KPG - Kiwi Property Group Limited

[simla]

Thanks for your reply, but I don't understand the point. All current prices are affected by inflation. Had someone reinvested that 7 cents, then the return would be in today's dollars just like the housing index. Apples to apples surely?

Your argument is surely more about whether people should use the dividend reinvestment plans instead of taking dividends, rather than whether this stock is a good or bad investment?

I post because I am genuinely interested in the answers. An awful lot of people own shares in KPG and many like myself will be perturbed to be reading here the suggestion that this investment may not be a good one. I ask questions which seem to me to support that it has been a perfectly good investment and am interested in replies.

[winner69]

Rest of sector on fire ....hitting new highs etc etc

Suppose there has to be dog in every sector

[Beagle]

Thanks for your reply, but I don't understand the point. All current prices are affected by inflation. Had someone reinvested that 7 cents, then the return would be in today's dollars just like the housing index. Apples to apples surely?

Your argument is surely more about whether people should use the dividend reinvestment plans instead of taking dividends, rather than whether this stock is a good or bad investment?

I post because I am genuinely interested in the answers. An awful lot of people own shares in KPG and many like myself will be perturbed to be reading here the suggestion that this investment may not be a good one. I ask questions which seem to me to support that it has been a perfectly good investment and am interested in replies.

You're missing the point. The point is not about whether people reinvest their dividends or not (note the companies dividend reinvestment plan remains suspended). That's a personal choice each investor makes as a fresh investment or not each time they receive income. The point is whether the company KPG and its business model is working for property investors consistent with the what one should expect out of a property investment over time ?

Most people invest in the property sector for capital gains and yield. This applies right across the sector whether its residential, commercial, industrial, office or retail. People expect that highly paid executives will be able to add value through tailored development programs and skillful management, not subtract value through their mismanagement of assets.

People expect that property will at the very least keep pace with general inflation and in KPG's case its crystal clear it hasn't. In addition yield is going backwards. 10 years ago they were paying 7 cps in annual dividends (8 cps in inflation adjusted terms today) and yet the forecast is for just "at least" 5.3 cps (whatever that turns out to be but lets just assume they didn't pick that number 5.3 cents out of thin air, so its logical to assume it will be somewhere close to that). The real value of the underlying assets is declining over time and the real value of the annual dividends is also declining over time so what value would you say that these highly paid executives are bringing to the table ?

[simla]

Obviously "highly paid executives" has nothing to do with it, merely the return to shareholders.

You say it is crystal clear they have not kept up with inflation, but inflation has been way below 6 or 7% for an awfully long time, so I do not understand why that is crystal clear. They would appear to have exceeded inflation for quite some time. Indeed they mentioned their 10% pa return to investors over quite a few years as I recall.

You say they should have done better. Well, fair enough if so. But that would be to answer my first question above:

1. 7 cents is a pretty good return on 1.18. Would you expect to get that on other property investments, after insurance rates maintenance tax and depreciation, and expect full return on the property index as well? I don't know.

Just WHAT would be acceptable? It is easy to say something is not enough, but what IS enough? By comparison, another well known property company owns the Johnsonville Mall, where the carpark always has potholes, the christmas decorations are pre WWI by the look of them, and the shops are increasingly closed. So, by comparison, I would say KPG do a great job, constantly keeping their assets relevant. It seems a little easy to say the small malls are a bad investment simply because covid struck which nobody could have seen coming. That is hardly a sign of bad management to my mind.

[Biscuit]

.....Would you expect to get that on other property investments, after insurance rates maintenance tax and depreciation, and expect full return on the property index as well? I don't know.

Just WHAT would be acceptable? ......

Well, that's a subjective question, but I'd say for leaveraged residential property you would want rent to at least cover expenses and expect long-term average capital gains of a couple of percentage points over realistic general inflation. Ignoring capital gains and interest you would probably be lucky to get 3% yield on residential, commercial should be higher.

[Beagle]

If you don't understand that a share price in 1994 of $1.18 is less in real dollars today when it is also $1.18 and even in non inflation adjusted terms the shares are going nowhere then I am afraid I cannot help you.
They're planning on paying 5.3 cps on $1.36 in assets which is just a 3.9% yield which is pathetic for a company with a mix of retail and commercial property.
They have no clearly defined plan to get back to 6.95 cps, that's another point I've made that you've missed.

Homework for the weekend for you. Have a really good play around with the Reserve bank inflation calculator and see how the real underlying value of money changes over time
https://www.rbnz.govt.nz/monetary-po...on-calculator/

[Habits]

If you don't understand that a share price in 1994 of $1.18 is less in real dollars today when it is also $1.18 and even in non inflation adjusted terms the shares are going nowhere then I am afraid I cannot help you.
They're planning on paying 5.3 cps on $1.36 in assets which is just a 3.9% yield which is pathetic for a company with a mix of retail and commercial property.
They have no clearly defined plan to get back to 6.95 cps, that's another point I've made that you've missed.

Beagle, throw the man a bone... lolz

[SPC]

Beagle why don't you recalculate your long term performance using the legendary 'TSR' formula used by the famous Fisher listed trifecta i.e cap uplift plus divs over last decade and see how it stacks up?

[Biscuit]

Well, that's a subjective question, but I'd say for leaveraged residential property you would want rent to at least cover expenses and expect long-term average capital gains of a couple of percentage points over realistic general inflation. Ignoring capital gains and interest you would probably be lucky to get 3% yield on residential, commercial should be higher.

I sold a rental yesterday, it averaged 9% p.a capital gain over twenty three years vs CPI of, apparently, a bit over 2% p.a. So I guess you would expect a highly paid manager in commercial property to at least beat that

[simla]

Thanks for specific info. The more the better.