Originally Posted by
LaserEyeKiwi
Reposting and updating some info that I shared a couple of weeks back:
- Less than half of KPGs tenants are speciality retail stores - and they all are getting more financial support from government than they did during last years lockdown (wage subsidy + lump sum resurgence payments),
- The rest of KPGs tenants are office tenants (most of who are carrying on as normal working from home), government departments and essential stores that remain open (supermarkets, medical etc) - none of whom will require rent relief.
- KPGs retail assets south of Auckland will be reopening fully on Wednesday (initially for click and collect and takeaway food operations), further reducing likelihood of rent relief to those speciality businesses - and if Level 2 arrives next week then even better.
- The income from “regional malls” like Northlands in Christchurch & The Plaza in Palmerston North (currently listed as “held for sale’) is not actually accounted for in KPG annual guidance. KPG management has said the longer these assets remain on their books, then the higher profits will be in the short term. So important to keep in mind that those regional malls are reopening fully shortly and have and will continue to be generating cashflow while they remain unsold, which will help counteract any rent relief payments that may occur in the Auckland assets. This is in addition of course to all of the continued uninterrupted cashflow being generated from KPGs commercial office assets nationwide, along with the cashflow from the large essential large anchor tenant stores (supermarkets etc obviously).
I think Auckland will likely be in level 4 for another few weeks at least, but I think the market has learnt that this is transient and a relatively minor concern long term for KPG. Especially as retail post lockdown has proved very resilient - if not outright booming - there have been no waves of retail bankruptcies, there have been no drop in retail rental yields (they have actually increased rents), there has in fact been more investment in retail assets across New Zealand.
This is the reason KPGs share price has essentially just seen a blip lower in this latest outbreak (remember it dropped to 83c last year when everyone was freaking out).