Long Term View: Kiwi Income Property Trust Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Kiwi Income Property Trust Ltd [KIP.NZ] has been a poorly performing stock since its December 1993 listing at $1.03. KIP shareholders have not done well. With 76c in net dividends* and 30% more in tax credits (see chart above) and numerous dilutions in shareholder capital** gives KIP a 90% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) and over the nearly 17 year listing*** of KIP an approximate annual net return of just under 5.3%.

This is approximately a 100% worse return when compared to the average of all NZX indexes.

Dividend data range: 2000 - 2010* - So actual returns will be higher.
A 2009 capital raising and various calls to the market for funds estimated at a 10% dilution for shareholders**
Available share price data***





Disc I own KIP shares in the Share Investor Portfolio

Long Term View Series

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Kiwi Income Property @ Share Investor

Kiwi Income Property debt levels should be a worry to shareholders
Why did you buy that stock? [Kiwi Income Property Trust Ltd]

Download KIP Company Reports
Discuss KIP @ Share Investor Forum


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c Share Investor 2010

NZX's Top 10 Dividend Returns

It is hard to get good returns from term investments and the property market at the moment with around a 3.5% real return from the former and similarly low results from investment properties, if you bought a house over the last 10 years.

The New Zealand Stockmarket has some good returns on selected stocks many are getting close to a 10% gross return. With this in mind lets take a look at the 10 best dividend players listed on the NZX.

Figures are gleaned from the NZX website and are based on figures calculated from market prices as of close of market on 9 June 2010. The gross returns are based on past profit performance.


The Top Ten

Telecom NZ Ltd [TEL.NZ] - 13.26%

Steel & Tube Holdings [STU.NZ] - 11.92%

Kiwi Income Property Ltd [KIP.NZ] - 9.92%

Vector Ltd [VCT.NZ] - 9.35%

Hallenstein Glasson Holdings [HLG.NZ] - 9.22%

Telstra Corp [TLS.NZ] - 9.08%

Freightways Ltd [FRE.NZ] - 8.41%

Air New Zealand [AIR.NZ] - 8.28%

Goodman Fielder Ltd [GFF.NZ] - 7.82%

Restaurant Brands Ltd [RBD.NZ] - 7.76%


While not guaranteed returns - the likes of TEL, TLS, KIP & AIR dividends will be under future pressure - even the minimum return from RBDs 7.76% is nearly twice the return of term investments and investment property.

Good to see I own 5 out of the top 10.

Disclosure I own FRE, GFF, HLG, KIP, STU in the Share Investor Portfolio


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Why did you buy that stock? [Kiwi Income Property Trust]

Kiwi Income Property Trust [KIP.NZ] was an addition to my portfolio earlier this year.

I wanted direct exposure to the commercial property market without actually buying a building outright.

Kiwi first came onto my horizon when I noticed they had ownership of the 40 level Vero office building in Downtown Auckland, and then my interest was piqued when their Sylvia Park shopping centre in Mt Wellington opened.


Why did you buy that stock?

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That is all I knew about the company. I like what I saw in its two high profile assets and went digging a little further. Kiwi have a good mix of quality properties, shopping centres and office buildings from Auckland down to Christchurch, among them; Northlands Shopping Centre, Centre Place Shopping Centre, North City Shopping Centre, The Plaza Shopping Centre, Downtown Plaza Shopping Centre, Langdons Road, PricewaterhouseCoopers Building, The Farmers Building and Countrywide Building.

In a property company one of the number one things an investor should look for is good quality assets. For me Kiwi fit the bill, so that for me is the main reason for me to make my small purchase of shares.

Coming a close second is management. Good properties are only going to get good returns over a long period if they are managed well and Kiwi property certainly is.

Since its creation in 1993 the company assets have grown to over NZ $2 billion, it has a great occupancy rate for its properties and it increased profit to just over $63 million in 2008, from just under $48 million last year.

The mix, age, quality of construction and geographical spread of assets show how good management have planned ahead.

The Sylvia Park shopping centre is a case in point. New Zealand's largest retail centre, it has room and space to grow and has over delivered in terms of initial expectations.

The only problem that they have had, and this seems endemic with shopping centre planners, they under estimated the need for car parking, something they are now remedying with a multi story car park now under construction.

Now another reason I bought this stock was that it was cheap in comparison to its share price high, at just over $1.70 per share, and its net asset value to capital market price. Its current market cap of NZ$872 million is less than the net asset value of just over $1.1 billion, so I had to buy.

In the Why did you buy that stock? series I have to ask myself if I would still buy today. At the current share price of $1.13 it represents excellent value and I would like to add some more, should my wife stop taking me off overseas and making me pay for it!


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c Share Investor 2008