Was watching.... suddenly took off mid avo and volume went up by 500k. FY2021 due in a month, will be a good result
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My understanding.....full year AFFO will be 5.50 to 5.6 cents...oct 2020 to March 2021...?
Or completely full year from April 2020 till March 2021?
Hi Fungus Pudding,
Can you elaborate on this please. Few questions;
- If interest rates are high people can afford less house so house prices less?
- How have interest rates affected REITs over the past 10-20 years compared to wider stock market?
- If the case is interest rates are low now and REITs over valued/low yield what’s the alternative investment option?
- When in the interest rate cycle would you invest in stocks in companies (eg mainfreight, Auckland airport) opposed to REITs
- Do you borrow via residential loads to invest in REITs and how would this affect your timings of debt pay down or investments?
Anything else I’m missing?
Asset prices will rise and fall with the cost of money. Prices and interest rates are the opposite ends of a see-saw. If you buy a property when interest rates are 2% it will be cheap to own and buyers will compete for it. Then if interest rates rise to 24% - the same buyers will simply not be able to afford the price they once could. Result is price will fall. That's the range of mortgage interest rates rates we've seen in NZ since the late eighties. IOW the price is one factor in owning an asett - interst rate is the other. That's the first point. Second question is not one I can answer as I know nothing about the stock market. I do hold a reasonable quantity of REIT shares but nothing else apart from funds in Milford assets - just to see what happens.
I'm not much use with your questions, sorry to say. I'm just a burnt out old real estate investor, who, having got sick of tenants has bought into REITs aand property syndications asI have got rid of most of my investment properties. I don't borrow at all, although that's generally not a sensible policy, but I've been there and done that and somehow can't be bothered anymore. Your last point about borrowing on residential to invest elsewhere - I think the govt. has put that one to bed with deciding to apply income tax to an outgoing (mtge-interest) which is about as dopey as Bill Rowling's speculation tax. I hope that provides some answers but feel free to ask more about any point.
Hi Bull... would you mind doing an analysis on KPG. I see a breakout at 1.25 from flag formation. However there is no flag pole (gap up) and the price has been in a rut/trading range for 6 months between 1.32 and 1.12. I would love to hear your TA thoughts.
I started with residential in the early 70s. By mid 80s I was right out of residential* - and into commercial and industrial - never in a big way, as I had no income other than my rental stuff right through. Lots of fun but it meant restricted ability to 'tick everything up to the eyeballs' as they say. It also meant learning how to live on next to nothing for a few years. Very educational. Nowadays as I said I just buy into syndicated props. e.g. Augusta, MacKersy properties etc. and REITs. I don't worry about buying the dips (I should but don't watch them closely enough to spot them), I have nothing overseas. As far as spending dividends go - I have a good surplus which I can't really burn up on travel that I had intended for the next few years, I have no debt to reduce, so I suppose I'll put a bit more into REITs. although I do have a special reason for buying into more syndicates. There's quite a few on offer. I like some of the syndicated offerings, but it's all horses for courses; meaning there's a benfit in the REITs as they are PIES. And the difference in taxation between the pies at 28% is worth having as the new top marginal rate is 39% (thanks Labour) Also, because I'm slack, I like the 'set and forget' nature of PIES - no paperwork at all. But no doubt I'll cling to my guiding adage 'keep stacking up income'
While I'm burbling away I'll add the special appeal of syndicated properties for me. That is my estate. Like most of us, I have my fair share of dead-beat beneficiaries to whom I would rather leave a proportional title or two, than too many REITs. The syndicated stuff is far less liquid and I would rather leave someone a bit of income than a bunch of shares they can flog off and blow in six months. Your other question - nowaday I only own one commercial building. It's a retail store with a national franchise tenant which is so easy to manage that the only reminder is a healthy pile of money in my account every month.
*I was young and green when I had a few flats and houses. The trick in those days was to find a vendor who was prepared to leave a bit owing on 2cnd or 3rd mtge - then wind a valuer up to a bit more then the purchase price (that was my equity) and bingo - on to the next one. It was fun. But I was too dam soft on tenants and realised commercial stuff is a different game as far as management goes.
Overall I've done okay out of R.E investing. I have a bit more money than I should ever need, and have avoided the horror of normal employment, having a boss and being told what to do - which never really appealed to me. :-)
Good on you Fungus Pudding sounds like you’ve done well for yourself.
Once again appreciate the comprehensive reply
hi habit , i agree with you on the range trading. i dont see any flag though. heres a pic of the daily chart
Attachment 12470
heres a pic of the 4 hourly shows a nice uptrend from covid lows
Attachment 12471
heres a pic of 30 min chart showing the trading range
Attachment 12472
short term traders be trading the range
long term holders will be just holding riding the uptrend
if/when the range breaks will entice more buyers/sellers into the stock. direction of the break is to be decided but the slow uptrend favours up at the moment.
fundamentally interest rates going forward and wall st will dictate long term outcomes for price.
good luck
Great thank you, what software do you use.
https://www.stuff.co.nz/business/ind...in-sylvia-park
Sylvia Park becoming the go to destination for international brands looking to enter the NZ market:
Quote:
Streetwear store Culture Kings to make million dollar debut in Sylvia Park
Australian streetwear giant Culture Kings will make its New Zealand debut at Sylvia Park, the second big brand to announce a new store at the Auckland mall.
The retailer, which is looking for in-store DJs as well as retail assistants to staff its new store, launched a local online shopping platform in 2017.
Kiwi Property’s general manager of leasing Aubrey Cheng said landing Culture Kings’ first New Zealand store at Sylvia Park was a huge coup for Kiwi consumers.
“With the streetwear scene becoming increasingly vibrant in New Zealand, the move to bring Culture Kings to Sylvia Park reflects the direction of the market, and allows Kiwis closer access to international brands and trends,” Cheng said.
The Culture Kings shop will be around 1000 square metres, Cheng said.
While Culture Kings did offer some unique product lines, the big drawcard for customers was the experience of the store, he said.
“They will set the new bar in terms of experience for retail.”
Entering a Culture Kings store was like entering a nightclub, which reflected their core customer base, Cheng said.
Bringing in brands like Culture Kings and JD Sports, was part of a broader strategy for Sylvia Park, he said.
“We are targeting unique stores, so people like Zara, Culture Kings and JD Sports,” he said.
“These retailers understand that if you get [the launch] right, it will be absolutely massive.”
Cheng said about 15 per cent of shoppers at Sylvia Park come from around the country.
People came to the city for events and went to Sylvia Park because it was a “one-stop-shop”, he said.
“We are very purposefully looking for those big magnets. It's not just about getting the brand into our mall, it's about getting the biggest store, so it has that compelling, unique draw.”
Culture Kings founder and chief executive Simon Beard said coming to New Zealand was exciting for the brand and had been in the works for quite some time.
“We had offers on places pre-Covid, but we put it all on hold,” he said.
Culture Kings had been looking at sites in the CBD but, post Covid-19, there had been a clear shift away from city centres for shoppers, he said.
Parking also posed a real problem for customers in Auckland’s CBD, making Sylvia Park a better option, Beard said.
The Sylvia Park fit out was the most expensive the company had done and ran into “millions”, he said.
What made Culture Kings different was that it had up to 1000 new product arrivals each week with up to half of those being world exclusives, Beard said.
“We like to say we sit at the intersection of music, sport and fashion.”
Culture Kings had seven stores in Australia.
The new Sylvia Park location was its first bricks and mortar store outside of Australia.
In February, it was announced that Beard was in talks with Boston-based Summit Partners to sell a half share of the company.
If completed, the deal would value Culture Kings at more than A$600 million (NZ$647m), which would make it the biggest ever private sale in Australia’s retail and apparel sector, according to Australian media reports.
The deal offered the company a door into the United States, Beard said.
Culture Kings Group recorded a A$19.4 million profit for the year ended June 30, 2020.
The Sylvia Park Culture Kings store will open on July 23.
First Retail Group managing director Chris Wilkinson said Culture Kings had a cult following in Australia.
”It is a very immersive experience,” he said.
The stores in Australia included barbers, as well as DJs.
”Having the barbers there mean people go in on a regular and habitual basis but then, when you are in that environment, it's all encompassing. You get wrapped up with the vibe of the store.”
Wilkinson said the decision to bring in Culture Kings by Sylvia Park give the mall an edge. ”The location of Sylvia Park makes it New Zealand’s only real regional shopping centre,” Wilkinson said.
“The connectivity is really important. There is very strong road access from north and south. Then, you have really strong public transport links. It has everything, as a retail destination, that is fit for the future.”
why kpg cant back to the pre covid share price 1.5?
A Buy.
also GMT result out with plenty of balance sheet room for farther development and a pipeline of ever increasing SQ Meters.
This sector providing resilience under pressure from the 10 year.
ARG a BUY.
Looking forward to their results announcement...
https://www.nzx.com/announcements/372327
Kiwi Property today advised that Richard Didsbury proposes to resign as a director of the company at its annual shareholder meeting, scheduled to take place on 12 July 2021.
https://www.nzx.com/announcements/372492
traders are pushing down and collecting as many cheap shares before monday result??
back to 3 months low again....
Kpg should trading around $1.25 at least.... possible traders are pushing down to collect cheap shares
Traders are feeding selling side with plenty of small amount of low shares... n while others side putting big no of share buying.
That make people sell as seeing the sp kept going down..
That is the theory...
Same with vista on the last couple days of trading..
Kiwi Property announces FY21 annual results - NZX, New Zealand’s Exchange
Net profit after tax: $196.5m (+$383.2m on pcp)
• Property fair value movement: +$99.8m (+3.1%)
• Net tangible assets per share: $1.36 cps (+10cps)
• Net rental income: $173.6m (-7.1%)
• Operating profit before tax: $116.3m (-10.3%)
• Adjusted funds from operations: $89.4m (-12.5%)
• Gearing: 31.2% (FY20 32.0%)
• Full year dividend: 5.15 cps (2.95 cps final dividend)
Kiwi Property today announced its financial results for the year ended 31 March 2021 (FY21), recording a net profit after tax of $196.5 million, up $383.2 million on the year prior, underpinned by growth in the value of its investment properties.
A stabilisation of trading conditions in the second half of the year contributed to a 3.1% or $99.8 [Note 1] million increase in the fair value of the company’s property portfolio for FY21. Kiwi Property’s office assets performed particularly strongly, delivering a 10.2% fair value gain, while mixed-use was up 1.5%. The company’s property portfolio was valued at $3.3 billion at 31 March 2021.
Despite the growth in net profit, Kiwi Property’s financial performance was adversely impacted by COVID-19. The cost of asset lockdowns and the associated rent relief measures contributed to a 7.1% reduction in net rental income, which decreased to $173.6 million for the year. Operating profit before tax [Note 2] was similarly affected, declining 10.3% to $116.3 million.
Kiwi Property Chief Executive Officer, Clive Mackenzie said: “Like many businesses, Kiwi Property was affected by COVID-19 in the 2021 financial year, with the cost of supporting our tenants, following early lockdowns in particular, causing a drag on operating profit. Despite this, we ended the year in a robust position, with leasing projections and rental abatements tracking better than forecast.”
Balance sheet
Kiwi Property maintained a strong balance sheet throughout FY21 and ended the year with gearing of 31.2%, comfortably within its self-imposed range of 25-35%. Since the close of the financial year, the company has refinanced $700 million of bank debt facilities in order to take advantage of favourable lending rates, resulting in an increased weighted average debt term of 3.5 years (on a 31 March 2021 pro-forma basis).
Portfolio rebalancing
Kiwi Property stepped-up its portfolio rebalancing programme in FY21, with the aim of reducing the company’s exposure to traditional retail and recycling capital to help fund its growth pipeline. The Plaza was listed for sale in October 2020, with Northlands subsequently also taken to market. Negotiations are now underway for both assets, with further updates to be provided in due course.
“Kiwi Property’s future lies in the creation of mixed-use communities at our large, strategic landholdings. By diversifying our portfolio uses we intend to create a platform for accelerated growth. Selling The Plaza and Northlands will enable us to down-weight our retail footprint and provide the market with further clarity around our strategic direction,” said Mr. Mackenzie.
Sylvia Park
Sylvia Park’s Level 1 expansion has performed well since its launch on 15 October 2020, benefitting from the opening of flagship Sephora, North Beach and Superdry stores over recent months. High profile retailers including JD Sports and Culture Kings have also now been confirmed for the centre’s new urban and athleisure precinct adjacent to Hoyts cinemas. Sylvia Park is home to 10 of New Zealand’s 11 favourite retailers, as well as 270 stores and 5,000 free carparks, the most of any shopping centre in the country [Note 3].
Mixed-use development
Construction of a second office building at Sylvia Park is scheduled to begin in October 2021, marking the next stage in the asset’s continued mixed-use evolution. Located at 3 Te Kehu Way, the $63 million, six-storey development will target a 6 Green Star rating and has been designed in response to tenant feedback.
“COVID-19 has changed what a number of businesses want or need from their office environment. While a CBD ‘hub’ remains important for many corporates, others are telling us they also want the flexibility to base employees at a suburban ‘spoke’ office. The convenience, amenity and public transport links offered by our mixed-use assets make them ideally positioned to meet this requirement,” said Mr. Mackenzie.
Centre Place North
In March 2021, Kiwi Property announced the formation of a 50:50 joint venture with Tainui Group Holdings (TGH) over Centre Place North and adjoining properties in Hamilton’s central business district, with a combined value of approximately $71 million. The agreement builds on the existing relationship between Kiwi Property and TGH and paves the way for the creation of a mixed-use precinct in the heart of Hamilton’s CBD, including a new office building currently under design.
Drury
The company’s plans for the development of a 51-hectare master-planned community at Drury made substantial progress in FY21, with the Minister for the Environment currently processing a Fast-track application for the project under the COVID-19 Recovery Act 2020. If successful, the application could enable earthworks to begin at Drury in the 2022 financial year (FY22), up to three years ahead of schedule. This acceleration of the project timeline will help Kiwi Property unlock housing and create jobs in the Drury area.
Build to rent
Build to rent (BTR) accommodation remains a potentially exciting opportunity for Kiwi Property. The asset class has a low correlation to office and retail with lower volatility, helping to further diversify the company’s earnings. Development schemes are being prepared for BTR at Sylvia Park and LynnMall, with the consenting process underway for both projects.
Sustainability
The company made notable progress on its Environmental, Social and Governance (ESG) journey in FY21, with the launch of a new sustainability strategy and commitment to becoming net carbon negative in its operations by 2030. Kiwi Property’s focus on emissions reduction delivered a 60% decrease in carbon output compared to the 2012 baseline and contributed to the company being awarded an ‘A’ rating by the Carbon Disclosure Project, the only business in New Zealand to achieve this milestone. Kiwi Property also launched a Sustainable Debt Framework in March 2021, enabling the company to green its existing corporate bonds and paving the way for it to issue additional green bonds in the future.
Dividend
Kiwi Property will pay a final cash dividend of 2.95 cents per share for the six-month period ended 31 March 2021. Payment will be made on 24 June 2021. Kiwi Property’s total cash dividend for FY21 amounts to 5.15 cents per share, equivalent to 90% of Adjusted Funds from Operations (AFFO) [Note 2]. AFFO guidance for FY22 will be provided once the sale of The Plaza and Northlands has concluded, however based on current projections, next year’s dividend is expected to be no less than 5.30 cents per share [Note 4].
Outlook
“Kiwi Property enters the new financial year with good momentum and a clear focus on achieving our strategic priorities. We start FY22 with exciting prospects ahead of us, including Drury, the new office tower at Sylvia Park and potentially BTR. We are focused on realising these and other opportunities, with a continued commitment to creating value for our stakeholders,” Mr. Mackenzie concluded.
Additional information
Kiwi Property has today also released an Annual Results Presentation, Annual Report, Property Compendium and Sustainability Report, which are available for download on the company’s website kp.co.nz/annual-result or from nzx.com
> Ends
...........
The lockdowns drop in rental income -$13m went straight to bottom line. Ouch
Resumption of 12 months of dividend. Thank you KPG team for your extra efforts and dedication this last 12 months
There is a lot to like about this announcement. The various 'irons in the fire' and especially "the company being awarded an ‘A’ rating by the Carbon Disclosure Project, the only business in New Zealand to achieve this milestone."
On this result, PE ratio is now under 10x!
Excellent news that they are in negotiations with buyers for both the Palmerston North Plaza Mall and also Northlands mall in Christchurch.
Also, combining the above with the facts that Drury is being fast tracked, along with the advanced plans for build-to-rent apartment towers at Sylvia Park & LynnMall - it really sounds like the pivot to further diversifying their holdings is well underway.
Very pleasing result all things considered and you can own it for 16 cents discount to NTA.
Solid result and quite a considerable discount to NTA of $1.36 as other shave noted. Might accumulate some more.
NTA in 24 -36 months higher and perhaps dividend possibly a 6 handle
From Announcement:
" could enable earthworks to begin at Drury in the 2022 financial year (FY22), up to three years ahead of schedule. This acceleration of the project timeline will help Kiwi Property unlock housing and create jobs in the Drury area."
This is HUGE potential ... Sylvia Park is roughly 9 hectares so this is 6 times the size though not as intensive.
Tbh housing in Drury is a bit far from the city however the offset is that KPG will be creating a new business district in the area. I just cant imagine what this will do for the fortunes of KPG holders. The management team are very skilled at first class properties
GLTAH
Another big decade coming for KIP.
More facts to chew on Mr Beagle ... 1. The suburb of Stonefields is 62 hectares approx. 2. The average new build retirement village is 5 to 7 hectares 3. The advice to the market that Drury is so far advanced is new information and 'should have' the SP bouncing up. The market is fickle so lets see what happens
Opportunity galore here
Look at page 23 of the report - KPG management already consider Northlands and The Plaza GONE.
portfolio now listed as 4 “mixed use” properties & 4 office complexes. The additional 4 “retail” only assets present a year ago are no longer considered as either part of the core portfolio or have been “reclassified”.
50% of Centre place north has been included as “properties held for sale” (along with plaza & northlands malls). The other 50% of Centre place, along with westgate lifestyle, are to be listed under “other property”.
“Properties held for sale” currently have an asset value of $347.5 million dollars. That is essentially the ballpark (low end minimum) for what we should expect KPG receive for the properties. With only 31% debt gearing ratio currently, there is going to be a lot of cash hitting KPG accounts this year.
This conceivably opens up the possibility or AFFO dividend payout increasing to 100%, possibly even a significant special dividend. However I wouldn’t mind if they kept most of it to allow for rapid development in Drury & build to rent towers within current gearing targets.
Wow look at the geographic “diversification” map. KPG “diversified” right out of everywhere below Hamilton (apart from some secure government filled office towers in wellington).
looks like they have heavily reduced earthquake risks to portfolio now.
Here’s the link to earnings call (just starting)
https://edge.media-server.com/mmc/p/5f93tguh
Some caution is warranted here. I don't pretend to have any planning insights in terms of which projects may or may not be approved but clearly that approval may or may not happen.Quote:
The company’s plans for the development of a 51-hectare master-planned community at Drury made substantial progress in FY21, with the Minister for the Environment currently processing a Fast-track application for the project under the COVID-19 Recovery Act 2020. If successful, the application could enable earthworks to begin at Drury in the 2022 financial year (FY22), up to three years ahead of schedule. This acceleration of the project timeline will help Kiwi Property unlock housing and create jobs in the Drury area.
Would be interesting to see the traffic figures over the next 12 -24 months on the Auckland South Corridor.
New Suburbs planned for east of hamilton and logistic hubs planned.
Projections for land use and demand both commercial and residential over the next decade is going to drive these SP's.
Rated BBB+ in MR B portfolio?
“Aim to exceed the projected dividend payout - its just a floor” divestment timing plays a part.
sounds pretty certain there will be a large projected dividend increase once the sales of plaza and northlands are complete.
Earnings call comments on build-to-rent potential:
- higher yields from build-to-rent property
- lots of support from government about creating build-to-rent market, and discussions with government
Ive watched this from the sidelines for some time and it seems they should be now in for a substantial lift in sp.Great forecast and future opportunities. NTA of $136?Its a no brainer for me
Surely NZ's GDP is now going to drive decisions and stopping the building of dwellings is not something that anyone wants to held be accountable for if they meet all legal compliance on statue books.
This new development will be something they drive to completion as hard as they can.
Earnings comments regarding gearing ratio / debt
currently only committed to $60 million new Sylvia park office tower. Add to that the Drury development (even if fast tracked) would be an additional $50 million over 2 years on earthworks & infrastructure (before building of structures would start in mid or late 2023 presumably). Build to rent potential start of construction seems like a 2022/23 at the earliest as well.
My interpretation of all that means that after the disposal of Northlands & Plaza malls, KPG is going to have a lot of excess cash on the books this year.
They did briefly mention growing “other” revenue sources “including funds management”. I’m not quite sure what they mean there - and no analyst asked about it unfortunately. I’m wondering if that has something to do for the intended use of the big influx in cash. Maybe potential for KPG to start investing in other companies???
Rated more BCA (beagle cautiously accumulating), a few more, (got a few more thiis morning and will possibly add more on any untoward weakness). Minimum of 5.3 cps for people on a 33% tax rate = 7.91 cps gross which on $1.21 gives 6.5% gross yield and a 15 cent discount to NTA. These are good metrics in an ultra low interest rate environment and again, this is based on a minimum of 5.3 cps in annual dividends which I would like to think might rise to close to 6 cps in FY23 which would lift gross equivalent yield to 7.4%.
There's no timeline to get back to the 6.95 cps distributions they were paying pre covid though and details on the extent of capital funding required for all the projects proposed is scant. The possibility of further Covid lockdown's should not be overlooked as a key business risk here.
All that said I think Auckland badly needs a satellite suburb at Drury and I am sure many of the thousands of new residents at Pokeno would enjoy shopping there.
A lot to like about the next 5 years for KPG. Drury is going to be a huge pipeline of growth and so is the little office blocks and build to rent apartment blocks they bolt onto their world class malls.
I would be shocked if the government doesn't approve the Drury project. New housing and infrastructure spending helps the government and their re-election chances I would have thought. Would go as far as to say that Cindy would be there with a hard hat on cutting the ribbon for a good photo op.
A solid hold imo and when you can buy them at a 11.5% discount to NTA it's very compelling.
In case you missed it - the earnings call Q&A made it pretty clear the dividend will be higher than 5.3c this coming year, and expect a projected dividend increase once the northlands and plaza sales are finalized (both have conditional offers already).
Also they made it clear they don’t have any large capital requirements over the next 2 years ($60 million for new Sylvia park office tower is only near term planned cost, and $50 million for Drury earthworks over 2 years if fast track approved)
I listened in.
not to much downside risk after that announcement, topping up at 1.22
Upgraded forecast issued 12 March 5.5 to 5.6 per share
Actual 5.72 (5.15 ÷ 90pct), up to 4 pct higher than upgrade
SP lower now at 1.22 each vs 1.27 then
Not sure I can understand this market value
inflation fears reflected in the 10 year and more to come weighing on sectors SP's. Perhaps offering a yet again wonderful opportunity to buy a bargain in a country that is expected to under perform.
Ohinewai given go ahead for housing and sleephead factory. Maybe that disadvantages the need for extra drury housing. Nope I dont think so
Retail spending surge may see NZ avoid recession
https://www.nzherald.co.nz/business/...ectid=12445163
Says that we continued our post covid spending spree over the Summer months. If retail is hot, how about retail property??
Huntly , and other planned developments are by Perry on the Eastern side of the expressway.
Just shows the expansion all the way south to hamilton off the new motorway corridor.
The expressway south of tamahere went through some very wealthy farm land belonging to some of new zealand most prominent individuals.
Only anecdotal but in Chch the malls have plenty of boarded up units. South City for example I counted Five the other day. EB games gone, Michael hill gone, a shoe shop gone, couple of others gone. Either boarded up or turned into mini kids playground.
Barrington mall, all the banks closing their doors. Riccarton, busy as always, but a few empty units dotted about.
Retail landscape changing from lots of smaller malls to much larger 'destination' malls with more/better offerings.
The retailers are dropping out of smaller malls and beefing up their online presence to support the smaller store footprints (great for margins).
Lucky KPG own some of the best destination malls :t_up:
Well at least the soon-not-to-owned-by-KPG Christchurch mall Northlands had near 100% occupancy when I was there last month.
south City mall had always been a dead zone from what I can remember (worked nearby for a couple of years 20 years ago) - and after the quakes i imagine it never recovered even to mediocre levels.
Good article on NBR regarding KPG is advancing to do built to rent ...
Am a bit surprised about the SP performance post results.
Mr Market doesn't seem to share my stance on KPG that's for sure. Thought we would be heading to $1.30.
Instos will be the moving factor. A look over the last 10 years in relation to bond yields is a starting point.
Yeah I agree with that. Trades cum the 2.95 cps divvy too. I'm happy to hold for the minimum gross yield of circa 6.5% I noted yesterday., and quietly hoping for slightly more this year and 6 cents or thereabouts in FY23 which is circa 7.5% gross for those on a 33% tax rate. Its okay as a hold and hope things get better.
My note of caution regarding any quick move back to and perhaps slightly above NTA of $1.36 is the company needs to demonstrate they have a clear roadmap back to annual distributions of 6.95 cps like they used to do before Covid (and hopefully more in time matching at least the rate of inflation so distributable earnings are not going backwards in real inflation adjusted terms). To be frank, estimated distributions of 5.3 cps for FY22 as a minimum was a slightly disappointing number and listening into the call yesterday gave a lot of broad brush stuff and future directional thinking but to me lacked clarity and definition in regard to what and exactly how they would rebuild distributions to that level ?
This is in stark contrast to ARG who seem to make steady annual increments to distributions notwithstanding the effects of Covid.
Its clear KPG have a focus on growing their asset base and transforming their real estate holdings and do not have a close focus on maintaining or getting back to prior distributable earnings in the short term. Kind of trust us, we will grow this thing for you.
On the other hand, ARG have a good development book too BUT they have a much closer focus on ensuring investors earn steady rewards for their support and have demonstrated greater resiliency during Covid and this together with their steady annual increases in dividends probably explains why ARG is trading at about NTA and KPG are at a ~ 10% discount. Disc: Hold both, twice as many ARG.
I am in the same boat as you. I've built a sizable position in this one so far and will keep buying at these prices. Fair value for me is still north of the NTA which has creeped upto $1.36.
Future prospects are also really strong for KPG. I expect the sales of the two older malls will find the new projects. Drury and BTR both represent fantastic opportunities and diversified recurring revenue streams for the company.
At some stage the listed PIE sector should also get a bit larger slice of the investments made by investors on the new 39% tax rate but I'm not sure if this group does enough investing to shift the pricing of KPG (or the other property PIE's). The 5.3c dividend is equivalent of 7.1% gross in this situation. If the div goes up to 6.0c, then its equivalent to 8.1% gross for those on 39% tax.
For what its worth, in my opinion you will find that many investors affected by the new 39% tax rate will be instructing their accountants to form an investment company for them which attracts a maximum tax rate of 28%. Once you go above a one third tax rate people tend to do something about it and its easy enough and perfectly legitimate for people to hold their investments in an investment company. For many, distributions from such company will not be an issue as they will take same as part repayment of the loan they lent the company to purchase the shares held previously in their own name. Company could be part or wholly owned by their family trust as an exercise in succession planning and / or asset protection down the track. Too much is being made of the 39% thing in my opinion in terms of gross implied yield as most with significant investment income in this tax bracket will be diverting this into family trusts or family investment companies.
To me, Sylvia is the golden goose of this company. More offices plus build to rent will surely help increase spending at the mall's shops, especially the food court/restaurants. Good synergies to be had building a working and living community on top of your shops. Not sure what I think about Drury yet, seems a lot of hurdles to clear yet in terms of council permits and such. Although if that new Drury train station ends up nearby I'll be pleased. One of my larger positions, not sure if I need more just yet but it's tempting.
Mr B is describing the standard practise which we adhered to right through the late 80's and 90's of the companies being owned by the Trusts and the individuals with the distributions going out to all holders.
This reduced tax and allowed company profits to be held tax free as investments also in Trust before profits were distributed to trust beneficiaries.
We handled blood stock this way with the partnerships set up by Faye and co as the bankers and under writers.
These days we have all this automated, as the standard accounting systems dont handle this level of complexity very well.
A lot of this was based on published articles available to practitioner's via the Accounting societies research archives.
US 10 year down over night, good for commercial property.
I've done countless thousands of tax returns over the last 40 years. There is only a tiny fraction of people who make over $180,000 personal income. Everyone I know earning more than that already has a family trust and / or company structure set up and the work was done years ago. People caught by this 39% personal tax rate will be those on a salary of more than $180,000, like ministers of parliament, Cindy and many of her colleagues how sad, never mind ;)
Yeah, 10 year rates in the US down overnight but what happens when the Fed's bond buying program comes to an end ?
US 10 Year.. would need to overlay the FED's buying programs. sorry the numbers were missing on the quilk cut and paste... but the general trend is there during the unwinding and the Taper tantrum.
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good result , i like how they are transitioning there model to community hub's. I think the govt making interest undeductible on rentals will pave the way for kpg to supply long term rentals and provide very stable returns.
Perhaps a worked example is in order.
Jack and Jill are comfortably well off baby boomers in their late fifties both with good careers in upper middle management and both earning $170K per annum.
They've done well in life and have built up a very good nest egg of $2m in investments with an average gross yield 5% returning them $100K passive income per annum.
Rather than take Cindy's new tax rate on the chin they form a new investment company called Jack and Jill investments ltd part owned by their family trust in which they already have their house and bach.
They sell their $2m worth of shares into the investment company and the company owes them a debt of $2m for the purchase of the shares.
The odd time Jack and Jill want special treats for their children and grandchildren that isn't covered by their already good salaries they get a part repayment of the $2m loan from Jack and Jill investments to fund that fancy first class Swiss ski holiday for the whole extended family. The income earned in the company $100K per annum before tax, $72,000 after tax is used to make partial repayment of the loan to fund the nice holiday. This lovely story pre supposes a post Covid recovered world where such indulgences can be enjoyed.
Later in life they sell more of their shares in Jack and Jill investment to their family Trust and start gifting back part of the loan as and when appropriate.
People need to take professional advice on these sort of structures.
Or you could buy KPG shares directly which is why this discussion is on the KPG tread. Beagle however makes an excellent point that many high income individuals will have structures like this so the new 39% tax rate may not create much extra demand for KPG or other listed PIE's
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You and I cant match the ethnic food joints though.
!930BC Abacus, & cash registers that don't register any cash!
It was so busy at Lynmall today I got dizzy going round and round looking for a carpark. So busy you'd swear the Queen herself and her Corgi's were there.
These must be good buying at the current level.
People can not travel overseas holidays.
They spent on malls... retailers..food court..movies n etc.
I guess people are still in love with blue chips stock. Overvalued stocks ....
Potential buyers remember these go ex dividend 2.95 cents on 8th June.
I guess we can expect a pretty ugly decline in the share price on the 8th June as the share price is falling in the run up to the ex-dividend date.
8th of June is today and they are already trading above their theoretical ex price.