Kiwi Property Group Limited Analysis

Overview

Kiwi Property (NZX: KPG) is the largest listed property company on the New Zealand Stock Exchange and is a member of the NZX15 Index.

Kiwi Property was formed more than 20 years ago and now proudly owns and manages a $3.0 billion portfolio of real estate, comprising some of New Zealand's best shopping centres and prime office buildings. The company's objective is to provide investors with a reliable investment in New Zealand property by targeting superior risk-adjusted returns over time through the ownership and active management of a diversified, high-quality portfolio. Kiwi Property is licensed under the Real Estate Agents Act 2008.

History

• Kiwi Property was founded in 1992 and listed on the NZX in December 1993 as Kiwi Income Property Trust
• In December 2013, Kiwi Income Property Trust internalised its management and, in December 2014, moved from a trust to a company structure, changing its name to Kiwi Property and its NZX Code from KIP to KPG.

To find out more, visit kp.co.nz

Performance

The following information was extracted from Kiwi Property Group Limited's half year results, released on 25 November 2024:

• Net rental income: $95.3m (+7.0%)
• Operating profit before tax: $56.4m (+7.7%)
• Net profit after tax: $43.2m (+218.4%)
• Adjusted funds from operations: $48.4m (-0.4%)
• Net tangible assets per share: $1.17 (-0.7% from FY24)
• Interim dividend: 2.70 cents per share (-5.3%)

Resilience showing through

Kiwi Property released its interim results for the six months ended 30 September 2024 (1H25) today, with the results reinforcing conviction that its strategy, focused on curating and creating retail-led mixed-use properties, is building momentum as challenging recent macroeconomic conditions start to ease.

Kiwi Property Chair Simon Shakesheff said, “It’s a pleasing half-year result given the current economic environment. The resilience of Kiwi Property’s assets is demonstrated through solid net rental income growth of 7.0% for the half-year. Operating profit before tax was $56.4 million (up 7.7%), reflecting a tight focus on costs, efficiencies, and execution, while net profit after tax was $43.2 million (up 218.4%), including a modest fair value gain over the period. While AFFO is marginally lower than the prior period (-0.4%), this is encouraging given higher interest costs and lower depreciation deductions as a result of the Government’s tax legislation change.”

Kiwi Property CEO Clive Mackenzie said, “The results of the last six months have given us even greater confidence in our strategy. Importantly, as the interest rate cycle begins to unwind and lift downward pressure, we are also seeing a stabilisation of Kiwi Property asset valuations that is reflected in the 1H25 results. Our expectation is that in creating a high-quality asset base with good transport connectivity, we will get stronger valuation and rental uplift over time.”

On 30 September 2024, the Kiwi Property portfolio was valued at $3.3 billion, including a fair value gain of 0.3% from 31 March 2024. Net tangible assets were stable at $1.17 per share.

“Retail sales at Kiwi Property’s assets have also held up well considering the current economic environment, with sales down -1.8% across the portfolio compared to the -3.8% reduction in sales nationally [Note 1]. Kiwi Property’s mixed-use specialty gross occupancy cost ratio (a key measure of tenancy affordability) increased from 12.2% to 14.3%, remaining within a conservative range and leaving room for future rental growth following the 4.2% total rent growth achieved over the first half of the financial year. The attractiveness of our centres as destinations also continues to be demonstrated through foot traffic, which increased from 36.3 million to 37.3 million over the preceding 12 months.”