KPG - Kiwi Property Group

[lorraina]

"The property is in a great location with transport, shopping and dinning at their doorstep".
Most probably suit retirees who do not want to move into a retirement village,or who do not have the capital for a retirement village unit.

[Shareguy]

KPG announced the conditional sale of the Vero Centre in Auckland to a Hong Kong-China based conglomerate for $458 million. The transaction price represents a 1.9% discount to the building's September 2023 valuation. Funds will be used to repay bank debt and invest in retail-led mixed-use centres

[Basil]

Results out and look really uninspiring. 
I think shareholders have every right to be disappointed that the dividend is being cut, yet again.
Outlook for only 5.4 cents in FY25. 
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KPG/431745/419411.pdf

[winner (n)]

Results out and look really uninspiring. 
I think shareholders have every right to be disappointed that the dividend is being cut, yet again.
Outlook for only 5.4 cents in FY25. 
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KPG/431745/419411.pdf

Good yield though lol .......while waiting for promised riches to become reality

[lorraina]

For a property company I thought the result was fair to good.

[Basil]

Good yield though lol .......while waiting for promised riches to become reality

How many decades is it now that have shareholders been waiting for capital gains lol

[Sideshow Bob]

How many decades is it now that have shareholders been waiting for capital gains lol

Best return would be to sell all of the properties and return all funds to shareholders.....BANG! 40% return....!!

[Shareguy]

Craig's take

Hill currently has an Underweight recommendation on KPG as not only does it offer one of the lowest CIPe Yield + Growth returns in the sector  (2.8% vs sector median of 6.0%) but he sees a real risk to KPG's dividend over FY25-FY28 if kept at current levels (5.70cpu). This caution was underpinned by the risk KPG may not be able to successfully lease Sylvia Park BTR Stage 1 at its desired price points (which although not impossible we believe are ambitious) as well as the general exposure of its office and retail portfolios to the soft macro backdrop. This result has confirmed our expectations and U/W thesis as KPG has cut its forward dividend with FY25 DPS guidance provided of 5.40cps, which is down -5.3% on FY24 (5.70cps) and our own expectations (CIPe: 5.70cps). We expect the stock to trade down today on news of the cut in DPS. Now saying 12 to 18 months to rent out BTR in a hot market.....

[Basil]

Those asking prices for rent make little sense to me but even if achieved the net yield is projected to be about 5%, less than half the yield they were getting on assets sold to fund this change of strategy...go figure?  For mine, it's really difficult to fathom the logic in the way management go about things. 

[snapiti]

I agree beagle......strange strategy indeed.....I see there ave debt is still mid 5% and the divi is already decreasing.
Have sold after purchasing under 80cps last time the SP went there....suspect it will go there again 

[Buzz]

Those asking prices for rent make little sense to me but even if achieved the net yield is projected to be about 5%, less than half the yield they were getting on assets sold to fund this change of strategy...go figure?  For mine, it's really difficult to fathom the logic in the way management go about things. 

Is that projected yield across the fully occupied BTR plus existing properties still owned. Or, is the yield less development costs, or something else? Would you mind providing a source to this info? Thanks

[Basil]

Is that projected yield across the fully occupied BTR plus existing properties still owned. Or, is the yield less development costs, or something else? Would you mind providing a source to this info? Thanks

Have a look at page 16 onwards
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KPG/431745/419411.pdf

[snapiti]

I think this is destined to hit a multi year low (mid 70's)
Strategy going forward is capital intensive with poor yields on offer for a stock that poeple only buy for yield.
I can see their ave debt servicing cost rising substancailly above the current 5.5%.
Selling the Vero building a good thing and will substancailly lower debt and gearing.

[Basil]

Selling the Vero building a good thing and will substancailly lower debt and gearing.

Only conditional on overseas investment office approval so probably will happen and getting gearing down to 27% in the current high interest rate environment is a good thing.  Gross yield at the new lower rate of 5.4 cents for 33% taxpayers is 10.1% (5.4 / 80) / 0.67 
Would be 10.75% at 75 cents.  An argument can be made for holding based on yield.  10% per annum better than most of the retirement companies are paying which is absolutely zilch!

[Shareguy]

The residential rental market is struggling in Auckland. Demand and rental prices are falling and it's happened quickly. Winter is always slow as people don't generally like moving and tend to hunker down, so it's early days. Retail, well we are all aware of how that's going.

Divi cut again and are told due completely to depreciation changes.  Management saying they have a plan to support the gap in their cashflows going forward to support the current new div.

Still a great dividend currently but insiders including the ceo have been selling.

https://api.nzx.com/public/announcement/433928/attachment/422066/433928-422066.pdf

Today's announcement that the Government to 'flood' cities with more housing by liberalising planning rules has the potential to affect the value of Drury and also their residential portfolio.

https://www.nzherald.co.nz/nz/politics/government-to-flood-cities-with-more-housing-by-liberalising-planning-rules/K4LYY3G54BF5TIDRWTUEEOGYEU/

Interesting times..