Market muddle boosts Kiwi Income

Friday 1st November 2002

September 11, Enron and weak world sharemarkets haven't bothered Kiwi Income Property Trust, whose shares have risen 46% since the beginning of 2001.

The stock took off as interest rates dropped and investors bought high-yielding instruments, and the climb has continued since rates bottomed. At $1.02 the shares are yielding 9.5% before tax.

"In the current climate risk-averse investors want yield and are prepared to forgo growth," UBS Warburg property analyst Stuart Graham says.

"It's the same for the whole property sector. The nature of the company's income stream is less volatile [than dividend-paying growth companies]."

Not that the company hasn't been growing. Over the past four years net profit has risen an annual average of 22%.

Early this year Colonial First State Property, a unit of Commonwealth Bank of Australia, took over the management contract and the connection with a major banking and funds management group is expected to benefit Kiwi over time.

The company's flagship, Royal & SunAlliance Centre in Auckland, is now fully tenanted and the $90 million redevelopment of Christchurch's Northlands shopping centre has begun.

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