KPG - Kiwi Property Group

Whacc · Aug 13, 2023, 09:50 PM

Well yeah, it makes sense in those instances because there is a defined & distinct large employer building housing with their employees in mind. The benefit is those employees get to live close to where they work.
They are isolated examples.
Why can't we have a thriving metropolis? Just one?

That isn't what National is proposing.
It's a little rich to say IT & WFH people can just move out there.

You & I both know that's not the intent here and it won't be the outcome either.
The soundbites (repeated by you in your original post) all centre on it being an appropriate solution for young people/families and those in lower socio-economic demographics. They are, by-&-large, not typically IT professionals or in similar vocations.
It's a policy that is shamelessly substituting greenfield for intensification in brownfield locations (where all the infrastructure, amenity & transport links are) to placate & sop to the NIMBY vote.

The likes of Sleepyhead and FPH are isolated.
There are less than a handful of employers in this country capable, let alone willing, to establish their own towns.
Most are and will be reliant upon support services from other industries. That's why we have cities.
A better analogy is Pokeno, Flatbush, Swanson or Silverdale.
People who advocate for greenfield over brownfield rarely venture out to see how this is playing out already.

In Ormiston/Flatbush we have unbridled sprawl with limited amenities.
Rows and rows of housing without even so much as a dairy for kilometres. Provisioning of infrastructure and public transport becomes a nightmare.
People are beholden to their cars to do anything and will continue to be for decades.

If it was greenfields & brownfields and the greenfields included provisioning for more intense amenity (a.l.a. Hobsonville) then I wouldn't be so cynical.
But it isn't, it's a sop to the NIMBY vote. Bishop & Willis sold out their principles.

Quote from: Whome on Aug 09, 2023, 10:31 AMThe Central Auckland isthmus has high land prices and restrictive regulations that discourage large company development so it makes sense to go greenfield development.

The "restrictive regulations" are a solvable problem.
We had a solution that everyone agreed with and National walked away from it.

Land prices are high because it's desirable. More people want to be there.
It's a market signal - our market is broken because we put restrictions in the way of these signals.

We live in, what I assumed was, a free market.
But the two parties that I've always placed faith in to uphold free market ideals are the ones most prominently advocating for retaining restrictions.
The 'libertarian' party, whose founding principles I associated strongest with, is the worst of the lot.
We've been strangled by and humoured NIMBYs for far too long in this country. It has to come to an end. There is no veto right over private property owned by others. If you want to stop development on your neighbour's property then bloody buy it yourself.

Waltzing · Aug 14, 2023, 07:29 AM

Yes the town close to the factory ... well that was https://en.wikipedia.org/wiki/Bournville

still going strong today...

KPG could well be the new town builder.

"a free market. "

no such thing today as societies have regulated markets and even if you list all market facing GOVT ministries on markets you would need an army of auditors.. and open new courts to deal with the fall out.

Not that the model might not work.

KPG doing something that may well be the "way of the future" from a previously well tried model from the past..

https://www.youtube.com/watch?v=4_Pbx9mvWPY

Shareguy · Aug 30, 2023, 12:12 PM

Nationals plan to stop depreciation on commercial properties is going to have an impact on all the Reits.

Sold most of mine some time ago.

Poet · Aug 30, 2023, 12:17 PM

Quote from: Shareguy on Aug 30, 2023, 12:12 PMNationals plan to stop depreciation on commercial properties is going to have an impact on all the Reits.

Sold most of mine some time ago.

In practice though won't the only effect on kpg be that we will get fully imputed dividends rather than partially imputed ones?
So kpg pays more tax and shareholders pay less.

Shareguy · Aug 30, 2023, 12:29 PM

Yes but depreciation acts as a 'tax shelter' by reducing the taxable income of investors is how I see it.. Good news for residential property though in that Labour's gradual reduction in interest deductibility to zero will be stopped from next year, also with full deductibility back in place after 3 years. Adds up to about $5000 to $6500 per property on average according to my accountant.

Nicola Willis said

In 2025, interest deductibility will lift to 75 percent, and by 1 July 2026, interest deductibility will be fully restored." She said the party would also bring the bright line test back to two years.

Waltzing · Aug 30, 2023, 05:17 PM

Well thats the reason for the HIT...

https://www.nzherald.co.nz/business/market-close-property-stocks-dive-after-national-swings-axe-on-depreciation-tax-breaks/RYOWMIEERRGP3GU7OG7JLTIWU4/

Onemootpoint · Aug 31, 2023, 02:24 AM

Elsewhere, LaserEyeKiwi referred to the impact of MMP and post election negotiations with other parties eg ACT may provide a 'reason' to reverse this stated policy.

Wait and see....

Waltzing · Aug 31, 2023, 07:42 AM

Yes does MS W know a profit and loss from a property lease...

Its all just numbers right?

That one is an ACT Vote winner? and business asks whats next ?

Depreciation ? you cant touch this?

https://www.youtube.com/watch?v=otCpCn0l4Wo

Ferg · Aug 31, 2023, 08:39 AM

Depreciation is not a "tax break". Calling it that is disingenuous given it is a legitimate business expense.

Basil · Aug 31, 2023, 09:44 AM

Quote from: Ferg on Aug 31, 2023, 08:39 AMDepreciation is not a "tax break". Calling it that is disingenuous given it is a legitimate business expense.

I couldn't agree more. To suggest that buildings never wear out and require replacing is contemptuous.
2% per annum suggests buildings should last 50 years, many don't.

winner (n) · Aug 31, 2023, 09:50 AM

Quote from: Basil on Aug 31, 2023, 09:44 AMI couldn't agree more. To suggest that buildings never wear out and require replacing is contemptuous.
2% per annum suggests buildings should last 50 years, many don't.

...and a Herald article this morning almost saying there could be a few ghettos around the place one day in the future

KPG build to rent not affected is it?

https://www.nzherald.co.nz/business/election-2023-property-council-hits-out-at-policy-proposals-to-remove-depreciation/TZOG4LGOONFJVDCBJN4R4ZG2MI/

Basil · Aug 31, 2023, 10:16 AM

Build to rent not affected? Good question, it would seem not from that article. Further as that article points out the treatment has been very inconsistent over the years.

Nevertheless, dealing with what's right in front of us now as I have some ARG and KPG I calculate the following effect of removal of the right to claim depreciation.
KPG eps reduces 0.24 cps, suppose you could say fair value reduced about 2.4 cps capitalising that at a PE of 10.
ARG eps reduces 0.32 cps, fair value reduced 3.2 cps.

This assumes they don't recover any of this from tenants over time through increased rent.

"Thanks" National, I really "needed" to swallow that dead rat after what has already been a tough month in the market. That said, I'd rather they get in because another 3 years of a Labour led coalition of chaos will be extremely bad for the N.Z. economy and the quantity of dead rats that involves me swallowing is a frightening prospect to contemplate.

Shareguy · Aug 31, 2023, 11:16 AM

Quote from: Basil on Aug 31, 2023, 10:16 AMBuild to rent not affected? Good question, it would seem not from that article. Further as that article points out the treatment has been very inconsistent over the years.

Nevertheless, dealing with what's right in front of us now as I have some ARG and KPG I calculate the following effect of removal of the right to claim depreciation.
KPG eps reduces 0.24 cps, suppose you could say fair value reduced about 2.4 cps capitalising that at a PE of 10.
ARG eps reduces 0.32 cps, fair value reduced 3.2 cps.

This assumes they don't recover any of this from tenants over time through increased rent.

"Thanks" National, I really "needed" to swallow that dead rat after what has already been a tough month in the market. That said, I'd rather they get in because another 3 years of a Labour led coalition of chaos will be extremely bad for the N.Z. economy and the quantity of dead rats that involves me swallowing is a frightening prospect to contemplate.

Yes agree, Labour had already stated they were going to remove it. So that's it I guess.

Onemootpoint · Aug 31, 2023, 11:15 PM

Some pushback to the proposals in mainstream media too:

Property Council hits out at policy proposals to remove depreciation

https://www.nzherald.co.nz/business/election-2023-property-council-hits-out-at-policy-proposals-to-remove-depreciation/TZOG4LGOONFJVDCBJN4R4ZG2MI/

Waltzing · Sep 01, 2023, 08:59 AM

They must be assuming that capital gains out weight the need for depreciation and maybe some brilliant economist with one of those amazing theories that dont involve any accounting suggested that its no longer needed...

forget the accounting and just model the market ..

The amazing capital gain model will allow the balance sheet to absorb the extra debt required to be carried for R&M or are profits to be cut and shareholders take the hit...

if thats the case it bail from these stocks and just trade them for peanuts...

There are better destressed assets out there to invest in.. heck second hand car auction houses would be a better bet..