Weekly update:
Attachment 14166
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Weekly update:
Attachment 14166
LEK, do u think KPG will keep delivering the same Div year on year? If so, it’s looking pretty attractive!!
actual forward gross dividend is not 9% (that is technically the trailing 12 month dividend currently), but is somewhere in ~7% range.
Technically they are intending to grow the dividend 3% each year - BUT the current stated gross dividend yield is artificially higher as they are moving to quarterly payments and with the first one paid this month it technically raises the dividends paid over the trailing 12 months into that 9% + category as it includes two half year dividends PLUS the upcoming quarterly dividend in that 12 month period.
Eg current calculation is based on 8.725c gross dividend, but actual forward 12 month payment will likely be around ~7c gross dividend with the expected guided for dividend growth confirmed at the December Earnings result.
Current trailing 12 month Dividend:
Sep ‘22: 1.425+0.271 = 1.696 (quarterly)
Jun ‘22: 2.85+0.677 = 3.527 (half year)
Dec ‘21: 2.75+0.752 = 3.502 (half year)
Total current trailing 12 month dividend: 8.725c
This year is a transition year, but they have already said dividends will not reduce. There is ample room to maintain dividend (they are actually guiding to increase it). The lost net income from northlands (once the sale is actually settled), is less than the difference between AFFO & dividend amount paid last 12 months.
Factors for this:
- Payout % of AFFO can increase (up to 100%, from current ~90%)
- New office asset comes online in Q1 2023 (Te Kehu Way in sylvia park precinct), increasing income.
- New 295 unit BTR development comes online in Q2 2024 (BTR 1 in Sylvia Park precinct), increasing income significantly.
- Rent reviews are still increasing income from existing assets every year.
- no more covid lockdowns/rent reliefs going forward (which impacted FFO negatively in last two financial years)
- any sell down into co-investment platform will generate management fees on sold down equity share
- funds received from asset sales will generate interest and/or reduce debt interest expense, until funds can be redeployed for future developments.
- Even though Northlands is being 100% sold, KPG is still to receive some income as new owner has contracted KPG to continue managing the property.
Thanks mate! Very insightful. How long have u been holding for? U sound pretty happy with them? They are now on my watchlist.
Dont forget cash from eg asset sales or dividend reinvestment doesnt evaporate. Cash raised will ultimately be used to increase operational cashflow (directly eg WIP or maybe by decreasing debt and therefore interest or maybe for development, a longer term cash generator). So unless your company is run by idiots such cash movements ought be at least approximately neutral and hopefully ultimately positive, as I believe in this case.
If there is any "lag" there ought be a commensurate reward further down the track. That's investing for you.
If your company is in trouble and selling assets, whole different kettle of fish of course.
'A blast from the past', or more correctly 'from 2008'.
For those that don't recognise three of those historic tickers:
a/ KIP (Kiwi Income Property Trust) is now KPG (Kiwi Property Group)
b/ ING Property Trust (ING) is now Argosy Property (ARG).
c/ AMP NZ Office Trust (APT) is now Precinct Properties (PCT)
Good point made by Fungus above, but things are changing.
Property Company PIE income forecast? DRP Active? Substantial New Capital last raised? (4) Goodman Property Trust Yes No April 2022 (Bond Offer) Vital Healthcare Property Trust Yes Yes April 2022 (Share Offer) Property for Industry Yes Yes November 2017 (Bond Offer) Precinct Properties Partial (1) No September 2022 (Overseas Investment Partnership) Argosy Properties Yes No October 2020 (Bond Offer) Investore Property Ltd. Yes No February 2022 (Bond Offer) Stride Property Group Partial (2) No November/December 2021 (Share Offer) Kiwi Property Group Partial (3) No July 2021 (Bond Offer)
Notes
1/ A full PIE entity up to now, Precinct Properties have sold a chunk of their properties into a minority owned entity named the 'Precinct Pacific Investment Partnership'. This sale was announced as unconditional to the NZX on 15-09-2022. Precinct will continue to manage these properties for their overseas investment partners. But property management is not a class of business that falls under the PIE tax regime. Therefore, in the future, the 'property management' side of PCT will distribute profit that will have to be disclosed in individual investors tax return share income.
2/ Stride Property Group is a 'stapled entity' that contains two separate companies 'Stride Property Limited' (SPL) and 'Stride Investment Management Limited' (SIML). The former is a PIE entity. The latter manages properties largely owned by others. So income from SIML must be declared in your tax return, alongside other dividend share income.
3/ Kiwi Property Group (KPG) have informed the market that they are going to raise the capital needed for their Lynnmall, Sylvia Park and Drury Sites by selling down their separately owned office building portfolio to a co-investment entity. KPG will continue to manage these office buildings, but the management contract will not fall under the classification of PIE income. Dividends derived from earnings from this co-investment venture will therefore have to be disclosed on your tax return alongside your other share dividend income.
4/ Not including Dividend Reinvestment Plan (DRP) contributions.
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Right now, Stride Property Group is the only one of the 'big eight' listed property entities on the NZX that does not have full PIE status. But Precinct Properties and Kiwi Property Group are in the process of adopting the 'Stride' model. Consider this post an 'advance warning' of the changing tax status of some of your property investments!
Some also regard property investment as a 'set and forget' formula to fund their retirement. However, this is a bit of a myth as all eight of our largest property investment entities have raised substantial capital over the last five years.
SNOOPY
P.S. I have also added information on which Property Investment companies have Dividend Reinvestment Plans (DRPs) that are currently active.
The DR siegal says the FED is over tightening as OIL prices come down...
Could these be bottoming in the next 12 months..
GMT had some bigger VOL yesterday.