Property Stocks

[LaserEyeKiwi]

Weekly Update:

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[Fiordland Moose]

good work LEK

[Cod]

Excellent update, thankyou for doing this on this forum.

[LaserEyeKiwi]

Weekly update:
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[Basil]

Argosy at 30% discount to NTA, (about 50% of its portfolio in industrial property) and a tax free yield of 5.67%, no wonder that nice young man Josh has it on his watchlist.

[KW]

I'm watching the REITs with interest, one of my favourite sectors that I have not invested in for a long time.  But they are still expensive. If anyone remembers the Australian recession in 1990/91 then you will remember the damage a recession does to commercial property valuations.  Wake me when the average dividend yield is over 7% (may need 10% in a high inflation environment though), then I get interested :-) 

[Basil]

I'm sure you'll already be aware that most REIT's are PIE's (portfolio investment entities) so you don't pay any further tax on distributions and it doesn't form part of your taxable income so anyone on a 33% tax rate (and I assume most on here are) is effectively getting a big leg up with the PIE structure.

I was hoping ARG would get down to $1 so one could effectively get the 10% gross you refer too, (has hit a recent low of $1.13) but with an NTA of $1.74 I wouldn't hold your breath hoping for that but I concede you never really know what the future will hold.  Big pullback in 10 year Govt stock in the last couple of weeks from 4.3% to about 3.7% has seen some REIT's recover a bit.

If the N.Z. 10 year Govt stock rate got up to 5% you might see 10% gross yields in this sector but is that very likely as a full blown deep recession takes hold ?

[LaserEyeKiwi]

Interestingly the NZ 10 year has fallen off a cliff over the last week, down from 4.25% to 3.6% currently. Really quite remarkable.

[winner (n)]

Interestingly the NZ 10 year has fallen off a cliff over the last week, down from 4.25% to 3.6% currently. Really quite remarkable.

Always good when bonds roll over and fall off the cliff ...... Big win for equities.

[LaserEyeKiwi]

Weekly Update:

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[winner (n)]

that was a good week for property stocks eh LEK

maybe the big drop in govt stock got punters excited?

[Cod]

Big sell off since xmas based on commercial mortgages being short term and/or variable in rate and leases being fixed, it had been assumed that all REITS have a business model that works great in times of falling rates but one that can get in tons of trouble when rates rise.
However in NZ both ARG and SPG have D/E ratio that is a lot less than US counterparts and both have explicitly stated that they are short/medium term hedged against rate fluctuations.
So we end up with inflated rent reviews and stable/hedged mortgage costs which equals greater earnings same costs.

Disc - topped up at 120ARG  165SPG

[Auto Rower]

Thanks for the update laser eye kiwi ,I did vote for thee in the referendum Honest .
 Can I ask why you have not got Asset plus on there as well .

[Arbroath]

LEK those gross dig yields look a bit light. What tax rates and DPS assumptions are you using say for Argosy?

[Basil]

Good work LEK.

Arbroath - I think he's taking the gross yield off the NZX website.
People need to double check the yields for themselves (DYOR), because most of these companies are portfolio investment entities (PIE's) and therefore taxpayers will not pay any further tax on distributions.  For example with ARG their forecast dividends for FY23 are 6.65 cps which on $1.30 gives a net yield of 5.115%.  For people on a 33% tax rate that's worth 5.115 / 0.67 = 7.63%.