KPG - Kiwi Property Group Limited

[winner69]

Its all go for Drury

http://nzx-prod-s7fsd7f98s.s3-websit...644/370009.pdf

[Lego_Man]

Indeed - and the irony is that due to the losses the bond market has suffered in 2022 so far, people are dumping their bond portfolios, when in fact they should be doing the opposite arguably. Investor psychology never fails to amuse.

Yep. Ignoring the incredibly rare defaults - with bonds, all you do is shift your nominal return through time. At the end, you always get your 100 bucks back.

Meanwhile Precinct just raised debt at 5.25% for 5 years, Mercury at 5.73%.

I would much rather own the bonds than the equity of any of these REITs - first security and a higher yield.

[Arbroath]

Yep. Ignoring the incredibly rare defaults - with bonds, all you do is shift your nominal return through time. At the end, you always get your 100 bucks back.

Meanwhile Precinct just raised debt at 5.25% for 5 years, Mercury at 5.73%.

I would much rather own the bonds than the equity of any of these REITs - first security and a higher yield.

Except you're wrong about the relative yields. The net yield on the equity is 4.6% for Precinct and for the newly issued bonds about 3.5% depending on your tax rate.

[LaserEyeKiwi]

BOOM! KPG gets DRURY sign off:

Kiwi Property gets approval for Drury development

6/5/2022, 9:23 am

Auckland Council has announced the approval of Kiwi Property’s Drury Private Plan Change application, paving the way for the creation of a major Green Star Community.

The successful application will unlock development at Kiwi Property’s 53-hectare site, which is set to be the location for the new Drury Town Centre, as outlined in the Drury-Opaheke Structure Plan. The company intends to create a thriving mixed-use community that will become a hub for the additional 60,000 people who are expected to call the area home over the next 25 years. Drury will be a transit-oriented development that brings together retail, office and residential, all within easy walking distance of each other and the new Drury Central Train Station, scheduled to open in 2025.

An earthworks consent has been issued by Auckland Council and this work is now underway, with the potential for construction of residential homes and large format retail to begin as early as 2023, pending funding.

Kiwi Property Chief Executive Officer, Clive Mackenzie, said Drury was poised to be a transformative project for the company.

“Kiwi Property’s strategy centers on the creation of connected mixed-use communities in key growth nodes. Drury will be the location of the third Auckland Metropolitan Centre in our portfolio, alongside Sylvia Park and New Lynn, offering an exciting range of future possibilities. The development is expected to unlock thousands of houses and new jobs, and generate significant value for the company for years to come."

ENDS

More details summarizing the Auckland council and central government funding for the area:

Auckland council has set aside $400m for local roads, parks and drainage at Drury over the next 10 years.

Central government has earmarked $2.4b for the area under its NZ upgrade infrastructure package, including $655m worth of upgrades to state highway 1 and the electrification of Kiwirail's Papakura-to-Pukekohe line.

There are also plans for a new $500m Drury central train station.

[Waltzing]

Gosh well there you go....

Big news.

[winner69]

Yield now close to 9%

Just trying to help the ramping

[Snoopy]

Yield now close to 9%

Just trying to help the ramping

....which will reduce as soon as KPG sells their Palmy and Christchurch Northlands Malls, which have the annoying and pesky habit of generating that stuff that the KPG board seem to treat with disdain - cash. Someone said the going rate for builders in Auckland is 100 bucks an hour now. So why not sell the malls and employ a whole lot of builders to dig some holes at Drury that might be covered over by buildings in a few years. That latter path sounds like a much higher cashflow option, provided you aren't worried about whether that cashflow has a positive or negative sign in front of it of course......

SNOOPY

[Beagle]

Yep. Ignoring the incredibly rare defaults - with bonds, all you do is shift your nominal return through time. At the end, you always get your 100 bucks back.

Meanwhile Precinct just raised debt at 5.25% for 5 years, Mercury at 5.73%.

I would much rather own the bonds than the equity of any of these REITs - first security and a higher yield.

I don't see it as a one or the other situation. Nothing wrong with a classic 60/40 equities / bonds portfolio now good quality bonds are paying over 5%.
I put my hand up for some of those Mercury bonds at 5.73%. That's a very, very attractive yield for a low risk utility bond.
Yes the gross yield on most REIT's is higher because they're issuing tax paid PIE returns but there's clear ongoing downside risk as aptly demonstrated by the recent share price performance of KPG which even on a day when they announced their much touted major development at Drury has been approved, went down 2.5 cents per share (2.4%).

....which will reduce as soon as KPG sells their Palmy and Christchurch Northlands Malls, which have the annoying and pesky habit of generating that stuff that the KPG board seem to treat with disdain - cash. Someone said the going rate for builders in Auckland is 100 bucks an hour now. So why not sell the malls and employ a whole lot of builders to dig some holes at Drury that might be covered over by buildings in a few years. That latter path sounds like a much higher cashflow option, provided you aren't worried about whether that cashflow has a positive or negative sign in front of it of course......
SNOOPY

LOL Classic post mate. That's the thing with these guys. They just keep building shiny new things at lower and lower net yields to investors and think they're doing a good job. I don't think I've ever read the term eps accretive in any of their presentations ?
What the heck is the point of building new shiny things if its eps dilutive ? I seriously wonder if management even understand these eps terms and if they do whether they're ever a consideration ?

Quite apart from whether new developments are eps accretive or dilutive rents don't seem to ever increase at anything like the inflation rate so the real winners with KPG properties are first and foremost management who keep patting themselves on the back with ever increasing pay and bonus rates and telling everyone what wonderful new facilities they've built and secondly all the tenants. You'd very easily be forgiven for thinking the interests of shareholders are subservient to all other stakeholders !

[LaserEyeKiwi]

I don't see it as a one or the other situation. Nothing wrong with a classic 60/40 equities / bonds portfolio now good quality bonds are paying over 5%.
I put my hand up for some of those Mercury bonds at 5.73%. That's a very, very attractive yield for a low risk utility bond.
Yes the gross yield on most REIT's is higher because they're issuing tax paid PIE returns but there's clear ongoing downside risk as aptly demonstrated by the recent share price performance of KPG which even on a day when they announced their much touted major development at Drury has been approved, went down 2.5 cents per share (2.4%).

LOL Classic post mate. That's the thing with these guys. They just keep building shiny new things at lower and lower net yields to investors and think they're doing a good job. I don't think I've ever read the term eps accretive in any of their presentations ?
What the heck is the point of building new shiny things if its eps dilutive ? I seriously wonder if management even understand these eps terms and if they do whether they're ever a consideration ?

Quite apart from whether new developments are eps accretive or dilutive rents don't seem to ever increase at anything like the inflation rate so the real winners with KPG properties are first and foremost management who keep patting themselves on the back with ever increasing pay and bonus rates and telling everyone what wonderful new facilities they've built and secondly all the tenants. You'd very easily be forgiven for thinking the interests of shareholders are subservient to all other stakeholders !

Seems clear to me - long term rising operating earnings, while also having gotten rid of some older asests in high earthquake risk areas over last 5 years.

2017: $78.0 million
2018: $94.7 million
2019: $91.6 million
2020: $102.2 million
2021: $89.4 million (includes $15.2 million in covid rent abatements)

2022: on track for $105 million+ (1st half was $48 million and included $7.4 million in covid rent abatements, 2nd half is over and will be reported in a few weeks time.)

[Monarch]

With the NTA discount hitting fresh highs, I hope that management seriously consider a buyback of some sort. If they actually believe the current NTA is an honest valuation of the company's assets then how can they go wrong buying them back, the NTA accretion would be immense. By my math, at the current NTA and price a buyback of 10% of the shares issued would allow an 11% higher dividend per share while keeping the total dividend expense constant. Also NTA accretive, taking NTA from 1.42 to 1.467.