5 NZX REIT stocks amid RBNZ’s tightened LVR restrictions

Highlights

  • First home buyers to find it tough to buy houses at increased prices from 1 November as new tighter lending rules come into play by the RBNZ.
  • GMT’s draft valuation report showed that its real estate portfolio would post an increase of roughly $500 million.
  • Stride Group conducted its annual shareholder meeting on 23 September.

The RBNZ announced the tightening of LVR restrictions for mortgages on 23 September. Beginning 1 November, banks will now be confined to just 10% of the new lending to owner-occupiers that account for over 80% of the value of the property.

The move will overly affect first-time buyers who receive over 75% of loans that were above 80% loan to value in July.

Amid this backdrop, let’s have a look at how these 5 REITs are faring.

NZX REIT stocks, market cap and return

Image source: © 2021 Kalkine Media New Zealand Ltd, Data source- Refinitiv

Precinct Properties New Zealand Limited (NZX:PCT)

Precinct declared that the ultimate conversion price of the subordinated convertible notes (PCTHA) was $1.4. The price is determined by the lower of the $1.4 conversion price cap and a 2% reduction to the market price of $1.66.

Agreement, allotment, and the start of trading of newly converted PCT shares will take place on 27 September.

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On 24 September, PCT ended the trading session at $1.695, down 0.29% from its previous close.

Argosy Property Limited (NZX:ARG)

Argosy property announced that the strike price for Argosy's dividend reinvestment plan had been set at $1.5979. For FY22, the Group has declared a cash dividend of 1.6375cps, which will be paid on 22 September 2021.

In order to calculate the strike price, a 2% discount was applied.

On 24 September, ARG ended the trading session at $1.65, up 0.3% from its previous close.

Goodman Property Trust (NZX:GMT)  

Goodman property’s draft valuation reports showed that GMT’s property portfolio would post a gain of nearly $500 million in the first half.

As per GMT’s CEO, the results have shown strong property fundamentals and buoyant investment for warehouses and logistics sector assets.

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The portfolio is likely to be valued at nearly $4.3 billion as at 30 September 2021.

On 24 September, GMT ended the trading session at $2.545, up 0.2% from its previous close.

Kiwi Property Group Limited (NZX:KPG)

KPG stated on Tuesday that it would begin construction on its first big build-to-rent project. Institutional landlords own and operate this type of property, which is mostly used for long-term rentals.

The 295-apartment complex will be erected in Auckland's Sylvia Park, and in the medium term, almost 1,200 flats are expected to be built on the property.

On 24 September, KPG ended the trading session at $1.18, down 0.42% from its previous close.

Stride Property Ltd & Stride Investment Management Ltd (NZX: SPG)

Stride's annual meeting results were announced on Thursday. Given the COVID-19 impact, the Group performed well in FY21. In the quarter, the profit after tax from continuing activities increased to $132 million, up from a loss of $0.1 million in FY20.

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Total assets under management were $3.4 billion, which included all acquisitions and ongoing projects. In FY22, the Group intends to expand its investment management business.

On 24 September, SPG ended the trading session at $2.46, down 1.6% from its previous close.

Bottom Line

It is yet to be seen how LVR tightening will fare out for the housing market.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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