Paul Keane's picture
Paul Keane

Property Heavyweights continue to expand Portfolios

The need to secure and increase Property portfolios was never more apparent than in the past week when Augusta Capital and Kiwi Property Group went head to head in an all-out attempt to secure ownership of the relatively small NPT property company. I remember the days not so long ago that one could buy shares in NPT for just a few cents. This latest tussle for ownership saw the share price reach 62 cents this past week. This is not a bad deal for investors who have languished in the wings hoping for better days, for years.

The tussle between Augusta and Kiwi came to a head this week with the former coming out the winner. NPT therefore will now be effectively part of the Augusta stable, with Augusta managing the Property portfolio it seems. Meantime, as part of the change, the Chairman and one other Director of the NPT sitting Board have been replaced with others of Augusta choosing.

The management of NPT will be watched with interest by its shareholders.

Augusta has stated that the changes will benefit shareholders and improve the asset management. Augusta has certainly come a long way in recent years, from a fledging Property company to a major player in the industry. Augusta Funds Management Limited just last week offered the market 1670 of $50,000 each investment units in the new Mercury Head Office in Newmarket Auckland. The syndication offers investors a 7% PA pre-tax return on their minimum investment of $50,000.

It is apparent that Augusta are now boxing with the Heavyweights in the industry, with a desire it seems to go for the big punch quickly rather than dance around the ring throwing jabs.

The new association with NPT suggests that this Company's future will undergo some change, particularly in light of the new aggressive property team running the Board. Investors should be in for an interesting ride, and we can expect more of the same as the Property Market becomes more intense, and competition for property in Auckland continues to remain competitive. It is probably inevitable that syndication intensifies for the Group overall as investors become more accustomed to this form of property investment, and the Augusta reputation for pulling off significant Syndications strengthens. 

The test will be, however, to retain a 7% net return for investors over time.

As inflation increases and returns harden, it is likely that returns will fluctuate and change over time. Meantime syndication driven by higher than normal returns from other investments, is apparently a sought after investment commodity.

by Paul Keane, director

Sharewatch | Restaurant Brands

Restaurant Brands has dished up another tasty result, with sales rising 28.3% to $497.2 million in the last year, and profits up 7.8% to $26 million.

The company has long been the New Zealand operator of KFC, Starbucks and Pizza Hut, with Carl’s Jr. a more recent addition. However, in the last year Restaurant Brands has gone international, buying a chain of KFC restaurants in Australia and Pizza Hut and Taco Bell in Hawaii and Guam.

In New Zealand, same-store sales rose for all chains except Carl’s Jr. KFC New Zealand remains the flagship chain, with sales of $296.5 million and EBITDA of $61 million. By comparison, the other three NZ businesses made EBITDA of $10 million, a fraction of KFC’s profits. Carl’s Jr. has a way to go before it can make a meaningful contribution.

Store revitalisation has been a huge part of KFC’s success. Restaurant Brands note that over 10 years, they’ve spent $100 million refreshing every store in the network. Sales have grown from $172 million sales in 2006 to $296.5 million today, with EBITDA going from less than $30 million in 2006 to over $61 million today.

In the Press

Local media highlights 19 Apr - 26 Apr 2017

17 per cent Auckland building inflation raises Labour's ire

Auckland building costs rose 17 per cent in the past year compared only 7 per cent nationally, a trend Labour's Andrew Little says illustrates a dire situation.
Using Statistics NZ material, Little said Auckland building consent costs rose from $1846/sq m in the year to March 2016 to $2153/sq m in the latest March year. That compares to the national rise from $1812/sq m to $1946/sq m, he said pointing to the official data.
(Source: NZ Herald)

Christchurch may get free carparking to bring people back into the CBD

Free car parking in the weekends is being investigated in a bid to bring more people back into Christchurch's central city.The council is looking into whether free car parking could be offered on the weekends in the central city as an enticement.City council transport operations manager Aaron Haymes said it was considering temporary free parking, but it had not made a final decision.

(Source: Christchurch Star)

We love Kiwi-owned banks, Consumer NZ survey shows

A greater proportion of customers with locally-owned banks believe they're being paid "competitive" interest on their deposits than do customers of their Australian-owned rivals.
People who bank with TSB, Kiwibank or the Co-operative Bank are also far less likely to say they're considering switching bank.These are the findings of a Consumer NZ survey of bank satisfaction which has led the consumer watchdog to give the three banks a joint "People's Choice" award.
(Source: Stuff)

New $3m plan for Dunedin's Cadbury plant

Mondelez International has unveiled its concepts for the $3 million redevelopment of Cadbury World in Dunedin.
While the factory will close early next year, the tourist attraction will expand into the factory's old dairy building, a site five times as big as the present Cadbury World.

(Source: NZ Herald)

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