KPG - Kiwi Property Group Limited

[Bjauck]

Whitcoulls?
Lotto?

Both are at Sylvia Park I am told.

[Beagle]

....................

[winner69]

Thanks for your feedback mate. Against a backdrop of substantially lower interest rates than that which prevailed 5 years ago it beggars belief the NTA was $1.34 then and is only $1.36 now. According to the Reserve Bank inflation calculator (housing index) $1.34 should be $1.98 now and using general inflation $1.45.

Ten years ago KPG was distributing 7 cps in annual dividends and adjusted for general inflation only if they were matching this today they would have annual dividends of 8 cps and they are forecasting just 5.3 cents per share.
https://www.rbnz.govt.nz/monetary-po...on-calculator/

KPG's NTA 10 years ago was $1 and its now $1.36, so that's a 36% gain in 10 years. The housing index suggests to match average house prices the NTA should have been $2.11.

As you've suggested commercial values are booming on the back of record low cap rates but KPG's huge reduction in annual dividends relative to where they were and their woeful underperformance in terms of capital growth appears grossly incongruous with the underlying trends in the overall property market and commercial property specifically.

I'm at a loss to explain their extremely poor performance ?. But things will be different going forward...or will they ?

the 5 Year Trend Statements in the AR aren't inspiring reading

You highlighted the words 'smoother returns' in one of their communications

They seem to have done a grand job in smoothing things in the last 5 years

[Beagle]

I should have done more research before I fell into the value trap, (not afterwards). Maybe the gap to NTA will close up somewhat and everything will be okay...

[winner69]

I should have done more research before I fell into the value trap, (not afterwards). Maybe the gap to NTA will close up somewhat and everything will be okay...

Safe as houses is Kiwi Property ....almost as safe as investing to the government

so you will be alright.

One of their bonds is yielding 1.0% and others 1.4% and 1.8%

And the Green Bonds at 2.0%

[kiwico]

There are plenty of them around. It's not as though they're in short supply.

Apostrophes seem to be buses. Not enought around when there should be some or far more than you need when they're not required.

[fungus pudding]

Apostrophes seem to be buses. Not enought around when there should be some or far more than you need when they're not required.

'Zactly. .

[jimdog31]

Thanks for your feedback mate. Against a backdrop of substantially lower interest rates than that which prevailed 5 years ago it beggars belief the NTA was $1.34 then and is only $1.36 now. According to the Reserve Bank inflation calculator (housing index) $1.34 should be $1.98 now and using general inflation $1.45.

Ten years ago KPG was distributing 7 cps in annual dividends and adjusted for general inflation only if they were matching this today they would have annual dividends of 8 cps and they are forecasting just 5.3 cents per share.
https://www.rbnz.govt.nz/monetary-po...on-calculator/

KPG's NTA 10 years ago was $1 and its now $1.36, so that's a 36% gain in 10 years. The housing index suggests to match average house prices the NTA should have been $2.11.

As you've suggested commercial values are booming on the back of record low cap rates but KPG's huge reduction in annual dividends relative to where they were and their woeful underperformance in terms of capital growth appears grossly incongruous with the underlying trends in the overall property market and commercial property specifically.

I'm at a loss to explain their extremely poor performance ?. But things will be different going forward...or will they ?

I too am at a loss other than its more a case of market sentiment than poor performance?

A few things id point out...

Capitalisation at 5.82% is super conservative given what the market is actually doing, talk to any commercial real estate agent and they will tell you in Auckland it has dropped substantially, and very swiftly, and all around the country its following suit. What effect will this have on the value when it hits the next valuation?

I think with a reduction in Capitalisation rate come Mar 2022 and you will see a substantial Lift in NTA. Precovid Cap rate for sylvia was 5.38% last valuation was 5.5%. Imagine if sylvia park (1/3 of assets) hit 5% cap rate (not outside the realms) ?

Looking through the property compendium for 2019 vs 2020 vs 2021

2019 2020 2021
Sylvia Park 955 982 1100
Syliva Lifestyle 77 74.3 86.5
Lynnmall 284 245 249
The Base 217.5 198 187.5
Westgate 90 79 88.5
Vero 450 445 500.5
ASB 230 238 260
Aurora 159.5 170 181.7
44 terrace 53.5 57.1 59.4
Other 125.2 154.6 190
Development 58.2 60 68
Plaza 207 170 ?
Northlands 247 195 ?
Centreplace 53.5 36.5 ?
Held for sale ? ? 347

Total 3207.4 3104.5 3318.1

It 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.

Dividend

I'll give them a pass on last year and accept the 5.15, given they gave concessions like everyone else. Next year though they have said,

"AFFO guidance for FY22 will be provided once the sale of The Plaza and Northlands has concluded, however based on current projections, next year’s dividend is expected to be no less than 5.30 cents per share [Note 4]."

There seems to be room for an upside there? Whats the plans for the $347 mill?

ACC

Pre covid (29 april 2016 last announcement) they were at 8.185% 104,473,105,

they then took advantage of the drop around covid and hit 9.206% 144,453,517, and then 10.463% 164,165,904

latest announcement (14 jun 2021) they are at 9.428% 148,034,507

So still 43,561,402 shares more than pre-covid.


Anyway, I truly believe NTA is way below what it actually should be and this will get rerated accordingly.

I think this would have to be the biggest bargain on NZX right now.

[winner69]

From KPG announcement -

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

[Beagle]

Thanks for sharing your perspective jimdog31.