KPG - Kiwi Property Group

[Shareguy]

I'm feeling the pain trying to rent properties at the moment so hate to think how Sylvia Park is going.

[Red Baron]

I'm feeling the pain trying to rent properties at the moment so hate to think how Sylvia Park is going.

No problem.   Just go to Sylvia Park and rent those properties zhat have been 'sticking around' yourself.  Vin vin!

RB

[Basil]

Solid result.  Guidance for 5.60 cps dividends in FY26 giving net yield of 6.22%, worth 9.3% gross to 33% taxpayers, (based on 90 cents share price) .
 Net rental income $194.1m (+5.0%)
• Operating profit before tax $116.2m (+7.4%)
• Net profit after tax $57.0m (+2,814.3%)
• Adjusted funds from operations $92.8m (-7.0%)
• Net tangible assets per share $1.14 (-2.0%)
• Full year dividend 5.40 cents per share (-5.3%)

Initial impressions.  The business has done well across the bottom of the economic cycle.
Leasing of Resido faster than I expected.
Management expense ratio has come down nicely but more work to do in my opinion.
Debt a bit higher than they would like but will come down with asset sales in Drury starting.
Good income stock with only very modest prospects for dividends to increase in the years ahead but the yield is very attractive and has PIE tax efficiencies.
Presentation https://api.nzx.com/public/announcement/452207/attachment/444132/452207-444132.pdf
Disc: I hold a few for income.   ~ 5% portfolio allocation.

[BlackPeter]

I'm feeling the pain trying to rent properties at the moment so hate to think how Sylvia Park is going.

They seem to do allright. Not saying their rentals are better, but on the other hand - they say location is everything in real estate.

[LaserEyeKiwi]

I'm feeling the pain trying to rent properties at the moment so hate to think how Sylvia Park is going.

They are renting them at 25% above market rate, and are leasing faster than expected, so not much to hate about how they are going.

[Basil]

Interesting that average age is only 36 so its clear its young people that value the seamless connectivity of it being adjacent to a transport hub and major shopping precinct. Allowing pets is another key differentiator whereas most landlords shun dogs in particular which is a shame because in my experience, people who love dog's are much more likely to be nice and decent people.

[Turkey]

I think you hit nail on the head Basil...there's clearly a market of renters who will pay over the odds for the amenity

I heard a young fella on the radio the other day who rents there.

He said he's paying a bit more than previous rent but the quality and amenities was worth the extra to his mind
For example they cancelled gym memberships and use residio
Sold the car and use the trains etc

The pets allowed was good, said something about communal roof top bbq area for gatherings and was generally complimentary about how it was run and the communication from management.

I think in Auckland there is probably a reasonable market for young couples who probably have decided they won't or can't buy in Auckland but will pay a higher rent with lifestyle benefits.

I think KPG has done very well in a weak rental market...good for them and shareholders
My advice is don't let Kainga Ora anywhere  near it...ever..lol

[LaserEyeKiwi]

I think you hit nail on the head Basil...there's clearly a market of renters who will pay over the odds for the amenity

I heard a young fella on the radio the other day who rents there.

He said he's paying a bit more than previous rent but the quality and amenities was worth the extra to his mind
For example they cancelled gym memberships and use residio
Sold the car and use the trains etc

The pets allowed was good, said something about communal roof top bbq area for gatherings and was generally complimentary about how it was run and the communication from management.

I think in Auckland there is probably a reasonable market for young couples who probably have decided they won't or can't buy in Auckland but will pay a higher rent with lifestyle benefits.

I think KPG has done very well in a weak rental market...good for them and shareholders
My advice is don't let Kainga Ora anywhere near near it...ever..lol

The financials for home ownership vs renting are arguably now quite skewed towards renting for those without existing property already. But the non-financial negatives of renting (no security of tenure, no pets, little ability to redecorate, uneven maintenance and management performance etc) normally make people choose home ownership instead. However a corporate built-to-rent option like Residio minimizes or eliminates a lot of the negatives of renting, and I actually would consider living in one myself instead of my own home if I lived in Auckland.

[lorraina]

A lot of "old" retired people like living with young people as neighbours.
I worked out living in a retirement village the DMF works out about $1,000 per week.
Cheaper to live at Silva Park.Near the shops,doctors, etc.Transport there too.

[Turkey]

Oceania Resido
...making mixed age living cool again...$850/week 


Seriously...not a bad idea there great Uncle Percy...why have all RV in the burbs?

[Basil]

DHB's providing a lot of in home care these days keeping resident in their homes as long as possible.  Food for thought.  What's the real cost of a retirement village unit per week if you invest the average of $1m and live there for 10 years.
1. You lose ~30% so that's 300,000 / 520 weeks =  $577 per week.
2. Weekly fee estimated at $200 per week
3. Opportunity cost, what you could have earned on that $1m invested in say KPG units paying 6.3% net = $63,000 per annum = $1,212 per week
True cost of average RV unit = $1,989 per week, call it $2,000.  On top of that KPG units might go up.

Maybe paying $850 per week for a 2 bedroom apartment with a  nice view and handy to everything really is quite a good alternative...could pay for it plus all utilities with your KPG dividends...that's pretty cool.  Only downside I can see, apart from noise is having to go somewhere twice a day to toilet your dog and pick up its droppings.

[lorraina]

I am sure the grand children would much prefer to go and see you at Silva Park than some retirement village...lol.
Most probably take you down to Glassons to help them buy some new gear...

ps.Granddad may I borrow $600 to buy the lovely frock you so much liked me in.??

pps.I can see a certain granddad getting banned from being any closer than 50 metres from a Glassons store....lol

[Basil]

ps.Granddad may I borrow $600 to buy the lovely frock you so much liked me in.??

Are you kidding me, absolutely not, go to Glassons instead, here's s $50 gift card lol

pps.I can see a certain granddad getting banned from being any closer than 50 metres from a Glassons store....lol

Its probably a good thing they don't sell underwear there lol

[Basil]

KPG 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.

[Basil]

https://api.nzx.com/public/announcement/462272/attachment/456195/462272-456195.pdf