Archive | Kiwi Property Group

Law firm says it’s leaving Vero Centre, not saying exactly when

Law firm Bell Gully has told its Auckland landlord, Kiwi Property Group Ltd, it will vacate its premises in the Vero Centre on Shortland St between the 2023-25 financial years.

Separately, Precinct Properties NZ Ltd said Bell Gully would move to its 1 Queen St office tower, which is to be refurbished over the next 3 years. It will have a hotel on the lower 11 floors, offices above, and now has 76% precommitment.

Bell Gully hasn’t determined exactly when it will leave. The firm has been a Vero Centre tenant since the building opened 18 years ago. It currently occupies 5912m² on 5 floors.

Kiwi Property chief executive Clive Mackenzie said: “We wish Bell Gully every success in their onward journey. While we are disappointed to see the firm leave, the advance notice by Bell Gully provides us with sufficient time to begin discussions with prospective tenants.”

The Vero Centre is 94% occupied, with a weighted average lease term of 7.0 years. Kiwi Property’s whole office portfolio has 98% occupancy and a portfolio weighted average lease term of 10.0 years.

Attribution: Kiwi Property & Precinct Properties releases.

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Kiwi Property returns steady as it nears completion of rebalancing

Kiwi Property Group Ltd’s after-tax profit rose by less than 1% in the September half-year on pretax profit down by just under 4%.

Chair Mark Ford said: “Over the past several years, we have been actively rebalancing the composition of our property portfolio in favour of greater exposure to Auckland, the nation’s economic powerhouse. The sale of non-core assets to achieve this strategy has predictably resulted in lower rental revenue in the short term, but has placed us in an even stronger position to pursue growth opportunities for long-term benefit.”

Chief executive Clive Mackenzie added: “The portfolio is strongly positioned, with our rebalancing programme almost complete. Our portfolio is valued at $3 billion and our portfolio weighting to our preferred market of Auckland now sits at 69%.”

The company has $140 million of projects nearing completion and a further $245 million underway.

Mr Ford said: “We increasingly see the importance of developing & owning complementary mixed-use communities, such as those we are bringing to life at Sylvia Park & Drury. Large land holdings, zoned appropriately, can accommodate a variety of commercial property uses.”

Mr Mackenzie said: “For the balance of the 2019 financial year, we will be focused on completing & advancing development projects underway at Sylvia Park & Northlands, and progressing zoning outcomes for our Drury landholdings.”

The fall in funds from operations largely reflected reduced income after the sale of the Majestic Centre in Wellington & North City mall in Porirua.

Statistics:

  • Net profit after tax up 0.9% to $48.3 million ($47.9 million)
  • Income down 4.4% to $118.7 million ($124.1 million)
  • Pretax profit down 3.9% to $59.2 million ($61.7 million)
  • Funds from operations (non-GAAP measure) $52.3 million ($54.2 million)
  • Gearing 29.4% (29.7% in March)
  • Basic & diluted earnings/share down 4% to 3.39c (3.53c)
  • Interim dividend up 1.5% to 3.475c/share
  • Projected cash dividend for year 6.95c/share (6.85c)
  • Investment portfolio down 0.4% to $3.04 billion ($3.05 billion)
  • Occupancy 99.3%
  • Retail occupancy 99.9%
  • Retail weighted average lease term 3.8 years
  • Total retail sales for 12 months up 2.4% (up 2.7% same store) to $1.7 billion
  • Increase in passing rents 3.8%
  • Office occupancy 97.6%
  • Office weighted average lease term 10.0 years

Link:
Interim report

Attribution: Company release & interim report.

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Kiwi Property opens bond issue

Kiwi Property Group Ltd opened an offer of up to $125 million of 7-year fixed-rate senior secured bonds to institutional & NZ retail investors on Monday. There’s no public pool.

The company expects S&P Global Ratings to assign the bonds an issue credit rating of BBB+. Kiwi Property’s current corporate credit rating is BBB (stable).

The indicative margin range is 1.45-1.55%, subject to a minimum interest rate of 4.00%. Kiwi Property will announce the actual margin & interest rate following the bookbuild process, and close the offer on Friday.

The offer is for up to $100 million, plus $25 million of oversubscriptions.

Attribution: Company release.

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Kiwi Property considers bond offer

Kiwi Property Group Ltd said today it was considering an offer of 7-year fixed-rate senior secured bonds to institutional & NZ retail investors, to be made next week.

Kiwi said it expects the bonds to have a BBB+ by S&P Global Ratings.

Attribution: Company release.

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Updated: Adelaide buyer settles second NZ mall purchase, manager appointed

Published 11 July 2018, updated 16 July 2018:
Kiwi Property Group Ltd said last Tuesday its $100 million sale of the North City Shopping Centre, Porirua, had settled.

Kiwi said in April it had sold the centre to the Angaet Group of Adelaide for $12.4 million less than book value.

It’s Angaet’s second New Zealand purchase following its acquisition of the WestCity mall in Henderson from the manager of Westfield Group’s New Zealand malls, Scentre (NZ) Ltd, settled last July.

Update: Angaet appointed Colliers to manage the centre from settlement on Monday 9 July. Colliers also manages WestCity.

The North City mall at 2 Titahi Bay Rd, Porirua, was built in 1990 and refurbished & extended in 1997 & 2004. The 3-level regional shopping centre has 98 tenants in a net lettable area of 25,439m² and 1102 parking spaces, and is anchored by Kmart, Farmers & a Reading Cinemas complex. It has 68 specialty retail tenants, 11 kiosks, 11 foodcourt tenants, and 8 office suites on the third floor.

Earlier story:
13 April 2018: Adelaide family makes Porirua mall its second NZ purchase

Attribution: Company release.

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Kiwi Property profit down – focus on the long term

Kiwi Property Group Ltd posted an after-tax profit of $120.1 million ($143 million in 2017), driven by another record operating result as measured by funds from operations (FFO – see note at foot).

The company said funds from operations grew by 8.2% to $111.3 million ($102.8 million), reflecting a 5.2% lift in rental income to $192.1 million, largely due to contributions from developments & strategic acquisitions completed the previous year.

While after-tax profit for the year was down, the company focuses in its annual report on long-term growth. Its target is 9%/year long-term total returns, last year it achieved 9.7%, this year it slipped to 9.3%.

Funds from operations/share slipped to 7.84c (7.95c). Net tangible assets/share were up a cent to 140c (139c).

Specialty retail sales rose 7.1% to $10,600/m² ($9900/m²).

A full-year dividend of 6.85c/share (6.75c) will be paid.

Chair Mark Ford said: “We continued to grow revenues while improving the quality of our investment portfolio through the sale of non-core assets, strategic acquisitions and the commencement of new development projects. We have also improved our conservative gearing position and executed strongly on capital management initiatives…

“In February, we were delighted to give the green light to the previously foreshadowed $223 million Galleria retail expansion at Sylvia Park, following 11 years of outstanding performance & growth at the centre. Our vision for Sylvia Park is the creation of a world-class town centre offering our customers exceptional retail, dining, entertainment & workplace experiences. This latest retail expansion will consolidate the centre’s position as New Zealand’s favourite shopping destination.”

$370 million of developments

Chief executive Chris Gudgeon said: “We currently have $370 million of developments in progress that will continue to add significantly to both the income performance & quality of our property portfolio.”

Sylvia Park continued to be a major focus. Highlights included:

  • The Grove dining district opened 100% leased in December
  • The $80 million office tower development, No 1 Sylvia Park, anchored by insurance company IAG, reached 90% leased this month when ANZ Bank (NZ) Ltd took 6740m² (5 full floors & a part floor)
  • Construction of the Galleria retail expansion began – completion is scheduled for mid-2020, introducing 60 new specialty retailers, a flagship Farmers department store, international mini-majors & additional multi-deck parking.

The $9 million Grove precinct opened 100% leased and will deliver an initial yield of 7.8%, growing to 8.2% over the following 2 years, with a projected 10-year internal rate of return of 10%.

In Christchurch, Kiwi began construction of the new dining & entertainment precinct at Northlands, to be known as Langdons Quarter.

The company continued its capital recycling programme with the sale of previously identified non-core properties. It sold the Majestic Centre in Wellington for $123.2 million in December and, post-balance date, secured an agreement to sell North City in Porirua for $100 million.

Kiwi reduced its gearing from 34.5% to 29.7% at balance date.

Its investment portfolio was 99.6% occupied at year end, above its long-term average, with a weighted average lease term of 5.3 years. The portfolio value increased to $3.1 billion ($3 billion).

Overall, rentals achieved through new leasing & rent reviews delivered growth of 3.5%.

$1.6 billion of the $1.8 billion total retail sales were in Kiwi’s portfolio of 7 shopping centres, equating to growth of 3.9% (1.3% like-for-like). Growth was strong in the mini-majors, commercial services and pharmacy & wellbeing categories.

The outlook

Mr Ford said the company was projecting an increased cash dividend of 6.95c/share for 2019, absent material adverse events or unforeseen circumstances.

“Our key focus in the year ahead will be on progressing our development projects underway at Sylvia Park & Northlands, while also progressing our town centre vision for our development land at Drury, south of Auckland.”

Note: Funds from operations is an alternative non-GAAP performance measure used to assess underlying operating performance and to determine income available for distribution. Kiwi said it’s a measure commonly used by real estate entities to describe their underlying & recurring earnings from operations, but it doesn’t have a standard meaning prescribed by GAAP and therefore might not be comparable to information presented by other entities.

Kiwi uses the Property Council of Australia guidelines. During the financial year, the council amended the method used to derive FFO to include the amortisation of leasing fees, and Kiwi Property has amended its current year FFO calculation to reflect this change.

Links:
Annual report
Company website, annual result pages

Attribution: Company release, annual report & presentation.

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ANZ commits to 5-plus floors at No 1 Sylvia Park

ANZ Bank NZ Ltd has agreed to lease about 6740m² of Kiwi Property Group Ltd’s No 1 Sylvia Park office development (pictured), now under construction.

Kiwi Property described Sylvia Park as the Sylvia Park town centre, which was the intention from the time the company bought the initial 24ha site beside the Southern Motorway at Mt Wellington in 1995 (back when the NZX-listed entity was a trust) and secured a plan change in 2001 that allowed for a business centre with a gross floor area of 148,000m², including a maximum 75,000m² for retail premises, entertainment facilities, taverns, cafés, restaurants & other eating places.

Kiwi’s plans then also included residential development, completing the town centre concept. In the intervening 17 years, however, it’s become New Zealand’s pre-eminent shopping mall.

ANZ, through subsidiary Arawata Assets Ltd, will take a 9-year lease over 5 whole floors & a partial floor, starting in 2 stages between June & December 2019 to suit the progressive relocation of bank staff into the building from a number of locations. ANZ has also secured exclusive naming & signage rights.

Kiwi Property chief executive Chris Gudgeon said yesterday: “Our vision for Sylvia Park is the creation of a world-class town centre, offering our customers exceptional retail, dining, entertainment & workplace experiences.

“ANZ taking this significant space in No 1 Sylvia Park reflects this transition to a town centre. Our ability to successfully lease over 10,000m² of office space in the building to major corporates such as ANZ & [insurance company] IAG NZ Ltd shows that the market is looking for such an offering. Our vision is now becoming reality.”

Mr Gudgeon said the new office building was being constructed to integrate seamlessly with the mall & The Grove Dining District, which opened last December.

“With a dedicated entrance, it offers businesses a truly unique & high quality working environment in an easily accessible location with excellent rail & bus transport links, allowing staff to take advantage of the extensive range of amenities & services at the centre.”

“ANZ & IAG, together with the ground-floor retailers, will occupy around 90% of the office building and, following ANZ’s full occupation in 2019, the project is expected to yield 7.4%, with a projected 10-year internal rate of return in excess of 9%.

“We look forward to welcoming ANZ to the building, joining approximately 350 IAG staff who will move into their new 3324m² office premises following completion of No 1 Sylvia Park in the middle of this year.”

“By year end, we will complete our new roughly 600-space shopper carpark building and the excitement will continue right through to mid-2020, when we complete our $223 million Galleria retail expansion project. This will take Sylvia Park to another level, featuring new international brands & concept stores, selected retailers from Sylvia Park’s current waiting list of specialty tenants, a 2-storey Farmers department store and a sophisticated new-generation, sophisticated dining precinct.”

Attribution: Kiwi Property release.

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Adelaide family makes Porirua mall its second NZ purchase

Kiwi Property Group Ltd has agreed to sell the North City Shopping Centre in Porirua to the Angaet Group of Adelaide for $100 million – $12.4 million short of book value. The transaction is due to settle in July.

It’s Angaet’s second New Zealand purchase following its acquisition of the WestCity mall in Henderson from the manager of Westfield Group’s New Zealand malls, Scentre (NZ) Ltd, settled last July.

In both cases, mall management has moved from the big portfolio owners and into the hands of real estate company Colliers.

Kiwi chief executive Chris Gudgeon said on Wednesday: “North City had been identified for sale as part of our capital recycling programme designed to fund current investment priorities. Proceeds from the sale will be used to pay down bank debt and provide further balance sheet flexibility.”

North City was on Kiwi’s books (at September 2017) at $112.4 million, with a cap rate of 7.63%. Kiwi has owned it since 1993, the year the company’s forerunner, the Kiwi Income Property Trust, was floated on the NZX.

The DiMauro family, under the leadership of Nick DiMauro & his son Michael, owns the whole of Angaet’s portfolio, which includes 25 shopping centres around Australia.

Nick DiMauro said yesterday New Zealand was an attractive investment location, and North City was a vibrant asset. The 3-level regional shopping centre has 98 tenants in a net lettable area of 25,439m² and 1102 parking spaces, and is anchored by Kmart, Farmers & a Reading Cinemas complex. It has 68 specialty retail tenants, 11 kiosks, 11 foodcourt tenants, and 8 office suites on the third floor.

The mall at 2 Titahi Bay Rd, Porirua, was built in 1990 and refurbished & extended in 1997 & 2004.

Attribution: Kiwi & Colliers releases.

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Kiwi Property gets 1.1% portfolio rise

Kiwi Property Group Ltd has reported a 1.1% ($34 million) net fair value gain on its portfolio of shopping centres and office buildings for the March year, lifting the total portfolio value to $3.1 billion.

The company’s biggest asset, the Sylvia Park retail centre (now having an office component added) is worth $835 million – $3.8 million more than the whole office portfolio. It also carries the strongest cap rate, which tightened by 50 basis points to 5.38%.

The Vero Centre on Shortland St in Auckland firmed 25 points to 5.5% and ASB North Wharf in the Wynyard Quarter firmed 13 points to 5.63%.

Chief executive Chris Gudgeon said on Thursday: “Kiwi Property’s portfolio has benefited from generally positive property market conditions, with the investment portfolio weighted average capitalisation rate firming to a record low. New leasing deals, strategic development works, strong sales at our key Auckland retail centres and strong tenant demand for our office properties have assisted value growth.

“This has been partially offset by the cost of seismic strengthening activities, predominantly at assets in regions with higher seismic risk, and related increases in insurance costs.”

Mr Gudgeon said the weighted average cap rate for the investment portfolio firmed 27 basis points to a record low of 6.10%, and the valuations indicated that, overall, the portfolio rental levels were essentially at market.

The company will confirm the valuations when it announces its annual results on 21 May.

Summary of portfolio valuations:

Attribution: Company release.

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BlackRock buys stake in Kiwi Property

US fund manager BlackRock Inc has taken a 5% stake in NZX-listed retail & office property investor Kiwi Property Group Ltd.

BlackRock acquired 71.15 million shares in Kiwi starting last Thursday, declared in a substantial securityholder notice this morning. It’s also been a 5% shareholder in SkyCity Entertainment Group Ltd since 2014.

BlackRock manages about $US6.3 trillion of assets.

Attribution: Company release.

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