Drury development: Auckland ratepayers could be stuck with multimillion-dollar infrastructure bill
https://www.nzherald.co.nz/business/...ectid=12451562
Some chit chat re Dury development.
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Drury development: Auckland ratepayers could be stuck with multimillion-dollar infrastructure bill
https://www.nzherald.co.nz/business/...ectid=12451562
Some chit chat re Dury development.
Could be a real fight to get this one going for the developers for sure. But south auckland has to development somewhere.
Its probably just the start of the who pays for what and when and how much.
Imagine if it gets the P/E of GMT.
With the bond yields due to rise it looks like the market want to hit this hard until the P/L shows it can handle the interest rate rises and the impact of inflation on retail demand.
Scooped up some more of these today at $1.16, surely the future isn't that dire for KPG. Maybe the best buy on the NZX at the moment...
so what does the council want exactly? For KPG to pay for all the infrastructure cost, and then also have KPG pay regular rates thereafter to the council for the “right” to use the infrastructure they themselves paid for upfront? If the council wants to collect rates to supply infrastructure services, one would expect they have to actually supply the infrastructure in the first place in some manner and not pass on 100% of the initial costs to developers.
council are on a hiding to nothing here. KPG wont agree to a loss making development.
councils just dont understand public companies the types of people employed by each is very very different.
shareholders wont like the ground work on this if it looks like a sink hole.
KPG will be better to move even farther south into the golden triangle.
Traffic volumes in the centre of the island will increase with the new ring roads around hamilton and Perry has been quick to start developments.
for the absurdities of local council thinking look no farther than the new demo bike access path in hamilton city.. deadly concrete tank obstacle courses.
design to kill a person on a bike if you ride to fast and cost of invasion proof pathways mega expensive.
Everyone is saying this is filthy dirt cheap, as cheap as chips, you can't go wrong...even I have fallen under the value spell.
You can't go wrong buying these we are all saying, the market must be absolutely nuts, but is it really ????
Why I'm not buying any more.
Property market has boomed over the last 5 years, listed, unlisted, retirement companies... you name it. Market has gone nuts...you simply can't go wrong in property in the last 5 years, surely ? Well I am sorry to say it but it seems you can go wrong.
So how have KPG gone in the last 5 years ?
http://nzx-prod-s7fsd7f98s.s3-websit...427/240301.pdf
NTA 5 years ago $1.34 Dividends per share 5 years ago 6.6 cps
NTA now $1.36, (has reduced materially in inflation adjusted terms). Dividends per share forecast this year At least 5.3 cps.
Priced for negative growth...yes...because that's what's been happening.
Nothing I heard in the most recent call indicated to me that have any tangible plan to get back to 6.95 cps in annual dividends pre covid in 2019.
Is KPG working ? Yes, for management and staff and tenants. Its been a lousy investment for shareholders in the last 5 years and has woefully underperformed the property market.
Cheap for good reasons in my opinion.
Why am I a shareholder ? Having zoomed out and looked at the 5 year picture I am not sure but there are only really three reasons. Hoping that the gap to NTA will close. I have too much cash and cash gives me almost no return. Maybe the annual cash dividend can get back to 6 cps and given its a PIE that's worth 9 cps to me and the gross yield is worth 7.7% to me, which is high for a property company.
Maybe they will get their act together in due course ? I'm not going to go down this rabbit hole any further than I already am. Already got one paw slightly burned so I will stop digging.
I have a very modest 2.1% portfolio allocation which I will hold and hope this comes right. I'm not adding to it and will put a 10% stop loss on it and if it hits that, I'm out.
Why has this so badly underperformed every other property and quasi property (retirement) company on the NZX over the last 5 years ?
What is managements plan to fix this ?
Why is the forecast dividend this year at a minimum of 5.3 cps so low compared to pre covid at 6.95 cps ?
What is managements plan to fix this ?
All I heard on the call is a change of direction with future property plans and trust us we know what we are doing.
What I find especially "interesting" with this one is that the NTA has gone backwards in real inflation adjusted terms and yet the market capitalization rates (cap rates) the valuers use has dropped a long way over the last 5 years which for every other property company has boosted their NTA, (e.g. ARG's NTA was $1.00 in March 2016 and is now $1.53)...just one example.
I very warmly welcome rebuttal and explanations from others as to why this has so badly underperformed the market in the last 5 years.
What caused all the excitement to drive the share price close to 170 in late 2019. Even a $200m capital raise at 158 didn't seem to dampen enthusiasm
Was it plummeting interest rates and the chase for yield or something?
Great post Beagle and good questions. I hope a KPG bull with more knowledge of KPGs portfolio can come in and shed some light on the situation.
I have heaps of these in my portfolio (10%), I dont have a rental property so I look at it as appropriate property exposure along with my OCA holding. Purchased the bulk under $0.90 last year. Then started to add more each time it dropped under $1.20 after the recovery to $1.30, with the most recent purchase being last week at $1.19. Now I am thinking ill sit on what I have and stop accumulating. Let the weighting drop as I buy other shares with each monthly pay. I have also just realized that the main reason for this investment was hoping for the NTA discount gap to close. Hmmm naughty me. Little other research was done other than looking at the property they own- which are quality, let's not forget that!!
Management are good operators.... they raised $200m in 2019 at $1.58 per share (how good). And another $200m odd before that in 2017 in the $1.30s. Now we can buy at $1.16.... The bulk of that money went into the Sylvia Park redevelopment + office tower which was completed around covid. Covid really did hurt the valuations, being retail. I wonder how much NTA value is to be unlocked there over the next 12 months? I also wonder if the Drury development potential is really reflected in the NTA?
Overall I am comfortable holding onto these for the following three reasons. May seem a bit simple but at the end of the day this is not a complicated company.
- Buying property in the golden triangle (being where the bulk of KPG properties are) under NTA value is good going. (Sorry, I can't answer why NTA has dropped over 5 years, was it just overvalued 5 years ago?)
- Drury is going to provide immense value gains over the next 10-15 years. Is this being reflected in NTA/share price?
- Management imo have the correct vision of the future with mixed use; retail, office, housing in the suburbs. As opposed to big CBD towers that require long commutes. When I saw ANZ take the naming rights+ floor space in the first tower at Sylvia park I saw that as a big endorsement of the model.
Thanks for your thoughts Rawz and I agree that its going to take time for their land holding at Drury to crystalize value.
Might be a good idea if we zoom out a little further and look at how they've gone over the last decade. https://kp-wordpress.s3.ap-southeast...-31-Mar-12.pdf Its interesting to note that annual dividends were 7 cps a decade ago. Hmmm.
NTA has gone up in the last decade so I suppose that's something.