Well the question to ask is will their income from operations (used to pay dividends) be reducing? If you think that is a real risk, then sure go ahead and “don’t invest” if thats how you feel. If however you think that operating cashflow will grow, then the high yield at todays share price looks rather safe.
In my personal judgement a drop in income from operations is unlikely to happen over the long term, since rental income generally increases every year upon rent reviews, and new assets are added generating new income streams (countered somewhat by assets disposed of or added to “co-investment” platform).
yes, in the past they have been hit with multiple negative large costs which has reduced operating income (most of it seismic related issues over the last decade in Christchurch and lower north island assets), and more recently of course the temporary covid rent abatements. That has been the core reason why KPG has suffered over the last decade, there was no way a different management team could have avoided those costs, unless they sold down assets years earlier.
But they have de-risked their portfolio substantially in the aftermath of the seismic events, selling off most of the assets exposed to high seismic risk, with the Plaza in Palmerston north being the remaining asset to sell. The 2 wellington office towers remaining are also presumably being included in the office “co-investment” sell-down plan, but in any case they are a small piece of the portfolio now (8% now, and lessor still once/if the office portfolio has sell down of 50%) and the main Wellington office asset (The Aurora Centre) had extensive seismic work in 2016.
92% of KPG investment portfolio is in Auckland/Hamilton now.
(meanwhile, bizarrely, almost every other listed property company is increasing their exposure in the high seismic areas, seemingly ignoring the lesson KPG has learned the hard way already. Go figure.)