Weekly Update:
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good work LEK
Excellent update, thankyou for doing this on this forum.
Weekly update:
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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.
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 :-)
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 ?
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.
Quote from: LaserEyeKiwi on Jul 04, 2022, 01:46 PMInterestingly 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.
Weekly Update:
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that was a good week for property stocks eh LEK
maybe the big drop in govt stock got punters excited?
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
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 .
LEK those gross dig yields look a bit light. What tax rates and DPS assumptions are you using say for Argosy?
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%.
LEK's update highlights the large discounts to NTA
Divie yields don't look too bad but if they were trading at NTA yields would be
GMT 2.5%
VHP 3.2%
PFI 3.3%
PCT 4.5%
ARG 4.1%
IPL 4.1%
SPG 5.2%
KPG 4.9%
Not that great when looking at it ths way
Must mean something .... wonder what?
Weekly Update:
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Weekly Update:
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Quote from: LaserEyeKiwi on Jul 22, 2022, 07:13 PMWeekly Update:
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What is up with KPG, we all know that kiwis cannot fly, but this kiwi has a wobble
Disc Love the stock but not reinvested.
Yes, very unloved, but I do see potential in Drury
Yes Drury could eventuate to be of similar or superior quality to even Sylvia Park, but it still plays on my mind how poorly management has done over the last decade. Does not inspire confidence that all the spend on Drury or BTR will see meaningful increase in dividend. Also, those malls that they are trying to sell, they have been at it for years now - makes me think the value they are at on the books will be higher than the sale price...
Quote from: LaserEyeKiwi on Jul 22, 2022, 07:13 PMWeekly Update:
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L E K why are you missing out the other property stocks ,not really sure why you do that !!
Maybe you should rename this thread selected or favorite property stocks
Quote from: Auto Rower on Jul 26, 2022, 03:28 PML E K why are you missing out the other property stocks ,not really sure why you do that !!
Maybe you should rename this thread selected or favorite property stocks
The 8 stocks listed above are the 8 stocks contained in the NZX property ETF (NPF) and are also large enough that they are included in the NZX50. Would always consider adding some more - what particular names did you think should be considered?
Kiwi will have up to ~$750m in cash on the books by year end from the sale of Northlands (which has been in the final stages of its sale process for what seems like forever), and at least 50% equity sell down of its office portfolio in the new "co-investment platform" if that transaction proceeds as planned towards year end.
With that cash balance the discount to book value is going to look increasingly attractive with such a large portion of the company's assets in cash vs property.
Quote from: Habitz on Jul 22, 2022, 10:41 PMWhat is up with KPG, we all know that kiwis cannot fly, but this kiwi has a wobble
Disc Love the stock but not reinvested.
For my money the whole office sector has a huge question mark hanging over it. What percentage of workers will continue working from home indefinitely ? How much space will corporates consolidate with their office leases when they come up for renewal ? Talking around the traps with a few SME's it seems many are planning on reducing their footprint and yet in the second breath many acknowledge that a lot of staff's work from home performance is far from ideal. Kids, pets, hobbies, food and any number of other possible distractions exist at home that don't so much at work.
Its hard to say how this pans out. Its rare for me to have to go into Auckland central in rush hour, (I work from home) but I had to on Friday last week. Anecdotally I was profoundly surprised by the lack of traffic that morning and the trip took a little less than half an hour when I had allowed an hour.
This is a worldwide issue and it hangs over the office sector and it won't surprise me in the slightest if KPG find no takers for their office Joint Venture scheme or if there is a bid it will be at a very significant discount to "theoretical" NTA. (Remembering that cap rates might be rising with interest rates so last years NTA might be very theoretical).
I think KPG need to show they can execute at least one really meaningful sale ($200m+) before there's any chance a very modest reduction in the discount to NTA occurs, (remembering that all listed companies in this sector are trading at sizeable discounts to NTA).
Quote from: Basil on Jul 26, 2022, 05:38 PMTalking around the traps with a few SME's it seems many are planning on reducing their footprint and yet in the second breath many acknowledge that a lot of staff's work from home performance is far from ideal.
This. It's a balancing act which IMO doesn't work as well as it could for employers.
Was it school holidays last Friday? That may explain the lack of traffic.
Ah yes thanks, that explains it, it was school holidays.
Quote from: LaserEyeKiwi on Jul 26, 2022, 04:07 PMThe 8 stocks listed above are the 8 stocks contained in the NZX property ETF (NPF) and are also large enough that they are included in the NZX50. Would always consider adding some more - what particular names did you think should be considered?
Hi L E K
I can see that you are looking at the market cap fair guide lines, & there are a few land & construction company's as you know not in your list these would have different objectives & plans ,but I see A P L as similar to above retail, office,commercial etc and with the smallest cap still comparable for anyone looking at that sphere .
I must add this is in no way criticism of the excellent updates that you post .
kind regards Auto-rower
Here's how property stocks have gone lately
On average 11.3% up from 26 week lows and 6.7% up on 4 week lows
Sector on fire ...... long may it continue
Why is it that whatever you look at with this group of stocks KPG is always the laggard
0000prop.JPG
Nice work mate, thank you. For my money, with such a long history of declining eps I think the market is deeply skeptical KPG can execute effectively on their proposed deals in a way that's eps accretive.
Its very easy to be forgiven for thinking their main goals are ESG related and building new shiny things for tenants and their other stakeholders are more important than shareholders. EPS growth is simply not on their radar.
I listened in to their most recent call and I was REALLY underwhelmed. I wouldn't back these guys to build a major new town center in Drury that's eps accretive for all the tea in China. I think they are woefully short on expertise to engage in a project of that size in a way that creates value for shareholders. Selling their office assets into a new joint venture vehicle they will manage, lets see shall we. A lot of their assets have been on the block for a long time now and their execution, (what execution ?), has been very poor.
I think the market is dead right to be deeply skeptical about KPG's ability to perform relative to its peers.
The triple whammy for office real estate
Rising interest rates, remote working and the push for greener buildings suggest a bleak outlook for the commercial property market
https://www.ft.com/content/11ce3ca3-f71e-472c-ba50-6b4a6a59c0ea
"...it is only a question now of how bad it gets. CBRE last month spoke of a "marked slowdown everywhere" thanks to the speed of interest rate rises, which had "taken us all by surprise".
"..optimists on the future of the office may be clinging to an unrealistically rosy scenario. They point, in particular, to a limited impact on office leases since Covid first hit two and half years ago.
That demand picture gives false hope: leases are typically long-term without easy break clauses, meaning that only now is an initial trickle of non-renewals turning into something more worrying. Three-quarters of New York leases, for example, have not come up for renewal in the past two and a half years, a recent SSRN study found."
https://www.nzherald.co.nz/nz/shocking-footage-shows-horrific-attack-on-palmerston-north-shop-by-gang-of-youths/JGGDN7DWSGWXBVSHR6DY4X7X5E/
Stay classy Palmie...is that the KPG mall?
https://www.nzherald.co.nz/business/government-tax-u-turn-landlords-allowed-breaks-back-for-long-term-rentals/SYU2VNIX56C3XHYNS5WWELXXYI/
So this should be good news, particularly for KPG's build to rent model (future)
The FT once again knocking the office rental market..
European office market faces biggest test since financial crisis
Cost of servicing debt tops rental income for first time since 2007 as creditworthiness deteriorates...
..... Look at the financial crisis and what happened: the pinch points were the refinancing moments, that's where the squeeze can come," said Adam Goldin, head of the UK business for CC Land, the Chinese developer that owns London's Leadenhall Building, known as the "Cheesegrater" skyscraper.
"If you simply don't have the money to refinance then you don't have the money . . . There are plenty of organisations out there, [such as] funds that are closed-ended and can't put more money in, so their one direction is to sell. We will then find out how much capital is there to buy," he added.
Craig's recent report says
Implied revaluations impact on gearing
As property values begin to incorporate the rate hike cycle, there is a risk that decreasing valuations may lead to an LPV breaching its gearing covenant ratios. Such a breach may force an LPV to raise equity at dilutive prices
At current asset valuations the NZ LPV sector has an average committed gearing of 32.8%, which rises +8.3% to an average of 41.1% according to Adjusted Premium implied revaluations. We note the following:
With the exception of NZL, none of the NZ LPVs would breach their gearing covenant on a committed basis should property values close to what the Adjusted Premium implies. However, as highlighted before, recent data for NZ dairy land is supportive of current valuations and we view the discount NZL trades to NTA as a function of it being in the early stage of its growth rather than investors view on dairy land revaluations.
On a committed basis GMT and PFI would experience the smallest increase in gearing of +5.9% and 5.6%. This is unsurprising given they have some of the smaller Adjusted Premium implied downwards revaluations.
PCT and VHP have the next lowest increases in committed gearing of +7.2% and +7.0% respectively. In our PCT calculations we have included the $114m development of 117 Pakenham Street which, although an uncommitted opportunity, is experiencing a level of leasing enquiry PCT described as 'encouraging'. We therefore view it will likely commence.
Excluding ARG/IPL/KPG/SPG are implied to experience the greatest increase in committed gearing levels of +8.1%/+9.4%/+10.3%/+12.0%. Pleasingly, should their gearing increase to the point Adjusted Premium implied downwards revaluations suggest, they will still be within their covenants with ARG/IPL/KPG/SPG having headroom of 9%/23%/5%/2%.
US REIT index down 12% last quarter. Maybe the worst of the repricing of REIT's is behind us ?
Quote from: arekaywhy on Aug 12, 2022, 02:42 PMhttps://www.nzherald.co.nz/business/government-tax-u-turn-landlords-allowed-breaks-back-for-long-term-rentals/SYU2VNIX56C3XHYNS5WWELXXYI/
So this should be good news, particularly for KPG's build to rent model (future)
Do you really want these people https://www.nzherald.co.nz/nz/shocking-footage-shows-horrific-attack-on-palmerston-north-shop-by-gang-of-youths/JGGDN7DWSGWXBVSHR6DY4X7X5E/ living above the shopping malls? I guess it would give new meaning to "shop local" LOL
Quote from: Basil on Oct 02, 2022, 11:42 AMUS REIT index down 12% last quarter. Maybe the worst of the repricing of REIT's is behind us ?
How many can afford higher interest payments while maintaining current dividend payout? If they cut their dividends, then there is further market cap price reductions to come.
Market has been betting on a Fed "pivot" coming soon which has been holding up share prices as the market looks through higher interest rates, however this is looking increasingly unlikely. When "higher for longer" becomes accepted market wisdom, the REITS are all going to reprice again.
Quote from: KW on Oct 02, 2022, 03:14 PMDo you really want these people https://www.nzherald.co.nz/nz/shocking-footage-shows-horrific-attack-on-palmerston-north-shop-by-gang-of-youths/JGGDN7DWSGWXBVSHR6DY4X7X5E/ living above the shopping malls? I guess it would give new meaning to "shop local" LOL
I'd expect that the rental units on top of malls won't be priced for social housing :) but apart from that - only really dumb crooks looking for a really short career outside of prison steal from their direct neighbourhood, i.e. it might even be a good idea to allow them to live there :).
Here is another proposal: Don't just allow them to live there, but give them jobs as security staff. I am sure problems in these malls would drastically go down!
Opportunity knocks says Warren Couillault, from Hobson Wealth and Koura Wealth
Think he's saying BUY
Does opportunity knock at the door of listed property?
https://businessdesk.co.nz/article/opinion/does-opportunity-knock-at-the-door-of-listed-property
Does that apply to PFI as well? At face value I don't understand why it has such a high share price/low yield, is there some big development coming on stream or is the PFI yield really seen as safer than the NZ 10 year bonds?
Smash up train wreck could last a while in this sector... lucky not as bad as the C's though...
Inflation .....
https://www.stuff.co.nz/business/opinion-analysis/300737450/bank-profits-arent-the-problem-the-reserve-bank-is
Quote from: Waltzing on Nov 13, 2022, 09:03 AMSmash up train wreck could last a while in this sector... lucky not as bad as the C's though...
Inflation .....
https://www.stuff.co.nz/business/opinion-analysis/300737450/bank-profits-arent-the-problem-the-reserve-bank-is
I'm genuinely surprised they were allowed to run that story
Quote from: arekaywhy on Nov 14, 2022, 10:33 AMI'm genuinely surprised they were allowed to run that story
Allowed by whom?
Last time I checked this was still a free country apart from a bunch of conspiracy theorists ...
have a look at the terms of the Public Interest Journalism Fund, and then consider the typical bent of the editors at these rags
Quote from: arekaywhy on Nov 15, 2022, 11:10 AMhave a look at the terms of the Public Interest Journalism Fund, and then consider the typical bent of the editors at these rags
Look, you clearly come with a strongly biased believe system (and maybe to a degree we all do :) );
I can remember as well left wing as well as right wing publications in NZ media ... though often the only bias of the author appears to be to fill the medium with noise.
It is not unusual that strong supporters of the opposition (whoever this might be at the time) think that the media are biased towards the government of the time. Happened under National as well as under Labour governments, but is just a confirmation of the posters confirmation bias ..., and has nothing to do with facts.
However - none of this means that journalists in NZ are not allowed to write (or say) whatever they think ... as long as they avoid hate speech and plain lies.
off topic : but when the 1689 right act is no longer considered by the NZ bench to provide a framework for that free country considering applying to the republic of ireland for political asylum...
I could think of better places than that Waltzing maybe Russia
IPL valuations taking a $143m hit or 12% as portfolio revalued
I'm no expert in such matters but an average cap rate of 5.6% still seems a little low.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/IPL/408855/391288.pdf
Possibly more downside to come.
From Craig's today
AUSTRALIAN REITS – Our JPM Colleague Richard Jones has published an update on the Aussie REIT space overnight looking at transaction markets. Valuations across the REIT's held up surprisingly well in the Dec-22 half with only minor devaluations across the 3 major commercial real estate classes: Office (-2.4%), Retail (-0.4%) and Industrial (+1.2%). The lingering question remains why not deeper cuts to values given the surge in bond yields, and the response from the REIT is that transaction values are yet to show a mark-down in book values is justified. Richard's view is that asset value declines are coming as rising neutral rates have lifted return expectations. He expects a further ~10% decline in assets values to be taken in 2023 based on targeted levered IRR framework which compares to current REIT equity pricing which implies ~20% declines
Quote from: Shareguy on Mar 29, 2023, 12:31 PMPossibly more downside to come.
From Craig's today
AUSTRALIAN REITS – Our JPM Colleague Richard Jones has published an update on the Aussie REIT space overnight looking at transaction markets. Valuations across the REIT's held up surprisingly well in the Dec-22 half with only minor devaluations across the 3 major commercial real estate classes: Office (-2.4%), Retail (-0.4%) and Industrial (+1.2%). The lingering question remains why not deeper cuts to values given the surge in bond yields, and the response from the REIT is that transaction values are yet to show a mark-down in book values is justified. Richard's view is that asset value declines are coming as rising neutral rates have lifted return expectations. He expects a further ~10% decline in assets values to be taken in 2023 based on targeted levered IRR framework which compares to current REIT equity pricing which implies ~20% declines
Isn't he saying that the current prices of reits are lower than they should be?
Quote from: Poet on Mar 29, 2023, 12:44 PMIsn't he saying that the current prices of reits are lower than they should be?
Yes and we've seen some big reductions in long term interest rates in the last few weeks, with potentially more to come so maybe the cap rates the valuers use are about right and generally speaking, REIT's should be trading a lot closer to stated NTA?
Quote from: Poet on Mar 29, 2023, 12:44 PMIsn't he saying that the current prices of reits are lower than they should be?
That's not how I read it. I think he's saying that if asset values fall 10% then REIT equity prices need to fall 20% because they are currently not reflecting any decline in asset values or the expectation of a higher yield in a higher interest rate environment.
This is consistent with international analysts and media that are saying that commercial real estate is the next shoe to drop. Zerohedge are already calling it the The Big Short 3.0. Lots of headlines like this ....
https://www.afr.com/property/commercial/why-super-savers-should-be-worried-about-commercial-real-estate-20230321-p5ctx1
https://www.marketwatch.com/story/there-is-going-to-be-a-real-mess-in-commercial-real-estate-but-maybe-not-a-financial-disaster-economists-says-bc548ab
I think we can agree that the article was poorly worded, although to my mind, not ambiguous.
Anyway - exhibit B for consideration
Same guy (Jones) quoted in AFR yesterday
Jones estimates that across the REIT sector there is $20 billion of liquidity available, equivalent to 35 per cent of drawn debt. He believes the recent sell-off is overdone, but admits that the outlook for the sector is likely to remain volatile.
https://www.afr.com/chanticleer/how-it-might-get-uncomfortable-for-australian-commercial-property-20230329-p5cwe0
You've got the likes of Goodman Group currently trading on a dividend yield of 1.6% which is utterly ridiculous. 3 years ago GMG was trading at $11, then it went to $26 during Covid. Even back at $18 its still not reflecting reality.
Its funny how property prices can be revalued upwards quickly (like during Covid) but then they come up with all the excuses as to how they cant revalue them downwards again.
ARG trading on a tax paid (PIE), yield of 6%, (9% gross for those of us on a 33% tax rate).
Enjoyed getting my $2.5K tax free quarterly divvy yesterday.
Last stated NTA $1.72. Last traded price $1.12. 60 cent margin of safety (35% discount to NTA).
Quite content with that.
Quote from: Basil on Mar 30, 2023, 04:03 PMARG trading on a tax paid (PIE), yield of 6%, (9% gross for those of us on a 33% tax rate).
Enjoyed getting my $2.5K tax free quarterly divvy yesterday.
Last stated NTA $1.72. Last traded price $1.12. 60 cent margin of safety (35% discount to NTA).
Quite content with that.
Not bad. 51% industrial property portfolio exposure should be fine and do well. 39% second tier office could be a bit more soggy - but decent margin of safety as you say.
Argosy Property Trust, Goodman Property Trust and Kiwi Property Group report next month.
Kiwi Property Group's most recent valuation update occurred in early March, reporting a 4.1% decline, while Goodman Property Trust's March update saw a 4.7% valuation decline.
The current investment environment - particularly the direction of interest rate movements - is a challenge for the sector.
While most of these property trusts remain sufficiently capitalised to avoid any risk of actual failure, the challenge remains to position themselves going forward and optimise returns for unit holders.
2023 may end up being a year of balance sheet and existing asset management for the sector, as depressed valuations and the rising cost of capital limit progress on long-term strategies.
Not my work - That's Chris Lee today - ffs - call a spade a spade - higher interest rates equal lower prop values
My view is long term interest rates have already peaked (Cap rates peaking too?) and the discounts to NTA for some REIT's are excessive. As we get past the peak, and interest rates start falling again, earning a PIE tax paid ~ 6% return, (effective rate for 33% taxpayers ~ 9%) is going to look even more attractive than it does now. Thought for the day...if capital gains are off the table with property for the next few years, maybe it's the yield that really matters now...
Quote from: Basil on Apr 04, 2023, 08:55 AMMy view is long term interest rates have already peaked (Cap rates peaking too?) and the discounts to NTA for some REIT's are excessive. As we get past the peak, and interest rates start falling again, earning a PIE tax paid ~ 6% return, (effective rate for 33% taxpayers ~ 9%) is going to look even more attractive than it does now. Thought for the day...if capital gains are off the table with property for the next few years, maybe it's the yield that really matters now...
Agreed - looks like we are close to the interest peak and as soon as interest rates drop again pseudo bonds (like all the REITS) will start rising.
Well, that's my view anyway ... and holding ARG, KPG and various Retirement villages (at the end of the day just another REIT).
Morningstar senior equity analyst Alexander Prineas says Australian REITs are well placed compared to their global peers.
"Look, everything is connected, and you can get some potential collateral damage from from things that are going on, weakness in the in the banking sector overseas and that sort of thing," he says.
"But if you don't need to sell assets, and you don't need to tap debt markets, and you're continuing to collect that rental income, then I think you're in a lot better shape than a lot of other businesses."
In the case of many locally listed property stocks, Prineas says they have long leases to a strong book of tenants, adequate interest rate hedging, and modest gearing levels - which is a measure of debt relative to assets.
"A lot of the bigger Aussie REITs don't need to tap the debt markets for the next 12 to 24 months so we think they can ride through a lot of these potential ructions in commercial property markets overseas," he says.
And while rising interest rates will hit valuations on their physical property assets, Prineas says this has been priced into the share price of the owners of these assets.
"The big office players is really where we see the biggest opportunities, and essentially the CBD is on special at the moment."
"You can buy them at a 35% discount to the values that super funds hold the assets on their books by accessing the listed REIT space."
Very strong day for ARG, GMT, KPG today... The country loves commercial property in Auckland.
yes even KPG got some...
All the action to day is in GMT....
GMT = Great Momentum Trade.
They are going wild for auckland commercial property....
Co-working space demands change in line with economic times
https://www.stuff.co.nz/business/property/131778996/coworking-space-demands-change-in-line-with-economic-times
222!!!!!
what demand!!!! For Auckland .... not smash and grab targets one supposes.
Agree that if you cant be there in person some text on a screen is not very persuasive
. Event a webineer may not sway the deal if the concept is new to many.
talking of property development has anyone come across any large tonka toys , very large ones?
we are in need of some props for a project that requires some larger toys , tonka would be good.
Large plastic ... must be able to be wheeled into place..
Rental properties and the interest in the interest...
https://www.stuff.co.nz/business/property/132018727/property-investors-facing-equivalent-of-105-interest-rate-investor-says
"Onekawa previously said she had stopped buying in New Zealand entirely, because prices were too high and compliance requirements too strict to make cash flows stack up."
GMT out today with an increase in earnings, report and DIV.
https://www.nzx.com/companies/GMT/announcements
Strong demand again across some of the com props..
GMT especially strong...
PCT seem quite happy with their prospects in Wynyard Quarter, Auckland where they are building 3 blocks.
Wynyard Quayside - new offices for 1400 Beca staff and others in the Wynyard Quarter
https://www.nzherald.co.nz/business/wynyard-quayside-new-offices-for-1400-beca-staff-and-others-in-the-wynyard-quarter/LAI2BSXTPJ4XNQ4GK2EXFUHJ4U/
And for those that don't sneak off elsewhere from time to time.....Snoopy sharing some analysis on listed property trusts......
Worth a read. :)
https://www.afr.com/property/commercial/industry-megafund-art-slashes-office-tower-values-by-15pc-20230703-p5dlfi
The Australian Retirement Trust has downgraded some of its office towers by as much as 15 per cent as the sector faces a reckoning (https://www.afr.com/property/commercial/why-super-savers-should-be-worried-about-commercial-real-estate-20230321-p5ctx1)and industry super funds turn to equities to cushion poor real estate performance.
This far outstrips Dexus' 6 per cent write-down (https://www.afr.com/property/commercial/dexus-wipes-1b-from-portfolio-as-values-slide-20230621-p5di7j) of its diversified portfolio last month and Charter Hall's 2.8 per cent downgrade (https://www.afr.com/property/commercial/charter-hall-takes-1-9b-hit-on-portfolio-value-as-rates-bite-20230615-p5dgrc) to its managed property portfolio, as regulators warn of over-inflated valuations.
Property valuers have been warning that prime CBD office towers could drop in value by as much as 20 per cent in coming months (https://www.afr.com/property/commercial/cbd-office-towers-face-price-falls-of-up-to-20pc-20230317-p5ct5t) and the superannuation industry watchdog is ramping up scrutiny (https://www.afr.com/companies/financial-services/apra-targets-valuations-of-unlisted-superannuation-assets-20230201-p5cgze) of how funds value unlisted assets.
even if well over valued the portfolio attracts buyers daily as its mainly a logistics hub company?
inner city would effect PCT more?
ARG broke up through the 100 day MA this afternoon at $1.125 Bottom looks like it might be in.
Disc: I added slightly to my position today.
What KPG funding model going forward. Have they got a cash stash to spend on these new towns. Did they sell all those old malls?
ARG's road show preso stated much of the portfolio is under market rents...
If the current govt stays in power they might double the number of ministries and ARG will be scrambling to build new blocks... could help PCT or even KPG who could build new towns for government allocated housing for that amazing ministry called housing something or rather dumpsters...
Sorry about that complete off the wall meaningless statements in a country governed by meaningless committees of political correctness and screaming ministers...
but wait did not someone write about all this before and he was called .... https://en.wikipedia.org/wiki/Franz_Kafka
thinking endless rooms of people sitting at desks with the sound of type writers clicking for ever..
Quote from: Waltzing on Jul 04, 2023, 09:03 PMIf the current govt stays in power they might double the number of ministries and ARG will be scrambling to build new blocks... could help PCT or even KPG who could build new towns for government allocated housing for that amazing ministry called housing something or rather dumpsters...
Me theenks you mees the real investment opportunity vor government affordable housing. It vill be vith Turners - zupplying more cars vor the poor to zleep in.
RB
Quote from: Waltzing on Jul 04, 2023, 09:03 PMWhat KPG funding model going forward. Have they got a cash stash to spend on these new towns. Did they sell all those old malls?
ARG's road show preso stated much of the portfolio is under market rents...
If the current govt stays in power they might double the number of ministries and ARG will be scrambling to build new blocks... could help PCT or even KPG who could build new towns for government allocated housing for that amazing ministry called housing something or rather dumpsters...
Sorry about that complete off the wall meaningless statements in a country governed by meaningless committees of political correctness and screaming ministers...
but wait did not someone write about all this before and he was called .... https://en.wikipedia.org/wiki/Franz_Kafka
thinking endless rooms of people sitting at desks with the sound of type writers clicking for ever..
Is 50 mil enough. Will be staged and deposits taken and bank funding if needed
ARG off to the races almost...
Did not like the heading, so did not watch it.
As the expression goes.....'hear no evil, .......' ;D
With reference to the US market:
Commercial real estate rebound may not happen until 2040, economist explains
https://www.youtube.com/watch?v=vzIXSQzbqYo
Do not think (hope) the commercial property is such a 'crisis' in NZ.
Quote from: Onemootpoint on Jul 06, 2023, 02:04 AMDid not like the heading, so did not watch it.
As the expression goes.....'hear no evil, .......' ;D
With reference to the US market:
Commercial real estate rebound may not happen until 2040, economist explains
https://www.youtube.com/watch?v=vzIXSQzbqYo
Do not think (hope) the commercial property is such a 'crisis' in NZ.
Watched the first couple minutes
Timeframe too extended IMO though made good points, to compare length of time from 2007 peak until 2019 price recovery.
US non-recourse. Holds more risk for lenders than NZ and Oz
GMT on fire lately... and ARG....
big bets on commercial property in the upper north island.
RBNZ decision out today.... ARG still hanging in there... GMT refusing to sell off...
Quote from: Habitz on Jul 06, 2023, 07:58 AMUS non-recourse. Holds more risk for lenders than NZ and Oz
Not the US entirely. Only 12 States are non-recourse. The rest all operate just like everywhere else.
Markets with Madison: Commercial property's interest rate pain
https://www.nzherald.co.nz/business/markets-with-madison-commercial-propertys-interest-rate-pain/RQBMQRFOTKXQDE2VY4ZYF6I5FI/
She interviewed VHP's fund manager in the first half.
Second half was with Rohan Korman-Smit from ForBarr. He tried hard not to be too negative, but still interesting. Seem to have a few clear favourites but not naming them directly. 'Fair value' a key word. But maybe some more interest rate pain to come.
Quote from: Onemootpoint on Jul 17, 2023, 07:37 PMSecond half was with Rohan Korman-Smit from ForBarr. He tried hard not to be too negative, but still interesting. Seem to have a few clear favourites but not naming them directly. 'Fair value' a key word. But maybe some more interest rate pain to come.
R K-S says ve are at 'vair value' on market pricing vor current interest rates, vith the current market discounts to NTA zignalling more vrite downs to come!
Industrial/office/retail most desirable in that order, but market pricing those assets accordingly too. Office upgrades needed to entice vorkers back vrom 'vork at home'. Retail long under pressure from internet zhopping, and zhort term consumer pressure.
'One in particular with balance sheet concerns has successfully executed a few asset sales' (Kiwi Property Group?, Precinct Properties?)
'Dividend growth most likely to come from under-renting today relative to market rates, with rising interest costs the negative factor. Expect relatively flat dividends (sector has always had just a 1-2% organic dividend growth rate) for the next three years.'
"For investors portfolio valuation, occupancy and lease terms should be considered. These three factors are determined by the outlook for the sector (do you expect sector rents to grow), the security of the tenant covenant (is the tenant likely to keep paying the rent), the gearing (where the effect of interest rates are felt, and the probability of capital raising at a discount comes in)."
"Yield verses comparable yield is a good metric, and a 'yield plus growth' type metric is generally how we think about it. Quality named tenants, working in an area of essential service with long lease terms should hold up pretty well in a possible volatile economic backdrop of the next twelve months."
RB
Reserve Bank while wishing to fight property price FOMO will have a tough time if Interest on capital is reintroduced in the PL of investors for rental properties.
While not directly related to COMP PROPS it places pressure on the whole market probably encourages people to keep investing in property in NZ.
Parker being removed as rev minister show Chippie does not want to scare the horses any farther and drive wealth investors off shore before election.
China today maybe heading for a property crash and watch the list property stocks as bonds on the top listed performer now trading at 10 percent of listed value...
SO much for brokers reports saying lighten up on GMT ....
Nupe they are piling in ...
Total failure of ARG to stay about 1.20 for DIV says it all...
another 12 months of this ? ... retest of 1.10 if ocr is hiked again?
Country cant take much more of this?
Could never happen NZ could it ...but Queen St seems to be heading that way already.
From Chris Lee
In my years working in London, Oxford Street was the retailers' jewel, attracting multi-millions of shoppers and tourists every year.
Today, the travails of retailers has left Oxford Street in disarray, major tenants like the House of Fraser long gone, reacting to the new phenomenon of homeless guests at their doorways, empty tenancies, constant shoplifting (with no police interactions), a recent social media organised mass raid by teenage thieves and, most of all, a refusal of Oxford Street property owners to reassess rentals, given the falling revenues, margins, and profits of their tenants.
Marks and Sparks, a Marble Arch icon, now says it plans to move as shoplifting becomes endemic and security costs unaffordable.
The Oxford Street shop owners note that the new trend to fill empty shops with seven-day tenants was the main factor in the 2022 seizure by regulators of 1 million pounds worth of fake Rolex watches.
The demand for much lower rentals will surely lead to much lower property valuations in a street where, in my day, you wore your Sunday best to do your Christmas shopping.
Queen street is almost there already. I had to go to a meeting that way a few weeks ago and witnessed two groups of youths having an altercation on the other side of the street in broad daylight. Since attending that meeting there have been two murders on Queen St in quick succession.
A real shame. I would suggest a number of people would be shocked walking up Queen st these days. The number of homeless and unsavoury characters is noticeable. Backpackers and other accomodation that were once for tourists are now home to emergency housing and returning 501's from Australia. Certainly not a place to be at night.
Parts of the Golden Mile in Wellington pretty bad as well .....only the brave frequent Manners St even during the day
All for the reasons Shareguy mentioned ......and no doubt over time this will spread ....even to places like Newmarket
What effect will the removal of depreciation have on earnings per share even though the silly revaluations continue to pollute retained earnings....
How can they be retained earnings?
buying at month end in these stock,,, ARG and GMT some bigger orders at the close.
certainly not put off my new tax policies.
New Zealand allowed depreciation on all buildings before the 2011-12 income year, after that it was rated at 0%.
Building depreciation was reintroduced for non-residential buildings only as part of COVID-19 response measures. This change was introduced from the 2020-21 income year, the depreciation rate for a non-residential building is 2% DV, or 1.5% SL. A new government have stated that depreciation will not be allowed returning to the pre covid status quo ante.
Question:
Did the dividend change dramatically between these or any other periods 2012 to 2022 interim results.
ARG 30 sept 2012 6.0 cents on 35.4 million income 6/35.4 = 0.169 cents div per million
ARG 30 sept 2013 6.0 cents on 40.3 million income 6/40.3 = 0.148 cents div per million
ARG 30 sept 2014 6.0 cents on 43.8 million income 6/43.8 = 0.136 cents div per million
ARG 30 sept 2015 6.0 cents on 48.6 million income 6/48.6 = 0.123 cents div per million
ARG 30 sept 2016 6.1 cents on 53.7 million income 6.1/53.7 = 0.113 cents div per million
ARG 30 sept 2017 6.2 cents on 48.5 million income 6.2/48.5 = 0.127 cents div per million
ARG 30 sept 2018 6.25 cents on 50.8 million income 6.25/50.8 = 0.123 cents div per million
ARG 30 sept 2019 6.275 cents on 51.0 million income 6.275/51.0 = 0.123 cents div per million
ARG 30 sept 2020 6.45 cents on 51.1 million income 6.45/51.1 = 0.126 cents div per million
ARG 30 sept 2021 6.55 cents on 53.1 million income 6.55/53.1 = 0.123 cents div per million
ARG 30 sept 2022 6.65 cents on 55.0 million income 6.65/55.0 = 0.121 cents div per million
Answer
No.
Well its off a bit now for sure...
No accountants in any party then ... no one who understands capital... no depreciation on what next ...
Arg has struggled for sure but some nice building at least?
Winston says growth for 2024 according to world funny money fund is ... well not much...
cant see these SP prices recovering any time soon... if sky city recovers roll out and into that and if you cant handle gambling there is always TRA... but that isnt a very green stock but ...
look manufactuers of 155 and tank nuclear active shells is probably a good bet ...
Good guy this David McWilliams and his economic commentary is generally on the button. Recent puece from Ireland ......could easily change Dublin to Auckland or Wellington and see this happening in this country
Ireland's commercial property market is on the cusp of monumental collapse
https://davidmcwilliams.webflow.io/articles/irelands-commercial-property-market-is-on-the-cusp-of-monumental-collapse
Scaring the horses...
once people figure out they can park there private holding companies there and share a office with thousands of other investors it will be a race to get in before you cant get a name plaque on the office ground level floor map...
not sure how many thousansds of companies to an office ... open plan ...
and your tax rate is half that of else where well...
dont worry its only ireland... the irish are used to everything going you know what...
best place to have your holding companies ...
they actually have their own language.... fancy that...
they will just get drunk and go and listen to some music...
https://www.youtube.com/watch?v=s11BuatTuXk
now that boy can drink....
but when your longing for home you cant beat some irish company...
https://www.youtube.com/watch?v=4Sje2VYw99A
tá mé ag iarraidh a dhul abhaile
Quote from: Waltzing on Oct 25, 2023, 07:37 PMScaring the horses...
once people figure out they can park there private holding companies there and share a office with thousands of other investors it will be a race to get in before you cant get a name plaque on the office ground level floor map...
not sure how many thousansds of companies to an office ... open plan ...
and your tax rate is half that of else where well...
dont worry its only ireland... the irish are used to everything going you know what...
best place to have your holding companies ...
they actually have their own language.... fancy that...
they will just get drunk and go and listen to some music...
https://www.youtube.com/watch?v=s11BuatTuXk
now this boy can drink....
Honestly, you are the the weirdest poster ever that I've seen. I mostly don't understand what you're saying, ever, but even putting that down to language difficulties which you obviously have, you don't communicate very well on anything and just come across as someone very odd and not worth reading.
You might be my first on here to go on ignore. Tell us why we should read your posts?
Live and let live I say. He's alright and doesn't need to justify himself to someone who's made less than 100 posts on here, or frankly to anyone else. Everyone has their own idiosyncrasies and peculiarities. Nobody's making you read his posts. Use the ignore function if you feel the need to.
Quote from: winner (n) on Oct 25, 2023, 07:20 PMGood guy this David McWilliams and his economic commentary is generally on the button. Recent puece from Ireland ......could easily change Dublin to Auckland or Wellington and see this happening in this country
Ireland's commercial property market is on the cusp of monumental collapse
https://davidmcwilliams.webflow.io/articles/irelands-commercial-property-market-is-on-the-cusp-of-monumental-collapse
I don't quite see the same situation - the article says the vacancy rate in Dublin is an astronomical almost 15%, with much more newly built space due to come online shortly.
Meanwhile the New Zealand listed property companies have vacancy rate under 1 or 2%.
Hey waltz me old mate, don't take to heart that rough post about your style of posts.
I enjoy them and get the gist of what you saying which is generally on point.
Keep at it mate
Cheers
https://www.nzherald.co.nz/business/unlocking-the-value-of-milk-fonterra-is-just-getting-started-says-ceo-miles-hurrell/F5SYHTQZFRAGPBHVX2UJL4K6DE/
apparently Fonterra is going to be rentng some property in what can only be described as the only sane country in Europe...
Off TOPIC...
The post was NOT SUPPOSED TO MAKE MUCH SENSE...
https://www.belfasttelegraph.co.uk/entertainment/news/pogues-singer-shane-macgowan-asked-gerry-adams-to-pass-republican-slogan-message-to-pm-tony-blair/39824034.html
Long live the IRISH...Alway look on the sunny side ..
https://www.youtube.com/watch?v=PFarc3yjSC8&list=OLAK5uy_m2KrQXGEFRQIZqAWx3D47xt3EsZifBf1A
Quote from: Waltzing on Oct 26, 2023, 08:41 AMhttps://www.nzherald.co.nz/business/unlocking-the-value-of-milk-fonterra-is-just-getting-started-says-ceo-miles-hurrell/F5SYHTQZFRAGPBHVX2UJL4K6DE/
apparently Fonterra is going to be rentng some property in what can only be described as the only sane country in Europe...
Off TOPIC...
The post was NOT SUPPOSED TO MAKE MUCH SENSE...
https://www.belfasttelegraph.co.uk/entertainment/news/pogues-singer-shane-macgowan-asked-gerry-adams-to-pass-republican-slogan-message-to-pm-tony-blair/39824034.html
Long live the IRISH...Alway look on the sunny side ..
https://www.youtube.com/watch?v=PFarc3yjSC8&list=OLAK5uy_m2KrQXGEFRQIZqAWx3D47xt3EsZifBf1A
Hey waltz ....thing this song is English but has hidden meanings
https://www.youtube.com/watch?v=MR5XSOdjKMA
Winner() you forgot to say OFF TOPIC !!!
Wiiner(), how long before property stocks on the NZX come even close to a stock O Neil would buy and hold...
Quote from: Waltzing on Oct 26, 2023, 08:41 AMhttps://www.nzherald.co.nz/business/unlocking-the-value-of-milk-fonterra-is-just-getting-started-says-ceo-miles-hurrell/F5SYHTQZFRAGPBHVX2UJL4K6DE/
The most depressing thing about that is that even a company like Fonterra cant find any reason to justify investing in innovation in NZ.
Crikey KW ... that is a bit depressing ...
Quote from: KW on Oct 26, 2023, 10:26 AMThe most depressing thing about that is that even a company like Fonterra cant find any reason to justify investing in innovation in NZ.
Agree
Could have teamed up Blis or other Otago people
Quote from: Waltzing on Oct 26, 2023, 10:27 AMCrikey KW ... that is a bit depressing ...
They may just be too busy trying to sort the mess they have over in Aust.
One minute it's for sale, the next it's not and... "operational efficiency" is going to save the day!
Targeting $1B of operational efficiency to be achieved in 7 years. That's pretty gunny when your costs for 2023 year were $2.3B and you've not managed to reduce costs at all in the last three years! Still, #GOALS, as they say, eh!
Oh and net profit from the Aust arm was down from $65m to $23m YoY too.
Aroha mai - that's all completely off topic!
(Off topic for a second) :D
Unusual post earlier in this thread. I find our forum friend W probably one of the the most interesting persons around here (and elsewhere).
Some seriously good info of ALL sorts in many threads often, but not always presented with a whimsical sense of humour.
Keep them coming W. Appreciated.
Prop Comps getting a BID from the US 10 year taking a pounding over night...
These will rebound in the next 12 months if inflation abates by xmas 2024...
CNBC Rick Santelli charting the 10 year today shows a level at 4.40 . Some brilliant charting Triangulation of the trends..
Next level 4.25 ...
Are the lows in for the COMP PROPS?
12 months of tough sleding and then?
Did you notice his pointing out the 5 triangular tops?
Almost 200,000 square metres of new warehouse space consented in Auckland in Q3
https://www.interest.co.nz/property/125300/almost-200000-square-metres-new-warehouse-space-consented-auckland-q3
"According to Statistics NZ's building consent data, 197,398 square metres (sqm) of new warehouse and storage buildings were consented in Auckland in Q3, which was the most new warehouse/storage space consented in the region in any quarter since Statistics NZ began compiling the figures in their current format in 1990."
GoodMan Prop has done a $226.5 million devaluation of its portfolio. That pushed the bottom line into a $153.4m loss for the six months.
US 10 year now down at 4,2... can NZ really keep its rates at higher levels or is the KIWI dollar just a JUNK currency...
those losses are fake... contaminating the retained revenue account with hot valuations... blame some WOKE DONKIE accounting professor...
must live in a university and we all know these days that they just houses of HOT IDEAS that evaporate faster than an iceberg on a global warming hot day...
Last week's news but worth noting - not everyone is happy:
https://www.nzherald.co.nz/nz/auckland-council-faces-legal-action-threat-if-it-sells-downtown-car-park-building-to-precinct-properties/QR7Q6424IRERXP5DU6FGDBWI7I/
https://www.stuff.co.nz/national/politics/local-government/301014518/auckland-downtown-carpark-a-122-million-done-deal-despite-tempers
"Auckland Council has sold its big Downtown Carpark building, but only after one of the most ill-tempered meetings this term.
The deal with listed property developer and landlord Precinct Properties which is partnering with Ngāti Whātua Ōrākei, was confirmed...."
There is no chance these stocks will get tax relief if the rumours out of the minister of finance office are as bad as reported by the tax payer union today.... depreciation wont be added back...
they are calling for an enquiry into the previous minster...
"A government inquiry, or at minimum, a select committee inquiry with the ability to call under oath the former Minister of Finance, and Treasury officials is called for. If the books are in the state Nicola Willis claims, clearly there has been a major failing within our public finance institutions. As well as getting to the truth, Wellington need to learn the lessons, if we are not to return to the 1980-style politicisation of public accounts."
Not strictly commercial property but ...
https://www.cnbc.com/2023/11/30/pending-home-sales-drop-to-record-low.html
Quote from: Waltzing on Dec 04, 2023, 09:23 PMNot strictly commercial property but ...
https://www.cnbc.com/2023/11/30/pending-home-sales-drop-to-record-low.html
Interesting but is there much correlation between house sales here and in the US?
our reserve banks expects the full effects of its rate hikes to kid in over the next 12 months and no relief till 2025...
well... maybe the house sales at the moment are being held up by inflow of immigrants?
those rate hikes could hurt peoples income next financial year and hit sales of everything...
US mortgages are typically locked in for 30 years at a fixed rates, and so most of the US homeowners are essentially trapped in their current houses on 3% mortgages, as anyone with half a brain did a mortgage reset when rates dropped that low.
So end result is homeowners are not feeling the higher rates, but the US home market has stalled out as no one is moving unless they absolutely have too.
USA REITS having a stunning rebound lately, well off the lows. here is the biggest by funds under management:
ARG - GMT have moved back up also. GMT the big surprise over the last 30 days...
Quote from: LaserEyeKiwi on Dec 19, 2023, 11:56 AMUSA REITS having a stunning rebound lately, well off the lows. here is the biggest by funds under management:
AREITs the same. This is the last chance to lock in high dividend yields.
We are about to cross the streams.(Ghostbusters reference)
Screenshot_20231219_161055_Chrome~2.jpg
Looks like Fundies are late to the party, both ARG and SPG are being held down whilst funds load up, half a million SPG have traded in the first six mins of trading, retail have also been caught napping see below chart from the US.
GBuebVwW4AAiH8j.jpeg
Quote from: Cod on Dec 20, 2023, 10:17 AMLooks like Fundies are late to the party, both ARG and SPG are being held down whilst funds load up, half a million SPG have traded in the first six mins of trading, retail have also been caught napping see below chart from the US.
Unlike the rest of world where economies are ticking along nicely, and retail spending is hitting new highs, NZ is in recession. Might be a while before retail property stocks pick up in NZ.
Agreed, but two things:
1. The equity market isn't the economy and vice versa.
2. The equity markets are open to overseas buyers, when overseas buyers see 6 or 7% on offer and they are only gettin 3% locally it is inticing.
Quote from: Cod on Dec 20, 2023, 11:13 AMAgreed, but two things:
1. The equity market isn't the economy and vice versa.
2. The equity markets are open to overseas buyers, when overseas buyers see 6 or 7% on offer and they are only gettin 3% locally it is inticing.
The stock market forecasts the state of the economy by about 12 months. Especially for retail. REITS cant sustain 6-7% yields if retail turnover is shrinking, as many of their leases are tied to tenant turnover. Retailers make less revenue, landlord receives less rent.
Quote from: KW on Dec 20, 2023, 11:55 AMThe stock market forecasts the state of the economy by about 12 months. Especially for retail. REITS cant sustain 6-7% yields if retail turnover is shrinking, as many of their leases are tied to tenant turnover. Retailers make less revenue, landlord receives less rent.
REITS are real estate investment trusts which can contain a variety of real estate types: commercial, industrial, retail, residential, mixes of all. To know exactly what any singular REIT owns, one must delve into its asset portfolio.
Quote from: LaserEyeKiwi on Dec 20, 2023, 01:45 PMREITS are real estate investment trusts which can contain a variety of real estate types: commercial, industrial, retail, residential, mixes of all. To know exactly what any singular REIT owns, one must delve into its asset portfolio.
Yes, I was referring specifically to retail property REITS.
US good jobs report which means no cuts for a while might show a disconnect between the US and the local market...
Markets used to move in step but no longer it appears...
US still on 10 yr 4 could indicate a no nothing year ahead and they are saying only 3 cuts at best...
COMP PROP stock may just be a big flat line for years... with slow cuts to valuations...
A value trap sector which pays a DIV,,,,
The more money NZ puts into COMP PROP and retirement the more the country traps money into extreme safetly of lands and buildings.
A defensive sector with no growth in SP in twenty years.
10 year does not seem to be making any new highs is there only 6 months left in this last 2 years of market malaise..
Let hope the GOVT annouce something ... anything that will lift the market ...
Like close down as many government departments as possible.. increase the size the Audit office and free the business spirits...
Note: yes this is not the NZ yield but it sets the tone for western economies.. or used to..
https://www.cnbc.com/2024/01/12/us-treasury-yields-in-focus-as-investors-assess-inflation-data.html
https://www.interest.co.nz/public-policy/126050/inflation-was-cooler-december-quarter-any-other-past-three-years-still-too-hot
More pain coming ?
https://www.nzherald.co.nz/business/grim-warning-anz-picks-two-more-reserve-bank-rate-hikes-ahead/KK35EIGCIVBUDIRFRJYUABAHPE/
Quote from: Waltzing on Feb 10, 2024, 07:29 AMMore pain coming ?
https://www.nzherald.co.nz/business/grim-warning-anz-picks-two-more-reserve-bank-rate-hikes-ahead/KK35EIGCIVBUDIRFRJYUABAHPE/
Every other bank disagrees with ANZ.
https://www.interest.co.nz/economy/126332/there-are-clear-signs-rbnz's-heavy-handed-hikes-are-inhibiting-household-demand-and
https://www.nzherald.co.nz/business/no-need-for-rbnz-to-hike-rates-again-say-economists-as-market-odds-tighten/57B7TM4MURCV3MHB4TPOGQO2SA/
Quote from: LaserEyeKiwi on Feb 12, 2024, 03:39 PMEvery other bank disagrees with ANZ.
https://www.interest.co.nz/economy/126332/there-are-clear-signs-rbnz's-heavy-handed-hikes-are-inhibiting-household-demand-and
ANZ are just following the money markets. Bond and Swap rates are back on the rise.
Three-year-ahead inflation expectations returned to the lowest levels seen before the pandemic in the latest New York Fed survey https://newyorkfed.org/microeconomics
NZ Inflation Dec 2023 = 0.5% annualized = 2% So, we are already at the target CPI.
But RBZN are not allowed to view CPI in that way, so what happens if we get another 0.5 The annualized rate would drop from 4.7 to 4.0 (we would drop off a 1.2 and add in a 0.5)
Its almost as if the ANZ are saying now that the Labour force numbers have come in above expectations, we obviously haven't crushed the economy enough and so we think the Interest rates need to go to 6.0.GGJgpOWX0AA2np2.png
Great pastels on inflation thank you..
the some of local com props have sold off again though.. ARG for instance and GMT.
6 ? lets hope NOT!
https://www.cnbc.com/2024/02/12/stock-market-today-live-updates.html
going to take a while for this to deflate...
Quote from: Waltzing on Feb 14, 2024, 08:40 AMhttps://www.cnbc.com/2024/02/12/stock-market-today-live-updates.html
going to take a while for this to deflate...
US equity markets had overshot somewhat.
Influential RBNZ survey shows a decisive drop in the expectation of future levels of inflation in a result that will give the RBNZ comfort ahead of its next Official Cash Rate decision
https://www.interest.co.nz/bonds/126359/influential-rbnz-survey-showsinfluential-rbnz-survey-shows-decisive-drop-expectation
SmartSelect_20240214_115345_Chrome.jpg
More com prop being built in the golden triangle ...
https://www.nzherald.co.nz/nz/ruakura-superhub-big-chill-distribution-opens-cool-storage-facility-in-hamilton/C3O4R6YYX5DSVAJYHLHNXXZQ2U/
Is NZ future still going to be strongest in agri culture and related industries needing logistical transport and warehousing support..
Quote from: Waltzing on Feb 18, 2024, 09:27 AMMore com prop being built in the golden triangle ...
https://www.nzherald.co.nz/nz/ruakura-superhub-big-chill-distribution-opens-cool-storage-facility-in-hamilton/C3O4R6YYX5DSVAJYHLHNXXZQ2U/
Is NZ future still going to be strongest in agri culture and related industries needing logistical transport and warehousing support..
That name rang a bell so I looked it up. A lot of articles talk about Tainui owning the Ruakura superhub - my understanding is that Port of Tauranga owns 50% in a JV with Tainui:
https://www.port-tauranga.co.nz/facilities/our-national-network/
Anyhoo - good news for FRE and POT (& Tainui) if facilities are expanding and companies are using the SuperHub.
Quote from: Ferg on Feb 18, 2024, 03:26 PMThat name rang a bell so I looked it up. A lot of articles talk about Tainui owning the Ruakura superhub - my understanding is that Port of Tauranga owns 50% in a JV with Tainui:
https://www.port-tauranga.co.nz/facilities/our-national-network/
Anyhoo - good news for FRE and POT (& Tainui) if facilities are expanding and companies are using the SuperHub.
Raukura - the red pit. It could only be a Tron suburb, eh.
The home to https://agresearch.recollect.co.nz/nodes/view/190
when will NZ agri industries bear fruit for investors?
https://www.nzherald.co.nz/business/maersk-puts-its-stamp-on-nz-supply-chain-with-150m-new-facility-at-ruakura/T2VMJ5E5QRDT5KNKFT6BEVPHKU/
COMP props in the Golden TRI set to take off in the next decade?
More office block for auckland?
https://www.nzherald.co.nz/business/watch-mansons-tclm-building-550m-wynyard-quarter-offices/M33QGO23JJBETALPN4CWRV4JCY/
China property investors maybe liquidating OS investments to prop up debts in the local market...
A trickle could become a flood and investors start to dump in fire sales in their OS portfolios to prop up the China Value trap property market...
The China investors were once buying up lots of commercial property world over but as valuations in china turn south and show no end of sliding over the cliff lots of real estate over the globe may come up for sale and at any price they can get.
Missed ths notice from ARG ..
bit of local buying going on at these levels...
https://www.nzx.com/announcements/425254
Quote from: Waltzing on Mar 07, 2024, 07:15 PMMissed ths notice from ARG ..
bit of local buying going on at these levels...
https://www.nzx.com/announcements/425254
Clearly - some people do see value in property stocks at the current price level. Buy low sell high?
But I guess it all depends on ones perspective. Others (for every buyer is a seller) think that things will run into the ground before they improve.
Good thing is - nobody can predict the future :) ;
Discl: holding;
GMT showing some strong performance. When the OCR moves later this year could we see a broad re pricing of this sector.
Still got the depreciation problem how ever.
Interest being restored to the cost of capital could see property investing across the broad market take off again...
could put a floor even under the RV sector ..
No rates cuts this year?
what maybe a flat economy ...
US showing no signs of inflation coming down any farther this year?
No gains in these stocks then this year but rather they may have all the gains for the year done and dusted already.
One of New Zealand's largest commercial property and fund managers, Oyster Group, has suspended withdrawals from a $1 billion-plus scheme and is selling properties to cope with rising interest rates and suffered a drop in the value of units.
While returns on funds deposited with major trading banks are up lately, the value of units owned by investors in the Oyster Direct Property Fund fell, company information showed.
ARE YOU AN AFFECTED OYSTER INVESTOR? EMAIL US
Oyster, which says it has a 20-year track record, will not pay out investors directly, although it says they can sell via Syndex, the online platform for the private capital markets for investing, divesting and capital raising in fractionally owned structures.
All up, the wider Oyster business says it manages schemes which own 34 properties valued at $1.9b and leased to 389 tenants.
The Oyster fund which suspended withdrawals owns a national real estate portfolio and people paid a minimum of $10,000 in 2016 to buy in.
"The fund's redemption facility remains suspended to allow the fund to maintain appropriate working capital," the latest product disclosure statement says.
Read More
New Oyster fund to make monthly payments...
Oyster's tempting Mega offer - Property News...
Oyster serves up investment pearl
Mark Schiele, group chief executive, said Oyster wasn't the only one selling: "Appropriate divestments are playing a part in the management strategy of many listed and unlisted funds to reduce the impact of higher borrowing costs in the current environment."
Cutting bank debt and coping with higher borrowing costs resulted in it last month selling 107 Harris Rd, East Tamaki, for $10.9m: "On settlement, the net sale proceeds will be applied to the repayment of the fund's debt to reduce the impact of the higher borrowing costs."
Very interesting post regarding that company.
A lot of people that may have bought in late 2022 will have paid top price also for residential property...
Is the NZ economy entering a phase where the ratio of capital that is allocated to export revenue generation versus non productive assets will provide a very challenging time for treasury officials going forward.
However companies that are focused on logistics should be able to weather the storm better...
The country will come to rely on its export sectors and they need logistics.
Quote from: LaserEyeKiwi on Jun 27, 2022, 01:27 PMWeekly Update:
DED9C560-DC7D-4B78-B306-E798996700A2.jpeg
Any chance you could update the above LEK?
Long term SP of KPG....
Quote from: Waltzing on Apr 06, 2024, 08:20 AMLong term SP of KPG....
OK - so, lets call this flat (in a range correlated to real estate prices). What the chart does not show is the reliable payment of good and tax efficient dividends per share. Pretty sure (but too lazy to pull out the historic data) the overall return comes close to an 8% in average ...
But sure - some people want to have the cake and eat it, too ...
Well some people did ... the DIY rental investor probably beat the professionals....
well some of them might have !!!
now you might say the recent run up in prices was a once in a hundred year event and you may be right.
ARG attracting some bids lately and very surprising .. over 700 G today....
supposed to be a sell or hold... someone is keen...
NO US rate cut till december and nothing in NZ till 2025...
these will bump along and instead of being a long they may well be a trade....
When are COM Props going to get into data centres...
Is this the future or residential property development in NZ?
Third world?
https://www.nzherald.co.nz/nz/kainga-oras-container-like-rotorua-homes-at-malfroy-and-ranolf-shock-residents/PCQ7D2JPZZG2HNQLXTHCWCVGSQ/
It's pretty tough being KO. Build fancy bespoke houses and people complain it's a waste of taxpayer money, and they should build prefab. Build prefab and people complain about the looks when it's half finished.
There's some flats being built down my road that are just a wooden framework at the moment, no roof or walls, should I be complaining that these new houses aren't weathertight?
Quote from: Waltzing on Apr 23, 2024, 10:52 AMIs this the future or residential property development in NZ?
Third world?
https://www.nzherald.co.nz/nz/kainga-oras-container-like-rotorua-homes-at-malfroy-and-ranolf-shock-residents/PCQ7D2JPZZG2HNQLXTHCWCVGSQ/
I agree, the looks are not flash, but I am sure living there is hundreds of times better than sleeping in the car or under the bridge ...
YES of course silly not realise this... after all those little bach's were considered perfectly ok for holidays for decades!!!
till people started building real houses to holiday in ...
Well TENTS next? you know like they build in https://education.nationalgeographic.org/resource/yurt/
you can buy them ONLINE!!!
Quote from: Waltzing on Apr 23, 2024, 10:52 AMIs this the future or residential property development in NZ?
Third world?
https://www.nzherald.co.nz/nz/kainga-oras-container-like-rotorua-homes-at-malfroy-and-ranolf-shock-residents/PCQ7D2JPZZG2HNQLXTHCWCVGSQ/
Did you even bother reading the article you linked to???
The article clearly explains that these are only half completed structures without the shared cladding, roofing and stairwell section built. They have a picture in the article of the completed design and it looks perfectly fine.
https://www.nzherald.co.nz/resizer/v2/DSVVGJRC6VDHJALYRNGLMMAW3M.jpg?auth=296356ced695f8ca865f56b499cccd6cd789532b03dd0d4f30b1c494a7dab09e&width=1440&height=1384&quality=70&smart=true
one wondered if these were on spec to the public on the open market how they would be viewed by the buying public... think the public needs to see them no gladding first...
Yes warehouses will still be needed to store stuff thats grown before its exported and to store stuff that comes in from other places... you know... from across the seas..
But .... is this the really exciting stuff... watch it play with clothing... really how long before the solider is operating it as a drone...
https://www.youtube.com/watch?v=32zE6d-weUg
could it replace a fork lifter driver in a warehouse ? or maybe could it clean a bathroom? is the average plumber under threat?
you be the judge...
10 year just took a big hit...
could it be ... https://www.youtube.com/watch?v=2X8GPH9jAs4
Quote from: Waltzing on May 04, 2024, 10:07 AM10 year just took a big hit...
could it be ... https://www.youtube.com/watch?v=2X8GPH9jAs4
The end of the beginning lol...?
https://www.interest.co.nz/economy/127654/full-force-monetary-policy-has-yet-be-felt-new-zealand-economy-and-will-arrive
"Treasury's chief economic adviser, Dominick Stephens recently said the agency was in the process of "successively downgrading" its forecasts ahead of the Budget.
NZ was in the depths of recession equal to the 3.9% decline in per capita gross domestic product that followed the Global Financial Crisis, he reportedly said. "
buckle up?
SLiIhtly off topic... but
was it supposed to be like this ...
https://www.interest.co.nz/public-policy/127641/brian-easton-wonders-whether-economy-another-long-stagnation-and-if-so-why
now this is smooth.. of course later on it was something else..... very sad... nice while it lasted...
https://www.youtube.com/watch?v=1bjzoh3iQJc
another day when these have held ...and ARG is proving very up and downie ...
back to 1.14
it seems that investment volumes are lumpy this year...
YUP - no wonder the property market is overvalued ...
https://www.nzherald.co.nz/nz/politics/pm-christopher-luxon-fronts-housing-announcement-amid-kainga-ora-review/WJJQFZKUTRAUXMHBICWJBK24W4/
PS: Accounting for something -- PUN there on Acoounting for NOTHING... M Waring .. got 2 copies...
Rate cuts when?
https://www.interest.co.nz/sites/default/files/2024-05/house-in-winter_0.jpg
One of these things is not like the others:
yes great little table ...nicely formatted and pastel colors..
Quote from: LaserEyeKiwi on Jun 01, 2024, 10:55 AMOne of these things is not like the others:
Great table, but why is there such a difference between the top and the bottom ?
I can't make any sense of the gross yields posted. I surmise with many of these companies being a PIE the effective yield its worth to an investor is determined by their own marginal tax rate.
For example with KPG, their new lower rate of 5.4 cents in annual dividends being PIE income its worth 5.4 / 0.67 = 8.06 cps gross to investors on a 33% tax rate so a gross yield of just over 10% to anyone that bought last week at 80 cents as well as the prompt return of 1.425 cps from Q4 FY24's dividend giving effective net entry price of 80-1.425 = 78.6 cps. On that net cost basis, the effective gross yield on FY25 income is 8.06 / 78.6 = 10.25%. Not too shabby at all.
Certainly, that's an attractive yield given their NTA was recently reported to be amongst the most stable of the group.
On the other hand a massive write-down on GMT's portfolio value and only a very, very modest yield. One of these is not like the others alright and not necessarily in a good way.
GMT - looks like the market likes warehouses over other sorts of houses and malls....
If this GOVT is spending more than the last one ... will it mean property being rented the GOVT wont decrease and COMP PROPS will continue to be supported by higher GOVT debt spending?
https://www.taxpayers.org.nz/240531_budget_newsletter
will the comp props get a bounce as the OCR starts to be cut at some point... its the at SOME POINT ...
Quote from: Basil on Jun 03, 2024, 05:54 PMI can't make any sense of the gross yields posted. I surmise with many of these companies being a PIE the effective yield its worth to an investor is determined by their own marginal tax rate.
For example with KPG, their new lower rate of 5.4 cents in annual dividends being PIE income its worth 5.4 / 0.67 = 8.06 cps gross to investors on a 33% tax rate so a gross yield of just over 10% to anyone that bought last week at 80 cents as well as the prompt return of 1.425 cps from Q4 FY24's dividend giving effective net entry price of 80-1.425 = 78.6 cps. On that net cost basis, the effective gross yield on FY25 income is 8.06 / 78.6 = 10.25%. Not too shabby at all.
Certainly, that's an attractive yield given their NTA was recently reported to be amongst the most stable of the group.
On the other hand a massive write-down on GMT's portfolio value and only a very, very modest yield. One of these is not like the others alright and not necessarily in a good way.
Just using the NZX website figure for the "Gross Divi" (which is a day delayed - have updated now for last Friday close).
Have also added last/current eyar dividend CPS per company reports, along with the guided forward FY25 dividend for those companies that have given it so far.
Quote from: Waltzing on Jun 04, 2024, 10:08 AMIf this GOVT is spending more than the last one ... will it mean property being rented the GOVT wont decrease and COMP PROPS will continue to be supported by higher GOVT debt spending?
https://www.taxpayers.org.nz/240531_budget_newsletter
will the comp props get a bounce as the OCR starts to be cut at some point... its the at SOME POINT ...
no not really - most governmemt departments have had their budgets cut. Basically everything outside of Health, education & foreign affairs. Staff cuts are fairly quick to do, but leases expiring or exiting early will take a lot longer, but are already well underway in Wellington.
Also have to remember that in the budget "spending" includes the amount being "spent" on tax cuts (which is a weird way to classify it, but that's how it's done). So the $3.6B in tax cuts for this current year was a big chunk of the new spending in this years budget.
Also have to factor in the large amount of extra new debt the government is taking on to pay for the tax cuts, which means higher interest payments.
Which mean then investors will want to look at property stocks that are auckland based? and mostly private enterprise leases...
wonder which COMP PROP has the best lease stats at the moment... KPG now being in the housing market ... there lastest Capability brown project being underway and the results some way off ?
https://en.wikipedia.org/wiki/Capability_Brown
Quote from: Waltzing on Jun 04, 2024, 05:00 PMWhich mean then investors will want to look at property stocks that are auckland based? and mostly private enterprise leases...
wonder which COMP PROP has the best lease stats at the moment... KPG now being in the housing market ... there lastest Capability brown project being underway and the results some way off ?
https://en.wikipedia.org/wiki/Capability_Brown
They all are in the very high 90%'s occupancy (most 99%+)
Quote from: LaserEyeKiwi on Jun 04, 2024, 06:33 PMThey all are in the very high 90%'s occupancy (most 99%+)
And most of them are trading massively below NTA, or liquidation value if you like. Anyone who has been through '87, '08/09, Covid as well, will know shit happens in the market SP and when it does that is the best time to get some, or a lot and look towards a prosperous future. Especially if the stock continues to pay an above average dividend while your capital stagnates, because property business prosperity is not tightly coupled to the stock market pricing. By all means exit the stock and abandon the dividends when events turn against us, if you are capital sensitive, but never miss the re-entry or the accumulation. The property sector is screaming 'buy me', interest rates are going lower soon, property is still in demand and will continue to be so. NZ is built on property, there are many avenues to partake in it, the NZX is one of them. Its time will and is coming back. Question only is imo whether you're part of it, and when.
PCT moving into the living space... following KIP..
https://www.nzherald.co.nz/business/precinct-properties-apartment-push/HTCPOZYAGNGHPFWOXNPGFR4HRU/
ARG bouced UP yesterday to 1.09...
is this sign that the market see value in this sector at these levels for some COMP PROPS.
rerate of com props starting 2025 or sooner? GDP out tomorrow...
rerate of com props starting 2025 or sooner? GDP out tomorrow...
If the market is forward looking by 6 months and the first cut is Feb as ANZ expect (07-06 RNZ) then the rerate would happen in September, but personally I wouldn't bank on it, it's just possible.
ARG getting a few hundreds thousand going through today... some real bargains some investors are thinking ... NZX had a good day ... more to come in the spring? two rate cuts by march 31st at leasr?
Orders building in ARG ... they know this is a possible low point for the next bull market cycle...
Yes...it was a big lurch from Adrian Orr from being extremely hawkish to now being quite dovish.
ARG forecasting 6.65 cps in dividends for FY25 and its a PIE fund so that's tax free in shareholders hands and to investors on a 33% tax rate is worth the same as 6.65 / 0.67 = 9.93 cps gross.
On a $1.025 share price that's a gross effective yield of 9.7%.
Good buying for that yield and a decent discount to NTA of $1.45 noting 51% of their portfolio is invested in the most favoured industrial building sector.
Disc: I broke my hiatus from buying NZX listed shares this morning and bought a few at that price. If we're not at the bottom of the commercial property cycle, I think we are very close.
Great day for many stock across a number of sectors including property, retirement, retail even and banks...
was this the bottom? the RBNZ giving hope to the market that it wasnt blind deaf and dumb....
well house prices maybe in the ditch but COMP PROP's like ARG appear to have bounced out of the ditch....
cant imagine why but is yield attracting a bid and was that the LOW... hope not ...
order building in ARG ...
yield coming down in Fix income ...
https://www.interest.co.nz/personal-finance/128780/anz-goes-second-cutting-retail-rates-both-fixed-home-loan-and-term-deposit
notice how fast this stock has been repriced ... a year or 2 ahead of its performance ....
the mere hint of rate cuts and Sir B buying and that was it .. to late to pick up a few 100 g or more at the 101 price that many are waiting for the orders to filled at...
I thought about buying a few more ARG today but it got away from me, so I hounded up a few KPG instead, not many. Need to keep plenty of cash up my sleeve to pound the crap out of HGH if their annual report is okay next month.
THE PROPS - BOB, BOUNCING OFF THE BOTTOM
wondered why those comp props are well bid at the moment and this might be why
https://www.interest.co.nz/economy/129057/david-hargreaves-previews-forthcoming-ocr-review-which-all-attention-revolves-around
I've got a slice of cash sitting on a cash fund at the moment, I'm thinking about moving it to the Kernel NZ Commercial Property Fund - get some exposure to the sector.
surely ARG has run well fast the OCR pivot at 1.18 but this also show the effect of a OCR expected path over the next 12 to 24 months...
the market moves very quickly with yield stocks showing the way forward.
that buy the day before was the thing to do.... that thing you do...
Property stocks benefit in quite a number of ways from lower interest rates and quite obviously we're now only just past the point of inflection where the cycle has turned.
Benefits include but are not limited too:-
1. Lower funding costs going forward, (ARG have just over a two year weighted average term to run on their loans so will benefit nicely when those are refixed
2. The economy improving enabling a stronger leasing market and better outcomes on rent review negotiations leading to more income
3. Lower future capitalization rates of lease income such that NTA increases when assessed by the valuers
4. Better outcomes for new builds and new tenant enquiry
Additionally, Investors value their tax free PIE income distributions more highly as by comparison to what they can get elsewhere in the market, the dividends look highly attractive.
I expect ARG to rerate gradually to circa $1.60 over the next few years. The initial bounce from $1.02 where I initially took a large stake, is just a bounce off a very heavily oversold position, i.e. low hanging fruit.
It's clear the economy is very weak so I expect a lot more cuts to come from the RBNZ, sooner rather than later. Even at $1.18 for ARG, 6.65 cps annual dividends gives 5.64% tax free income = 8.42% gross for 33% taxpayers. That plus capital gains are highly attractive as we swiftly head into a lower interest environment. ARG also have a track record of on average, slowly growing dividends over time, unlike KPG who have a truly shocking track record of shrinking them over time.
OCR to be at 4.5% in July 2025 according to the RBNZ MPS August, which means each OCR Review + MPS till then will be a 0.25% drop, I think the next one is November.
I see the desire to not crash the economy completly is at the moment equally balanced by the desire to lower inflation (balanced competing interests).
Each OCR drop is probably going to be followed by a rerate of all comp props (excepting) GMT of about 8-10 cents. GMT's rerate will be slower and smaller because of it's lower dividend return IMHO.
yup yield stocks .. pump it up ....
https://www.youtube.com/watch?v=3Y71iDvCYXA
Quote from: Cod on Aug 23, 2024, 12:31 PMOCR to be at 4.5% in July 2025 according to the RBNZ MPS August, which means each OCR Review + MPS till then will be a 0.25% drop, I think the next one is November.
I see the desire to not crash the economy completly is at the moment equally balanced by the desire to lower inflation (balanced competing interests).
Each OCR drop is probably going to be followed by a rerate of all comp props (excepting) GMT of about 8-10 cents. GMT's rerate will be slower and smaller because of it's lower dividend return IMHO.
Review dates
9 Oct
27 Nov
I'm picking 75 points between the two .
with china looking like it cannot control it property sector and US comp props under pressure....
you might have to be selective in this sector...
stagflation is hanging like the swords of "Sword of Damocles."
RBNZ has a little page on this sector world wide... but really is that all they have to say on the matter? must be another page and data...
From the AFR. No doubt this applies to NZ as well. Avoid property in the Auckland CBD near all the social housing places, and stick to ones close to Britomart and Commercial Bay. North Shore might be dying too. Wellington is probably a lost cause, but Govt tenants cant afford to move to nicer offices now ;D . Christchurch doesnt have any offices lol. Owners of large shopping malls will do well, strip/local malls not so well. Specialist property plays (storage, health, childcare etc) will be dependent on the underlying operating sector economics.
I have a lot of money in AREITs at present - I'm up 16% in 2024 with a bunch of dividends yet to come. All bar one (my single pure play office REIT) are in nice uptrends as they await interest rate reductions in Australia. Its been super easy money (which is why I like them so much) 8)
................................................................
And the office market? Don't believe the horror stories out of the United States. Australia's office market is going to split between the haves and the have-nots, but Harrison says that after a 22 per cent fall in valuations in two years, we've hit the bottom for the high-quality assets he wants to buy.
"I don't think it's as bad as everyone thinks," he says. "There'll be winners and losers, and for good quality assets, yes, we have hit trough pricing."
Sought-after assets
Not only that, but premium office towers in the core of cities such as Sydney are also becoming sought after by big institutional investors.
Brookfield's co-head of Australian real estate at Brookfield Asset Management, Ruban Kaneshamoorthy, is bullish on premium office property and would like to get more, but the lack of new supply over the next five to 10 years is going to make it harder to find these jewels.
"There's no new supply coming on," he says. "Economic rents that you need to justify developments are at minimum 30 per cent to 40 per cent higher, and probably even higher."
Harrison and the chief executive of Dexus, Ross Du Vernet, say the office market will be split between premium assets in the core of Australia's CBDs, and lower-quality buildings that are either in the wrong locations, or will cost too much money to update to the standard tenants now demand.
"Capital follows tenants," Harrison says. "Tenant demand is definitely focusing on modern, well-located assets. I think older assets are going to become more and more difficult to both keep tenants and attract tenants."
De Vernet says that if given the choice between a premium asset in the wrong part of town, and an older building in the core of the CBD with strong transport connections, he's picking the latter.
The question of what happens to the second-tier B-grade and C-grade office buildings that dot the country's cities is a difficult one to answer.
Kaneshamoorthy is blunt: the owners of these properties are in trouble.
"Honestly, I wouldn't want to be a holder of a second-grade building, because that stuff is just going to fall off a cliff. The reason being, you can't lease it. You can't find a tenant. Banks, therefore, don't want to lend to you. So it's a sort of self-fulfilling spiral to the bottom."
Harrison and Du Vernet see two other factors as being in their favour.
One is yet another shift in the work-from-home trend, with the NSW government telling public servants to get back to the office. "All this work-from-home nonsense is completely changing," Harrison says.
On Monday, Lendlease CEO Tony Lombardo said he was not seeing tenants change their space requirements. "If you're coming in three days a week, you still need to have the same office space," Lombardo said. "If anything, what we are finding on the three days, there's not enough desks for the amount of people that come in on the three days, and that's becoming a real capacity issue."
Harrison has noticed a shift away from hot-desking (or activity-based working, as it's known) and towards fixed desks – including at Charter Hall. "We certainly have, and we're not going back," he says. "I think workspace ratios have risen."
The other tailwind is looming rate cuts, which Du Vernet says will bring buyers back to Australian property markets.
"I think probably all owners are feeling that transaction volumes are very low," he says. "But I do think that the psychological impact of a cut will actually be quite important for the market."
Those low transaction levels might soon change, too. Ian Holmes, principal at advisory firm Denison Partners, says office assets worth $40 billion are sitting in five wholesale funds that will be subject to liquidity reviews in the next three years.
Some of those assets may need to be sold to fund liquidity pressure, and the valuation of all assets will be closely scrutinised. Homes says that will be an interesting process, given "it's not obvious that there's a long list of buyers".
Except, of course, for those premium buildings, where it seems everyone still wants to be.
Quote from: Basil on Aug 23, 2024, 12:05 PMProperty stocks benefit in quite a number of ways from lower interest rates and quite obviously we're now only just past the point of inflection where the cycle has turned.
Benefits include but are not limited too:-
1. Lower funding costs going forward, (ARG have just over a two year weighted average term to run on their loans so will benefit nicely when those are refixed
2. The economy improving enabling a stronger leasing market and better outcomes on rent review negotiations leading to more income
3. Lower future capitalization rates of lease income such that NTA increases when assessed by the valuers
4. Better outcomes for new builds and new tenant enquiry
Additionally, Investors value their tax free PIE income distributions more highly as by comparison to what they can get elsewhere in the market, the dividends look highly attractive.
I expect ARG to rerate gradually to circa $1.60 over the next few years. The initial bounce from $1.02 where I initially took a large stake, is just a bounce off a very heavily oversold position, i.e. low hanging fruit.
It's clear the economy is very weak so I expect a lot more cuts to come from the RBNZ, sooner rather than later. Even at $1.18 for ARG, 6.65 cps annual dividends gives 5.64% tax free income = 8.42% gross for 33% taxpayers. That plus capital gains are highly attractive as we swiftly head into a lower interest environment. ARG also have a track record of on average, slowly growing dividends over time, unlike KPG who have a truly shocking track record of shrinking them over time.
Surprised how some of the property stocks have got hammered this month given imminent rate cut expectations of RBNZ, noting the Fed's 50 basis point cut this week and hoping RBNZ follow suit, (our economy is in far worse shape than theirs's in my opinion).
Very heavy selling in ARG this week, down to $1.045 at close on Friday.
Forecasting 6.65 cps dividends for FY25 and noting a very stable and consistent track record of dividend payments in previous years with some modest growth in same, and being a fully tax paid PIE fund that makes the effective gross yield for 33% taxpayers of 9.5% (6.65 / 104.5/ 0.67 x 100), which I think is quite an extraordinary opportunity given the direction of interest rate travel and its effects as noted in my post above. Opportunity knocks ?
Disc: Good sized position in ARG.
Quote from: Basil on Sep 22, 2024, 01:10 PMSurprised how some of the property stocks have got hammered this month given imminent rate cut expectations of RBNZ, noting the Fed's 50 basis point cut this week and hoping RBNZ follow suit, (our economy is in far worse shape than theirs's in my opinion).
Very heavy selling in ARG this week, down to $1.045 at close on Friday.
Forecasting 6.65 cps dividends for FY25 and noting a very stable and consistent track record of dividend payments in previous years with some modest growth in same, and being a fully tax paid PIE fund that makes the effective gross yield for 33% taxpayers of 9.5% (6.65 / 104.5/ 0.67 x 100), which I think is quite an extraordinary opportunity given the direction of interest rate travel and its effects as noted in my post above. Opportunity knocks ?
Disc: Good sized position in ARG.
Yes, I was wondering this as well. Probably all these fund managers and heavy hitters selling their property stocks to be able to fund with the proceedings their AIA capital rise and load up on Spark? Anyway - I never understood the term "smart money".
Sometimes markets are confusing (or should I say confused?), but I am pretty sure ARG will keep paying its dividends (other than with Spark I see no issue with them keep earning the money they distribute).
Anyway - holding a reasonable amount of ARG as well, and not worried. They are earmarked for many happy dividend payments and maybe a rebalance when the interest rates are scratching along the bottom. Not now.
I think the AIA capital raise sucked the wind out of the sails of the whole N.Z. market this week with some stocks getting hit harder than others. It's been reported the NZX was down, (from memory), 2.8% this week.
Update.
Big fund rebalancing last week combined with the AIA cap raise sure threw a curveball into the NZX.
(Edit: updated divi %)
The yield shown for ARG is incorrect. Rather than taking the NZX yields at face value people need to do their own calculations to see what its worth to them.
I calculated the effective gross yield of ARG for 33% taxpayers in post #210 above with workings shown as 9.5% @ a share price of $1.045
Maybe other yields shown in that table with yields being taken from the NZX are also incorrect ?
Quote from: Basil on Sep 22, 2024, 01:10 PMSurprised how some of the property stocks have got hammered this month given imminent rate cut expectations of RBNZ, noting the Fed's 50 basis point cut this week and hoping RBNZ follow suit, (our economy is in far worse shape than theirs's in my opinion).
Very heavy selling in ARG this week, down to $1.045 at close on Friday.
Forecasting 6.65 cps dividends for FY25 and noting a very stable and consistent track record of dividend payments in previous years with some modest growth in same, and being a fully tax paid PIE fund that makes the effective gross yield for 33% taxpayers of 9.5% (6.65 / 104.5/ 0.67 x 100), which I think is quite an extraordinary opportunity given the direction of interest rate travel and its effects as noted in my post above. Opportunity knocks ?
Disc: Good sized position in ARG.
VCX got whacked as well - I think its more the index rebalancing and triple witching that occurred last Friday that has distorted prices. We'll see this week if they bounce back.
Quote from: Basil on Sep 23, 2024, 10:35 AMThe yield shown for ARG is incorrect. Rather than taking the NZX yields at face value people need to do their own calculations to see what its worth to them.
I calculated the effective gross yield of ARG for 33% taxpayers in post #210 above with workings shown as 9.5% @ a share price of $1.045
Maybe other yields shown in that table with yields being taken from the NZX are also incorrect ?
Fair comment - not sure how NZX calculates it.
Perhaps I'll just add the trailing twelve dividends + imputation credits myself - and add a separate forward TTM guidance yield metric for those companies that have given them. But then it still wouldn't accurately represent the different yields for different tax payers.
Quote from: LaserEyeKiwi on Sep 23, 2024, 11:04 AMFair comment - not sure how NZX calculates it.
Perhaps I'll just add the trailing twelve dividends + imputation credits myself - and add a separate forward TTM guidance yield metric for those companies that have given them. But then it still wouldn't accurately represent the different yields for different tax payers.
I think if you assume most but not all investors on here are on a 33% marginal tax rate, that would be a fair assumption. If others are on a different rate they will have to do their own calculations or ask on here and we can help them work it out.
Yeap KW, a lot of index rebalancing last week. For most, last Friday was not a good day to revalue one's portfolio.
Quote from: Basil on Sep 23, 2024, 11:09 AMI think if you assume most but not all investors on here are on a 33% marginal tax rate, that would be a fair assumption. If others are on a different rate they will have to do their own calculations or ask on here and we can help them work it out.
Yeap KW, a lot of index rebalancing last week. For most, last Friday was not a good day to revalue one's portfolio.
Fortunately for fund managers, that's why they do it on the third Friday not the last lol
COMP prop back to the pre OCR start line....
builders look to be on small jobs....
https://www.interest.co.nz/property/130005/tough-times-are-getting-tougher-building-industry-fewer-and-fewer-new-homes-are
hard landing ...
they are just such a trade... back to the dollar rounded zones....
https://businessdesk.co.nz/sponsored/signs-of-growth-emerging-across-the-commercial-property-sector#no_universal_links
mean really they might show some gains about 2030 ... when the country has a surplus...
Quote from: Basil on Sep 23, 2024, 10:35 AMThe yield shown for ARG is incorrect. Rather than taking the NZX yields at face value people need to do their own calculations to see what its worth to them.
I calculated the effective gross yield of ARG for 33% taxpayers in post #210 above with workings shown as 9.5% @ a share price of $1.045
Maybe other yields shown in that table with yields being taken from the NZX are also incorrect ?
I think they total the dividends in the last 12 months and use that to calculate the div yield. It just that there are 5 divs in the past 12 months. It should show correctly after 20/12/24.
ARG 03 Dec 2024 Interim 1.663c 0.112c 0.246c 18 Dec 2024 NZD
ARG 10 Sep 2024 Interim 1.663c 0.142c 0.314c 25 Sep 2024 NZD
ARG 11 Jun 2024 Interim 1.663c 0.074c 0.163c 26 Jun 2024 NZD
ARG 12 Mar 2024 Interim 1.663c 0.084c 0.186c 27 Mar 2024 NZD
ARG 05 Dec 2023 Interim 1.663c 0.079c 0.173c 20 Dec 2023 NZD
https://www.nzherald.co.nz/business/economy/gdp/massive-gdp-fall-nz-in-deep-recession-worst-since-1991/CG5ZWBO6GFGCHAT5OT6EMK3UTQ/
Crickey. That's a shocker, economy in virtual free-fall. Surely this has major implications for the speed and extent of RBNZ interest rate cuts next year? I think an emergency meeting of the RBNZ and a 100 bps cut should be done immediately but the ivory tower boffins at RBNZ are probably already long gone on holiday and we have to wait until mid-February. Surely such apparently desperately needed, deep prospective cuts from RBNZ next year helps the commercial property sector recover from its malaise? Disc; Small position in ARG and slightly underwater.
A german lady who settled in NZ and was working as a trade secretary in auckland for the germans brought an old stuff and things shop... she said it was her worst ever year here... she though 2009 was bad...
she nearly packed up this year and went home except she got married to a local commercial property developer a few year ago ....
well...its what you do in NZ right?
now shes wondering which country is worst off... germany or nz..
does anyone even remember 1991? did first auckland ironman in 93...just a young tacker..
anyone resigning at the RBNZ? no wonder the government doesnt not want to CUT CUT CUT....they are scared as..
Quote from: Basil on Dec 19, 2024, 04:03 PMhttps://www.nzherald.co.nz/business/economy/gdp/massive-gdp-fall-nz-in-deep-recession-worst-since-1991/CG5ZWBO6GFGCHAT5OT6EMK3UTQ/
Crickey. That's a shocker, economy in virtual free-fall. Surely this has major implications for the speed and extent of RBNZ interest rate cuts next year? I think an emergency meeting of the RBNZ and a 100 bps cut should be done immediately but the ivory tower boffins at RBNZ are probably already long gone on holiday and we have to wait until mid-February. Surely such apparently desperately needed, deep prospective cuts from RBNZ next year helps the commercial property sector recover from its malaise? Disc; Small position in ARG and slightly underwater.
Sep Qtr numbers all history now Basil ....no need to panic ...things on the up
Hope Orr doesn't panic as well .....cutting to fast and deep will only cause greater pain down the track
Waltz ..I remember 1991 .... A mate who had a business heard there were was a deep recession and asked me what's a recession and after I explained he replied 'ah, so recessions don't impact everybody' and he continued on being happy and making heaps of money
Quote from: winner (n) on Dec 19, 2024, 04:48 PMSep Qtr numbers all history now Basil ....no need to panic ...things on the up
Sounds suspiciously like an OCA analyst's presentation...no need to worry, we're on the improve already and everything is coming right...what could possibly go wrong lol
well Winner i dont think you spent much time in an accounting office over the decades and saw the damage to farming and retail in tough times...
it leave deep impressions in the mind...
that word recession on the front line to those people is like a war....
Well this gives us opportunities to create financial accounting movements that benefit group accounting of private companies and trusts (1995 advanced accounting research paper accounting society), most people dont have that advantage...
the advantage people here have is that SP's are cheap again for certain sectors.. TRA and HLG have moved already showing that people arnt waiting for the good times... they knew buy 6 months ago.. and wait...
partly a bit of a bump to this thread, reflective of the greater NZX market focus.
See this week Craigs IP on You Tube suggesting options to consider time for a move sooner rather than later to Interest Income alternatives.
Certainly Tuesday close for those bidding above $1.01 for IPL on day one of trading ex dividend might have been a pleasant surprise, unfortunate for the originating bidder at $1.01 to a large extent. Suspect a margin call went unsettled and shares were offered to the market, perhaps again unfortunate for someone.
This sector is being hit since maybe no one though the economy was as bad as the earnings season has suggested...
https://www.nzherald.co.nz/business/markets-with-madison/recession-rut-the-major-companies-doing-it-tough/YOOIZY3RM5GPNLOOS5TWMGGX4U/
yup its gfc prices ... weirddo stuff ...
Reasonably positive commentary from ARG, past the bottom of the cycle ? https://www.argosy.co.nz/assets/documents/ARG472-Investor-Update-March-2025_web.pdf
Green shoots + 10% gross yield for 33% taxpayers + sizeable discount to NTA. (NTA, $1.45, latest price 99 cents).
I think the bottom is in for this sector.
Disc: Hold some already / accumulating and expecting 25 bps cuts from RBNZ in April and May making 10% gross yield look absolutely stunning.
Why anyone would bother with the retirement sector which is suffering from massive oversupply when there's highly attractive metrics like this on offer from commercial property, is beyond my understanding.
thank you ...
Quote from: Basil on Mar 26, 2025, 05:16 PMReasonably positive commentary from ARG, past the bottom of the cycle ? https://www.argosy.co.nz/assets/documents/ARG472-Investor-Update-March-2025_web.pdf
Green shoots + 10% gross yield for 33% taxpayers + sizeable discount to NTA. (NTA, $1.45, latest price 99 cents).
I think the bottom is in for this sector.
Disc: Hold some already / accumulating and expecting 25 bps cuts from RBNZ in April and May making 10% gross yield look absolutely stunning.
Why anyone would bother with the retirement sector which is suffering from massive oversupply when there's highly attractive metrics like this on offer from commercial property, is beyond my understanding.
Quote from: Basil on Mar 26, 2025, 05:16 PMReasonably positive commentary from ARG, past the bottom of the cycle ? https://www.argosy.co.nz/assets/documents/ARG472-Investor-Update-March-2025_web.pdf
Green shoots + 10% gross yield for 33% taxpayers + sizeable discount to NTA. (NTA, $1.45, latest price 99 cents).
I think the bottom is in for this sector.
Disc: Hold some already / accumulating and expecting 25 bps cuts from RBNZ in April and May making 10% gross yield look absolutely stunning.
Why anyone would bother with the retirement sector which is suffering from massive oversupply when there's highly attractive metrics like this on offer from commercial property, is beyond my understanding.
It might be that with property stocks you build or buy it, hold it for a very long time, revalue, very occasionally sell and recycle, ride the interest rate cycle up and down pay out too much in dividends to hungry beagles and don't grow much
With RV stocks you buy land, build and clip the ticket, then you sell what you built again and again and again and keep 30% everytime you sell it again, again, again...
ARG share price lower now than 5 or ten years ago SUM share price higher than 5 or 10 years ago.
A bit simplistic but you get the gist
Yes I get that, but RYM share price less than a third of what it was in 2014 and OCA price languishing in the toilet too, both with their already very modest dividends, suspended so stock selection is critical. Its all about what your goals are. If you want high yield at arguably the bottom of the commercial property cycle, I believe I've made a good case. For me on the cusp of retirement and looking for dividend income to replace earnings, it's an attractive proposition especially at this stage of the cycle, at that yield and discount to NTA.
Younger people chasing growth should do well over the long-term having some SUM in their portfolio.
they are defensive stocks and they are very sensitive to the yield curve and the OCR.
the NZ economy will rebound as long as the country can find a business orientated mind set... it does not seem to have one yet...
logistics is supporting the economy and rest homes are not ... they are holding pens...and produce nothing ...
LOL Holding pens might be a bit harsh mate. Some of them are very nice and there's a lot of happy people at the better ones but yeah, in terms of producing yield for investors, they're all absolutely hopeless. The only one paying any dividend at all is SUM and that's only 2.15% with no imputation credits, so only 1.4% after 33% tax. I can't put fuel in my boat or feed my big dog with that, not unless he's going on a near starvation diet lol. As for OCA and RYM, senior management and directors are still happy to milk these companies for their full fees, (no reduction, even a token reduction of 10%, ever offered despite their truly appalling performance), all the while in recent times paying shareholders absolutely nothing. What an absolutely disgraceful situation.
Quote from: Waltzing on Mar 27, 2025, 10:48 AMthey are defensive stocks and they are very sensitive to the yield curve and the OCR.
the NZ economy will rebound as long as the country can find a business orientated mind set... it does not seem to have one yet...
logistics is supporting the economy and rest homes are not ... they are holding pens...and produce nothing ...
Overly pessimistic mate - There has never been a recession since the depression that NZ has not recovered from in relatively short order (a year or two), regardless of the vibes of the economy or political governance.
Interest rates are back to normal, mortgage holders will all rollover to lower rates through the course of this year, and central government has done the bulk of its spending cuts. It all adds up to a fairly positive economic environment heading into 2026.
I also think it's extraordinary that people think that the property cycle will all of a sudden no longer continue, and that listed property names will never again increase in price.
"This time is different" are usually incredibly dangerous words to enter someones brain.
Quote from: LaserEyeKiwi on Mar 27, 2025, 11:48 AMOverly pessimistic mate - There has never been a recession since the depression that NZ has not recovered from in relatively short order (a year or two), regardless of the vibes of the economy or political governance.
Interest rates are back to normal, mortgage holders will all rollover to lower rates through the course of this year, and central government has done the bulk of its spending cuts. It all adds up to a fairly positive economic environment heading into 2026.
Interesting take on Commercial Property investments https://www.rnz.co.nz/news/business/556320/commercial-property-increasingly-popular-with-investors
Quote from: LaserEyeKiwi on Mar 27, 2025, 11:51 AMI also think it's extraordinary that people think that the property cycle will all of a sudden no longer continue, and that listed property names will never again increase in price.
"This time is different" are usually incredibly dangerous words to enter someones brain.
Yeap...just looking at ARG as an example. 10% gross yield and the shares are $1 and the NTA is $1.45
"Blind Freddy" can see interest rates are coming down and we are at the bottom of the cycle for commercial property.
There's a very good chance that on top of that extraordinary 10% gross yield, it gets a lot closer to asset backing over the next couple of years,
like it has in every other property cycle... I also think there's a pretty good case for KPG at 87 cents and noted in their half year presentation they are making solid moves on human resource cost reductions which has for a long time been one of my main criticisms. I have the yield at 9.2% gross and AFFO payout at 89% based on 5.4 cps. Not a massive fan of KPG but we are at the bottom of the retail cycle so it could be a good trade and also get a lot closer to NTA of $1.17 in the years ahead. Yield is not shabby either when we have 2 x RBNZ rate reductions baked in as almost a certainty in the next two months on 9 April and 28 May.
Quote from: Basil on Mar 27, 2025, 12:25 PM...
I also think there's a pretty good case for KPG at 87 cents and noted in their half year presentation they are making solid moves on human resource cost reductions which has for a long time been one of my main criticisms. I have the yield at 9.2% gross and AFFO payout at 89% based on 5.4 cps. Not a massive fan of KPG but we are at the bottom of the retail cycle so it could be a good trade and also get a lot closer to NTA of $1.17 in the years ahead. Yield is not shabby either when we have 2 x RBNZ rate reductions baked in as almost a certainty in the next two months on 9 April and 28 May.
Hmm - re KPG, wasn't it you highlighting their risky strategy to set on Build for Rent?
Just wondering how this will play out with immigration at a low point and Kiwis queuing up at the departure gates?
Did I miss the memo - or do you assume that all the Americans fleeing the tyranny of the Dump regime will be enough to fill the empty appartments? I guess, it might be possible. How many of the 200 million decent Americans need to come to completely change our real estate situation? I reccon 0.1% of them (i.e. 200k) per year would be completely sufficient for a turn around in the domestic rent market.
50% leased as of 30 Sept 2024 isn't too bad mate and certainly exceeded my earlier expectations. Overall, not a bad half year report considering that covered the very darkest part of the recession from April - Sept 2024. Green shoots now going forward into FY26 and FY27 ?
https://api.nzx.com/public/announcement/442498/attachment/432656/442498-432656.pdf
I'm pleased to see they are striving for a more efficiencies in the operation of the business. That to me was a big negative and change was long overdue.
Anyway...there's enough encouragement there, along with the fact that I am sure we are at the bottom of the commercial property and retail cycle for me to take a modest stake. Its hard to find reliable yield elsewhere at that level and I can't go all in on Turners and HLG lol
Please don't start me up on that bloody idiot, Chump lol
"This time is different" -- LEK
History may not repeat, but it sure does have rhythm.
Every time is different, but it follows a similar path.
Quote from: Cod on Mar 27, 2025, 03:57 PM"This time is different" -- LEK
History may not repeat, but it sure does have rhythm.
Every time is different, but it follows a similar path.
ha ha ha giving me a heart attack seeing that partial quote attributed to me in that manner! For the record I was arguing against the thought process often behind "This time is different".
Quote from: LaserEyeKiwi on Mar 29, 2025, 10:15 AMha ha ha giving me a heart attack seeing that partial quote attributed to me in that manner! For the record I was arguing against the thought process often behind "This time is different".
Apologies LEK, I agree with you sentiment - I was proposing up a more nuanced idea that people associated with that thought process might wish to entertain.
Argosy results out and looks pretty solid. Sometimes a bit of boring in one's portfolio is a good thing.
KEY RESULTS FOR THE PERIOD INCLUDE:
• Net property income for the period of $116.9 million, up 0.4% on the prior comparable period;
• $72.7 million revaluation gain for the 12 months to 31 March ($111.7 million revaluation loss in the prior comparable period), up 3.6% on book value, contributing to a full year net profit after tax of $125.9 million (loss of $54.5 million in the prior comparable period);
• Net distributable income of $55.8 million, the same as the prior comparable period (note this year Argosy incurred incremental tax expense of $2.8 million, following the Government's removal of tax deductions for depreciation on buildings);
• Sound portfolio metrics, with occupancy at 96.5% and WALT of 5.1 years;
• NTA per share of $1.53 up from $1.45 at 31 March 2024;
• Portfolio gearing steady at 35.7%, in the middle of the target band of 30-40%;
• Divested and settled the non Core asset at 8 Forge Way for $35.2 million, achieving above book value;
• Successful portfolio leasing and rent review outcomes, including 3.5% annualised rental growth on rents reviewed and 86% tenant retention rate;
• Progress on green developments, continuing our portfolio transformation and progress to a 50% green portfolio by 2031 (37.2% at 31 March 2025);
• Argosy achieved notable success at the annual Property Council of New Zealand (PCNZ) Awards. The company won the Supreme Award for its 6 Green Star Built property located at 8 Willis Street/Stewart Dawsons Corner. This property was also Highly Commended at the World Green Building Council's Asia Pacific Leadership in Green Buildings Awards.
• Additionally, the 6 Star Green Built property at 105 Carlton Gore Road received an Excellence Award at the PCNZ Awards. These accolades further underscore the quality of our portfolio and our commitment to sustainable practices;
• Appointment of Alex Cutler to the Board, as part of the Board succession process; and
• FY26 dividend guidance of 6.65 cents per share, consistent with the prior year.
Divie outside policy band but no worries- asked how the company planned to get back into its dividend ratio, chief financial officer Dave Fraser said there were "a lot of tailwinds" that would help
RoE 9.6%, which is much better than the previous two years (they both had negative RoE), but worse than any other year since 2018 (first year I tracked them). Still - things are clearly improving, revaluation gains are back and they even sold some property above book value ... sort of confirming the latter is conservative.
I note dividend yield is 6.2% (and this on PIE income, i.e. tax favorable), which looks good in the context of likely capital appreciation.
Yeap, 6.2% net return is worth 9.25% gross for those on a 33% tax rate. That and $1.07 is a long way south of $1.53 NTA and a gradually recovering economy together, seems like a solid dynamic underpinning the investment case. I think we're past the bottom in this commercial property cycle and there is a not unreasonable prospect of the gap to NTA closing up a bit.
Not sure about their latest acquisition on a 5% yield and whether that's eps accretive when borrowing cost is 5.1%, especially when they could be buying their own shares back at a huge discount to NTA. Might have a word to them at the annual meeting about that. That said, I think they have navigated the very deep and protracted recession very well and maintained the divvy payout throughout so some credit is deserved there. Hopefully better economic times ahead noting their annual rent review average increase was 3.5% this year and many parts of the portfolio are significantly under-rented compared to market. (For those that don't know, many lease deals involve fixed rate reviews and that can slip behind market rates over the years). Under-rented means current contracted rent v market value.
As much as all this "greening" of the portfolio makes me want to roll my eyes with disdain, it does seem to be what customers want.
I added some more today noting the next divvy is due next month.
budget surprise:
20% immediate tax write off for new commercial buildings built (excludes land).
Quote from: LaserEyeKiwi on May 22, 2025, 04:07 PMbudget surprise:
20% immediate tax write off for new commercial buildings built (excludes land).
Wow, that's ten years worth of the old straight line depreciation @ 2% per annum.
yes great news... market said ... nothing yet.. still good news for the prop comps going forward...
https://www.taxpayers.org.nz/nicola_willis_fudge_it_growth_budget
Also read thats its retroactive, in that it will be available for things that were started before May 22, as long as they are finished after May 22.
Oh well investors (campers) that means looking at the building programs of the com props... that is very supportive to SP's and means actually reworking those bottom lines in models...
the brokers will have to rework there models and which will mean those debt limits on the books are now fully supported by the tax deductions..
Quote from: Waltzing on May 23, 2025, 10:07 AMOh well investors (campers) that means looking at the building programs of the com props... that is very supportive to SP's and means actually reworking those bottom lines in models...
the brokers will have to rework there models and which will mean those debt limits on the books are now fully supported by the tax deductions..
Zo zoft vittings get a 'one off' 20% depreciation lolly. But ztill 0% depreciation allowed vor ze 'hard zhell' zhat zurrounds zhem? Property investment companies are ztill 'worse off' zhan vhen ze Nicola and Chris show came to town are zhey not?
Also much more to gain vrom 'other sectors' zucking ze 20% depreciation lolly zhan property. Listed property asset investors zounding a little desperate as ze property market continues to ztagnate?
RB
I see the impact as being very muted for REITs: (18% depreciation differential) x (28% tax rate) x (building / land %) x (the $ of the portfolio that qualifies). It's probably a small number....maybe 3.5% of the building value in year 1 only. Unless a REIT is heavily weighted towards new builds......or does this also apply to buying existing buildings off another party?
Quote from: Ferg on May 23, 2025, 12:49 PMI see the impact as being very muted for REITs: (18% depreciation differential) x (28% tax rate) x (building / land %) x (the $ of the portfolio that qualifies). It's probably a small number....maybe 3.5% of the building value in year 1 only. Unless a REIT is heavily weighted towards new builds......or does this also apply to buying existing buildings off another party?
The 20% immediate tax write-off under Budget 2025's Investment Boost applies to new commercial buildings and qualifying capital improvements owned by REITs, but it does not apply to all REIT buildings. Residential buildings, land, and second-hand commercial buildings already used in New Zealand are excluded. REITs must evaluate their assets individually to determine eligibility, focusing on whether the buildings are new, commercial, and meet the policy's criteria.
das Ganze Wirtschaft....odr konjunktur
Disclosure, Indulged rather large on IPL 12 to 11 months ago, and the last few months into SPG.
bit random but regards the apparent changes in market sentiment towards REITs over the last year.
Perhaps a year ago I very much held a mindset that interest rates would be receding and that would affect capital valuations and consequently NTAs to be a positive for SP uplifts, also saw merit to the thought that the yields would reduce as investors saw REITs as an alternative to offset interest income levels dropping as bond yields fall, late August 2024 reassured me some, however where are we now. Seems that there are specific issues that is precluding much reduction in global bond yields.
I checked out some SPH notices this year in respect of SPG. If recall correctly Forbar had some significant investments made for their clients in MIS funds this calendar year at around $1.10 levels. Generate Invs had since October 2024 bought some at around an average of $1.30 levels but had pretty much exited at $1.10 levels glad I am not using them for my Kiwisaver perhaps. Is it that Ryman's SP decline has had ripple effects into the REITs?? In the end I think the current consensus is that the time to re-rate is still out into the future, am I still tying up my capital sooner than I should??
Could be losing my faculties but I find it hard not to be accumulating a few more SPG and KPG etc at current levels.
Quote from: Otago K on May 27, 2025, 07:10 AMDisclosure, Indulged rather large on IPL 12 to 11 months ago, and the last few months into SPG.
bit random but regards the apparent changes in market sentiment towards REITs over the last year.
Perhaps a year ago I very much held a mindset that interest rates would be receding and that would affect capital valuations and consequently NTAs to be a positive for SP uplifts, also saw merit to the thought that the yields would reduce as investors saw REITs as an alternative to offset interest income levels dropping as bond yields fall, late August 2024 reassured me some, however where are we now. Seems that there are specific issues that is precluding much reduction in global bond yields.
I checked out some SPH notices this year in respect of SPG. If recall correctly Forbar had some significant investments made for their clients in MIS funds this calendar year at around $1.10 levels. Generate Invs had since October 2024 bought some at around an average of $1.30 levels but had pretty much exited at $1.10 levels glad I am not using them for my Kiwisaver perhaps. Is it that Ryman's SP decline has had ripple effects into the REITs?? In the end I think the current consensus is that the time to re-rate is still out into the future, am I still tying up my capital sooner than I should??
Could be losing my faculties but I find it hard not to be accumulating a few more SPG and KPG etc at current levels.
Good choice Otago K. Your SPG is up about 11c and KPG up about 10.5c since your post on 27/5/25. I have been on a buying spree for last month and now looking at property stocks...GMT, PFI, SPG, KPG and ARG. Looking at the PE, EPS, NTA, DIV and YLD I notice ARG seems to be looking like a better buy at the moment. Every time I go to buy the others I seem to push the wrong button and end up buying ARG. Is it just me or is anyone else having the same problem.
I posted this a while back in the KPG thread.
QuoteKPG closed at 87 cents and I bought a few more, why ?
You get 1.35 cents back in quick time with fourth quarter June divvy so looking at this for future income and treating the 1.35 cents per share near term divvy as part repayment of the purchase price the net purchase price is 85.65 cps. Forecast to pay out 5.6 cps so 5.6 / 85.65 = 6.54% Net. Its a PIE so to 33% taxpayers that's worth 6.54 / 0.67 = 9.76% gross and if you take shares in lieu of divvy at a 2% discount that becomes 9.76% / 0.98 = 9.96% gross, call it 10% paid quarterly.
I think there is some scope for a very small increase in divvy in the years ahead too. Great income stock ! P.S. 27 May. To my last point above. In a note released today Craigs see Dividends increasing to 5.8 cps in FY27 and 6.0 cps in FY28.
and this in NOv 2024 when I started buying ARG
QuotePresentation is here. https://api.nzx.com/public/announcement/442203/attachment/432292/442203-432292.pdf
Sometimes boring is good. ARG is a yield story. Big research paper by Craigs I read recently has them as the highest yield of all listed property stocks. 6.65 cps / 109 = 6.1% PIE tax free yield worth 6.1 / 0.67 = 9.1% effective gross yield for 33% taxpayers. Back out the 1.6625 cps coming in a few weeks and treat it as partial return of the purchase price those investing for 2025 income are getting 6.65 / (1.09-.016625) = ~ 6.2% tax free worth 9.25% gross for 33% taxpayers. With the 2% DRP scheme reinitiated if you subscribe to that the effective yield becomes 9.25 / 0.98 = 9.44% gross, paid quarterly.
That will look pretty darn attractive this time next year when term deposits are under 4%.
Looking at the bigger picture with interest rates falling, cap rates should stabilize and eventually provide a tailwind, the economy should start recovering from sometime next year and they have a number of developments in the pipeline.
NTA is now $1.46 and it trades at a decent discount to that. I think they have done well to keep the dividend yield unchanged this year in light of depreciation no longer being claimable, (unlike KPG who seem to look for any excuse to drop their payout)
I have a moderate position I hold for yield.
ARG have not run away much from the $1.09 I started buying at late last year. My average price is just over $1.07 and I believe they are very good buying at the current level and the highest yielding stock of the listed REIT's.
Events since Nov 2024, I have added quite a few more and they now represent about a 10% portfolio position and almost the same for KPG. Recent tax changes in this sector of an immediate 20% tax deduction for new commercial buildings will help ARG a lot in the coming years and others in the sector too. Noting too that ARG still trade at a large discount to their $1.53 NTA. Annual meeting is next Tuesday.
Funnily enough I was driving through Highbrook earlier this week, haven't driven through there in years so your post is quite timely. GMT have done a great job there but I don't find their shares trading very close to NTA or the low yield attractive. Noting also quite modest yields for VHP and PFI, they don;t float my boat either. Don;t know enough about the other listed REIT's to post anything about them on here that adds value.
Quote from: Otago K on May 27, 2025, 07:10 AMPerhaps a year ago I very much held a mindset that interest rates would be receding and that would affect capital valuations and consequently NTAs to be a positive for SP uplifts, also saw merit to the thought that the yields would reduce as investors saw REITs as an alternative to offset interest income levels dropping as bond yields fall, late August 2024 reassured me some, however where are we now. Seems that there are specific issues that is precluding much reduction in global bond yields.
Same, I started loading up on Australian REITs in late 2023, early 2024. Picked up some more during the April tariff tantrum when yields got pushed back up to 8%+ again.
Back in 2008 I also loaded up on REITs. Got a total return of 30% per annum over the next 5 years. This time round won't be as lucrative, but I'm expecting at least 15% per annum for three years (Year 1 achieved, Year 2 on track, and the RBA should come to the party for 2026).
Just imagine what'll happen to property related stocks if John Key gets his wish ...and RBNZ over reacts to takes OCR to 2.0%
https://www.nzherald.co.nz/business/sir-john-key-urges-100-basis-point-interest-rate-cut-to-boost-nz-economy/DTHZTVGQGZDC5ASZGELH3IVUEY/
Quote from: winner (n) on Jul 19, 2025, 08:03 AMJust imagine what'll happen to property related stocks if John Key gets his wish ...and RBNZ over reacts to takes OCR to 2.0%
https://www.nzherald.co.nz/business/sir-john-key-urges-100-basis-point-interest-rate-cut-to-boost-nz-economy/DTHZTVGQGZDC5ASZGELH3IVUEY/
Indeed. 50 points on the cards though.
Infometrics lifting forecast
https://www.rnz.co.nz/news/business/567250/infometrics-doubles-new-zealand-s-2026-growth-forecast
Not surprisingly there's a pretty strong correlation between the 10 Year Govt Bond rate and KPG share price
The Govt 10 year rate still hanging around the 4.5% mark ... hasn't moved down much for a while
If John Key gets his way and OCR goes to 2.25% and say 10 Yr rate goes to 3.% expect KPG share price to go to about $1.40
If 10 Year goes to say 2.0% (maybe wishful thinking) the KPG goes to something like $1.55
Pretty cool eh .....WHERE'S THE BUY BUTTON .... even if already in
Might just buy the kernel property fund so I don't have to guess who benefits the most
Quote from: winner (n) on Jul 19, 2025, 10:59 AMNot surprisingly there's a pretty strong correlation between the 10 Year Govt Bond rate and KPG share price
Would you have chart of that?
Quote from: Buzz on Jul 20, 2025, 05:57 PMWould you have chart of that?
KPG Share price v 10 Year Govt Bond relationship from 2008
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IMG_6200.png
Great image Winner. Thank you for putting in the work to share this.
It was nice to see ARG getting some love today on the market, up on more than 1 m volume as well as KPG on more than 3 million shares traded.
Quote from: Basil on Jul 21, 2025, 05:54 PMGreat image Winner. Thank you for putting in the work to share this.
It was nice to see ARG getting some love today on the market, up on more than 1 m volume as well as KPG on more than 3 million shares traded.
I topped up today on both KPG and ARG and looking forward to AGM tomorrow and might attend if I am feeling up to it.
Quote from: seaweed on Jul 18, 2025, 06:04 AMGood choice Otago K. Your SPG is up about 11c and KPG up about 10.5c since your post on 27/5/25. I have been on a buying spree for last month and now looking at property stocks...GMT, PFI, SPG, KPG and ARG. Looking at the PE, EPS, NTA, DIV and YLD I notice ARG seems to be looking like a better buy at the moment. Every time I go to buy the others I seem to push the wrong button and end up buying ARG. Is it just me or is anyone else having the same problem.
Didn't quite get a bite of ARG, think I had placed a BUY at 96 cents while I delayed to assess, and when got back to it gut felt it had moved higher to a level that I would just focus on KPG.
KPG I will need to sell down the portfolio percentage allocated to KPG for in effect a Trust Entity owned holder as a result in part to appease a potential (discretionary) beneficiary expressed concerns. 20% uplift in values since second half of April will have to be the limit of the gains if I chose to appease him and listen to his threats of legal actions for my perceived fiduciary delinquency.
SPG still not back to SP 12 month lows as at Feb 2025 if I am not mistaken, perhaps the REITs will pop somewhat after the August OCR review??
Has anyone looked deeply into NZL? They reckon affo/ps will be ~7.75 cents in three years time, seems pretty attractive. And gearing is on the lower end of the sector. Surely dairy farm and forestry land is safer than office property these days. When it first listed I thought the management contract was excessively favourable to the manager but thinking about it more it really doesn't seem out of order when compared to actively managed investment funds.
Quote from: Otago K on Jul 29, 2025, 07:13 AMKPG I will need to sell down the portfolio percentage allocated to KPG for in effect a Trust Entity owned holder as a result in part to appease a potential (discretionary) beneficiary expressed concerns. 20% uplift in values since second half of April will have to be the limit of the gains if I chose to appease him and listen to his threats of legal actions for my perceived fiduciary delinquency.
SPG still not back to SP 12 month lows as at Feb 2025 if I am not mistaken, perhaps the REITs will pop somewhat after the August OCR review??
Pretty disappointing that a
discretionary beneficiary is throwing their weight around like that. I think if that sort of thing happened to a trust I was serving on, I'd be reminding that person that the Trustees have the discretionary power to give him / her as much or as little as they think is appropriate, including perhaps, nothing.
REIT's like ARG and KPG which are both PIE's are yielding in the mid to late 8% range for 33% taxpayers. That rises to close to a 10% effective gross yield for those on a 39% tax rate including trusts.
Quote from: Otago K on Jul 29, 2025, 07:13 AMDidn't quite get a bite of ARG, think I had placed a BUY at 96 cents while I delayed to assess, and when got back to it gut felt it had moved higher to a level that I would just focus on KPG.
KPG I will need to sell down the portfolio percentage allocated to KPG for in effect a Trust Entity owned holder as a result in part to appease a potential (discretionary) beneficiary expressed concerns. 20% uplift in values since second half of April will have to be the limit of the gains if I chose to appease him and listen to his threats of legal actions for my perceived fiduciary delinquency.
SPG still not back to SP 12 month lows as at Feb 2025 if I am not mistaken, perhaps the REITs will pop somewhat after the August OCR review??
I was so looking forward to going to the AGM but Shingles got the better of me. My advice to everyone is to get the Shingles vaccine. Anyway, to take my mind off that blo-dy painful condition I have bought 3 lots of ARG in last three weeks and one lot of KGB but am still liking the look of ARG also bought FSF and PGW just for a laugh and still got lots of SPK for a bigger laugh.
Quote from: Plata on Jul 29, 2025, 07:19 PMHas anyone looked deeply into NZL? They reckon affo/ps will be ~7.75 cents in three years time, seems pretty attractive. And gearing is on the lower end of the sector. Surely dairy farm and forestry land is safer than office property these days. When it first listed I thought the management contract was excessively favourable to the manager but thinking about it more it really doesn't seem out of order when compared to actively managed investment funds.
I had a quick look but bought more ARG. When is NZL next div due?
Quote from: seaweed on Jul 29, 2025, 09:56 PMI had a quick look but bought more ARG. When is NZL next div due?
Should be in September, 1.8-2 cents I'd guess.
Quote from: Plata on Jul 29, 2025, 07:19 PMHas anyone looked deeply into NZL? They reckon affo/ps will be ~7.75 cents in three years time, seems pretty attractive.
Thanks for bringing this company up which gets almost no attention. I haven't looked deeply but on a quick review it listed in 2020 at $1.25 promising to pay 90-95% of AFFO but this has been adjusted to 60-90%. I think its somewhat disrespectful to initial investors who bought this as a yield investment that the directors are now granting themselves such a wide power of discretion as to the level of dividend, although some might see that as a bonus if they trust the directors to invest in value accretive opportunities.
https://api.nzx.com/public/announcement/451937/attachment/443747/451937-443747.pdf
The yield 4.3% tax paid as a PIE does not compare favorably with the likes of KPG 5.7% tax paid, or ARG 5.9% tax paid but the farm leases are longer and it does accord an opportunity to invest in rural land at a reasonable discount to NTA. Investors are well served with Rob Campbell as chair. Best wishes to holders.
Quote from: Basil on Jul 29, 2025, 09:11 PMPretty disappointing that a discretionary beneficiary is throwing their weight around like that. I think if that sort of thing happened to a trust I was serving on, I'd be reminding that person that the Trustees have the discretionary power to give him / her as much or as little as they think is appropriate, including perhaps, nothing.
......
Indeed has been done, including formally by my co-trustee lawyer via his acting solicitor, a differing reality that I think is a distorted one, if not merely a sense of entitlement or desire to control. I certainly don't see they have the attributes to replace me as a trustee.
Quote from: Basil on Jul 29, 2025, 10:38 PMThanks for bringing this company up which gets almost no attention. I haven't looked deeply but on a quick review it listed in 2020 at $1.25 promising to pay 90-95% of AFFO but this has been adjusted to 60-90%. I think its somewhat disrespectful to initial investors who bought this as a yield investment that the directors are now granting themselves such a wide power of discretion as to the level of dividend, although some might see that as a bonus if they trust the directors to invest in value accretive opportunities.
https://api.nzx.com/public/announcement/451937/attachment/443747/451937-443747.pdf
The yield 4.3% tax paid as a PIE does not compare favorably with the likes of KPG 5.7% tax paid, or ARG 5.9% tax paid but the farm leases are longer and it does accord an opportunity to invest in rural land at a reasonable discount to NTA. Investors are well served with Rob Campbell as chair. Best wishes to holders.
I haven't looked into NZL at all, but my gut thoughts, if you had a desire to hold farmland in your portfolio the yields you have identified look to indicate a degree of value, farmland doesn't offer the cash returns that other NZ property might do ( and I might suggest it's more volatile in valuations ). Not on my radar on any basis, discl; have some off market direct farmland ownership, albeit less than 24 months ago.
Quote from: Basil on Jul 29, 2025, 10:38 PMThanks for bringing this company up which gets almost no attention. I haven't looked deeply but on a quick review it listed in 2020 at $1.25 promising to pay 90-95% of AFFO but this has been adjusted to 60-90%. I think its somewhat disrespectful to initial investors who bought this as a yield investment that the directors are now granting themselves such a wide power of discretion as to the level of dividend, although some might see that as a bonus if they trust the directors to invest in value accretive opportunities.
https://api.nzx.com/public/announcement/451937/attachment/443747/451937-443747.pdf
The yield 4.3% tax paid as a PIE does not compare favorably with the likes of KPG 5.7% tax paid, or ARG 5.9% tax paid but the farm leases are longer and it does accord an opportunity to invest in rural land at a reasonable discount to NTA. Investors are well served with Rob Campbell as chair. Best wishes to holders.
If I recall correctly that dividend switch up occurred because they became a bit overleveraged once the covid easy money dried up. They actually suspended it for a while under the guise of a buyback being better allocation. The current yield isn't the story though, the story is the future yield. If you hold the payout ratio of fy2024 81% constant, by their affo forecasts (midpoint) and guestimate of shares issued, DPS grows from 4 cents to 4.3 cents FY25, 4.9 cents FY26, 5.15 cents FY27. I feel this makes it quite competitive with the others, especially given the fact that ARG is at 100%+ payout ratio and KPG is approaching the same.
So the payout ratio of affo was 90-95%, then it was nothing and now its 80% with guidance of 60-90%, is that correct ? Given this all occurred for a newcomer company within a few short years, how can we rely on any guidance they give about future earnings or payout ratios ?
My wife already has enough exposure to rural land for both of us but just out of curiosity what's driving the growth in forecast income ? How reliable are those forecasts given we are talking about the notoriously cyclical rural sector which is booming now but may be quite different 3 years hence ?
Look, if they can get those future forecast returns off rural land, obviously I am skeptical given the current boom in the rural cycle, that's a fantastic return.
Latest from ARV is current year payout is within normal program guidelines. Craigs have KPG growing DPS to 6 cps by FY28. That seems quite plausible to me given we are almost certainly at the bottom of the retail cycle.
To me, at face value, buying KPG you are buying what is almost certainly the bottom of the retail cycle whereas with rural, you are at face value, probably buying the top of the commodity cycle. That's my preliminary view but I'm certainly interested to hear your thoughts on those questions above.
For what its worth I added more KPG and ARG this week because I know I can almost certainly trust their forecast payouts and they both have a VERY long history of doing what they say they will do, (with the exception of one missed dividend during the depths of the Covid crisis with KPG).
Yes that is my understanding of the payout guidance. I agree they have not shown reliability with the dividend.
I would say the earnings growth forecasts they have provided hinge on rent reviews, this years avg rent increase looks like it will be around 5% due to cumulative CPI change since some properties had their last reviews. With CPI still at almost 3% and all the leases being CPI indexed or higher there should be consistent growth in income. I think for the later years in the forecast they must be assuming some level of interest rate reduction and/or rotation of assets (potentially from lower yield pastoral ~5% to orchard or forestry which so far have been ~8%). I may be mistaken but as they are the land owner, not the farmer, they are much less exposed to the dairy cycle.
I used to hold KPG and am open to holding again, especially with a 6 cent dividend. But not at a 100% payout ratio.
Our objectives are likely different, the dividend is nice but matters less to me than the risk/reward(TSR).
I had a bit more time today to have a somewhat deeper look into this. Thank you Plata for bringing this to our attention. Its certainly not without its own unique merits and shareholders are very well represented with Rob Campbell as chair. Always important to look ahead especially as FY25 is more than half done and dusted. Looking at that forecast of 4.9 cps for FY26 on a share price of 93 cents that's a tax free PIE yield of 5.27%, worth 7.87% or 8.64% gross equivalent to 33 or 39% taxpayers respectively, (assuming they meet forecast and pay out 80% of affo). That's a very good yield for rural land and your point about AFFO growth is well made.
Not super happy that the manager get's 10% of all uplift in NAV from one year to another, (without any hurdle whatsoever in terms of acceptable run rate of growth....surely a baseline of the CPI + a few percent as a minimum should have been set as a baseline before performance fees become payable), but the 0.5% per annum of NAV management fee is a lot less than most actively managed funds charge so I suppose taken together its not unreasonable and the Chair is highly experienced and will be keeping a very close eye on what new deals will be asset and affo accretive with his (close to a million shares holding) so some comfort can be derived from that.
Seems like a good vehicle to gain exposure into rural land with no need to get your hands dirty or wear gumboots. I wish my wife's rural land provided returns that good lol.
Nice to see Kiwi Property back at $1 today. No reason I can see that this can't keep going up until its much closer to its NTA. Ditto for ARG.
Quote from: Basil on Aug 14, 2025, 06:50 PMNice to see Kiwi Property back at $1 today. No reason I can see that this can't keep going up until its much closer to its NTA. Ditto for ARG.
Yes, though I expect Mr Market will gyrate around $1 for a while, albeit ameliorated by the (declining) 6.8% gross dividend paid quarterly. With NTA at $1.14, I'm not expecting any sudden increase in SP to close that gap, in time it will but not until KPG proves out it's BTR strategy, the property market stabilises and Drury especially continues to develop.
Those quarterly divis have been a lot more satisfying than my TD's, hence I have a decent swag of KPG and remain content with that decision.
Probably should say I accumulated for a couple of years in the 80's.
Quote from: Buzz on Aug 14, 2025, 07:42 PMYes, though I expect Mr Market will gyrate around $1 for a while, albeit ameliorated by the (declining) 6.8% gross dividend paid quarterly. With NTA at $1.14, I'm not expecting any sudden increase in SP to close that gap, in time it will but not until KPG proves out it's BTR strategy, the property market stabilises and Drury especially continues to develop.
Those quarterly divis have been a lot more satisfying than my TD's, hence I have a decent swag of KPG and remain content with that decision.
Probably should say I accumulated for a couple of years in the 80's.
Zo you have held vor 40+ years, and vinally it gets back to ze issue price!
Zhat eez vhat I call 'Buzzloyalty'
RB
ARG and KPG both closed today at prices that give a PIE tax free yield of 5.6%, 5.65% to be exact for ARG.
Depending on your marginal tax rate that's worth 8.4% gross to 33% taxpayers and 9.2% gross to anyone using this PIE structure to beat the 39% tax rate applicable to Trusts or those earning over $180k.
Those are very attractive effective gross yields in a falling interest rate environment. It wouldn't surprise me if in addition to a cut by the RBNZ next week there's another one next time and a further cut late this year or early 2026.
you accumulated when? in the 80's? Did not know the stock was listed back then... has the SP moved much since ??? what happened to it in the crash...
If the Reserved Bank dont cut the OCR the Minister is going to ask them release information on how they add up the numbers...
What do you guys reckon is the reason for stride trading at a comparatively higher yield than the others? Maybe the wellington exposure? lower asset quality?
Quote from: Plata on Aug 16, 2025, 11:33 AMWhat do you guys reckon is the reason for stride trading at a comparatively higher yield than the others? Maybe the wellington exposure? lower asset quality?
They dropped their dividend just after covid, which instituted a bit of doubt and their last half year statement was signalling a slower recovery than say ARG. My view is they will get there. I believe their NTA is currently $1.72 determined by buillding values that have not yet increased much.
Quote from: Plata on Aug 16, 2025, 11:33 AMWhat do you guys reckon is the reason for stride trading at a comparatively higher yield than the others? Maybe the wellington exposure? lower asset quality?
Yeah I would ask a similar question. There are some institutional and managed funds looking to work out of holding SPG, my worry is that the Wellington % is maybe (?) low on the earthquake building standards as an additional determinate.
discl: have a overweight position from late April 2025 in SPG, and had some influence in not taking a position in ARG at the same time. Suspect Basil might think I picked the wrong horse here.
Not personally sure the NTA of SPG will not shrink a little more still in the short term.
The whole NZ REIT sector is following a different correlation to what I think would drive it, compared to say the Aussie market from what I am picking up, it was quite buoyant around RBA rate cuts there.
At least KPG is performed well enough, having managed to re-balance one trust entity portfolio on a 19.7% SP rise to 99c from April purchases to hold a remnant percentage of shares at my nil cash funds invested basis.
Quote from: Otago K on Aug 17, 2025, 11:20 AMThe whole NZ REIT sector is following a different correlation to what I think would drive it, compared to say the Aussie market from what I am picking up, it was quite buoyant around RBA rate cuts there.
With the exception of the Melbourne market, commercial real estate is doing ok over there. Cap rates are dropping, and they are all reporting their first period where asset valuations are going up rather than down. Rents are rising with inflation, vacancy rates are reasonable, debt levels are reducing, and dividends are being raised. The build pipeline is shrinking due to costs, so a lot of older buildings are now being refitted or repurposed.
Quote from: Plata on Aug 16, 2025, 11:33 AMWhat do you guys reckon is the reason for stride trading at a comparatively higher yield than the others? Maybe the wellington exposure? lower asset quality?
Yes and a range of other factors including:-
A steady reduction in distributable income per share over the last 5 years, 2025 to 2021 as follows - 8.64 cents 10.76 cents 10.66 cents 10.95 cents 11.58 cents, see page 43 of the annual report
Steady reduction in NTA over the years
High weighting to office assets including a fair few B grade assets which are highly vulnerable which saw a significant increase in vacancy rate in FY25
One of their divisional management contracts is not perpetual and subject to review next year
By comparison to other listed REIT's its fairly new and only listed in 2016, the market needs time to build trust and respect for what they are trying to do
The market is not attributing much value to the property management side of the business, (rightly or wrongly, you be the judge)
Some quite woke employment policies I spotted on their website which I think are excessive, e.g. 5 weeks annual leave for all staff, and 5% contribution to Kiwisaver for any staff member who contributes 4% or more.
The structure of the whole thing being stapled securities might put some investors off who want something that's simple to understand.
There will be other factors at play here for sure, which people can DYOR on a deep dive into this sector starting with reviewing their FY25 annual report here https://api.nzx.com/public/announcement/452359/attachment/444320/452359-444320.pdf
BTW - A very good recent article by Tim Hunter in the NBR recently about all the governance mistakes made by NZL. You should try and get a copy. It was scathing. PM me with your email address if you can't get a copy of it any other way and I'll send it to you. I'm not impressed at all with the way Rob Campbell has lead the governance of NZL. Investment in NZL is a definite NO from me. This presents as a possibility but there are plenty of modest quality B grade assets in their portfolio so its definitely not without considerable risk.
Quote from: Basil on Aug 17, 2025, 03:21 PMYes and a range of other factors including:-
A steady reduction in distributable income per share over the last 5 years, 2025 to 2021 as follows - 8.64 cents 10.76 cents 10.66 cents 10.95 cents 11.58 cents, see page 43 of the annual report
Steady reduction in NTA over the years
High weighting to office assets including a fair few B grade assets which are highly vulnerable which saw a significant increase in vacancy rate in FY25
One of their divisional management contracts is not perpetual and subject to review next year
By comparison to other listed REIT's its fairly new and only listed in 2016, the market needs time to build trust and respect for what they are trying to do
The market is not attributing much value to the property management side of the business, (rightly or wrongly, you be the judge)
Some quite woke employment policies I spotted on their website which I think are excessive, e.g. 5 weeks annual leave for all staff, and 5% contribution to Kiwisaver for any staff member who contributes 4% or more.
The structure of the whole thing being stapled securities might put some investors off who want something that's simple to understand.
There will be other factors at play here for sure, which people can DYOR on a deep dive into this sector starting with reviewing their FY25 annual report here https://api.nzx.com/public/announcement/452359/attachment/444320/452359-444320.pdf
BTW - A very good recent article by Tim Hunter in the NBR recently about all the governance mistakes made by NZL. You should try and get a copy. It was scathing. PM me with your email address if you can't get a copy of it any other way and I'll send it to you. I'm not impressed at all with the way Rob Campbell has lead the governance of NZL. Investment in NZL is a definite NO from me. This presents as a possibility but there are plenty of modest quality B grade assets in their portfolio so its definitely not without considerable risk.
Basil, could I please seek some depth to the highly vulnerable aspect comment, do you see that as merely the vacancy rate on what is less desirable office options for tenants in the Wellington supply or is there details of the earthquake ratings on the buildings to be accessed somewhere you could direct me to please?
Quote from: Otago K on Aug 18, 2025, 07:20 AMBasil, could I please seek some depth to the highly vulnerable aspect comment, do you see that as merely the vacancy rate on what is less desirable office options for tenants in the Wellington supply or is there details of the earthquake ratings on the buildings to be accessed somewhere you could direct me to please?
Towers in Wellington are highly vulnerable. proven history of needing to do earthquake strengthening and/or repairs on Wellington towers regardless of the supposed NBS ratings.
Remember vividly the KPG AGM where the retiring CEO spoke in great detail how it lead to a lost decade of returns across there assets in seismic active areas (Wellington/Chirstchurch/Palmerston North) - and subsequently they moved to unload their assets in those areas to eliminate that exposure in the future.
Quote from: Otago K on Aug 18, 2025, 07:20 AMBasil, could I please seek some depth to the highly vulnerable aspect comment, do you see that as merely the vacancy rate on what is less desirable office options for tenants in the Wellington supply or is there details of the earthquake ratings on the buildings to be accessed somewhere you could direct me to please?
Sure, no problem mate. What do you make of the charts on page 27 of the annual report for forecast vacancy rate of B grade office buildings over the next 3 years ? They looked pretty scary to me and in tandem with vacancy rates across their portfolio climbing quite a bit in FY25, I did not get sufficient comfort the dividend of 8 cps forecast for FY26 is sustainable in the medium term, especially when they might lose the management contract on part of their portfolio in FY27. Others might have a different view and that's fine and I acknowledge the discount to NTA is quite large and the yield is the best of the REIT's and possibly / probably ? all the risks are already fully priced in.
The other positive seeing as they have new builds in the pipeline is the recently announced accelerated 20% write-off will help with their tax bill as those new buildings are delivered. They will also benefit from falling interest rates and hopefully firming capitalisation rates like the rest of the sector. I didn't read the whole report...there could be more info on the earthquake ratings and remedial costs or not, sorry, not sure.
Quote from: Basil on Aug 14, 2025, 08:44 PMARG and KPG both closed today at prices that give a PIE tax free yield of 5.6%, 5.65% to be exact for ARG.
Depending on your marginal tax rate that's worth 8.4% gross to 33% taxpayers and 9.2% gross to anyone using this PIE structure to beat the 39% tax rate applicable to Trusts or those earning over $180k. Those are very attractive effective gross yields in a falling interest rate environment. It wouldn't surprise me if in addition to a cut by the RBNZ next week there's another one next time and a further cut late this year or early 2026.
Forgot to add that in addition to those yields, canny investors topping up this month will know that both pay a quarterly dividend next month so they get some money back on their investment in double quick time. Disc: I added a few more ARG at the close today and some more KPG last week.
Quote from: Basil on Aug 18, 2025, 11:27 AMSure, no problem mate. What do you make of the charts on page 27 of the annual report for forecast vacancy rate of B grade office buildings over the next 3 years ? They looked pretty scary to me and in tandem with vacancy rates across their portfolio climbing quite a bit in FY25, I did not get sufficient comfort the dividend of 8 cps forecast for FY26 is sustainable in the medium term, especially when they might lose the management contract on part of their portfolio in FY27. Others might have a different view and that's fine and I acknowledge the discount to NTA is quite large and the yield is the best of the REIT's and possibly / probably ? all the risks are already fully priced in.
The other positive seeing as they have new builds in the pipeline is the recently announced accelerated 20% write-off will help with their tax bill as those new buildings are delivered. They will also benefit from falling interest rates and hopefully firming capitalisation rates like the rest of the sector. I didn't read the whole report...there could be more info on the earthquake ratings and remedial costs or not, sorry, not sure.
Thanks Basil and KW for addressing some matters that might be determinations. I had a quick look at the thread yesterday morning (and in my brain saw a bit more) that I don't disagree that there are matters to assess in determining a question of Mr Market having not got the SP right. but with real life matters of focus for me personally didn't reply, and I'm still needing to focus my time there at present. Admittedly there are some potential heightened risks with SPG, and ARG do seem to be in the process of actioning on a re-balance of assets in their portfolio to Industrial properties. Another big positive for ARG c/f SPG I admit is the clarity in their summary reporting, to get that sort of thing took quite some time or frustration and some estimations, maybe therein lies a reality. I agree in essence that the quality of some of the portfolio isn't going to match some other options.
The questions of the management side of the operation as you say is up for reassessment should the entity that they hold a minimal (2%?) ownership share, if the loss of the management contract of it eventuate it would alter the balance some, as to what value needs to be considered for that business operation ??, bearing in mind contracts are solely for business entities that they also hold a direct ownership interest in so they haven't attracted any independent commissions as such.
When I looked to determine the thoughts of valuation it wasn't easy to breakdown and consider what the SP moves might be.
I would be a fool to not re-assess when I have time to think it over again including what the KW post has heightened in my current consciousness, and the fact that some big players are clearly selling down or out. Always was going to sell down in the longer term with my general REIT and specific property company over weight allocation in my portfolio holdings.
On the positive if I need to do it extensively to sleep without doubts, at the current SP is comfortably above the sort of $1.12 BUY levels.
discl might tidy up to become coherent when brain isn't required elsewhere
Some investors that always make a killing will be doing so again from this ever isolating stocks that get hit every time the NZ govt and Reserved bank stuff up every ten year cycle...
Just wait for another NZ Government to do it all again in ten years... when the Prop Comps get to say ARG 1.60 or 70.. do a take some off the table... as they will blow it... they always do...
remember none of these professional politicians and none of the government officials ever come from the commercial sector in numbers big enough to to make any difference...
Quote from: Basil on Aug 17, 2025, 03:21 PMBTW - A very good recent article by Tim Hunter in the NBR recently about all the governance mistakes made by NZL. You should try and get a copy. It was scathing. PM me with your email address if you can't get a copy of it any other way and I'll send it to you. I'm not impressed at all with the way Rob Campbell has lead the governance of NZL. Investment in NZL is a definite NO from me. This presents as a possibility but there are plenty of modest quality B grade assets in their portfolio so its definitely not without considerable risk.
Yes re stride it seems the higher yield is not undeserved. Re NZL I exited the other day as the risk/income reward is not attractive anymore. I'm having an awful issue at the moment where all my unloved income stocks run up past the point of being compelling to hold. I'm concerned the strategic review will be yet another lucrative event for the manager, and like you I don't have much faith that the board can keep this reasonable. It continues to surprise me how none of the property companies ever just buy and hold, always churning around with the illusion of value add, strategy this and that.
Some PCT new they are building more apartments.. investors here probably already following it as with KPG.. the Word Recovery is mentioned..
NZH..
announcing somewhere 1B in new investment...? thats a lot cant be right..
https://www.nzherald.co.nz/property/billion-dollar-apartment-builder-precinct-properties-launches-new-100-scheme/XM57ED5R2VD6XGYLR56IQOZKN4/
ARG 1.21... who ever back up the truck in the 1.00 is now sitting nicely...
APL to throw another one I have taken an increased stake into the last 6 months, they have a no debt period until the Munro Lane (?) property is sold and the then NTA value is returned. Sufficient cash flow at present for a small income stream of quarterly dividends to assist the time value costs of holding APL. They had recently increased the next year occupancy but didn't disclose a budget on the refurbishment costs they might face, do wonder if substantial work involved it will chew into the annual rental negotiated more than a little.
Volume and support of GMT is a surprise since the DIV announcement... shows people are buy commercial property as a proxy for GOLD? Move from 1.90's back to 2.06... ARG massive move from high.90 to touch 1.21 could also be seen a Gold Proxies with a DIV.. in other words Bricks , steel and Land...
REIT's are a yield thing and bricks and mortar plain and simple. Most being PIE's allows people on higher tax rates to have their distributions capped at 28% tax. That matters a lot for Trusts and people facing the 39% tax rate and also makes a meaningful difference for the huge numbers of people taxed at a marginal tax rate of 33%. KPG and ARG both go ex their quarterly Sept dividends shortly, (KPG on 4 Sept and ARG on the 9th), and that is part of the reason behind the share price rise lately but interest rates declining and the RBNZ set to cut more next month and possibly again as early as late November are making the yield from REIT's even more attractive as well as in some cases lowering the companies funding costs.
Disc I hold a significant number of ARG and KPG
Breakout on ARG today on significant volume of nearly 2m shares. Chart looks very pretty. Still a substantial gap between the current share price of $1.225 and NTA of $1.53. The trend is your friend for holders.
GOLD in there them bricks, steel , fancy smart buildings... GOLD....and they havnt got enough of them in the golden triangle...
Big orders coming in for ARG... one for nearly 500,000 at 1.22 good buying support depth.. is this the market moving from TD to yield? Is there a panic in some circles that bank deposits are going to attract no yield? Looks like some investors think they are cheap on a long term basis... surely they are kicking themselves they did not get in when it was in the low 1's....
GMT moved 13 cents on tiny yield in the past few weeks....
ARG 1.24 GTM 2.15...
Another 12 months when more TD comes off higher yields?
https://www.interest.co.nz/saving/term-deposits-1-to-5-years
safe though? or is land and bricks actually safer... of course it is... in fact TD's should have a risk associated with them...
GMT 2.18!!! gosh do they actually think that real buildings are going to be a hedge against global conflicts or
something... it rocketed back up...
2.19...
2.20 and above?
Quote from: Waltzing on Sep 08, 2025, 02:17 PMGMT 2.18!!! gosh do they actually think that real buildings are going to be a hedge against global conflicts or
something... it rocketed back up...
2.19...
2.20 and above?
Actually - NZ properties well might be a hedge. Just look at how Swiss property values developed since say - 1930 ies.
I guess even the Trumpistas buy themselves NZ passports and properties, and many will think that a house here might be a good option in case whatever they do on the other side of the world fails.
But hey, maybe its just the idea of interest rates going down ..
ARG trade ex div tomorrow.
Quote from: Basil on Sep 08, 2025, 08:34 PMARG trade ex div tomorrow.
Yes and can't see sp dropping much on ex div. there is about 1.3 million between $1.20 and $1.22
yes ARG has powered back up to where it reach on the first rate cuts... amazing the depth there now.. cant buy gold..well they are buying buildings instead.. smart and smarter ones... pity the future under the next government looks like governments deficits for ever... slow to no growth economy with the only growth being ever growing government.. and other bodies... dont expect these SP to rise fast...
Multi year high for KPG at $1.06 !
Quote from: Basil on Sep 17, 2025, 05:15 PMMulti year high for KPG at $1.06 !
I got a few KPG, but am in love with ARG and like there PE and NTA. Also like FSF.
Quote from: Basil on Sep 17, 2025, 05:15 PMMulti year high for KPG at $1.06 !
So cyclical these commercial property stocks, I got all of my KPG in the $0.8's over a year+ or so of building a position (easily justified by the good dividends), very predictable cycle patterns correlated to CPI and easily monitored on the charts. Gives a long window for accumulation so don't have to go large all at once, and same for exits. Still about 10 cents discount to NTA and at this SP, about 6.5% gross div paid quarterly, my div yield is much better having got in ~20-25 cents lower. Plenty to like, I have an overweight position. SP will in time probably overshoot NTA as well, keep an eye on the charts.
Quote from: Buzz on Sep 18, 2025, 12:08 AMSo cyclical these commercial property stocks, I got all of my KPG in the $0.8's over a year+ or so of building a position (easily justified by the good dividends), very predictable cycle patterns correlated to CPI and easily monitored on the charts. Gives a long window for accumulation so don't have to go large all at once, and same for exits. Still about 10 cents discount to NTA and at this SP, about 6.5% gross div paid quarterly, my div yield is much better having got in ~20-25 cents lower. Plenty to like, I have an overweight position. SP will in time probably overshoot NTA as well, keep an eye on the charts.
Sorry, I don't like quoting myself but to put this in context, that is a 7+% dividend return so far
and 6+% capital (unrealised) return, for 13.2% portfolio return on paper. A very good solid basis stock in the portfolio for an otherwise boring and easily overlooked stock.
And don't believe the mantra about 'you can't time the market', that's utter BS, absolutely with these cyclical stocks, timing (and a bit of patience) is everything and it stares you in the face, if you can read a SP chart.
Quote from: Buzz on Sep 18, 2025, 12:20 AMSorry, I don't like quoting myself but to put this in context, that is a 7+% dividend return so far and 6+% capital (unrealised) return, for 13.2% portfolio return on paper. A very good solid basis stock in the portfolio for an otherwise boring and easily overlooked stock.
And don't believe the mantra about 'you can't time the market', that's utter BS, absolutely with these cyclical stocks, timing (and a bit of patience) is everything and it stares you in the face, if you can read a SP chart.
Agree that being in a position to buy at the right opportune time holds merits in what might be a cyclical business stock, is the key variable I have discovered to outperform, never too concerned about the actual day date when I start or decide to place the finish line around decisions. I'm honest that I don't have the TA skill base set to maximise the potential but when it comes to KPG I am more than happy to have bought in the last two weeks of April 2025, and from here can not imagine I will not at the least to be free carrying a portion in a few years time; always likely to be getting a closed PIE income return if in the bottom drawer permanently from now.
Craigs forecasting growth to 5.8 and 6.0 cps PIE distributions in FY27 and FY28 for KPG.
Love how tax is capped at 28% because of PIE structure and dividends can be excluded from your tax return.
That's very attractive for those doing their best to minimise the 39% tax band for over $180k income. Also attractive for all those in the 33% tax category.
Quarterly payments and DRIP at 2% discount for some property stocks like ARG and KPG and some others are also attractive elements to this asset class..
I still think we're quite early in this property cycle and it's not too late to accumulate more for those that aren't already well positioned.
P.S. I think the RBNZ needs to take drastic action to try and stimulate the economy which has been in recession for years, (year to 30 June GDP down 1.1%)
https://www.nzherald.co.nz/business/economy/gdp/nz-gdp-june-quarter-dropped-09-stats-nz/NECXAUT2CBGPLEPSXL4SZSHRDU/
We need the OCR down below 2%.
"We need the OCR down below 2%." -- Basil
Looking overseas all major economies are headed back to the zero bound, Switzerland never really moved up since covid, the only thing that will alter this calculus is broad european conflict, which causes capital flight and rising OCR.
The last time NZ was close to the zero bound ARG was $1.70 as the market chased yield.
Many bank economists now calling for a 50 bps rate cut on October 8 and 25 bps in November 26.
https://www.nzherald.co.nz/business/economy/official-cash-rate/gdp-slump-sparks-calls-for-reserve-bank-to-deliver-50bps-rate-cut-in-october/AKSU4JYYHRCHLCZPQZB4FRZMLY/
OCR should therefore be 2.25% by late November but really needs to be 1.00-1.25% to stimulate the economy properly in my opinion. The fact is we've been in recession now for several years. All the "talk" of growth this and recovery that, has just been talk. Its time for politicians and especially the RBNZ to man up and admit we've been in a multi year recession since Covid hit and we desperately need genuine and serious stimulus to get out of it.
Quote from: Basil on Sep 18, 2025, 05:46 PMMany bank economists now calling for a 50 bps rate cut on October 8 and 25 bps in November 26.
https://www.nzherald.co.nz/business/economy/official-cash-rate/gdp-slump-sparks-calls-for-reserve-bank-to-deliver-50bps-rate-cut-in-october/AKSU4JYYHRCHLCZPQZB4FRZMLY/
OCR should therefore be 2.25% by late November but really needs to be 1.00-1.25% to stimulate the economy properly in my opinion. The fact is we've been in recession now for several years. All the "talk" of growth this and recovery that, has just been talk. Its time for politicians and especially the RBNZ to man up and admit we've been in a multi year recession since Covid hit and we desperately need genuine and serious stimulus to get out of it.
You might be right on the 1% target needed, particularly since the current lot in government seem to have abdicated their role in any sort of growth fiscal policy through its austerity program.
Interesting statistic from the US. Data Centre REITS are the worst performing sector. Few of those listed on the NZX and ASX, thinking Goodman in particular.
Screenshot 2025-10-06 092815.png
50bps cut should add support to rising SP of REITs.
Great news for the economy ! 50 bps is exactly what's needed and some much needed stimulation from the Reserve Bank.
https://www.nzherald.co.nz/business/reserve-bank-expected-to-cut-the-official-cash-rate-but-by-how-much/CCMYL4RCUJGIFCWGIHCAHCBVYM/
Love how my mate Jim puts it -
RBNZ having another great day - devaluing the currency, encouraging asset price inflation, and doubling down on the 'destabilise to stabilise' strategy - last seen in the hopeless hero rate cuts of 2020 and the mean and macho hikes of 2022. What a mess.
I couldn't disagree more. 2.5% is only very mildly stimulatory to the economy and is not enough in my opinion. We have been in recession ever since Covid.
Maybe Jim has forgotten what a real stimulatory rate is. Recall it went down to 0.25% for 12 months at one point https://www.rbnz.govt.nz/hub/news/2020/03/ocr-reduced-to-025-percent-for-next-12-months
That was a desperate measure for desperate times.
Today's cut needs to be followed by another 50 bps in late November to 2.0% in my opinion to become more appropriate for the endless recession we've been in and then perhaps another 50 bps in February 2026.
Well the reserve bank is now carrying the sole load of restarting the economy since the government has abdicated adding any stimulus themselves and actively kneecapped the construction sector with their infrastructure freeze.
Great stuff 50 points should make a difference a real difference. Businesses's have most of their loans floating, so this will be meaningful. Will also help the lack Lustre real estate market and most importantly improving consumer confidence.
Good times are coming. Forget the polls, I have no doubt National will be in again next year.
Big capital raise from PCT. Paying dividends while issuing equity is an interesting strategy.
Truly amazing....just shows the quality of the management in some of these property companies... slick salesman..
The large Precinct capital raise has put a lot of temporary price pressure on others in this sector. I like KPG and ARG the most in this sector and current pricing looks like a real opportunity to me for those not already well positioned in those two.
Looks like the COMP PROPS have run out of steam for a while.. really did PCT think it was cheaper to cap raise rather issue bonds? Or has it reach its covenants..
Their gearing before the cap raise was 41% which is getting up there. I think this capital raise gives them the capability to buy MCK's downtown M Social hotel giving a more complete downtown development.
41% is certainly up there. My understanding is most banks like to remain at under 55-60% LVR.
SIR B, runs a local intelligence gathering network hes set up over decades.. notes come in by hand from operatives circulating around the city in everything from Tax Cabs to shoe shine boys....