Listed Property Trusts

[lakeside]

St Laurence experiences solid revaluation growth across portfolio

Active property investment vehicle St Laurence Property & Finance (SLPF) recorded a significant uplift in property valuations of more than 9.5% in the year to 31 March 2007.

Valuation increases resulted in unrealised revaluation gains of $26.7 million in the year to 31 March 2007. SLPF¡¦s investment property portfolio increased from $244.5 million to $306.0 million during the period through a combination of acquisition and valuation growth.

SLPF chairman Kevin Podmore says the continued increase in asset values is a reflection of strong demand for property assets in the commercial and industrial space. Prices have been driven higher by further local and international demand for New Zealand property overall, combined with robust underlying economic conditions.

Of the 26 properties in SLPF¡¦s portfolio, 12 properties showed valuation gains of more than 10%. Six of these properties demonstrated gains of more than 15%. SLPF¡¦s North Harbour property at 13 William Pickering Drive rose in value by 23.5%, from $6.7 million to $8.3 million, with several other Auckland properties recording increases of more than 10%.

Other significant performers included:
„_ SLPF¡¦s Repco property in Mt Wellington, Auckland which rose 15.5% to $22.4 million during the period;
„_ Cain Park in Penrose, Auckland which experienced a 14.1% lift in value from $9.1 million to $10.3 million;
„_ Eagle Technology House in Victoria Street, Wellington which rose in value by 11.5% from $19.2 million to $21.4 million; and
„_ The former Deloittes building in Molesworth Street, Thorndon, which experienced a 11.7% rise in value to $15.4 million.

Mr Podmore says increasing demand for industrial space is creating a number of development opportunities for SLPF in its existing property portfolio. ¡§We are actively pursuing these development opportunities and expect demand for future developments to continue as space in prominent locations becomes increasingly scarce.¡¨

Plans are currently underway for SLPF to design-build more than half the vacant development land to the rear of the Repco distribution centre in Mt Wellington, Auckland. This is expected to further increase the value of the property in the future. Other design-build opportunities within the portfolio include the Central Park industrial complex in Porirua, Wellington where a commitment has been recently secured to design and build a new warehouse and distribution centre for national furniture retailer Harvey Norman.

This is the first in what we hope to be a number of design-build developments on a site which is ideally located for companies looking to centralise their distribution and warehousing operations

¡§St Laurence Property & Finance¡¦s primary focus in 2008 is to continue to progress with the value-add opportunities already identified within the investment property portfolio. As well as this, we will continue to focus on our strategic property development assets, including our joint venture developments,¡¨ Mr Podmore says.

[rmbbrave]

'Own-your-own' gets property survey tick
5:00AM Monday June 18, 2007
By Anne Gibson


Listed property companies that own real estate they can develop are highly attractive and have the most potential in the sector, says broker Goldman Sachs JBWere.

And commercial real estate is favoured over retail or industrial property.

Analysts at Goldman Sachs JBWere have produced an in-depth analysis of the $6 billion listed property sector, and gave the highest ratings to companies or trusts that own land they can develop.

"We believe internal development opportunities should command a premium in the listed property vehicle sector," wrote analysts Shamubeel Eaqub and Matt Henry.

Kiwi Income Property Trust's ability to build offices at Sylvia Park made it an extremely attractive stock, they said.

Macquarie Goodman Property Trust's strong development pipeline gave it potential. And Property For Industry's significant number of development chances made it a drawcard.

Another criterion for potential winners is their mix of real estate. The analysts are picking stocks with large holdings of commercial real estate will do better than those with industrial or retail property.


"Industrial and retail properties tend to require redevelopment with higher frequency, shorter development lead times and greater ease of securing leasing commitments," they wrote.

They favour the office or commercial real estate for which demand is high, leases are long and redevelopment is needed less often.

AMP NZ Office Trust's focus on the commercial sector was attractive, they said, and they ranked it as one of their most preferred because of its pure exposure to the prime office sector.

"We expect the strong sector dynamics to deliver solid near-term rental growth in the coming period, supported by the trust's 12.5 per cent under-rented portfolio. We view the high quality portfolio as offering a below-sector risk profile - higher quality assets tend to be more resilient in less supportive macro environments."


AMP says its trust is New Zealand's largest in the office sector, owning and managing $1.4 billion of real estate.

Macquarie was the analysts' most preferred stock in the sector with "a compelling above-sector average net yield of 6.6 per cent" and big upside through its development portfolio.

Expansion had been Macquarie's major theme since the trust's inception, they said. Its Australian associate, Macquarie Goodman Group, had relationships with quality tenants in Australia and this would help the New Zealand trust to deliver good returns.

But the analysts downgraded their recommendation on Kiwi from buy to hold, saying its unit price had risen more than any other listed property entity in their coverage.

Kiwi should trade at a premium to the sector because of the quality of its assets and its inherent development opportunities at Sylvia Park.

"However we believe the share price fully reflects the value of the trust's portfolio encompassing these factors," they said.

ING received far less praise.

"In general, we view ING's portfolio as being at the lowest quality of the listed property vehicle sector under our coverage," they wrote. "Since inception, the trust has pursued a growth-in-assets-under-management strategy, the pace and volume of which has meant the quality of stock entering the portfolio has been mixed.

"We see the lower quality as being accompanied by greater vacancy and cap rate risk in a slowing economy, and therefore relative to its peers, we maintain a lower confidence in the trust delivering against our forecasts."

ING this month ditched its takeover plans for Calan Healthcare Properties Trust and started a unit buyback plan. It claims its $1 billion portfolio is one of New Zealand's largest and best.

The two analysts said Property For Industry's shares had traded at a premium because shareholders had given it credit for its strong value creation through portfolio expansion.

Its shares would hold that premium and the analysts were confident it would continue to

[lakeside]

Interesting. They don't mention debt or equity as being important

NAP slipped below the radar. They are 55%retail 41% commercial and 4% industrial.

SLPF 46% commercial, 33% industrial and 20% retail. The last two up a bit in 2006 but it is probably development of bareland / central park to industrial and retail that has increased these rather than quiting offices. I wonder what farms comes under - industrial I suppose and retirement villages - industrial?

6 billion for the whole industry and ING 1 billion is big - STL has over 1 billion $400 billion SLPF and $300 NAP.

[lakeside]

$800 000 SLPF through off market today at $1.21 but still the odd bargain at $1.14 popping up.

[lakeside]

MGP is about 50% office and 50% industrial nearly all in Auckland. It has done well in the last year - 40% or so and has the name., and about $1 billion in assets... but I do miss capital properties!

[a bowden]

What is everyones thoughts on CHP, i brought them early this year, they just have a steady momentum backwards, they need to improve quick before i bail.

[lakeside]

Well I think they just didn't get the numbers in their Feb report - "However, these gains were more than offset by the conversion of the
Australian properties' values into New Zealand dollars. The 9% appreciation
in the NZD/AUD exchange rate between 30 June 2006 and 31 December 2006
resulted in a decline in carrying value of Australian properties of $7.2
million when expressed in New Zealand dollars. The carrying value in
Australian dollars of the Australian properties remained unchanged at
AUD$72.8 million."

So maybe like FPH a good company, held back by the dollar and long term a good investment.

[troyvdh]

...boring and dull stuff I know but I really like this company....every ...like I mean every...1/4 it just gets better.....if and when the next burp comes along tbhis outfit will continue to deliver.....boring i know....

hold a few and always have......zzzzzzzzzzz

[Lawso]

I quite agree, troy. I've been in PFI since 1999 and my purchases over the years - around $30k - have grown to my current holding of nearly $65k, thanks largely to the DRP and the compound interest miracle. And the price appreciation of course - first purchase was @ 78c, current price 144. Boring as hell, eh?

[Lizard]

Wonder what's up with KIP? Big volume through on the close.

I only notice, as I decided to start re-building my property trust holdings again yesterday - and bought a few KIP for starters.