Kiwi Property stepped-up its portfolio rebalancing programme in FY21, with the aim of reducing the company’s exposure to traditional retail and recycling capital to help fund its growth pipeline.
“Kiwi Property’s future lies in the creation of mixed-use communities at our large, strategic landholdings. By diversifying our portfolio uses we intend to create a platform for accelerated growth.
I have that feeling I’ve heard similar stuff before .....like Oceania underwent ‘change in strategic direction’ and it’s taken an eternity for that to sort of play out and for the market to try and understand it.
Maybe KPG will also frustratingly underperform for a few years until the market sees the light of day
it sure does feel like OCA doesnt it. The valuations that KPG have are a little easier to follow though!
"t seems they have been substantially writing down the value of the dogs for the last 3 years, and recycling that capital will have a positive effect on NTA also."
it reminds me of ARG a few years ago and over the last 12 months KPG has started the move to concentrate on its core portfolio.
W(n) has the stats and while MR B paints the down side which is factual it should be the low at 1.10 or there abouts.
It took ARG a few years to turn it around and that took about 5 years.
Most of you will be investors unlike our small team which is using markets to test transactional software.
Surely your view as mostly NZ citizens is to look at your country over a 10 year horizon and GMT, ARG , PCT and KPG are defensive stocks that have 20 year or more investment strategies.
Mr B has highlighted they have possibly not managed the asset portfolio very well to say the least.
Jim dog - your comments re capitalisation rates are interesting
What do you make of this historical chart from recent preso?
Rates declining over the years except in retail. Do valuers see retail assets as increasingly riskier or something?
Whatever quite a fascinating chart
it is a fascinating chart. essentially what that chart is saying is that pure retail rental return is stable and/or increasing, while the underlying asset value isnt increasing OR that the underlying asset price is decreasing and rental is staying the same.
i can tell you that rental rates are increasing right across the country, therefore the underlying assets will appreciate. The majority of KPG assets are in Auckland, you cant tell me that the holdings havent increased substantially since early 2020? when the valuers decided to change cap rate for sylvia from 5.38 to 5.50.
I definitely think this cap rate that theyve used is skewed by the “dogs”, centre place, plaza.
Like i said before get those out of the portfolio and things will be back on track.
I do think there is a lot of “death of bricks and mortar” entrenched in valuers minds, and like another poster pointed out whats happened to malls in america.
Is that real though? Given what we are seeing in retail right across the board , does anyone here actually believe that?
”click and brick” is actually the new model. Every retailer worth their salt in NZ is embracing the need for both and creating synergys to make each work for each other.
Thanks for that jimdog. I know you have shops around many parts of the country so i am curious to hear any insights as to why the value of these regional malls have declined so much ?
Have they not invested enough to keep them modern and fresh ?
Is this the result of competitive pressure from other malls in those regions ?
Is this a retail regional problem specific to those regions in question ?
And finally, has their management of these malls been professional and competent ?
Any thoughts you'd care to share would be really appreciated.
On the cap rate thing for Sylvia Park in particular, yes I think there is "retail bias" from the Valuers there. Cap rate of over 5% seems really illogical for an asset of that quality.
Last edited by Beagle; 21-06-2021 at 10:09 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Thanks for that jimdog. I know you have shops around many parts of the country so i am curious to hear any insights as to why the value of these regional malls have declined so much ?
Have they not invested enough to keep them modern and fresh ?
Is this the result of competitive pressure from other malls in those regions ?
Is this a retail regional problem specific to those regions in question ?
And finally, has their management of these malls been professional and competent ?
Any thoughts you'd care to share would be really appreciated.
On the cap rate thing for Sylvia Park in particular, yes I think there is "retail bias" from the Valuers there. Cap rate of over 5% seems really illogical for an asset of that quality.
I think we need to view each of those 3 in isolation.
Centre place north - i can speak with certainty around this as I live in Hamilton, basically the Base and chartwell have both affected the inner city shopping, much better parking in both.
I think selling this for a loss would be short sighted as there a huge amount of inner city developments going on to revitalise the CBD, and alot of empty shops are being earthquake strengthened and converted to apartments so this location will appreciate in value.
Northlands in Chch - very interesting here, i have recently purchased a building within 500m if this development and the cap rate is 5%!!! after completing this sale, the real estate rang me and asked if id sell to the neighbour for a quick $500k profit? (i said no, but would have meant a 4% cap rate) this mall is in the most affluent part of Christchurch and I cant understand why they have written the value down, unless of course they over capitalised when developing (surely not?). Maybe there is an aversion to the quakes here so that valuers suppress the value and therefore the cap rate is higher?
The plaza - Palmy is a strange case. The mall itself is very run down, but i think its more a reflection of the region/city as a whole. My impression is that the Uni isnt as well attended as it used to be, with massey having sites around the country, and potentially a lower socio economic effect in that region. I dont really see palmy fitting into their portfolio and rightly so they are disposing.
Another factor to take into account regarding valuations, cap rates is a lot of money is leaving residential due to the interest deductibility legislation and heading towards commercial property at all ends of the price continuum and this is massively impacting asking prices to the upside.
Thanks for your posts Jimdog! Appreciate your thoughts.
Like you have pointed out, how has the Sylvia park cap rate increased?? Every time I go there it is packed. Never a shop empty unless it is being refurbished. How much of the KPG retail portfolio has been unfairly punished because of COVID and/or the overseas mall situation. The Base valuation has been dropping, cap rate at 6.38% Could/should it be in line with Sylvia park cap rate of 5.50% given it is Hamilton's best mall with room to expand into the mixed use model?
Might go back to accumulating more, if it goes low $1.10's I certainly will. Feel like NTA will continue to increase once the perception of (quality) retail brick and mortar catches up to reality.
Does anyone have on hand the cap rates of the other property funds? Or the market avg? I assume it is around 5% or just under?
I think we need to view each of those 3 in isolation.
Centre place north - i can speak with certainty around this as I live in Hamilton, basically the Base and chartwell have both affected the inner city shopping, much better parking in both.
I think selling this for a loss would be short sighted as there a huge amount of inner city developments going on to revitalise the CBD, and alot of empty shops are being earthquake strengthened and converted to apartments so this location will appreciate in value.
Northlands in Chch - very interesting here, i have recently purchased a building within 500m if this development and the cap rate is 5%!!! after completing this sale, the real estate rang me and asked if id sell to the neighbour for a quick $500k profit? (i said no, but would have meant a 4% cap rate) this mall is in the most affluent part of Christchurch and I cant understand why they have written the value down, unless of course they over capitalised when developing (surely not?). Maybe there is an aversion to the quakes here so that valuers suppress the value and therefore the cap rate is higher?
The plaza - Palmy is a strange case. The mall itself is very run down, but i think its more a reflection of the region/city as a whole. My impression is that the Uni isnt as well attended as it used to be, with massey having sites around the country, and potentially a lower socio economic effect in that region. I dont really see palmy fitting into their portfolio and rightly so they are disposing.
Another factor to take into account regarding valuations, cap rates is a lot of money is leaving residential due to the interest deductibility legislation and heading towards commercial property at all ends of the price continuum and this is massively impacting asking prices to the upside.
Just reading Beagle's post that you have shops around many parts of the country.
How do listed property trusts/companies compare against owning in your own right.
What are the advantages/disadvantages. A few years back you could get a similar yield for shares/units in a listed entity as you could buying an individual property so I always wondered what the advantages of buying individual properties were.
I am guessing control, leverage and the possibility of adding value if you know what you are doing.
Versus liquidity, diversification of property and tenancy risk and no management responsibilities.
I guess it is only hypothetical for me as I lack the capital and I am risk averse when it comes to investment. Any property I could afford probably would be risky.
Thanks mate, appreciate your thoughts. Agree centreplace is a great space in the heart of Hamilton and having been there a few times I totally hear you regarding parking ! Lack of investment in parking but also as you suggest, places like the base are a magnet for shoppers in north Hamilton and with abundant free parking too.
Palmy is another where I feel they could have done more and managed it better. It felt old and tired last time I was there 25 years ago !
I haven't been to the Chch one but "I get" the earthquake residual risk thing.
I need to mull this one over for a while. Its seems quite extraordinary that NTA was $1.34 5 years ago and is now only $1.36. Its really "quite something" to achieve that sort of return in 5 years against a backdrop of huge falls in cap rates. That's truly "remarkable". If I stick around (after stumbling into this value trap), I'll have some extremely tough questions for the directors at the annual meeting. The Beagle will be in maximum bark mode !!
Last edited by Beagle; 21-06-2021 at 10:51 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
1 also live in Hamilton and i gotta say that my friends and i very rarely go near the inner city of Hamilton,Centre Place included.
lI believe that there is a growing safety issue and despite the building of apartments etc,it's only going to get worse.
Originally Posted by winner69
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