Back in April they raised $50 million in an institutional and shareholder offer for additional shares and just recently I received a very glossy (and no doubt expensive) prospectus asking for an additional $125 million from shareholders.
Now I am not against companies raising capital from time to time, it is part of being a shareholder, but the dilution for shareholders if they don't take up the offer is something that cannot be ignored.
The high debt levels are a worry too in an economy that is yet to bottom.
The company has massive debt levels of almost NZ$1 billion which is just slightly half of the value of the assets on its books - assets that are worth $200 million less than last year and are likely to be worth even less next year as the commercial property sector comes under more pressure due to a business slowdown and less rental activity.
Management of various assets has also been a little lax to say the least with a building in Wellington, BP House, only being offered for sale to one interested party when there were others sniffing around - very strange.
The over-reliance on one property for income - Sylvia Park Shopping Centre - and the spending of shareholder capital to continually expand it could also be a concern if the retail sector continues to slide as it has over the last 18 months.
I am starting to backslide on my reasons for buying in the first place and regret my purchase - be it ever so small - I don't like losing money and fear I will with this one if their debt levels overwhelm their asset values, shareholders run out of money to prop it up and institutions lose interest.
KIP Shareholders please keep an eye out for your investment over the coming year.
As a footnote, and it really needs to be said even though it is probably obvious, I did not participate in the April capital raising and will not involve myself in the latest money grab.
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Download the KIP MCN prospectus
From Fishpond.co.nz
NEW! "Letters to Aston: Lessons Learned from a Lifetime of Investing" by Martin Hawes
c Share Investor 2009
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