Will real estate stocks — ARG, PCT, KPG – continue their stellar show?

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Will real estate stocks — ARG, PCT, KPG – continue their stellar show?

 Will real estate stocks — ARG, PCT, KPG – continue their stellar show?

Summary

  • Argosy property is focused on reducing the impact COVID-19, green development, and capital management.
  • Kiwi Property reports strong sales for December.
  • Precinct optimistic due to high-occupancy rates and high-end clients.

Real estate stocks in New Zealand have generally performed well in CY2020. The real estate market of NZ is diverse, ranging from residential, commercial to retirement homes, and lifestyle blocks. COVID-19 restrictions did not have much impact on this market, and it did well across segments.

Housing demand in the residential sector continued to rise, but due to high prices, it is becoming difficult to afford. Commercial property is mostly rent-based and it is becoming a significant investment market. However, in terms of sales, the office segment is leading the market.  Even the construction industry of New Zealand is booming with new properties, trying to catch up with new trends in construction.

Let us look at the performance of three real estate stocks:

Argosy Property Limited

Argosy Property Limited (NZX:ARG) has a diversified portfolio of mainly office and Retail properties in Auckland and Wellington areas.

Argosy’s first-half results showed a strong performance in key focus areas, including minimising the impact of COVID-19 on businesses, green development, and capital management.

Jeff Morrison, Chairman of the Company, said that the HI FY21 reflected a strong start despite the challenging circumstances and uncertain economic outlook.

For the six months to 30 September, Argosy’s net property income was NZ$51.1 million in the first half of FY21, similar to the net property income over the same period the previous year. However, there was a lag in the rental income. The Company provided the support to tenants in terms of rental discounts to the tune of NZ$3.3 million and NZ$0.3 million in rental delays. 

Its net distributable income was up by 21.5% at NZ$36.0 million compared to NZ$29.7 million over the same period in 2020. Net distributable income per share was also up by 21.2% to 4.35 cents from 3.59 cents per share.

Also Read: A win-win situation for both, Argosy’s DRP to help shareholders and the Company

The Company completed the acquisition of two industrial properties in Auckland during this period, at a cost of NZ$76 million, and continued to develop value-added projects in Lambton Quay, Wellington and Jamaica Drive, Wellington.

Recently, ARG announced its dividend reinvestment plan and also the resolve to give sustainable dividends to its shareholders.

ARG was down 0.32% at NZ$ 1.540 on Monday at the time of writing this article.            

Kiwi Property Group

Kiwi Property Group (NZX:KPG ) in New Zealand showed a strong resilience to the pandemic.

Even though in its results for the six months ended 30 September 2020, the company showed a dip in operating profits, and net profit, after the tax was up 47.5% to $54.2 million due to the gain in investment properties.

Clive Mackenzie, the CEO of Kiwi Properties, said the timely steps taken by the Company helped it navigate the COVID-19 situation.

The Group’s Asset Management General Manager said that the sales had been very strong in its retail segment since the start of COVID-19. Kiwis have been shopping, especially on Black Friday and Christmas. She said that this trend would continue through FY21.

It reported good sales growth for the month of December alone. For December 2020, its retail portfolio grew by 4.2%, specialty stores grew by a whopping 9.3% in December alone. Sales at NZ’s favourite shopping center Sylvie Park were up 12 %.

The Company’s sales update for the quarter ended December showed an upward trend. An increase in the sales across shopping centers was noted. Specialty stores were up 9.5%.

KPG was trading down 0.78% at NZ$1.280 on Monday at the time of writing this article.

Precinct Properties New Zealand Limited

Precinct Properties New Zealand Limited (NZX:PCT) has continued to perform well in FY20. It continues to remain positive in its outlook despite uncertainty in the macro-economic scenario. PCT is confident due to high-occupancy levels, and long-term lease.

The Company also gave a dividend guidance of 6.50 cents per share for FY21. This is an increase of 3.2% over the previous year.

As on September 30, the Company’s portfolio was valued at NZ$3 billion. The occupancy rate was 98%, and the Company has high-end client base.

Also Read: Precinct Properties Provides Quarterly Report For December 2020

The Company is also making good progress in its property in 44 Brown Street, Wellington, and it is focusing on the sustainable development of its buildings. It scored well in its sustainability score.

PCT stock remained unchanged from Friday, its previous close, and was trading at NZ$ 1.725 on Monday at the time of writing this article.

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