KPG - Kiwi Property Group

[Shareguy]

Good post but I have real concerns about whether they can execute their future development plans in a value accretive way.  There is no evidence to date that any development work they have done in the past is either eps or NTA accretive and compounding that when you start selling assets like they did last year at up to a 12% yield to develop rent to build at a 5% yield in the current yield environment with the cost of capital where it currently sits, this makes no sense to me in fact you'd be forgiven for wondering if the board have lost the plot or has no vision other than to provide new buildings that benefit other people than shareholders.  You can definitely put me in the camp of I'll believe their current development program is value accretive when I see it.  To me it's a yield story and it ends there and anyone hoping this will deliver capital gains over the long term might like to consider their share price performance over the last 25 years, especially relative to other property classes.

Disc: I have recently reduced to a "nursery" sized portfolio position, < 1% and will reevaluate in due course.  I am not sure the inexorable march higher in interest rates is done yet by any means and interest rate sensitive stocks trading primarily for their yield face further possible downside pressure from higher rates, especially if there's a dividend cut.

I agree for the same reasons. If they are a good buy why are the executives and board members not loading up.  I sold out some time ago.

[Waltzing]

maybe KPG has got it right as commercial centres struggle to keep workers coming into the office...

https://www.cnbc.com/2023/10/06/the-urban-doom-loop-threatening-cities-like-new-york-and-san-francisco.html

[winner (n)]

So Kiwi wanted to raise gearing ratio from 45% to 50% but needed 25% of bond holders to agree

They decided to bribe bond holders offering them 0.5% of the face value of their bonds to those who voted in favour at the meeting so long as the resolution was passed.

Seems holders of $263m of bonds voted yes please

Suppose $1.3m plus admin/handling fees well spent

Jenny Ruth has full story
https://justthebusinessjennyruth.substack.com/p/high-yielding-kiwi-property-readies?publication_id=1827355&utm_campaign=email-post-title&r=1rwf26


PS ...suppose bribery allowed in good ESG practices

[Basil]

Another example of KPG directors working actively to destroy shareholder value.
I have sold out now. When you look at the history of how KPG have destroyed shareholder capital over the years relative to any other form of property investment, this company is an unmitigated disaster.
Woefully bad financial performance over the long run which they try and hide behind a thick facade of ESG pretentiousness.  Management are vastly overpaid Muppets.  Relying on them to add value with their Drury development is a fool's errand as they have never succeeded in adding real NTA or eps with any of their other developments in the last 25 years.  Holders will be hoping this "time its different"...(the most dangerous expression in capital markets)..

[winner (n)]

KPG share price in 70's

Think this is all time low

Suppose records are meant to be broken ...maybe Kiwi now officially a real dog stock

[snapiti]

KPG share price in 70's

Think this is all time low

Suppose records are meant to be broken ...maybe Kiwi now officially a real dog stock

activate hoover mode under 80cps....dont mind saying I am buying plenty especailly under 80cps

[snapiti]

beagle you are a smart cookie.....whats the current KPG gross dividend based on 33% tax rate @ 78cps, must be over 10% maybe even closer to 11%....yes I know this might change based on the proposed depreciation rules

[snapiti]

I did the numbers and based on 33% tax rate I think it is a gross yield of 10.75% given 78 cps

[Basil]

5.7 / 0.67 = 8.5075 cps gross for those on a 33% tax rate
8.5075 / 77 = 11.05% Gross.
GNE is 10.7% Gross based on 17.8 cps fully imputed @ $2.31.

Too good to be true so that must beg the question for both companies, Is the current dividend rate maintainable or are these a dividend trap?
One thing these two companies have in common is the way they wax lyrical about all things ESG.

I used to own both.  I think it's really telling on a day the market bounced back and had it strongest day in 10 weeks, both these stocks plumbed fresh new multi-year lows.

[winner (n)]

activate hoover mode under 80cps....dont mind saying I am buying plenty especailly under 80cps

Great yield snaps me old mate

But more to come ...everybody says interest rates going to fall to past Levels pretty quickly

So if punters happy with 4%/5% points less share price of 120/130 could happen sooner than later

So you get your yield and big capital gains

(This is not intended to be financial advice)

[Basil]

Change in depreciation will wipe about 1 cps earnings off.
Can they maintain 5.7 cps?  If you believe yes then its probably a buy.
If not what's the new maintainable yield ?  4.7 cps ?, in which case the yield becomes about 9% with is nothing special.

[snapiti]

Yep fully adjusted my fair value and buy price to take into account a lower divi, happy with the 9% should the depreciation rules change but very happy to collect attractive 11% gross divi until the new rules are implemented(if ever), get the feeling sometime over my 10 year prospective hold that 9% will look very attractive against any interest rate decline causing, perhaps artificially, some capital gain, even a little will be cream on top of large gross yield   

[Waltzing]

US yields backing off highs and if this bunch of no hopers who do actually build stuff... can make something work it might stay in business and keep paying a DIV... you would hope...

NZ needs every company that can make a profit ... even the bad ones..

[snapiti]

Great yield snaps me old mate

But more to come ...everybody says interest rates going to fall to past Levels pretty quickly

So if punters happy with 4%/5% points less share price of 120/130 could happen sooner than later

So you get your yield and big capital gains

(This is not intended to be financial advice)

no hurry for the cap gains......I believe they will come sometime over my 10 year window.....for the record I have no faith in the company doing anything to help with capital gains.....it will purely be an interest rate yield driven gain.....I really do think 78 cps is a no brainer for part of a divi portfolio, have to admit I have been somewhat greedy at 78cps and KPG has now blown out to be 55% of my divi portfolio.
With all that said I do have some hope that the companies DURY plans will yield good early results from selling some of the site partially developed to other developers......anyone on here up with the play with the new(March this year) country wide blanket development band on LUC land rated 1,2,3....this is a monster of a development decision and under these new rules Dury could not happened so kudos to KPG for having all the rezoning done already.....I think there will be some market surprise with the prices KPG achieve for parts of the Dury land they choose to sell   

[snapiti]

very pleased I got greedy @ 78cps, 10% cap gains in 10 days.......bonus