for my own benefit as well of course!

The asset values of these companies have all been going up over the last few months, supported by rising income from those assets, as all these companies increase rents in line with CPI increases. Outside of cap rate changes, The only way these assets start getting valued lower on a real world basis any time soon is if inflation suddenly stops or they suddenly start seeing rising vacancies (none of which is happening….yet - recession would be a different story!)

here is how i see this playing out. Over the next 2-3 years the average rents will increase ~15% total (spurred by inflation). Inflation is eventually brought under control and comes back down to 4% or less. At that point OCR/interest rates fall, and cap rates/yields on property assets return to pre-inflationary levels. But the increased rents will remain at the new level (and will continue to increase at 3-4% going forward). In the end we are left with significantly higher income and significantly higher valued assets.

of course I could be wrong and a deep prolonged recession would definitely hurt in the short/medium term. But a high interest rate / high inflationary environment is very different from a high interest rate / low inflation environment.

(note: I still wouldn’t be investing in any of the property names with sub 4.5% yields currently, but thats more to do with my own preferences)

[BlackPeter]

Well the asset values of these companies have all been going up over the last few months, supported by rising income from those assets, as all these companies increase rents in line with CPI increases. The only way these assets start getting valued lower any time soon is if inflation suddenly stops or they suddenly start seeing rising vacancies (none of which is happening….yet)

As you say - yet.

Market seems to expect it though.

Interesting to study the great recession in Europe in the early thirties following the big bull run during the roaring 1920íes. Plenty of unpaid rents and subsequent vacant offices and storage halls after a time of plenty.

Obviously - nobody knows, whether and how history will rhyme this time ... but markets seem to have an inkling.

Long bull run - tick;
World wide pandemic - tick;
Rising inflation - tick;
World war looming - tick;
Debts spiralling out of control - tick;
Drop of property values? Well, we don't know yet, but markets considering this option ... ?

[LaserEyeKiwi]

As you say - yet.

Market seems to expect it though.

Interesting to study the great recession in Europe in the early thirties following the big bull run during the roaring 1920íes. Plenty of unpaid rents and subsequent vacant offices and storage halls after a time of plenty.

Obviously - nobody knows, whether and how history will rhyme this time ... but markets seem to have an inkling.

Long bull run - tick;
World wide pandemic - tick;
Rising inflation - tick;
World war looming - tick;
Drop of property values? Well, we don't know yet, but markets considering this option ... ?

Could well be the case, you never can know.

Thankfully our commercial property sector in NZ is nowhere near the same bubble territory as residential was/is. If I didn’t have relatives living in my residential investment property I would have sold up quite some time ago as the return on asset value is abysmal - I really don’t understand why anyone was buying residential investment properties over the last few years as it was all cashflow negative if financed at even just 60% gearing (just kidding - i know people were buying purely for capital gains).

[Waltzing]

Reserve Banks have more tools today to monitor economic information than in the 1930's.

They were flying blind in terms of knowing what there financial positions were and what their economies were actually doing.

The real question is what is QT going to do to the US market.

But commercial prop in NZ is highly defensive and the price of exports will surely be the number that prop's up the economy.

Governments often change in environments like this.

And business friendly policies will be promoted.

Since when has com prop been a short term trade? Not often.

[LaserEyeKiwi]

Reserve Banks have more tools today to monitor economic information than in the 1930's.

They were flying blind in terms of knowing what there financial positions were and what their economies were actually doing.

The real question is what is QT going to do to the US market.

But commercial prop in NZ is highly defensive and the price of exports will surely be the number that prop's up the economy.

Governments often change in environments like this.

And business friendly policies will be promoted.

Since when has com prop been a short term trade? Not often.

slightly off topic - but I remain super jealous of the US residential mortgage rates. It will actually play into their recovery for the better, because although there residential mortgage rates are spiking above 6% this week - it will have almost no impact on consumer sentiment or spending due to the fact nearly everyone is on 30 year fixed rates! So they could have 10% mortgage rates there and it wouldn’t really matter to anyone with an existing mortgage because they essentially never have to refix.

(I have an online friend who managed to refix for under 3% on his 30 year fixed rate mortgage last year - he is now set for life. He finds it most bizarre that most NZ mortgages are only fixed for 2 years). So there is of course an immediate impact on new mortgage lending though (which has fallen off a cliff) so not good for there house builders / real estate industry.

[Waltzing]

While off topic its a very interesting feature of the lending environment and the margins for banks LEK.

[Sideshow Bob]

On the same subject, a huge proportion of NZ mortgages are 1 or 2 years. One of the banks here offered a 7-year rate, which they stopped recently. It was just that they weren't lending on it, but they hadn't had an inquiry from anyone for it for 18 months!! :ohmy:

[Waltzing]

Is that a good thing? the US home buyer would perhaps not agree.

[Waltzing]

ARG 113....

what a day boys and girls , what a day...:eek2:

[LaserEyeKiwi]

Currently our basket of property stocks is exactly matching the NZX50 weekly performance: down 6.3%

[lawson]

As Jack Bogle once said "Don't just do something, stand there!" prices have been very tempting for sometime but so far I've managed to do nothing and hopefully the reward for doing nothing will continue to outperform as these prices come down.

I understand the fact that these are bond proxies as sentiment and demand is driven by how their yield stacks up against other yields available. This week the ASB put out a 5 year fixed rate note at 5.524% and their credit rating is pretty good, they accepted 7.5 x oversubscription and still had to scale a little such was demand so I can see the property stocks as bond proxies have some stiff competition for the money available and that will continue but 5 years from now the ASB Note will, if we are very lucky have just held up against inflation over that period where I think the property stocks especially if they continue to cheapen stack up well as you get your yield and also a shot at capital appreciation something bonds/notes can not give but you have to accept the risk of capital loss too.

[Waltzing]

perfectly timed, just standing there!

[LaserEyeKiwi]

Weekly update - and what a savage week it was!:

The basket of 8 property stocks managed to outperform the NZX50 (-4.5% vs -4.9%)

Two names, SPG & KPG, now yielding over 7%.

13906

[Waltzing]

Great table! have you extened the data table monthly to give you a trend for charting?

although MS give automatic daily updates in the new formulas which you can automate with VBA.

im sure your all aware of the new functionality in 365.

[winner69]

Some might find this interesting. Concentrates on one REIT but a lot of numbers and trends of REITs in the US ….says industrial ones facing headwinds

https://seekingalpha.com/article/4519065-stag-4-8-percent-yield-3-risks-drive-price-lower

[Waltzing]

Winner(n) NZ industrials in Central North Land are by an large servicing NZ export industries and demand for NZ food exports likely to decrease?

These com props service the heart lands productive export sectors. NZ may find that its exports save the day for the whole economy yet again?

[LaserEyeKiwi]

Winner(n) NZ industrials in Central North Land are by an large servicing NZ export industries and demand for NZ food exports likely to decrease?

These com props service the heart lands productive export sectors. NZ may find that its exports save the day for the whole economy yet again?

I know pricing may change, but has demand for essential food items (dairy/meat) ever actually decreased in volume significantly for NZ?

[Waltzing]

Going to be very interesting LEK to see where export commodities and future prices are for the next 12 months.

[LaserEyeKiwi]

Some might find this interesting. Concentrates on one REIT but a lot of numbers and trends of REITs in the US ….says industrial ones facing headwinds

https://seekingalpha.com/article/4519065-stag-4-8-percent-yield-3-risks-drive-price-lower

It’s once again good to know that our listed property companies have gearing ratios significantly lower than the average American listed REITs. Currently sitting at ~30% debt-to-assets, and all with average interest rates at significantly lower levels than the current market.

[Waltzing]

as you say LEK the NZ market is a very different animal to the US one.

[lawson]

It’s once again good to know that our listed property companies have gearing ratios significantly lower than the average American listed REITs. Currently sitting at ~30% debt-to-assets, and all with average interest rates at significantly lower levels than the current market.

Very true and also as the article mentions the big headwind facing industrial Reits in the USA is that Amazon had over-stocked and taken on more warehousing than it needed during Covid lockdowns and now needs to unwind all of that. So some of their factors are very market specific and don't apply here.

[winner69]

Do you guys subscribe to this

https://www.jll.nz/en/trends-and-insights/research/industrial-market-snapshot?utm_campaign=AP-NZ-RES-Research-Market%20Snapshots%202Q2022-0622-Campaign&utm_medium=email&utm_source=Eloqua&utm_term=3204359

[LaserEyeKiwi]

Do you guys subscribe to this

https://www.jll.nz/en/trends-and-insights/research/industrial-market-snapshot?utm_campaign=AP-NZ-RES-Research-Market%20Snapshots%202Q2022-0622-Campaign&utm_medium=email&utm_source=Eloqua&utm_term=3204359

no, but that’s an interesting chart on that landing page.

[Waltzing]

Winner(n) only interested in the occupation rates of ARG, GMT and maybe sometime in the future KPG....maybe

[Waltzing]

Bit of a dead cat bounce here or real value?

never got to 1.10 .... bugger...

[winner69]

Bit of a dead cat bounce here or real value?

never got to 1.10 .... bugger...

The tide has stopped rushing out waltz ....its turned big time ..... and will the waves will wash ashore to the excitement of those waiting ..... but they would have missed out on the best part of the bounce

Translation - its all up from here

[LaserEyeKiwi]

Weekly update:

13936

[Waltzing]

well Winner(n) hope that tide doesnt come in to quick. :eek2:

[LaserEyeKiwi]

Interestingly the NZ 10 year has fallen off a cliff over the last week, down from 4.25% to 3.6% currently. Really quite remarkable.

[winner69]

Interestingly the NZ 10 year has fallen off a cliff over the last week, down from 4.25% to 3.6% currently. Really quite remarkable.

Always good when BONDS roll over and fall off the cliff …... Big win for equities.

[troyvdh]

Am I correct in thinking that given construction costs in general have increased by say 20 % over the past 12 months that existing property entities are due for re rating ?.
Yesterday I had a conversation with a construction foreman employed by one of the bigger commercial building companies in CHCH...he said more than one project was on hold...Im talking millions.

[fungus pudding]

Am I correct in thinking that given construction costs in general have increased by say 20 % over the past 12 months that existing property entities are due for re rating ?.
Yesterday I had a conversation with a construction foreman employed by one of the bigger commercial building companies in CHCH...he said more than one project was on hold...Im talking millions.

You are correct. Replacement costs rise and existing buildings will always follow.

[LaserEyeKiwi]

ANZ cutting 2 yr interest rate today from 5.8% down to 5.45%. Still not as low as heartlands 5.29% rate (which is online only), but perhaps the first sign that mortgage rates may not be heading too much higher any time soon. Also might be a bit of price discovery going on and maybe they had stretched the maximum margin over the OCR & wholesale rates that the market would tolerate.

[LaserEyeKiwi]

ACC upping there holdings in PFI from 6.4% to 7.4%

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/PFI/394899/374165.pdf

[troyvdh]

Yeah I noticed that....Ive been buying a few as well...

[LaserEyeKiwi]

Weekly Update:

13951

[Rawz]

How do you calculate KPG gross dividend yield?

[Baa_Baa]

How do you calculate KPG gross dividend yield? Looks like it's straight from NZX (https://www.nzx.com/instruments/KPG)

[ithaka]

Can someone please help me understand how NZX arrives at gross dividend yield for IPL of 5.635%?
By my calculations it should be (1.975*4)+.331+.338+.307+.365=9.241/1.69 = 5.468%

[Raven74]

Can someone please help me understand how NZX arrives at gross dividend yield for IPL of 5.635%?
By my calculations it should be (1.975*4)+.331+.338+.307+.365=9.241/1.69 = 5.468%
Calculated from previous days closing.
9.241/1.64=5.635%

[ithaka]

Calculated from previous days closing.
9.241/1.64=5.635%
Thanks. So simple. Saturday obviously not updated with Friday's close.

[winner69]

LEK's update highlights the large discounts to NTA

Divie yields don't look too bad but if they were trading at NTA yields would be

GMT 2.5%
VHP 3.2%
PFI 3.3%
PCT 4.5%
ARG 4.1%
IPL 4.1%
SPG 5.2%
KPG 4.9%

Not that great when looking at it this way

Must mean something .... wonder what?

[Rawz]

Means NTA doesn’t mean much and should price these reits on current dividend and forecast div growth rate?

[Waltzing]

market pricing in recession.

[LaserEyeKiwi]

Weekly Update:

13973

[LaserEyeKiwi]

VHP reports a 3% / $85m revaluation gain for 6 months ending June:

https://www.nzx.com/announcements/395523

[LaserEyeKiwi]

Weekly Update:

14004

[LaserEyeKiwi]

I see now after reading their annual report why Goodman (GMT) has such a terrible operational return on assets: it is getting absolutely raped by the annual “management fees: of almost 1% of the asset.

[Waltzing]

LEK join the management team!!!!

its been a great trade from 1.20...

[winner69]

Everything going gangbusters …even ARG 20% up from its lows

I think LEK needs to give us a thrill and add another column to his weekly table …GAIN FROM RECENT LOW

That be good stuff

[winner69]

Here's how property stocks gone lately

On average 11.3% up from 26 week lows and 6.7% up on 4 week lows

Sector on fire

Why is it that whatever you look at with this group of stocks KPG is always the laggard

[RTM]

Here's how property stocks gone lately

On average 11.3% up from 26 week lows and 6.7% up on 4 week lows

Sector on fire

Why is it that whatever you look at with this group of stocks KPG is always the laggard

Suggest you check with Beagle. He will explain it to you.

[Waltzing]

MR B's take on KPG ...

sweet little lies...

https://www.youtube.com/watch?v=uCGD9dT12C0

[LaserEyeKiwi]

Weekly Update:

(Will modify a bit next week, bring in some High / Low comparisons like Winner suggested)

14020