NZ listed property stocks: update

Share prices of NZ listed property trusts (LPTs) have been hit over recent weeks.  LPTs are often bought for yield so the share price can be dragged down as bond yields rise.  Cash yields on LPTs remain attractive compared to bank deposits (see below).  The graph (courtesy of FNZ) shows an average sector cash yield of 5%.  This ignores the tax efficiency of LPTs - the pre-tax dividend rate is generally much higher for high rate taxpayers:

According to FNZ most LPT property portfolios are "in solid shape".  See FNZ's table below - average sector occupancy is 98%, average gearing is 30.2% and the average weighted average lease term (WALT) is 7 years.  All these are robust sector averages:

NZ property 2.png

Argosy and Stride have the highest sector dividend yields.  Kiwi Property has the largest portfolio by value.  Meanwhile FNZ's preferred exposure is Goodman Property given its low gearing, high Auckland industrial exposure, development program and low average property value (meaning expected higher asset liquidity).  All four of these LPTs are held in our Global Property Fund.  

John Berry

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