KPG - Kiwi Property Group Limited

[winner69]

Maybe it isn’t 11% pa …you’d think they would have said 11% pa if it was

Maybe LEK can confirm it is ‘11% pa’

Or maybe it is just 11% which ties in with SailorRobs thinking yesterday inndispatches discussion with LEK

I don’t know so don’t ask me but one hopes it 11% pa

[LaserEyeKiwi]

this is the link you want https://www.nzx.com/announcements/431170

LEK are you happy?

$459 million???

YES.

1.9% discount to Sep 2023 value???

YES.

Let us hope it is smooth sailing for this deal to completion.

[Balance]

So what?

Shareholders in KPG do not benefit from whatever the company does - I came to that conclusion years ago when I confronted the managers about their continuous capital raising (always favoring institutions) to award themselves with ever bigger management fees and rewards. They had the cheek to argue with me that they were better than that!

There is zero alignment of interests between the management and shareholders.

Compare and contrast with Goodman and you can see the difference.

[LaserEyeKiwi]

Maybe it isn’t 11% pa …you’d think they would have said 11% pa if it was

Maybe LEK can confirm it is ‘11% pa’

Or maybe it is just 11% which ties in with SailorRobs thinking yesterday inndispatches discussion with LEK

I don’t know so don’t ask me but one hopes it 11% pa

No that is not a “since inception” figure.

It was purchased in 2001.

The earliest annual report on NZX is 2015 and at that stage it had a capital value of $323m.

Annual net income + realised gain on sale would reasonably equate to 11% per annum ballpark.

[LaserEyeKiwi]

This transaction (if completed) will represent the majority of KPGs remaining de-risking strategy.

Their remaining standalone office portfolio (ASB north wharf in Auckland & Aurora Center in Wellington) are combined worth less than this sale, and worth not much more than KPGs build-to-rent asset.

[LaserEyeKiwi]

No that is not a “since inception” figure.

It was purchased in 2001.

The earliest annual report on NZX is 2015 and at that stage it had a capital value of $323m.

Annual net income + realised gain on sale would reasonably equate to 11% per annum ballpark.

$236m was the original cost I think.

So the capital gain over 23 years equates to 4.94% GAGR. Add annual net income on top of that.

[RTM]

“Vero Centre, a flagship office asset in the company's portfolio, is being sold at a discount of 1.9% to its last year's September valuation, but at a property-level return of 11% from inception, Kiwi Property said in an exchange filing.”

From a Reuters report. I’m still confused as to what it means.

[SailorRob]

“Vero Centre, a flagship office asset in the company's portfolio, is being sold at a discount of 1.9% to its last year's September valuation, but at a property-level return of 11% from inception, Kiwi Property said in an exchange filing.”

From a Reuters report. I’m still confused as to what it means.

It means they flogged it to some idiot who paid far too much and most all the return came from capital appreciation rather than cash generation from the net rent.

The buyer is now holding the nuclear waste.

[SailorRob]

$236m was the original cost I think.

So the capital gain over 23 years equates to 4.94% GAGR. Add annual net income on top of that.

What's your estimated total then, around 8%? Sounds about right to me.

[LaserEyeKiwi]

What's your estimated total then, around 8%? Sounds about right to me.

Its 11%, like KPG said today.

Net operating income last year for the building was $25.4m, which is a 5.5% return on the $459m sale price. But $25.4m is a 10.75% return on the original $236m build cost.

So including capital gain & net operating income, 11% sounds entirely plausible for an average annual return over 21 years.