Daily ShareChat: Kiwi Income Property Trust

Kiwi Income Property Trust's $66 million, or 3.5%, drop in its portfolio valuation to $1.83 billion was slightly better than expected, says Forsyth Barr analyst Jeremy Simpson.

It "highlights the resilience of the retail portfolio in particular and indicates office valuations are stabilising," Simpson says.

Kiwi's major retail asset, the Sylvia Park shopping centre's value dropped 3.7%. If the partially redeveloped and expanded Plaza shopping centre in Palmerston North was excluded, the rest of the retail portfolio fell 3.6% on average.

The key driver of the fall in values of the office assets is a softer outlook on market rents with the most impacted being the Vero Centre, down 7.7%, and the National Bank Centre, down 8%.

"Kiwi has relatively defensive cashflows and it remains one of our preferred listed property vehicles with its focus on tightly-held prime retail and office assets and its long-term bank facilities," Simpson says.

The listed property sector is factoring in a further downturn and a Kiwi unit price at $1.05 implied a further 6% fall in property values, he says. Kiwi's net tangible asset backing is now $1.24 per unit.

"The portfolio remains sound with 98.5% occupancy, a weighted-average-lease-term of 4.2 years and gearing at 30%," he says.

BROKER CALL: Forsyth Barr rate Kiwi Income Property Trust as buy.

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