Would 5 NZX REIT stocks thrive with boost in housing supply?

Highlights

• New planning rules have been announced under a new bill to boost housing affordability.
• Property for Industry released a presentation given at the NZX Virtua Investor Day on 19 October.
• Vital Healthcare announced the allotment of placement units on Wednesday.

The NZ government has unveiled a new bill that will assist in tackling the housing crisis by permitting at least 48,200 and as many as 105,500 new homes to be built in 5-8 years.

This goal can be reached by allowing up to three homes of up to three storeys on most sites in cities without any need for resource consent from August 2022.

The changes will enable more homes that attracted first home buyers’ attention to be built in areas closer to their work, transport and community facilities.

Let’s go through how these 5 REITs are performing.

Image source: © 2021 Kalkine Media, Data source- EODHD/Others 

Investore Property Limited (NZX:IPL)

Investore paid a cash dividend of 1.975cps for the first quarter of FY22 on 17 September 2021. The Group has a target of an annual cash dividend of 7.9cps to shareholders for FY22, assuming there is no further worsening of economic conditions amid the COVID-19 pandemic.

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The Group plans to deliver improved returns for its shareholders.

IPL ended the day 0.53% in green to close at $1.89.

Property for Industry Limited (NZX: PFI)

PFI released a presentation to the NZX virtual investor event on 19 October. The Company has achieved a year-end average occupancy of 98.5% with a weighted average lease term of 5.09 years since 2011.

PFI has delivered an average annual return of 11.31% since its inception.

The Group entered the second half of 2021 in a good position with an excellent portfolio, a strong balance sheet, and a favourable stance for industrial property.

PFI ended the day 0.68% in green to close at $2.97.

Kiwi Property Group Limited (NZX:KPG)

On 1 October, Kiwi Property announced the purchase of 385 Mt Wellington Highway for $27.5 million. The 7144 sqm property will be procured with vacant possession and is located adjacent to Sylvia Park Lifestyle in Auckland.

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The agreement is anticipated to be finalised on 24 June 2022.

KPG ended the day 0.87% in red to close at $1.145.

Vital Healthcare Property Trust (NZX:VHP)

Vital’s manager, NorthWest Healthcare Properties Management announced the opening of the $25 million unit purchase plan (UPP) on 19 October. The UPP is part of a $140-million capital raising plan, where VHP also aims to assume $115 million placement of new units.

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VHP announced Wednesday that 39,655,172 units had been allotted.

VHP ended the day 0.34% in green to close at $2.92.

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

Given the effect of the COVID-19 pandemic, Stride Group fared admirably in FY21. In the period, profit after tax from continuing activities increased to $132 million, up from a loss of $0.1 million in FY20.

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For the year ended 31 March 2021, the total cash dividend for its two groups, SPL and SIML, was 9.91cps. While keeping an eye on market circumstances, the Group intends to expand its investment management business.

SPG ended the day 0.82% in red to close at $2.43.

Bottom Line

New construction density guidelines aimed at increasing affordability are a big step forward, However, issues remain on viability and execution.

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