Property Stocks

[seaweed]

Multi year high for KPG at $1.06 !

I got a few KPG, but am in love with ARG and like there PE and NTA. Also like FSF.

[Buzz]

Multi year high for KPG at $1.06 !

So cyclical these commercial property stocks, I got all of my KPG in the $0.8's over a year+ or so of building a position (easily justified by the good dividends), very predictable cycle patterns correlated to CPI and easily monitored on the charts. Gives a long window for accumulation so don't have to go large all at once, and same for exits. Still about 10 cents discount to NTA and at this SP, about 6.5% gross div paid quarterly, my div yield is much better having got in ~20-25 cents lower. Plenty to like, I have an overweight position. SP will in time probably overshoot NTA as well, keep an eye on the charts.

[Buzz]

So cyclical these commercial property stocks, I got all of my KPG in the $0.8's over a year+ or so of building a position (easily justified by the good dividends), very predictable cycle patterns correlated to CPI and easily monitored on the charts. Gives a long window for accumulation so don't have to go large all at once, and same for exits. Still about 10 cents discount to NTA and at this SP, about 6.5% gross div paid quarterly, my div yield is much better having got in ~20-25 cents lower. Plenty to like, I have an overweight position. SP will in time probably overshoot NTA as well, keep an eye on the charts.

Sorry, I don't like quoting myself but to put this in context, that is a 7+% dividend return so far and 6+% capital (unrealised) return, for 13.2% portfolio return on paper. A very good solid basis stock in the portfolio for an otherwise boring and easily overlooked stock.

And don't believe the mantra about 'you can't time the market', that's utter BS, absolutely with these cyclical stocks, timing (and a bit of patience) is everything and it stares you in the face, if you can read a SP chart.

[Otago K]

Sorry, I don't like quoting myself but to put this in context, that is a 7+% dividend return so far and 6+% capital (unrealised) return, for 13.2% portfolio return on paper. A very good solid basis stock in the portfolio for an otherwise boring and easily overlooked stock.

And don't believe the mantra about 'you can't time the market', that's utter BS, absolutely with these cyclical stocks, timing (and a bit of patience) is everything and it stares you in the face, if you can read a SP chart.

Agree that being in a position to buy at the right opportune time holds merits in what might be a cyclical business stock, is the key variable I have discovered to outperform, never too concerned about the actual day date when I start or decide to place the finish line around decisions. I'm honest that I don't have the TA skill base set to maximise the potential but when it comes to KPG I am more than happy to have bought in the last two weeks of April 2025, and from here can not imagine I will not at the least to be free carrying a portion in a few years time; always likely to be getting a closed PIE income return if in the bottom drawer permanently from now.

[Basil]

Craigs forecasting growth to 5.8 and 6.0 cps PIE distributions in FY27 and FY28 for KPG.

 Love how tax is capped at 28% because of PIE structure and dividends can be excluded from your tax return.

That's very attractive for those doing their best to minimise the 39% tax band for over $180k income. Also attractive for all those in the 33% tax category.

Quarterly payments and DRIP at 2% discount for some property stocks like ARG and KPG and some others are also attractive elements to this asset class..

 I still think we're quite early in this property cycle and it's not too late to accumulate more for those that aren't already well positioned.

P.S. I think the RBNZ needs to take drastic action to try and stimulate the economy which has been in recession for years, (year to 30 June GDP down 1.1%)
https://www.nzherald.co.nz/business/economy/gdp/nz-gdp-june-quarter-dropped-09-stats-nz/NECXAUT2CBGPLEPSXL4SZSHRDU/
We need the OCR down below 2%.

[Cod]

"We need the OCR down below 2%." -- Basil

Looking overseas all major economies are headed back to the zero bound, Switzerland never really moved up since covid, the only thing that will alter this calculus is broad european conflict, which causes capital flight and rising OCR.

The last time NZ was close to the zero bound ARG was $1.70 as the market chased yield.

[Basil]

Many bank economists now calling for a 50 bps rate cut on October 8 and 25 bps in November 26.
https://www.nzherald.co.nz/business/economy/official-cash-rate/gdp-slump-sparks-calls-for-reserve-bank-to-deliver-50bps-rate-cut-in-october/AKSU4JYYHRCHLCZPQZB4FRZMLY/

OCR should therefore be 2.25% by late November but really needs to be 1.00-1.25% to stimulate the economy properly in my opinion.  The fact is we've been in recession now for several years.  All the "talk" of growth this and recovery that, has just been talk.  Its time for politicians and especially the RBNZ to man up and admit we've been in a multi year recession since Covid hit and we desperately need genuine and serious stimulus to get out of it.

[LaserEyeKiwi]

Many bank economists now calling for a 50 bps rate cut on October 8 and 25 bps in November 26.
https://www.nzherald.co.nz/business/economy/official-cash-rate/gdp-slump-sparks-calls-for-reserve-bank-to-deliver-50bps-rate-cut-in-october/AKSU4JYYHRCHLCZPQZB4FRZMLY/

OCR should therefore be 2.25% by late November but really needs to be 1.00-1.25% to stimulate the economy properly in my opinion.  The fact is we've been in recession now for several years.  All the "talk" of growth this and recovery that, has just been talk.  Its time for politicians and especially the RBNZ to man up and admit we've been in a multi year recession since Covid hit and we desperately need genuine and serious stimulus to get out of it.

You might be right on the 1% target needed, particularly since the current lot in government seem to have abdicated their role in any sort of growth fiscal policy through its austerity program.

[KW]

Interesting statistic from the US.  Data Centre REITS are the worst performing sector.  Few of those listed on the NZX and ASX, thinking Goodman in particular.

You cannot view this attachment.

[Cod]

50bps cut should add support to rising SP of REITs.

[Basil]

Great news for the economy !  50 bps is exactly what's needed and some much needed stimulation from the Reserve Bank.

https://www.nzherald.co.nz/business/reserve-bank-expected-to-cut-the-official-cash-rate-but-by-how-much/CCMYL4RCUJGIFCWGIHCAHCBVYM/

[winner (n)]

Love how my mate Jim puts it -

RBNZ having another great day - devaluing the currency, encouraging asset price inflation, and doubling down on the 'destabilise to stabilise'  strategy - last seen in the hopeless hero rate cuts of 2020 and the mean and macho hikes of 2022. What a mess.

[Basil]

I couldn't disagree more.  2.5% is only very mildly stimulatory to the economy and is not enough in my opinion.  We have been in recession ever since Covid.

Maybe Jim has forgotten what a real stimulatory rate is.  Recall it went down to 0.25% for 12 months at one point https://www.rbnz.govt.nz/hub/news/2020/03/ocr-reduced-to-025-percent-for-next-12-months
That was a desperate measure for desperate times.

Today's cut needs to be followed by another 50 bps in late November to 2.0% in my opinion to become more appropriate for the endless recession we've been in and then perhaps another 50 bps in February 2026.

[LaserEyeKiwi]

Well the reserve bank is now carrying the sole load of restarting the economy since the government has abdicated adding any stimulus themselves and actively kneecapped the construction sector with their infrastructure freeze.

[Shareguy]

Great stuff 50 points should make a difference a real difference.  Businesses's have most of their loans floating, so this will be meaningful. Will also help the lack Lustre real estate market and most importantly improving consumer confidence.

Good times are coming. Forget the polls, I have no doubt National will be in again next year.