Archive | Kiwi Property Group

Kiwi Property sets bond rate, settles Majestic sale

Kiwi Property Group Ltd has set the interest rate for its $125 million issue of 7-year fixed-rate senior secured bonds at 4.33%/year.

The offer closed yesterday and trading in the bonds will open on Wednesday 20 December.

S&P Global Ratings has assigned an issue credit rating of BBB+ to the bonds.

Majestic sale settled

Kiwi Property said on Monday it had settled the $123.2 million sale of the Majestic Centre in Wellington to Investec Property Ltd, as the responsible entity for the Investec Australia Property Fund. Kiwi Property will continue to manage the building for Investec.

Earlier story:
15 November 2017: Kiwi Property sells Majestic to Investec fund

Attribution: Company releases.

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Kiwi Property sells Majestic to Investec fund

Kiwi Property Group Ltd has secured an agreement to sell the Majestic Centre in Wellington for $123.2 million to Investec Property Ltd, as the responsible entity for the Investec Australia Property Fund.

As part of the sale arrangement, Investec will appoint Kiwi Property to manage the office tower, which has undergone one of New Zealand’s largest seismic upgrades. It’s Investec’s first New Zealand purchase.

Kiwi Property chief executive Chris Gudgeon said yesterday: “We are immensely proud of what we have achieved for the tenants of the Majestic Centre, raising the seismic performance rating of the office tower to 100% of new building standard.

“Notwithstanding, the Majestic Centre was identified for sale as part of our capital recycling programme. Proceeds from the sale, which is due to settle in December, will be used to pay down bank debt, providing further flexibility for Kiwi Property to invest in line with our strategy.”

In the company’s annual accounts to March 2017, the value of the 21-storey Majestic Centre increased to $119.4 million, but a net value loss of $5 million was recorded after allowing for capex on the seismic upgrade programme completed in January. The building, at 100 Willis St, has a net lettable area of 24,469m² (2322m² retail, 22147m² office) & 240 parking spaces and typical floorplates of 1000m².

Kiwi Property is due to release its result for the September half-year next Monday, 20 November. At the moment it’s showing the Majestic Centre has 92.1% occupancy, a weighted average lease term of 6.8 years & net rental income of $7.1 million.

The buyer, Investec, said it was acquiring the property on an initial yield of 7.1% and with average annual contractual rental escalations of about 2.75%. It said the property was 98% occupied and had a long weighted average lease expiry of 6.6 years.

Investec is a South African investment bank which has a dual listing in Johannesburg & London. It floated the Investec Australia Property Fund on the Johannesburg Stock Exchange in 2013, launching with an $A130 million portfolio of 8 industrial & office properties.

That portfolio now comprises 25 properties worth $A942 million, and fund chief executive Graeme Katz said yesterday that was a scale at which management believed an ASX listing could be considered.

He added: “We continue to believe in the case for investing in good quality investment properties in Australia & New Zealand. The fund’s current equity yield of 8.2% is attractive for South African investors, especially as it is underpinned by the region’s favourable macro-economic conditions, property yield spread over historically low funding costs locked in and income returns in hard currency.”

Link:
14 November 2017: IAPF portfolio value approaches $A1.0bn mark through acquisition & value uplift

Attribution: Kiwi & Investec releases.

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Kiwi acquires more expansion land at Sylvia Park

Kiwi Property Group Ltd has secured an agreement to acquire a 3.2ha property at 79 Carbine Rd & 10 Clemow Drive in Mt Wellington for $27.1 million.

Chief executive Chris Gudgeon said on Friday: “When combined with our existing landholdings on Carbine Rd & Clemow Drive, this acquisition enables us to consolidate a strategic 7.7ha landholding with a road bridge connection to Sylvia Park over the railway line.

“We have no immediate plans to redevelop the land. However, given our world-class town centre vision for Sylvia Park and Mt Wellington’s status as a metropolitan centre, it makes good sense for us as a long-term investor to increase our landholdings in this strategic location. Kiwi Property’s landholdings in Mt Wellington now total over 30ha, including the main 20.4ha Sylvia Park Shopping Centre site.”

Improvements on the newly acquired property comprise a coolstore, industrial buildings, a truck fuel stop and temporary structures for office & storage. The property is leased to 8 tenants, including Fonterra & VINZ, with current passing income of about $1 million/year and a weighted average lease term of 4.77 years.

Mr Gudgeon said Kiwi would fund the acquisition from existing debt facilities. It’s due to settle this Friday, 13 October.

Kiwi already has 3 expansion projects underway at Sylvia Park – a new dining lane, an office building & a multi-level carpark. A fourth development project, comprising a retail galleria expansion & carpark, is in an advanced planning stage.

Attribution: Company release.

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Kiwi Property settles second Drury site purchase

Kiwi Property Group Ltd settled its acquisition of 30.6ha at Drury on Wednesday, after receiving approval from the Overseas Investment Office a week ago to proceed.

The company intends to create a new town centre next to Stevenson Group Ltd’s mostly industrial 360ha development site.

Kiwi’s 3 greenfield sites are next to the junction of the Southern Motorway, Great South Rd and the North Island main trunk railway line, 35km south of Auckland’s city centre.

Chief executive Chris Gudgeon said: “This brings our total landholdings to 42.7ha, at a purchase price of $39.8 million. A third land parcel of 8.6ha has been secured via a right of first refusal, with the purchase price to be determined with reference to the market when the right is exercised.

Earlier stories:
13 September 2017: Kiwi Property’s Drury buy approved
10 September 2017: Second round for Auranga precinct confirms Drury as major growth centre
7 April 2017: Kiwi Property plans new town centre next to Stevenson’s Drury development
30 August 2013: Drury South industrial area plan change & MUL extension approved

Attribution: Company release.

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Kiwi Property adds 2 banks to its funding pool

Kiwi Property Group Ltd has further diversified its sources of debt, adding HSBC Holdings plc & China Construction Bank Corp to its pool of banking lenders.

Kiwi chief financial officer Stuart Tabuteau said today the company had increased its total finance debt facilities by $75 million to $1.3 billion. It’s added a $100 million facility from HSBC on 3-, 4- & 5-year terms and a $100 million 6-year facility from China Construction Bank, and paid down $125 million of shorter-dated debt.

Mr Tabuteau said one result was to increase Kiwi’s weighted average term to maturity of its finance debt facilities by half a year to 3.5 years.

Attribution: Company release.

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Kiwi Property’s Drury buy approved

Kiwi Property Group Ltd said yesterday it had received approval from the Overseas Investment Office to proceed with its acquisition of land at Drury, 35km down State Highway 1 from Auckland’s city centre.

The company said on 7 April it had secured agreements to acquire 3 greenfield sites totalling 51.3ha adjacent to the junction of the Southern Motorway, Great South Rd & the North Island main trunk railway line.

The Overseas Investment Office approval relates to the acquisition of a freehold interest of 39.2ha of this 51.3ha.

Kiwi Property chief executive Chris Gudgeon said yesterday: “This landholding reinforces our commitment to be part of Auckland’s future growth. Our vision is to develop a town centre to complement the existing Drury town centre, which would be staged over the next 20 years to coincide with predicted population growth, household formation & employment growth in South Auckland.”

Settlement of Kiwi’s purchase of 30.6ha of the Overseas Investment Office-approved land parcels is due to occur next Wednesday, 20 September 2017. Mr Gudgeon said Kiwi would fund it through existing debt facilities.

He said in April the acquisition price for 2 of the land parcels, totalling 42.7ha, was $39.8 million. Kiwi secured the third parcel of 8.6ha via a right of first refusal, with the purchase price to be determined with reference to the market when the right is exercised.

Earlier stories:
10 September 2017: Second round for Auranga precinct confirms Drury as major growth centre
7 April 2017: Kiwi Property plans new town centre next to Stevenson’s Drury development
31 October 2016: Work starts on 3 striking special housing area projects
24 August 2016: Work set to start after fast approval for Auranga special housing area at Drury
4 July 2015: 2 large special housing areas for Franklin
30 August 2013: Drury South industrial area plan change & MUL extension approved
4 September 2012: Drury South plan changes notified

Attribution: Company release.

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Institutions much keener on Kiwi Property offer than existing retail investors

Kiwi Property Group Ltd completed the retail bookbuild component of its $161 million fully underwritten 1-for-11 pro rata entitlement offer on Wednesday.

Chief executive Chris Gudgeon said 74% of all entitlements were taken up by existing shareholders. But there was a clear division of enthusiasm between institutional & retail shareholders – 94.5% of the institutional component was taken up by existing shareholders, but in the retail component it was only 50.4%.

The clearing price under the retail bookbuild was $1.38/share, a 2c premium over the application price. Eligible retail shareholders who elected not to take up their entitlements and ineligible retail shareholders will therefore receive 2c for every new share they don’t take up.

Mr Gudgeon said in June the NZX-listed company intended to use the net proceeds initially to pay down bank debt and reduce gearing, before being used to fund potential investment & development opportunities, including the potential expansion & improvement projects at Sylvia Park, Northlands, The Base, and in the longer term at Drury.

Earlier story:
21 June 2017: Kiwi Property seeks $161 million new equity

Attribution: Company release.

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Kiwi Property seeks $161 million new equity

Kiwi Property Group Ltd announced a $161 million equity-raising on Monday through a fully underwritten pro rata entitlement offer.

The $1.36/share issue price reflects a 4.5% discount to the theoretical ex-entitlement price of $1.424/share. The theoretical ex-entitlement price equals the average price of 118,132,021 new shares at the application price of $1.36 and 1,299,452,240 existing shares at $1.43, which was the closing price on the NZX on 16 June.

Kiwi Property chief executive Chris Gudgeon said the NZX-listed company intended to use the net proceeds initially to pay down bank debt and reduce gearing, before being used to fund potential investment & development opportunities, including the potential expansion & improvement projects at Sylvia Park, Northlands, The Base, and in the longer term at Drury.

Under the offer, eligible Kiwi Property shareholders will be entitled to acquire one new share for every 11 existing shares held on the record date, which is today.

The institutional component of the offer will be accelerated and occur over the next 2 days.  Settlement & allotment of new shares is scheduled for Friday 30 June.

The retail component of the offer will open tomorrow for eligible retail shareholders with a registered address in New Zealand or Australia and close on Monday 10 July. Settlement & allotment of new shares is scheduled for 17 July.

Under the offer, there is no rights trading. Instead, new shares not taken up or attributable to ineligible shareholders will be offered to institutional investors through 2 bookbuilds run by the joint lead managers, one for the institutional offer and one for the retail offer.

Any premium achieved above the application price for the new shares in each of the bookbuilds will be shared on a pro rata basis (with no brokerage costs deducted) between those shareholders who don’t exercise their entitlements or who are ineligible to do so.

Due to the timing of this offer, Kiwi Property’s dividend reinvestment plan has been suspended for the final dividend payable tomorrow. Shareholders who elected to participate in the plan will be paid the dividend instead.

Attribution: Company release.

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Kiwi Property operations up as revaluation gains slashed

Kiwi Property Group Ltd lifted operating earnings by 13% in the year to March, but a $135 million cut in revaluation gains put paid to any rises on other financial statistics.

Don’t feel sorry for the company though: Kiwi was very happy to bask in the glow of that revaluation windfall last year. When the company announced its 2016 result, chief executive Chris Gudgeon said: “We have this year seen the benefit of our long-term strategic initiatives, with asset values rising on the back of rental growth, leasing success & development activities, combined with improved market conditions.”

Carefully ignoring revaluations meant that, this year, Mr Gudgeon could focus on other aspects of the business, many of them more positive for the long term than a market shift in portfolio assessments.

But first, those key figures:

  • Net rental income up 16.6% to $182.5 million ($156.6 million)
  • Funds from operations up 12.9% to $102.8 million ($91.1 million)
  • Net fair value gain on investment properties $41 million ($175.9 million)
  • Net fair value gain/(loss) on interest rate derivatives $9.7 million ($17.6 million loss)
  • Total income down 35.7% to $290.6 million ($391 million)
  • Pretax profit down 36.8% to $171.7 million ($271.7 million)
  • After-tax profit down 43% to $143 million ($250.8 million)
  • Basic & diluted earnings/share down 45% to 11.10c (20.15c)
  • Investment properties up 11.2% to 2.97 billion ($2.67 billion)
  • Gearing ratio 34.5% (30.3%)
  • Net asset backing/security up 3.7% to $1.39 ($1.34)
  • Weighted average cap rate down 3.2% to 6.40% (6.61%)
  • Occupancy rate 98.8% (98.7%)
  • Weighted average lease term 5.6 years (5.1).

Portfolio performs

Mr Gudgeon said the rise in funds from operations, the company’s key operating measure, was driven predominantly by rental income from completed developments & acquisitions.

He said in the company results announcement today that Kiwi’s strategy in recent years had been to substantially rebalance its portfolio weighting towards Auckland: “We’ve invested in high  quality office buildings & retail centres in locations favoured by the Auckland unitary plan, and we increasingly see ourselves as town centre investors, creating diverse, engaging environments for New Zealanders – exceptional places for exceptional people.

“Outside of Auckland we have invested in dominant regional shopping centres and in the creation of a core Government office precinct in Wellington, supported by long-term Crown leases.

“At year end, we retained a strong balance sheet. Our gearing ratio stood at 34.5% and our net tangible assets/share increased from $1.34 to $1.39, reflecting positive asset revaluations. Our overall cost of debt reduced 27 basis points to 4.61% after we took advantage of favourable debt market conditions to refinance.”

He said the company continued to diversify its revenue base, growing third-party assets under management to $400 million. It added The Base at Te Rapa & Centre Place South in Hamilton to its external assets under management.

Other key outcomes for the year included:

  • opening New Zealand’s first H&M and Zara stores at Sylvia Park
  • starting construction works on a new office building at Sylvia Park, which will seamlessly integrate with a ground-level extension to the existing dining lane. Kiwi will also build a new 600-space carpark building
  • completing the 35,000m² core Government office precinct in Wellington (44 The Terrace & The Aurora Centre), with tenants now in occupation, providing a weighted average lease term of 15 years
  • completing the seismic strengthening work at The Majestic Centre, which achieved a seismic performance rating of 100% of new building standard on the office tower, and securing new lease agreements over 2800m² with Summerset and OMV
  • assuming management of The Base under the joint venture agreement with Tainui Group Holdings
  • securing a new 12-year lease with Suncorp for 5991m² of office space at the Vero Centre
  • the rollout of further electric vehicle charging stations at shopping centres, taking the total to 22 at 5 centres, and
  • being named the best performing New Zealand company for carbon disclosure.

Post-balance date, the company announced it had acquired, or secured acquisition agreements, for 51ha of future urban land at Drury, 35km south of the Auckland cbd.

Link: Property compendium

Attribution: Company release, accounts.

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Augusta wins fight for NPT

Augusta Capital Ltd – kept at bay for 8 months by former NPT Ltd chair Sir John Anderson – won control of the smaller NZX-listed property company today.

Shareholders voted 54.87% against the NPT board’s preference for Kiwi Property Group Ltd to sell 2 properties to NPT and become a cornerstone shareholder, then supported the ousting of 2 directors and appointment of 3 Augusta nominees.

Mr Sewell joined the NPT only last year and replaced Sir John as chair on 17 March.

If anybody was swayed at today’s meeting, it would have been by a handful of figures produced by Salt Funds Management Ltd managing director Matt Goodson, who turned around appearances on returns from competing Kiwi & Augusta proposals, and by both a persuasive address and subsequent pointed interjections from Augusta managing director Mark Francis.

Augusta didn’t have a proposal before today’s meeting. It made one last August when it bought 9.26% of NPT – raised to 18.85% 2 weeks ago – but, for the meeting, only put up resolutions to oust Mr Sewell & Jim Sherwin and install Augusta chair Paul Duffy and 2 independents, Allen Bollard & Bruce Cotterill. Carol Campbell was the one existing director whose position wasn’t questioned.

Both Augusta & Kiwi had proposed buying NPT’s management contract, on very different terms. Augusta’s buyout wasn’t up for a vote today, but the board vote means it can be put in place.

Attribution: Meeting, company release.

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