Property Stocks

[Snoopy]

Just doing some background reading on BT Group plc Annual Report 2005and found the the following note on United States Generally Accepted Accounting Principles. I think it is of interest to property investors. I believe the NZ rules are similar to the UK rules in this instance

From p113

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(a) Sale and Leaseback of Properties

Under UK GAAP, the sale of BT's property portfolio is treated as a fixed asset disposal and the subsequent leaseback is an operating lease.

Under US GAAP, the transaction is regarded as financing and the land and buildings are recorded on the balance sheet at their net book value., an obliagtion equivalent to the cash proceeds is recognised and the gain on disposal is defered until the properties are vacated by BT.

(To convert accounts from NZ GAAP to US GAAP) rental payments paid by BT are reversed and replaced by a finance lease interest charge and a depreciation charge.

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Why is this of interest? It measn that companies that set out to square up their balance sheet by selling off properties and leasing them back (RBD, BRY come to mind) are effectively not allowed to do it if they were operating in the US!

SNOOPY

[karen1]

In today's Herald: http://www.nzherald.co.nz/business/n...ectid=10821019

Should holders be wary/watching closely?

[percy]

In today's Herald: http://www.nzherald.co.nz/business/n...ectid=10821019

Should holders be wary/watching closely?

For Goodman unit holders it is positive that management are looking after unit holders' best interests.
For PGC it looks as though "the trust" has gone out of Perpetual.Losing major client will mean Perpetual is a "dead duck".

[karen1]

Thanks Percy

[Billy Boy]

Bill English was saying this morning that he expects the current
global volatility to carry on for at least a decade.
So (IMO) divvy stocks are going to be the fashon to come.
I hold GMT, DNZ, ARG,. These are the shares I have held for about
3 years now. Price has gone up & down and it don't matter coz
those divvy's kept comming in. I get 8% - 10% on originial PIE, investment.
My strategy is to sell down most other stocks and beef up on LPT's.
They have never let me down
BB

[karen1]

Cheers BB, just wasn't sure if I saw an alarm bell in that article, but as Percy said good that GMT are looking after holders. And likewise, I have held GMT for a few years, and enjoy the divs!

[fungus pudding]

Bill English was saying this morning that he expects the current
global volatility to carry on for at least a decade.
So (IMO) divvy stocks are going to be the fashon to come.
I hold GMT, DNZ, ARG,. These are the shares I have held for about
3 years now. Price has gone up & down and it don't matter coz
those divvy's kept comming in. I get 8% - 10% on originial PIE, investment.
My strategy is to sell down most other stocks and beef up on LPT's.
They have never let me down
BB

Yep. they're not bad things. I'm a property investor, and the only shares I bother with are LPTs. I hold DNZ, Arg, Aug, Pfi, KIP, GMT and Ano. Just thought I'd buy a bunch rather than another building. They provide excellent extra income, especially as they are PIES. To date the capital growth hasn't been too flash - but it's such easy money, not having to deal with councils, valuers, tenants, insurance companies etc, that I'm not complaining at all.

[Billy Boy]

Hey !!!! (light bulb , light bulb )

Maybe they should make Mighty River Power, and the other SOE's
all, :-
PIES

cheers BB

[Anna Naum]

JB Were makes changes to ratings in REIT space

New Zealand: Real Estate: REITs - No growth in sight; lowering coverage view to Cautious

· No rental or valuation growth in sight: After incorporating revised Jones Lang LaSalle (JLL) sector forecasts and specific stock adjustments, we forecast EPU and DPU for NZ REITs to remain flat over the next few years with the only bright spots being premium Auckland CBD office and retail. There is similar message on valuations with no material cap rate contraction expected in FY13.
· NZ REITs fully valued: Following its rerating NZ REITs are trading in line with its long run average cash yield and slightly above its long run average to reported NTA. Moreover, our GS ECS Research team expects the current spread over long bonds to narrow to our target level (300bp) in 12 months.
· NZ REIT coverage view lowered to Cautious from Neutral: This reflects a full sector valuation and no positive short term catalysts. In particular, our analysis suggests the next key sector drivers, being higher net rentals and strong property valuations, are unlikely to emerge in a noticeable way for NZ REITs in the next 12 months. We revise our NZ REITS 12-month target prices by -6% to +3%, and our FY12-15 EPS estimates by up to -/+3%.
· Retain Buy on DNZ: DNZ remains our preferred NZ REIT reflecting a solid tax paid yield, above average DPU growth, and supportive realizable NTA, which in turn creates opportunities for accretive portfolio and capital management initiatives.
· GMT down to Sell from Neutral: We downgrade GMT to Sell, driven by likely further share price headwinds from a low NTA with limited net absorption in Auckland industrial coupled with GMT’s relatively high land bank holding costs.
· KIP up to Neutral from Sell: We upgrade KIP to Neutral, underpinned by a tax paid yield of 6%, attractive exposures to prime Auckland CBD office and retail, plus issues surrounding problematic properties seem well understood.

[Billy Boy]

Tks Anna
For most people the Q. still remains. " Got $100K what do I do with it"
Banks. About = too, or slightly < all up inflation. Not counting tax
Finance Coys's. Too risky and not much better than Banks for the good ones.
Bonds. Not liquid enough, and devalued by inflation and tax.
Rental housing, Running about 4% - 5% Profit on average (Yes arguable). Reasonably inflation proof. And not about to fall over coz of Europe. Shortage now and shrinking.
Cost of new ?, very expensive. Mainly coz of Land, Local Body compliance and GST.
Share Market. Yoyo stuff, Not for the inexperenced.
Big worry ahead, INFLATION. We will not be immuned as we will import it, Mainly
underlying inflation. It's happening now !! CPI inflation will come later.
LPT,s. Will go up and down both in S/price and Divs, But will be there at the end.
Now I have made a few statements above. Please rip my post apart or add other
angles.

BB