Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZSA concerned Kiwi Property paying too much in dividends

By Jenny Ruth

June 14 (BusinessDesk) - The New Zealand Shareholders' Association says it is concerned that Kiwi Property Group is paying out more in dividends than it is taking in as cash.

When Kiwi reported its results last month, it said it would pay a final dividend of 3.475 cents per share on June 20 to those holding shares on June 5. That takes the annual per-share payout to 6.95 cents, up from 6.85 cents.

That’s 9 percent more than the 6.4 cents per share it reported in adjusted funds from operations, or AFFO.

The company is forecasting a 7.05 cents per share dividend for the current year, “absent material adverse events or unforeseen circumstances.”

NZSA says that as well as increasing the dividends for the year just gone, it is also raising the forecast payout for this year “despite lacking cash coverage.”

That means “dividends will require a degree of debt funding, at least until the Sylvia Park development is completed and fully contributes,” the group representing retail shareholders says.

Kiwi is in the middle of its $258 million expansion of the mixed-use shopping and offices complex at Sylvia Park which is due for completion in mid-2020.

“The company explained that it felt shareholders would like to see dividend streams smoothed, but, in our view, that is different to making increases without sufficient cash to meet the extra cost, particularly with a degree of uncertainty over future macro-economic activity,” NZSA says in its advice to members on how it will vote its proxies at Kiwi’s annual shareholders’ meeting on June 20.



Kiwi says the AFFO measure is commonly used by real estate entities to describe their underlying cash flows from operation in a particular year.

“As you may be aware, we recently disposed of two non-core properties – Majestic Centre in Wellington and North City in Porirua,” Kiwi told BusinessDesk.

“We are redeploying the proceeds from those asset sales into new development opportunities at Sylvia Park that offer better long-term returns for our shareholders,” it said.

“Those opportunities are ANZ Raranga – our new office building anchored by ANZ and IAG – and our Galleria retail expansion,” the company said.

“Understandably, the asset sales result in a temporary drop in earnings while the new developments come on stream,” it said.

“We have chosen to smooth the dividend during this transition period, rather than reduce it. We signalled this intent to our shareholders at our annual result in 2018 and noted that our intention was to grow our AFFO over the next couple of years (assisted by the income from the new developments) to cover our cash dividend. “

The shares were recently down 0.6 percent at $1.565, and have gained almost 15 percent so far this year.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Reference Group Proposal: Motorists, MTI Support Ban On Less Safe Car Imports

A proposal to ban some used car models from being imported into New Zealand is being welcomed by the Motor Industry Association, which says Japan's scraps are being sent here for waste disposal. More>>

ALSO:

Expenses Investigation: ANZ Boss Departs Under Cloud

Last month the bank said chief executive David Hisco was taking extended leave for health reasons. However, today it has said in addition to the health issues, the board was concerned about certain transactions after reviewing Mr Hisco's personal expenses. More>>

ALSO:

Wider Net Ban, Other Threats: Plan To Expand Protection For Maui And Hector’s Dolphins

The Government is taking action to expand and strengthen the protection for Māui and Hector’s dolphins with an updated plan to deal with threats to these native marine mammals. More>>

ALSO:

Fish & Game Support: Canterbury Officer Of Health Warns On Nitrates In Water

"Nitrate testing of 114 drinking water samples from across the Canterbury plains showed that more than half of them were above the level considered safe in the world's largest ever study on the impacts of nitrates in drinking water." More>>

ALSO: