How are these 5 NZX REITs doing amid rising property prices?

Highlights

• The REINZ house price Index rose 27.2% for the year ended November 2021 as the demand surpassed supply. 
• Precinct announced Tuesday that the third stage of the Wynyard Quarter Innovation Precinct had begun.
• Argosy Property will pay a second-quarter dividend for FY22 on 22 December. 

New Zealand witnessed high growth in property prices this year. The REINZ house price index increased 27.2% for the year ended November to a new high of 4,281.  

REINZ CEO Jen Baird stated that the increase came from the rise in demand as regions of NZ came out of alert levels. However, various government actions to cool off the market, increase in the OCR by the RBNZ and tighter lending measures by banks may lead to firmer sales volumes next year. 

On this note, let’s have a look at how these 5 NZX REITs are doing. 

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Precinct Properties New Zealand Limited (NZX:PCT) 

Precinct announced Tuesday that the development of 124 Halsey Street and Flowers Building is in the third stage of the Wynyard Quarter Innovation Precinct. 

The project has an estimated cost of $157 million and would produce a yield on cost of circa 5.75% after the lease of the building. 

PCT ended the day flat to close at $1.64.

Asset Plus Limited (NZX:APL) 

Asset Plus witnessed a challenging period due to the COVID-19 pandemic. It delivered a total comprehensive income of $2.52 million for the 6 months ended 30 September 2021, down from $11.53 million in pcp. 

It paid a gross quarter dividend of 0.519cps. It plans to develop the Munroe Lane project successfully and keep a positive income stream. 

APL ended the day flat to close at $0.305.

Kiwi Property Group Limited (NZX:KPG) 

Kiwi Property signed an agreement with a Swedish furniture giant, IKEA. The Company has committed to selling 3.2 hectares of land at Sylvia Park to IKEA. The Group had been intending for the furniture giant to enter NZ and help in the same by finding good locations for its stores and customer meeting points. 

KPG ended the day 0.87% in green to close at $1.165. 

Property for Industry Limited (NZX:PFI) 

PFI announced on 12 December that its Wellington property located at 38 Seaview Road had been divested. Bayleys had marketed the property, which had been sold unconditionally for $10 million. 

The agreement for the divestment is likely to take place in February. 

PFI ended the day 0.34% in red to close at $2.92. 

Argosy Property Limited (NZX:ARG) 

Argosy delivered viable earnings, cashflows and dividends to stockholders for the 6 months ended 30 September 2021. The Group has projected a dividend of 6.55cps for FY22 and plans to start a new dividend policy from 1 April. 

It will pay a cash dividend of 1.6375cps for the second quarter of FY22 on 22 December. The strike price for DRP was announced at $1.518 per share. 

APL ended the day 1.59% in red to close at $1.545. 

Bottom Line 

Some of the key issues to be considered, as per property economists, would be increasing mortgage interest rates, an increasing inventory of houses for sale, further lending curbs and a prospective cooling off the construction sector. 

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