Archive | Kiwi Property Group

NPT works through detail of Kiwi bid

NPT Ltd chair Sir John Anderson said on Friday negotiations were progressing constructively with potential cornerstone shareholder Kiwi Property Group Ltd, but he still hasn’t set the date for a shareholder meeting to consider offers.

NPT said on 11 January the original bidder to take the company over, Augusta Capital Ltd, had dropped its High Court quest to get that meeting brought forward, and Sir John didn’t mention Augusta in his statement on Friday.

On the Kiwi proposal, he said: “Attending to the finer details of the management agreement, sale & purchase agreements and terms of the share subscription, as well as arrangement of other funding for the transaction, is taking longer than initially expected.

“It is critical that the board & Kiwi take the time to get this level of detail right, and for the board to ensure that it achieves the best possible position for NPT & the shareholders in the circumstances.”

He expects the shareholder meeting will now be held in April.

Attribution: Company release.

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Augusta drops court action but NPT meeting likely delayed

Augusta Capital Ltd has dropped the High Court proceeding it lodged against NPT Ltd to force an earlier shareholder meeting on an Augusta proposal to inject properties into NPT and replace the NPT board.

NPT had said it would send shareholders the meeting date this month and that it intended to hold the meeting in February to consider Augusta’s & other proposals. However, NPT chair Sir John Anderson told NZX yesterday that, “at this stage, it intends to issue the notice of meeting in February and hold the meeting as soon as possible after that”.

Augusta proposed injecting 3 properties worth $327 million into the company and buying out the management contract. In December, NPT disclosed a competing proposition from Kiwi Property Group Ltd, which proposed injecting 2 of its properties worth $230 million, becoming a cornerstone shareholder with a stake up to 19.9%, also buying out the management contract, but leaving the NPT board intact for the moment though with a succession plan.

Sir John said Augusta’s court action was “an unfortunate distraction. The proceedings were not constructive.

“We are very committed to engaging with shareholders as soon as possible on the very important matters before the company. We will make every effort to hold this shareholder meeting in February, but are conscious that the process of due diligence of the Kiwi Property assets, negotiation of terms and preparation of the shareholder information memorandum may mean this is not possible. In the event of a delay, we certainly expect to be in a position to issue a notice of meeting in February, with a view to holding the meeting soon thereafter.

“Unless Augusta formally withdraws its proposed resolutions, we will still put those to shareholders at the meeting. At the same time full details of the transactions proposed by Kiwi Property Group will be provided to shareholders together with the resolutions required by NZX listing rules for consideration.“

Earlier stories:
8 January 2017: NPT interim report shows company treading water
14 December 2016: Kiwi proposal for NPT revealed
2 December 2016: Augusta gets February court date while NPT continues with meeting plan
23 November 2016: Lack of revaluations halves NPT profit
4 November 2016: NPT considering more than just Augusta’s proposal
31 October 2016: 
Fourth era for NPT a hard option to combat
27 September 2016: 
Augusta buys 9% of NPT

Attribution: Company release.

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NPT interim report shows company treading water

Under-siege listed property investor NPT Ltd posted its interim report & presentation on 30 December, confirming that it remains little more than a vehicle for somebody else’s greater purpose.

The accounts show the company’s 5 properties have overall occupancy of 98.1% – Print Place in Christchurch, a $13 million property, and the $27.2 million Heinz Wattie’s Warehouse in Hastings both on 100%, the $35 million Roskill Centre in Auckland on 97.5%, $58 million Eastgate Shopping Centre in Christchurch on 96.2% and the $36.7 million AA Centre in Auckland down at 92.2%.

Net rental climbed from $5.48 million in the September 2015 half to $6 million in March 2016, but declined to $5.54 million in the September 2016 half.

Directors said in their 30 December presentation the special shareholder meeting planned for February would determine the company’s strategic direction. Meanwhile, they’d focus on unlocking value within the existing portfolio, including looking to further value-add opportunities at Eastgate.

“Given the strong Auckland cbd office leasing market, we will upgrade an additional floor at the AA Centre.”

In an ironic poke at the fluctuating management style – in & out of house over the years, and heading out again no matter who wins the battle for control – NPT would “leverage the closer tenant relationships following the internalisation of the property management function”.

Augusta Capital Ltd bought 9.26% of NPT last September and proposed injecting 3 properties worth $327 million into the company, buying out the management contract and, because of the NPT board’s resistance, replacing the 3 directors.

In December, Kiwi Property Group Ltd came to the board’s at least temporary rescue, if not the company’s, with a proposal to inject 2 of its properties worth $230 million, becoming a cornerstone shareholder with a stake up to 19.9%, also buying out the management contract, but leaving the NPT board intact for the moment though with a succession plan.

When St Laurence Holdings Ltd acquired the management contract on 1 December 2005 for what was then The National Property Trust, it had $268 million in assets. At November 2007 it had $318 million of assets & $184 million of equity. When unitholders agreed to convert the trust into a company at the end of 2010, assets were down to $189 million following global financial crisis revaluations & sales. Impacts from Canterbury’s earthquakes in 2010-11 and the collapse of management contract owner St Laurence drove the portfolio value down to $162 million at September 2011.

It took another 5 years, to September 2016, to get the portfolio back up to $170 million, with net equity at $120 million.

The NPT board hasn’t set a date yet for the special shareholder meeting which will determine the company’s future, beyond saying it will be in February.

Links:
NPT, interim result presentation
NPT, interim report
Kiwi Property proposal

Earlier stories:
14 December 2016: Kiwi proposal for NPT revealed
2 December 2016: Augusta gets February court date while NPT continues with meeting plan
23 November 2016: Lack of revaluations halves NPT profit
4 November 2016: NPT considering more than just Augusta’s proposal
31 October 2016: 
Fourth era for NPT a hard option to combat
27 September 2016: 
Augusta buys 9% of NPT

Attribution: Company release.

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Kiwi proposal for NPT revealed

NZX-listed NPT Ltd chair Sir John Anderson revealed a second offer yesterday which he said the board preferred over one from Augusta Capital Ltd, this one coming from Kiwi Property Group Ltd.

Augusta, which became a 9.26% NPT shareholder in September, has been trying to get an NPT shareholder meeting called to consider its proposal, which involves injecting 3 properties worth $327 million into NPT, buying out the NPT management contract and, because of the NPT board’s resistance, replacing the 3 directors.

Sir John said Kiwi Property proposed injecting 2 of its properties worth $230 million, becoming a cornerstone shareholder with a stake up to 19.9%, also buying out the management contract, but leaving the NPT board intact for the moment though with a succession plan.

Sir John said the Kiwi proposal was one of 4 received, and the NPT board intended to recommend it to a shareholder meeting which would be called for February. He said yesterday: “As well as our own review, we commissioned an independent assessment by specialist advisors, Northington Partners Ltd, and have consulted with major shareholders. The outcome is that we believe the Kiwi Property proposal is likely to deliver the best short- & long-term benefits to shareholders.”

The 2 Kiwi properties to be added to NPT’s small portfolio are North City shopping centre, Porirua, and the Majestic Centre, Wellington. Kiwi has proposed that NPT fund the transaction via a capital raising & bank debt.

Northington Partners said its conclusion reflected the following key elements:

  • The acquisition of properties from Kiwi Property was more consistent with NPT’s existing portfolio & strategy
  • The Kiwi Property proposal would lead to an immediate & considerably higher level of earnings accretion
  • Kiwi Property would make a significantly higher payment for the externalisation of the management contract
  • Kiwi Property had proposed a more “investor friendly” management contract, with the ability to terminate without cause and the maintenance of an independent NPT board, and
  • The Kiwi Property proposal would provide NPT with the ability to leverage the Kiwi Property management resources to benefit the existing NPT portfolio.

Kiwi has proposed assuming management of the NPT portfolio for $6 million. Sir John said the management agreement could be terminated without cause, on a fee equivalent to the greater of fair market value or 2.5% of tangible assets. NPT would gain access to Kiwi’s fund & property management expertise, its shareholders would benefit from a material reduction in the management expense ratio and from potential investment performance upside resulting from the application of Kiwi’s specialist management capability.

Benefits ascribed to the proposal:

  • An increase in portfolio scale, from $170 million to $400 million, with no material increase in gearing
  • An increase in market capitalisation, from $110 million to $265 million, assisting liquidity & market appeal
  • An immediate 16% increase in earnings/share, from 3.58c to 4.16c
  • A reduction in NPT’s management expense ratio from 99 to 70 basis points/share, made possible by access to Kiwi’s management platform
  • Investment performance upside for NPT made possible by access to Kiwi’s specialist management capabilities and significant resources.

Link:
Kiwi Property proposal

Earlier stories:
2 December 2016: Augusta gets February court date while NPT continues with meeting plan
30 November 2016: NPT sticks to its programme as Augusta goes to court
 16 November 2016: NPT calls in Northington to weigh up options
4 November 2016: NPT considering more than just Augusta’s proposal
31 October 2016: Fourth era for NPT a hard option to combat
27 September 2016: Augusta buys 9% of NPT

Attribution: Company release.

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Suncorp cuts floorspace under new Vero Centre lease

Insurance company Suncorp Group Holdings (NZ) Ltd will cut its footprint in the Vero Centre on Shortland St, in the Auckland cbd, from 9214m² to 5991m² under the terms of a new 12-year lease.

Its landlord, Kiwi Property Group Ltd, said yesterday it had entered into a heads of agreement with Suncorp, which has been a major tenant in the tower, with naming rights, since its opening in 2001.

Suncorp operates in New Zealand under its Vero & Asteron Life brands.

Kiwi Property chief executive Chris Gudgeon said yesterday: “The new Suncorp NZ lease is testament to the Vero Centre’s continuing position as one of New Zealand’s premier business addresses.”

He said the lease improved the building’s weighted average lease term to 7 years and gave the company’s office portfolio a weighted average lease term of 10.4 years. The agreement includes 2 3-year rights of renewal.

Mr Gudgeon said Suncorp was redesigning its workspaces to accommodate an activity-based working environment.

Attribution: Company release.

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Kiwi Property lifts return and unveils more expansion

Kiwi Property Group Ltd lifted after-tax profit by 26.7% in the September half to $45.6 million ($36 million a year earlier).

Chief executive Chris Gudgeon also announced further expansion at the company’s flagship property, Sylvia Park in Auckland.

Funds from operations (FFO) increased by 5.3% ($2.4 million) to $47.7 million, which chief executive Chris Gudgeon said was driven predominantly by rental income from newly acquired assets & completed developments. This is an alternative performance measure Kiwi Property uses to help assess the company’s underlying operating performance and to determine income available for distribution. It’s calculated in accordance with guidelines issued by the Property Council of Australia.

Key financial points:

  • Property assets up $209 million (7.8%) to $2.88 billion
  • Gearing up 440 basis points to 34.7%
  • Net asset backing up 1c to $1.35/share
  • Finance debt weighted average term to maturity 4 years (up from 3.9 years in the March 2016 financial year)
  • Weighted average cost of debt 4.72% (4.88% in the March 2016 financial year)
  • Kiwi Property will pay a 3.375c/share interim dividend, up 0.075c/share (2.3%)
  • Total retail sales $1.64 billion (up 5.8%)
  • Like for like retail sales (up 3.4%)
  • Total rental income growth 13.9%
  • Like for like rental income growth 3.9%
  • Occupancy steady at 98.6%
  • Weighted average lease time 5.5 years
  • Third-party assets under management grown to $350 million.

Dining & overall expansion at Sylvia Park

Along with the financial results, Mr Gudgeon announced a further investment at Sylvia Park and planning for a mall expansion. First, the $9.1 million expansion of the dining lane: “The project is expected to provide an initial return on project cost of about 6.5% and a 10-year internal rate of return of about 8.5%. Works are scheduled to commence in January and complete in December 2017.

“This project is the next step in Kiwi Property’s long-term vision to create a world-class town centre at Sylvia Park, with planning now also in advanced stages for a $180 million retail expansion of the shopping mall, the development of which could begin as early as mid-next year.”

During the half-year, Kiwi Property:

  • settled the acquisition of a 50% interest in The Base, Te Rapa, and assuming management of the property for the joint venture with Tainui Group Holdings Ltd
  • opened the remaining retail tenancies in the newly completed Westgate Lifestyle large-format retail centre at the top of the North-western Motorway
  • settled the sale of Centre Place South in Hamilton, a cbd retail asset which had been identified as non-core
  • completed office projects at the Aurora Centre & 44 The Terrace, Wellington, with long-term government leases now in place for 32,000m², and
  • began construction of a new office building at Sylvia Park, anchored by IAG NZ Ltd, that’s been designed to integrate seamlessly with the existing centre.

Since September, Kiwi Property has opened the first New Zealand stores for international fashion brands H&M and Zara, at Sylvia Park. Mr Gudgeon said: “The introduction of these global retailers is an important first step in our expansion plans, which envisage the creation of a truly world-class retail offer in Auckland.”

The company’s investment strategy “focuses on the establishment, growth & enhancement of a core property portfolio targeting property exposures that are expected to outperform. Execution of this strategy has resulted in our core retail portfolio value growing from $885 million at September 2010 to $1.8 billion today, our core office portfolio growing from $375 million to $718 million and our overall exposure to the Auckland market increasing from $910 million to $1.75 billion.”

Link:
Kiwi Property half-year report

Attribution: Company release.

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Kiwi Property bonds at 4%

Kiwi Property Group Ltd said on Wednesday it had closed its $125 million 7-year bond offer fully subscribed, including $50 million of oversubscriptions. There was no public pool.

The interest rate for the fixed-rate senior secured bonds will be 4%/year. They will be issued on 7 September.

Attribution: Company release.

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Kiwi Property opens deferred $125 million bond issue

Kiwi Property Group Ltd opened the $75 million 7-year bond issue yesterday that it first announced in June, but deferred because of the Brexit vote in the UK.

Kiwi said it would accept oversubscriptions up to $50 million.

The offer of fixed rate senior secured bonds opened with an indicative margin range of 1.65-1.85%, subject to a minimum interest rate of 4%/year. The actual interest rate will be decided on the issue closing date of 31 August, after the bookbuild process.

All the bonds are reserved for clients of the issue managers. There’s no public pool.

The bonds have the same conditions as Kiwi Property’s $125 million of bonds that mature on 20 August 2021.

Attribution: Company release.

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Kiwi secures tenant to start Sylvia Park office tower

Kiwi Property Group Ltd will build a 10-storey $80 million office tower at the Sylvia Park shopping centre after securing insurance company IAG NZ Ltd as an anchor tenant.

Kiwi Property chief executive Chris Gudgeon said on Wednesday the new building would be constructed in the airspace above the shopping centre, “seamlessly integrating with a ground-level extension to the existing dining lane, in keeping with Sylvia Park’s evolution as a town centre”.

The tower will have 11,370m² of offices on 9 levels above a new 800m² ground-floor alfresco dining precinct adjacent to a new landscaped town square.

IAG has agreed to a 12-year lease of 3324m² of space, representing 29% of total office floorspace, and Mr Gudgeon said other businesses had expressed strong interest.

“Our office solution at Sylvia Park will offer businesses a truly unique & high quality working environment in an easily accessible location with excellent rail & bus transport links. Staff will benefit from the extensive range of amenities & services present at Sylvia Park.”

Enabling works will begin this month, for completion in May 2018. Key features of the project include:

  • 1250m² efficient floorplates
  • ‘Vertical villages’ or inter-floor atrium connections between blocks of selected floors
  • Ability to introduce fresh air to enclosed internal ‘balconies’ through opening windows
  • 5-star Greenstar design rating & NabersNZ base building 4-star energy rating
  • Bike parks & end-of-trip facilities
  • 3m floor-to-ceiling height on typical office floors
  • Lobby level café & casual meeting spaces.

Mr Gudgeon said Kiwi Property’s expected incremental net income yield on total project cost was 6.7%, and a 10-year internal rate of return of 8.8-9.0% was projected. The value on completion is anticipated to be about $87.5 million.

Retail expansion continues

Mr Gudgeon said: “Kiwi Property also continues to progress plans for its retail expansion of Sylvia Park to create a world-class retail offer. The first stage, comprising the first ever New Zealand stores for retail fashion giants H&M and Zara, is now well advanced & on programme to open this spring.”

Future stages of retail expansion, still in the planning phase, include up to 20,000m² of new space in a second-level fashion galleria that’s expected to feature:

  • New international brands & concept stores, including selected retailers from Sylvia Park’s current waiting list of specialty tenants
  • A next-generation, relaxed, sophisticated & welcoming ‘café court’ with 8 experiential dining offers
  • Potentially one or more department stores
  • New multi-deck carparks with seamless transition from the surrounding road network
  • Parking assistance provided by a new user-friendly digital wayfinding system, similar to that currently being rolled out in the existing centre.

A $180 million total project cost for the retail expansion stage is projected, with construction potentially starting in 2017 for staged completion between 2019-21, depending on progress with pre-leasing activities now underway.

Combined, the total estimated cost of the retail expansion & office development plans is about $280 million.

Sylvia Park, beside the Southern Motorway at Mt Wellington, has annual sales exceeding $455 million and net rental income this year of $38.8 million. It has a net lettable area of 68,783m², 209 tenants & 3937 parking spaces.

Attribution: Company release.

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Brexit vote stalls council & Kiwi Property bond offers

Auckland Council decided yesterday, and Kiwi Property Group Ltd today, to defer the bond offers they announced last week because of the uncertainty following the Brexit vote in the UK.

The council said last Wednesday it was considering a retail bond issue of fixed-rate secured bonds to the public in New Zealand & institutional investors.

Kiwi Property said on Friday it was considering an issue of 7-year fixed-rate senior secured bonds to New Zealand institutional & retail investors, to be offered this week.

Earlier story:
27 June 2016: Kiwi Property to make bond offer this week

Attribution: Company & council releases.

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