Release Date: November 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kiwi Property Group Ltd (KWIPF, Financial) reported a 7% increase in net rental income to $95.3 million, showcasing strong demand and rental growth prospects.
- The company achieved a 4.2% increase in total leasing spreads, with new leases up by 5.6%, indicating strong rental growth.
- Foot traffic at Kiwi Property Group Ltd (KWIPF) centers increased by 1 million visits to 37.3 million, reflecting the attractiveness of their retail destinations.
- The company's investment in MSEE Property provides access to a deep pool of wholesale investors, potentially enhancing earnings growth.
- Kiwi Property Group Ltd (KWIPF) successfully reduced employment and admin expenses by 20%, demonstrating effective cost management.
Negative Points
- Retail sales at Kiwi Property Group Ltd (KWIPF) centers declined by 1.8%, although this was better than the national average decline of 3.8%.
- The office portfolio's valuation declined, primarily influenced by challenges within the sector, particularly at the Vera Center.
- Occupancy slightly decreased from 99.3% to 98.4%, mainly due to the departure of a major tenant at the Vera Center.
- The development cost of the Rosado project exceeded the initial budget by approximately $19 million, or around 9%.
- The current valuation of the Rosado development is below its cost, reflecting challenges in the rental market and rising interest rates.
Q & A Highlights
Q: Regarding the Mazi Property Investment, what are you actually buying with the $6.5 million? Is it a 50% interest in a management contract for $2 billion in assets under management?
A: Yes, the investment in Mazi Property is about providing us an additional capital source and the prospect for earnings growth over time. Mazi is a well-established business with a great track record and access to a deep pool of wholesale investors. We believe there's an opportunity for enhanced earnings for Kiwi Property from this relationship.
Q: Could you provide some commentary on why the investment will help retain key executive shareholders?
A: The key drivers of the business, including relationships and origination capability, are remaining with the business. This is more of a partnership than a buyout, aligning interests and cultures. We've worked closely with Mazi as a manager and see synergies in how we run our businesses.
Q: What are the funds provided to Mazi Property specifically being used for?
A: The funds are to assist Mazi with debt repayment and to set them up on a platform for future growth. It's about providing working capital and positioning them to grow as the economy improves.
Q: Regarding the build-to-rent (BTR) strategy, would future projects require partner funding, and what percentage would partners need to fund?
A: For the growth of the BTR asset class, we will need third-party capital. We expect the majority of the capital for future projects to come from third parties, as we've always intended.
Q: Can you provide guidance on leasing the vacated space at the Vero Center? Will there be any spending to partition vacated areas or replace lifts?
A: We are still leasing some of the vacated space and have leased three floors with two more to lease. We are undertaking an upgrade of the building, including lift replacement and improvements in high-profile locations like lobbies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
