GMT, PCT, KPG: Will mortgage rate hikes impact these REIT stocks?

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GMT, PCT, KPG: Will mortgage rate hikes impact these REIT stocks?

 GMT, PCT, KPG: Will mortgage rate hikes impact these REIT stocks?
Image source: kwarkot, Shutterstock.com

Highlights

  • Banks raise interest rates after the central bank raised the OCR by 50 bps
  • ANZ was the first bank followed by BNZ and ASB
  • The hike in mortgage rates might dampen the housing market further

Three banks have raised interest rates after the RBNZ lifted the OCR from 1% to 1.5% on Wednesday. ANZ Bank was the first bank to raise its mortgage rates after the Reserve Bank of New Zealand hiked its official cash reserve ratio.

It announced that its floating and flexible home loan interest rate would go up by 0.5% to 5.54% and 5.65% (annually).

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ANZ managing director for personal banking said that OCR was only one of the reasons that determined our decision to raise interest rates. Other reasons were the global economic response to the COVID-19 pandemic and the Ukraine-Russia standoff, which is driving inflation to three decades high.

Besides the OCR, the Bank has seen a significant increase in wholesale rates recently and this has impacted fixed interest rates for home loans.

Other banks including BNZ and ASB have also lifted their variable home loan rates after the RBNZ’s hike in the OCR. ASB will lift its floating mortgage rate from 4.85% to 5.35% and its orbit rate from 4.95% to 5.45%.

Against this background, let’s see how are these NZX REIT stocks performing.

Kiwi Property Group Limited (NZX:KPG)

KPG recently announced Joanna Harris as its new GM, People. Her appointment is expected to bring value to the company as it evolves as a builder of mixed-use property. She joined the Company on 11 April. Recently, KPG also paid a dividend of 5.3 cps for FY22. It has been a consistent dividend-payer despite losses suffered by the Company on account of COVID-19-related disruptions.

Clive Mackenzie said that the dividend announcement would give some amount of certainty to the company‘s shareholders.

On 14 April, the stock was trading up by 0.47 at NZ$1.080, at the time of writing.

Goodman Property Trust (NZX:GMT)  

GMT is an important player in the field of real estate. Recently, it acquired Sky Television’s campus for nearly NZ$56 million. This purchase complements other portfolios of the Company and that is why it is significant. GMT plans to build this site into logistics estate that would cater to a large number of regional centers.

GMT reported that the pandemic had no impact on its customer demand, and it gave a dividend payout of 1.37 cps to its shareholders.

Also read: Goodman (NZX:GMT) obtains a development contract with NZ Post

On 14 April, the stock was up by 0.64% at NZ$2.37, at the time of writing.

Precinct Property New Zealand Limited (NZX:PCT)

PCT develops premium properties across New Zealand. It announced today that it was considering making an offer for secured, fixed-rate six-year green bonds. The offer will be for institutional and NZ retail investors. Full details of the offer are expected to be released in the last week of April. PCT has appointed ANZ Bank as the arranger and the bond coordinator.

Investors should know that no money and applications for the Green Bonds are being sought right now.

If an offer is made, it will be in accordance with the Financial Markets Conduct Act 2013.

PCT has performed well in its financial results. It delivered an increase in net income by 6.3% over pcp at NZ$45.5 million. The Company has more than NZ$1 billion worth of projects in the pipeline.

On 14 April, the stock was trading down by 0.32% at NZ$1.545, at the time of writing.

Bottom Line: The banks have increased mortgage rates. This will help in cooling off the over-heated property market. This might discourage home buyers from buying properties, but it will also hit property developers.

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