Clive Mackenzie expressed satisfaction about progress on the new Sylvia Park scheme. Photo / Michael Craig
Clive Mackenzie expressed satisfaction about progress on the new Sylvia Park scheme. Photo / Michael Craig
Revenue was up at one of New Zealand’s largest listed landlords partly from more sales at its malls but bottom-line profit turned to a loss after property devaluations hit.
Kiwi Property Group, with $3.1 billion of assets, declared a $227.7m net loss after tax for the year to March 31,2023, a turnaround from last year’s $224.3m net profit, mainly due to unrealised devaluations.
Revaluations added $128m to last year’s result but this year that became a negative $352m devaluation.
But the business was upbeat about record sales at its shopping centres.
It made $1.7b in sales at Sylvia Park, LynnMall and The Base, up 28.5 per cent. Sylvia Park’s performance was especially strong with $889m sales.
Shareholder dividends will rise from last year’s 5.6cps to 5.7cps and Kiwi forecasts it will pay 5.7cps in the 2024 financial year.
Chairman Mark Ford and director Mark Powell are retiring, with Carlie Eve and Peter Alexander replacing them.
On the outlook, Ford said: “We are clear on our way forward and confident of our ability to turn our strategy into reality. By doing so, we will drive the company’s operational results, promote growth in our share price and help create greater recognition within the market of Kiwi Property’s value.”
Forsyth Barr has a neutral rating on the business, saying in an earnings preview: “Retail sales at Kiwi malls remain solid but there could be signs cost of living is having an impact. Elevated committed gearing remains a focus.”
The Base in Hamilton was one of the increasingly popular malls. Photo / Christine Cornege
Gearing was up in the first-half result, with added pressure from announced asset devaluations.
Forsyth Barr would be looking for an update on the sale of Westgate Lifestyle and the development work at Sylvia Park and Drury.
Revenue of around $193m for the full year was anticipated and ebitda of $162m.
Of Sylvia Park, the company said the sale of 3.2ha of land to Ikea was now unconditional, and work is ongoing on the precinct’s 295 apartment build-to-rent (BTR) complex.
The development’s superstructure is now up to nine floors high and on track for completion in early FY25.
The company said BTR was flourishing in markets such as Australia, where quality BTR apartments attract impressive rents. Kiwi expected similar trends to flow to the New Zealand market, positioning BTR to deliver attractive returns over time.
Of its Drury project, it said: “Stage one earthworks are underway and the site’s 13 residential super-lots are now formed, and at grade. Kiwi Property has a range of options available to fund the development, including the introduction of capital partners, the sell-down of one or more of the site’s super-lots or even potentially the release of large format retail sites.”
One unusual aspect of the accounts was a payment after a legal dispute Kiwi won: “Litigation settlement income of $6m represents claims settled against third parties regarding engineering services provided in connection with an investment property.” A Kiwi spokesman said he couldn’t elaborate on that today.
Chief executive Clive Mackenzie tested positive for Covid yesterday but joined the conference call this morning.
His total pay was up from last year’s $1.50m to $1.54m and Kiwi has 98 employees earning $100,000+. Investors were told the bottom-line loss was disappointing but not unexpected.
The company had a four-point growth strategy: leading the market on mixed-use assets, increasing diverse capital sources, driving asset performance and building a future-fit business.
Plans v reality: at the BTR construction site on May 4. Photo / Michael Craig
Jarden’s managing director Arie Dekker asked Mackenzie about the input and management costs of BTR after the company showed Auckland residential rents were growing faster than inflation. Mackenzie cited rising immigration and tertiary students returning as indicators of further growth potential.
The company’s borrowing grew from $850m to $1b but it has sold the Westgate lifestyle centre for $85.7m in a deal which settled on May 1.
Mackenzie wouldn’t talk to the Herald about his remuneration today.
He said on the unusual $6m litigation settlement: “We’re bound by confidentiality provisions in that settlement. I can’t add any extra colour to that.”
Westgate lifestyle centre had sold to a joint venture with Rod Duke and Harvey Norman. The buyer is the Westgate Lifestyle Centre Joint Venture.
“From an operating perspective, the business is trading really well and traded well all the way through Covid and that’s bounced back even stronger: great assets and strong performance,” Mackenzie said in summary.
On an Auckland rent graph in Kiwi’s results presentation today, he said rental property was clearly a great hedge against inflation.
In about a year’s time, the Auckland housing scheme is scheduled to deliver 295 new residential tenancies, rented in perpetuity, providing what chief executive Clive Mackenzie describes as “a place to set roots”.
He wants people to live there long-term, bucking the instability that often typifies our residential rental market.
Construction of the central tower, Building B, had reached level seven. It will be 12 levels tall by the time it is complete.
Buildings A and C, flanking the central block, will both be nine levels and are now at levels five and four respectively.
Last year, Kiwi had $3.6b of real estate and pushed up bottom-line profit 14 per cent partly because of big revenue rises from an expanded Auckland shopping centre and revaluation boosts.
It reported a strong performance, announcing 2021′s $196.5m net profit after tax was $224.3m for the March, 2022 year.
Its big real estate portfolio rose in value $99.8m in 2021 but $120.5m by 2022.
Shares have been trading around 90c, down 11 per cent annually. Its AGM is is to be on June 28.
