Augusta (AUG) - Was Kermadec Property (KPT)

[Farouk]

Not much mention on these boards of this one. I reckon that it should get up to $1.20 before too long. PFI, KIP etc have all rallied due to the new tax rules coming in, whereas KPF not far from issue price.
I have bought a few anyway, after reading this (from Monday's Herald)-I know that For-Barr have a vested interest as they underwrote the issue, but it makes sense to me............

The fledgling Kermadec Property Fund has been recommended by a broker after a tax overhaul which will make listed real estate vehicles more attractive.

Jeremy Simpson, of Forsyth Barr Research, gives a buy recommendation for the new company, saying its unit price is expected to rise.

Kermadec would benefit from the new portfolio investment entity (PIE) regime, he said.

Listed property vehicles are expected to qualify for PIE status by October this year, following the introduction of a new law in December which will see investors keep more dividends and pay less tax.

Simpson said Kermadec had good prospects.

"Kermadec is trading at a larger-than-expected discount to the listed property vehicle sector, and we see upside as it develops a listed track record. We also expect further upside for the sector once the positive aspects of the PIE regime are fully understood."

While other property entities had been re-rated with unit price rises, Kermadec was yet to benefit.


"Kermadec has significantly and unjustifiably lagged its listed peers in terms of the PIE market re-rating to date," Simpson said. Its share price was trading at around net tangible asset value, which he said was unusual in a sector that was now largely trading at solid premiums to asset backing.

Kermadec listed in December.

[BRICKS]

IS that the Farouk of many years ago where have you BEEN.. [8D]

[Farouk]

I've been around-have been too busy with other things to spend much time looking at shares, I have been a "passive" investor.
Glad to know that i may have been missed-- anyway what do you reckon about this Kermadec outfit, they own a Parking Building in Auckland, so that's got to be something good.

[Paddie]

quote:Originally posted by Farouk

I've been around-have been too busy with other things to spend much time looking at shares, I have been a "passive" investor.
Glad to know that i may have been missed-- anyway what do you reckon about this Kermadec outfit, they own a Parking Building in Auckland, so that's got to be something good.

And the Kebab shop?

Good to have you back Farouk.

Paddie[^][^]

[fungus pudding]

http://www.nzherald.co.nz/section/3/...ectid=10510423

Paul Glass of Brook Asset Management, which does not own Kermadec shares, said: "This is an outrageous transaction.

"You have to wonder what the retail shareholders were thinking of when they approved this deal."

Hmm, selling a dog of a property from a company you own to another company you control....

Forbar listed the issue and Forbar controls the retail shareholders on this one.... Top 10 shareholders:

Name / Shares / %

NEW ZEALAND CENTRAL SECURITIES DEPOSITORY LIMITED 15499085 19.8871
FORSYTH BARR CUSTODIANS LTD <1 M A/C> 9434487 12.1055
FORSYTH BARR CUSTODIANS LTD <1L A/C> 5360211 6.8778
AFM HOLDINGS LIMITED 4206968 5.398
PROPERTY MANAGER HOLDINGS LIMITED 3887468 4.9881
FORSYTH BARR CUSTODIANS LTD <1999 A/C> 2642860 3.3911
FORSYTH BARR CUSTODIANS LTD <1 H A/C> 1783609 2.2886
LEVERAGED EQUITIES FINANCE LIMITED 1167639 1.4982
IAN RICHARD SEDDON 1155185 1.4822
FORSYTH BARR CUSTODIANS LTD <1 E A/C> 979283 1.2565

What are your thoughts? Still think this is a good investment?

Valuations read well, even without allowing for plottage value. Kermadec are selling at over 30% discount to NTA, and are returning the equivalent of 17.5% to a 39% taxpayer. Doesn't seem at all risky to me.

[POSSUM THE CAT]

Funguspudding The old story if it sounds to good to be true it probally is not true

[fungus pudding]

Funguspudding The old story if it sounds to good to be true it probally is not true

Well there's no arguing with the dividend. Are you saying the valuations are not true?

[POSSUM THE CAT]

Funguspudding. Why is it discounted so much other people think the risk is to great. have a read of some of the related party deals.

[fungus pudding]

Funguspudding. Why is it discounted so much other people think the risk is to great. have a read of some of the related party deals.

Doesn't seem too bad to me. ING and Kiwi income are also heavily discounted. I think they'll all recover quite well. They're all pies so give damn good returns to high marginal tax payers, and even if commercial property falls ..... well the discount is already built in. The tenants are there - they're paying the rent. WALT is good in all cases. I'm no expert in shares, but I do have some knowledge of real estate, and I reckon the 3 companies I have named are all good buying at present.

[COLIN]

Doesn't seem too bad to me. ING and Kiwi income are also heavily discounted. I think they'll all recover quite well. They're all pies so give damn good returns to high marginal tax payers, and even if commercial property falls ..... well the discount is already built in. The tenants are there - they're paying the rent. WALT is good in all cases. I'm no expert in shares, but I do have some knowledge of real estate, and I reckon the 3 companies I have named are all good buying at present.

I'm with you f.p. on that. NAP is another one in that category. While I acknowledge that some of these particular property trusts may not have the most attractive of properties (unlike APT, for instance) that factor is built into the price and the PIE yields represent a darned sight better proposition than the yields obtainable from a lot of second-tier finance companies around. I think a lot of the reason for the depressed price of some of these trusts is a follow-on from the price slides we have witnessed in LPT's in Australia, where some highly leveraged ones have come unstuck, e.g. Centro Properties.
I was reading an interesting piece today regarding property PIES, which pointed out that maximisation of the tax depreciation shield is one of the main drivers of value under the PIE regime. The aim of the game is to "write off" as much as they can before the corporate tax rate is reduced to 30%.