KPG - Kiwi Property Group

[Basil]

https://www.nzherald.co.nz/business/whats-going-on-with-petrol-pricesand-will-they-fall-fast-enough-to-turn-the-economy-around-liam-dann/premium/VPPPIYEC4VFYJLPOZNV62ADCFE/

[winner (n)]

Lots of chat at other place about the relationship between REITs share prices and 10 Year Govt rates.

Yes KPG share price has a very strong correlation with the 10 Year rate

10 Year currently 4.36% ......means 'theoretical price' for KPG is $1.06

As we all no doubt agree KPG under priced at moment ...on this basis anyway

[Basil]

Definitely rated BBB.  Basil been buying.

[Dolcile]

Lots of chat at other place about the relationship between REITs share prices and 10 Year Govt rates.

Yes KPG share price has a very strong correlation with the 10 Year rate

10 Year currently 4.36% ......means 'theoretical price' for KPG is $1.06

As we all no doubt agree KPG under priced at moment ...on this basis anyway

Winner I'm curious, how do you infer a price of $1.06 from the 10 year rate?

[winner (n)]

Definitely rated BBB.  Basil been buying.

Bought a few this afternoon ....got 19 tranasction notifications lol

[winner (n)]

Winner I'm curious, how do you infer a price of $1.06 from the 10 year rate?

The linear regression formula derived from a database of monthly closes since 2008 of KPG share price and 10 Year Govt rate ....cross checked for reasonableness with same methodology of yield v 10nyear

[Basil]

The linear regression formula derived from a database of monthly closes since 2008 of KPG share price and 10 Year Govt rate ....cross checked for reasonableness with same methodology of yield v 10nyear

Seems sound to me.  I like the 9%+ yield along with Directors ambitions to grow DPS by 3% a year.  Pretty safe investment in the low to mid 90's I reckon.  Risk and reward well and truly skewed to the upside in my opinion.

[Pierre]

It's always been the same sadly, Basil. Wait for big oil profit announcements in coming months - they won't have suffered very much, if anything.

Here's the news from Shell:

Shell posts best quarterly profit in four years as Iran war boosts oil and gas prices

https://www.cnbc.com/2026/07/30/shell-2q-earnings-iran-war-oil.html?__source=androidappshare

[Otago K]

Some indication heard that KPG might have found a support level from sell off of August September 2026 at 87c that will see some sort of uplift. Due to where it sits in the REIT pricing cycle at present.
Not advice do your own research, and further events will have their own influence.
Discl: smaller holding from April 2025 levels that are now free carried for Funds Invested.

[snapiti]

Some indication heard that KPG might have found a support level from sell off of August September 2026 at 87c that will see some sort of uplift. Due to where it sits in the REIT pricing cycle at present.
Not advice do your own research, and further events will have their own influence.
Discl: smaller holding from April 2025 levels that are now free carried for Funds Invested.

not so sure about your comments, big sellers in the market for all REIT's, keep an eye on treasury yields and bond market for guidance, KPG down 17% YTD and nothing in the charts to indicate a change in direction yet, also KPG is looking expensive to many of it peers (yield 6.2% net)

[777]

Is the down turn in property companies due to investors fear of Labours tax threat?

[Shareguy]

Is the down turn in property companies due to investors fear of Labours tax threat?

I don't think so 777. Labours cgt will have an impact though. The current situation is more to do with interest rates. REITS are closely aligned to movements in interest rates. We are currently in an upward cycle.

Colliers latest report below explains it well I think

Traditionally, when borrowing costs for government debt have risen around the world, yields in other asset classes such as commercial property have been pushed higher, and New Zealand as an advanced economy follows this pattern.

In the most recent interest rate cycle, government bond yields have increased but commercial property yields have not risen as quickly, according to data in the latest monthly research report from the Colliers Research & Economics team.

Hamish Fitchett, National Director of Research & Economics at Colliers, says this is because domestic commercial property values have generally remained resilient during the recent period of weak economic activity.

"Globally, long-term debt markets are under pressure. The 10-year US Treasury yield was around 4.8 per cent in early September, while the 30-year yield recently moved above 5.25 per cent and reached its highest level since before the Global Financial Crisis," Fitchett says.

"US Treasuries set a global benchmark for debt pricing and influence the returns sought by international capital, which means their yield increase has placed similar upward pressure across many other developed economies, including New Zealand."

Long-term government bond yields have moved materially higher since the low interest rates of the pandemic.

New Zealand's 10-year government bond yield was 4.46 per cent in June 2026, more than 3.5 percentage points above the sub-1 per cent rates recorded during 2020. Government debt now provides investors with a much higher return than it did through the previous cycle, shifting the benchmark against which other long-duration assets are assessed.

I'm holding Kpg and will look to add when we see more clarity on the current cycle. Can't see how you can go wrong though under $90c. 

[snapiti]

I don't think so 777. Labours cgt will have an impact though. The current situation is more to do with interest rates. REITS are closely aligned to movements in interest rates. We are currently in an upward cycle.

Colliers latest report below explains it well I think

Traditionally, when borrowing costs for government debt have risen around the world, yields in other asset classes such as commercial property have been pushed higher, and New Zealand as an advanced economy follows this pattern.

In the most recent interest rate cycle, government bond yields have increased but commercial property yields have not risen as quickly, according to data in the latest monthly research report from the Colliers Research & Economics team.

Hamish Fitchett, National Director of Research & Economics at Colliers, says this is because domestic commercial property values have generally remained resilient during the recent period of weak economic activity.

"Globally, long-term debt markets are under pressure. The 10-year US Treasury yield was around 4.8 per cent in early September, while the 30-year yield recently moved above 5.25 per cent and reached its highest level since before the Global Financial Crisis," Fitchett says.

"US Treasuries set a global benchmark for debt pricing and influence the returns sought by international capital, which means their yield increase has placed similar upward pressure across many other developed economies, including New Zealand."

Long-term government bond yields have moved materially higher since the low interest rates of the pandemic.

New Zealand's 10-year government bond yield was 4.46 per cent in June 2026, more than 3.5 percentage points above the sub-1 per cent rates recorded during 2020. Government debt now provides investors with a much higher return than it did through the previous cycle, shifting the benchmark against which other long-duration assets are assessed.

I'm holding Kpg and will look to add when we see more clarity on the current cycle. Can't see how you can go wrong though under $90c. 

just to add to your post, since this Collier report NZ 10 year bond yield has increased to 4.97% and has been over 5%, which is up substancailly from the 4.46% mentioned in the report.
KPG have done well to move away from the Wellington office space markets but I don't think @90cps a yield of 6.2% is that attractive

[Basil]

5.75 cps / 90 is 6.39% tax free PIE yield worth 9.54% gross to 33% taxpayers. Well worth noting they have a goal of growing that at 3% a year. Sylvia Park is a very high quality asset in my opinion.

I hold KPG and ARG in equal numbers.