Most of the industries, including the real estate sector, have been impacted by the unprecedented impacts of COVID-19 in some way or the other. People and businesses who bought houses can expect delays in possession while those who wish to sell some property have to wait much longer. Rents are being delayed due to contractions in economic activity. All in all, the adversity of impact would really depend on how long the shutdown in New Zealand will last and how swiftly, with their austerity measures being implemented, will rebound when things get to normal.
In light of this discussion, let’s look how four of the biggest real estate players are coping in these uncertain times, which company has postponed or even cancelled distributions to cut cost keeping in mind a long-term horizon.
Kiwi Property Group Limited (NZX:KPG)
New Zealand- based leading real estate company, Kiwi Property Group manages a portfolio of real estate comprising some of best shopping centres and prime office buildings in the country. The Group’s property portfolio is quite diversified inlcuding mixed-use, office, retail and other use types assets that are heavily weighted to the golden triangle, home to 50% of the New Zealand’s population. Around 71% of the properties are located in Auckland and 8% in Hamilton. Kiwi Property occupancy rate stands high at 99.4% and the weighted average lease expiry is 5.1 years.
On 6 April 2020, the Group announced to have cancelled dividends to its shareholders worth $55.3 million to preserve its cash amidst the ongoing disruption caused by the COVID-19 pandemic. A number of comprehensive cost savings measures are being implemented to lower expenses and help in offsetting any income losses due to obstruction being caused by measures to control the pandemic.
To sail through this time of unprecedented challenge, Kiwi Property Group is working to ensure the wellbeing of its people, tenants and customers.
Upon indication by the government, the Group has put non-essential capital expenditure projects on hold as of now until there is greater clarity about the future trading environment.
With a market capitalisation of $1.31 billion, KPG stock during the time of writing, on 8 April 2020 was trading at $ 0.89, up 2.30%.
Precinct Properties New Zealand Limited (NZX:PCT)
Precinct Properties New Zealand is the only NZX-listed CBD specialist with investments predominately across premium and A-grade commercial office properties in New Zealand and around 300 clients, from both private and public sectors. Precinct’s key business focus remains maintaining high levels of occupancy as well as building long-term leasing relationships. The Group’s investment portfolio metrics indicate an occupancy of 99% and ~9 years of weighted average lease term.
As New Zealand was placed in COVID-19 alert, Precinct Properties New Zealand closed all of its buildings and construction sites safely and securely. This included the Company’s assets at Commercial Bay and Wynyard Quarter in Auckland.
Precinct Properties New Zealand continues to have a strong finance position amidst the volatility. The Company is engaged in an active execution of its business continuity plans for ensuring that proper precautionary measures are being adopted for the safety of employees, while also mitigating any potential losses for the business.
Given the ongoing scenario and uncertainty surrounding the end of COVID-10 pandemic, the Company expects FY20 earnings to be on track with its previous guidance and the Company also announced the shareholders that its dividend of 6.30 cps would be paid as scheduled.
With a market cap of ~ $2.19 billion, PCT stock at the time of writing, on 8 April 2020 was trading at $1.65, down 1.79%.
Argosy Property Limited (NZX:ARG)
Argosy Property Limited is also one of the largest diversified property investment vehicles in New Zealand and the Company has undergone a number of changes in its management structure over the years.
Company’s CEO Peter Mence recently quoted in an announcement that Argosy Property is confident in the resilience of its business and the quality of diversified portfolio amidst a lot of volatility and uncertainty in the market. With the business confidence going, Argosy Property informed the stakeholders that the fourth quarter dividend of 6.35 cents per share would still be paid in June 2020. As the potential impact of Covid-19 remains and the Company is comfortable with the overall business performance.
Most importantly, the government accounts for ~26% of Argosy’s current rental income, which certainly bolsters a high-degree of future revenue.
Otherwise also, the Company has diversification and strong portfolio metrics with different property ownership by location, type and tenant. As at 29 February 2020, the Argosy portfolio has 45% weighted to Industrial assets, 38% of Office spaces as well as 17% of Large Format Retail spaces.
With a market cap of ~ $732.06 million, the ARG stock, at the time of writing was trading, on 8 April 2020, at $0.90, down 1.10%.
Stride Property Ltd & Stride Investment Management Ltd (NZX:SPG)
Stride Property Group, a real estate investment manager, comprising Stride Property Limited and Stride Investment Management Limited. The Group invests across office, retail and industrial assets in in New Zealand.
As New Zealand will move to COVID-19 Alert Level 4, Stride Property Group has assessed its existing directly-held portfolio of leases to understand the consequences of the unprecedented COVID-19 situation. The Group clearly informed that approximately 28% of its gross rental income of its directly-held portfolio can be classified as “Essential Businesses” under Alert Level 4 based on the New Zealand Government’s current guidelines. So, the closures will result in a loss of gross rental income of $ 0.4 million, which depict approximately 0.5% of gross rental income.
Although, Stride’s diversified investments are expected to continue generating revenues from a variety of sources for the shareholders.
With a market cap of ~ $ 471.30 million, SPG stock at the time of writing was trading at $ 1.33, up 1.53% on 8 April 2020.