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So just how much of APT do the Arabs end up with? I find it hard to tell from all the SSH notices. Is it the whole 50%? APT own some of the country's premium major commercial office towers. Sovereign Wealth Funds are going to be an increasing feature of the global investment climate, and I guess we should be thankful that they will help to sustain asset values. They might make me an offer for my house that is too good to refuse? But seriously, this type of source of funding is going to spark a lot of debate - look at the hysterical outbursts surrounding the Dubai approach to AIA, and the Hong Kong proposals for LPC.
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and getting cheaper.
I can't quite understand why these stocks a getting absolutely trashed. They are all trading enormously below NTA , have dividend yields in the 8-10% region depending on which one you choose. I just don't get it.
I rang my favourite commercial agent a few days ago about a commercial property in St Heliers ... long term bank tenant, decent quality offering. Vendor's expectation were a yield of around 7%. WHY ON EARTH would you buy something like this when you can buy a stock like ING Property Trust ( yield at 84c is 10.4% ) or Kiwi Income on a yield of over 8% that are both trading at about 70c in the $1 in term of NAV. Both are geared at around 30% , have long term interest rate hedges for 3-5 years at rates 2-3% below current borrowing costs. Their occupancy rates are between 97 and 100% and they both claim the portfolio's are around 5% under-rented.
They appear to me like the market is pricing in a dooms-day scenario where rents collapse by 20% , tenants start leaving in droves or going belly up and generally the NZ economy starts going backwards at an alarming rate. For anyone with anything more than a short term view they look great buying.
Disc: have purchased in recent days
30,000 AMP Office
18,500 Kiwi Income
20,000 ING Property
27,500 Goodman Property Trust
30,000 Kermadec Property Trust
9,800 Property for Industry
Yield over whole portfolio if divi's maintained at 2007 payout ..... 9.11% !!!
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I'd be careful about choosing one investment type (e.g. property trusts) over another, simply because they are a PIE. Very soon there are likely to be PIE's for every sort of investment, so wait a bit and pick up a PIE in the asset class you want.
As I understand it, one major benefit of PIE's would be for those eligible for income-tested benefits such as working for families tax-credits, DPB etc, as (at least to a limited extent), the income from PIE's appears to be excluded from the calculation of entitlement. Since the effective marginal tax rate for people under these circumstances are much normally much higher (50 - 80%?), they can achieve a significant improvement in net income by moving to PIE status investments.
Still, I'm a fan of property trusts at these prices too. APT would be my pick for now. PFI is always a good stalwart though and NAP a speculative pick as heavily discounted and now better structured to survive a downturn.
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I too am a fan of property trusts.
I feel the right time to buy is about now because of the yeild's.
I have just sold a comercial building and am looking to invest into
Prop Trusts because No Hassels. No worries about tennants, GST,
rates, matainance, Insurances, etc.. and at the present unit price
the return is better. And will still have a hedge against inflation.
Lizard
Whats you view on ING.
The only real criticism I can drup up is the some of their
buildingsare outdated. But of late they have spent some millions updating.
NAP...
too much leveraging in todays inviroment and that could be holding the
SP down. No imputations !!
KPF...
small but an up and comer
APT...
Solid as they ar mostly Gvt Departments. But not a good spread
across the prop sectors. Yeild lowest of all.
KIP...
Been volitile as of late. Insto's getting out. Not such a good yeild.
Other thoughts would be interesting
BB:)
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BB - I don't like ING, but it's hard to put my finger on exactly why. More just an overall impression over the years that their property trusts have been managed more to benefit the shareholders in ING themselves rather than for the benefit of unit holders in the underlying trusts. I was rather disappointed when they got their mitts on my old favourite, CHP (now IMP). Still hold some IMP though.
Agree with you that it is still the leverage (and quality of properties) not helping NAP, but the 50% discount to NTA is probably enough and the decline in share price seems to have stopped here. Also, proposed restructure of management fees is a big improvement and should improve cashflow. However, the discount on APT is now making them look comparatively more attractive - I guess it is factoring in a National govt and a decline in Wgtn CBD rentals.
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Great to see some good discussion on these. I have spent this evening analysing APT and ING ... written quite a good spreadsheet which is good for valuing the Net Asset Backing per share under various "what if" scenario's .... for your interest at the current share price of 84c for ING you are buying the whole portfolio on a blended yield of 10.29% !!!! APT at $1.07 ..... 8.28%. Just to stress , that's the cap rate of the buildings , not the dividend yield. Look at quality of AMP Office's portfolio and tell me that a cap rate of 8.28% is not great buying ... ING's is just plain cheap !!!
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Sorry ... APT at $1.07 is actually an implied cap rate 8.73% ... the 8.23% equates to paying $1.17 for the shares.
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Interesting calcs Gold Guru. Happy to wait a few days for you to finish off the rest of the trusts. ;)
I have been reading with interest the comparison of fee structures between the various trusts provided in the current Grant Samuels report provided to NAP holders. Superficially, APT has the lowest fees by a considerable margin, while IMP appears to have the highest. However, this is based on most recent year data and will vary considerably due to differences in performance fee structure - APT doesn't appear to have a performance fee component.
PFI probably has the lowest fee structure once performance fees are taken out. ING has only slightly higher base fees than APT (relative to gross rent) but also takes a performance fee. IMP seems to have nearly twice the base fees (as a % of gross rental) that PFI operates with and still includes a hefty performance fee. KIP also looks to be at the high end. GMT and the revised NAP holding the middle ground.
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Just done my calcs on Kermadec ( KPF ) and at 65c I calculate you are effectively buying the portfolio on a 10.65% cap rate. That is some 2.40% higher than the current valuations on their portfolio.
I see their is still very determined selling of ING , down to 81c now. With the AGM a few weeks away some pretty hard questions will be raised. The recent buy in Albany off PFI is questionable ... would have prefered they extended the buy-back at these prices, would have added more value IMHO.