Sharechat Logo

Daily ShareChat: Kiwi Income Property Trust

By Jenny Ruth

Tuesday 23rd November 2010

Text too small?
 Jenny Ruth

Kiwi Income Property Trust has a high-quality portfolio of assets and a very solid balance sheet but it faces further headwinds both in the office and retail markets over the next six to 12 months, says Buffy Gill, an analyst at Goldman Sachs & Partners New Zealand.

"In addition, the stock looks fully valued once tax changes come into play. We would need to see retail or office rents recover faster than we are forecasting or management being able to lease up vacant space ahead of expectations in order to revise this view,"Gill says.

The trust's underlying rentals weakened in the six months ended September with office rentals on a like-for-like basis down 2.6% and retail rentals down 1.3%, she says.

"The retail environment is still very tough, in our view, particularly at a top-line sales level. We would therefore expect to see further weakness in the retail portfolio as the remainder of leases are rolled over in the next six to 12 months."

In the Auckland office market, occupancy continues to be "challenging" with excess capacity and new builds not expected to clear for the next few years. Against her expectations, the Christchurch PricewaterhouseCoopers centre is also proving difficult to refill, Gill says.

Recommendation: Hold.

DISCLAIMER: To the extent that any of the content above constitutes advice, it is general advice that has been prepared without reference to investor’s objectives, financial situation or needs. Before acting on any advice, investors should consider the appropriateness of the advice and IRG recommend that investors should obtain appropriate financial, legal and taxation advice before making any financial investment decision. The report is based on information compiled from public information and private research. IRG have completed the report on a best endeavours basis and do not accept any liability of loss or damage. IRG suggest that clients use this as part of a decision making process and check key data before making any investment decisions.
Employees may have an interest in the securities discussed in this report.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Kiwi Income Property Trust
Kiwi Income sells Queen St building to Australian firm
Kiwi Income Property may need to sell assets or raise equity to exit management contract
Kiwi Income manager stays mum on internalisation proposal, sees retail, Auckland office improving
Kiwi Income manager mulls Commonwealth Bank proposal to internalise contract
Kiwi Income Property sees smaller payout in 2014 as annual earnings fall 15 percent
Kiwi Income Property first-half pretax earnings fall 16 percent
Wellington's commercial property market to remain subdued: KIP
Kiwi Income Property Trust
Write-downs hurt Kiwi Income Property Trust but 1H distributable profit rose 9.1%