Properties with an eye to the future 

Our investment portfolios are not completely immune to the impact of Covid-19, and noticeably any funds exposed to the retail sector did suffer.

Our investment portfolios are not completely immune to the impact of Covid-19, and noticeably any funds exposed to the retail sector did suffer. After all, during lockdowns nobody can go shopping. In the USA and Australia many retail brands have gone to the wall. Kiwi Property Group who own Sylvia Park Mall and The Base in Hamilton as their flagship retail properties, also took a blow on the share market. In their recent announcement to the stock exchange, Linda Trainer, Kiwi Property GM Asset Management, says the solid post-lockdown June 2020 trading performance (up on this time last year), was encouraging, and reflects a solid bounce back compared to other retail centres, though she warns that much will still depend on New Zealand’s overall economic performance.

“For now, sales are strong,”

she says. She also points out that Kiwi Property Group has a portfolio with a strengthening non-retail exposure. In contrast, another holding in our portfolios is Goodman Property Group which delivered a stellar performance due to owning light industrial property which fared better than retail. Recently the Stuart Carlyon team was invited to a tour of Goodman’s industrial properties in south and west Auckland. Goodman’s focus on logistics companies meant business as usual during the lockdown. Tenants include DHL and NZ Post (kept busy delivering things) to Cottonsoft toilet paper; a product that did very nicely during the pandemic rush. Highbrook Business Park is their beautifully landscaped flagship development where companies such as OfficeMax are happy to have their head office as part of their warehouses. Innovation at older sites caught our eye too. Goodman worked with NZ logistics company Coda (owned by Fonterra and Port of Tauranga) to develop a freight hub integrated with rail sidings. Here up to 300 container loads are unloaded and reloaded between trucks and trains inside modern warehouses. The design obviates the need for excess use of trucks, saving 11,300 truck journeys per annum and around 1.5 million litres of fuel each year.  The new freight hub, located in Otahuhu, incorporates energy efficient features such as LED lights, power check metering and efficient heating and cooling systems, as well as water efficient fittings. The site has quadrupled in size since 2016. 

ESG – an important ingredient of good business 

It is encouraging to see businesses like Goodman Property talking about the bundle of Environmental, Social and Governance (ESG) considerations as part of their strategy. We fully support these initiatives because they have a beneficial impact on risk as well as return. Stronger governance results in less risk while lower energy consumption and reduced waste generation makes simple economic sense. A high ESG rating indicates a stronger degree of future-proofing. In their announcement Kiwi did highlight that it

“is the highest rated New Zealand company within the CDP (Carbon Disclosure Project) and is a member of FTSE4 Good, a series of benchmark and tradable indices for ESG (Environmental, Social and Governance) investors.”

Kiwi has achieved a 50% reduction in CO 2 emissions vs 2012 baseline.  We applaud next-generation properties that reduce energy and CO 2 waste. Most certainly they will outperform their older generation counterparts.