We pulled 10 gems from the torrent of property news this week to keep you abreast of the most important insights affecting investors. 9-15 May 2020
In Property News This Week we focus on just that – property news this week – and resist the temptation to analyse the Goverment’s budget released yesterday. It featured huge numbers and addresses the immediate emergency, but lacks vision and can’t really be called transformational. Besides, it’s more about jobs than property, and has been covered extensively elsewhere.
Instead, we’ll stick to doing what we do best: keep you abreast of the most important insights affecting property investors.
- The Augusta rescue mission: a sign of how much Covid-19 has changed the world
- PFI announces 1.8 cent dividend and rent relief agreements
- Provincia negotiates Covid-19 rent relief, forecasts full 6% dividend
- ANZ drops home loan rate but hits savers with lower term deposit rates
- Westpac matches 2.99% and then goes long
- Housing shortage could be soon be over: BNZ
- AirBnB freeze bites deep
- NZ citizens migrating home in record numbers
- Landlord and family told they must wait until tenants decide to move out
- Tenant kicked out after threatening to blow up landlord’s truck
The Augusta rescue mission: a sign of how much Covid-19 has changed the world
In late January, Centuria was prepared to pay $2 per share to take over Augusta, valuing it at $180m, but withdrew its bid in March in the face of Augusta’s plunging share price.
Centuria is back for another go, but this time it’s getting a 25% stake for 55 cents a share.
There is no doubt this was a rescue mission – as Augusta chief executive Mark Francis put it on a call to investors and analysts on Monday: “You couldn’t have written a script that would have affected us more.”
Last month Augusta forfeited a $4.5 million deposit when it had to abandon its purchase of Albany Lifestyle Centre.
Augusta also negotiated a deferred settlement date on the other property it had under contract, the Anglesea Medical Centre, until 30 September. The purchase price remains the same at $55 million, and the deposit has been released to the vendor.
Augusta is now hoping to syndicate the medical centre in time to meet the new settlement date. If it fails to settle, it can still lose another $4.49 million comprising the $2.75 million deposit already paid plus $1.74 million for failure to settle.
Article link (paywalled)
PFI announces 1.8 cent dividend and rent relief agreements
Property for Industry announced a first quarter dividend of 1.8c per share last week, along with a number of rent agreements with tenants to help them grapple with Covid-19 restrictions.
Chief executive Simon Woodhams said the company had agreed a range of solutions on a case-by-case basis, including abatement of a proportion of rent for several tenants.
“Rent deferrals have been agreed with other tenants and, in some cases, discussions have been combined into wider lease discussions.”
Woodhams expected the discussions to continue throughout much of 2020, and that they are “still not yet in a position to quantify the impact of the Covid-19 virus on PFI’s 2020 earnings”.
Provincia negotiates Covid-19 rent relief, forecasts full 6% dividend
The impact of the Covid-19 pandemic on Provincia Property Fund has not been dramatic, leaving it as one of the few funds to forecast no change on its previously forecasted pre-tax cash yield target of 6% p.a. for the year to 31 March 2021.
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ANZ drops home loan rate but hits savers with lower term deposit rates
ANZ has matched Kiwibank and ASB with a 2.99% home loan rate. Their new 1-year fixed ‘special’ offer is now 2.99%, a reduction of -6 basis points. ANZ also reduced its 18-month rate by -29 bps from a previously uncompetitive level, down to 3.20% and also cut -10 bps from its 2-year fixed rate, taking that rate down to 3.25%.
At the same time, ANZ has taken a knife to term deposit offers, dropping almost all rates from 60 days to 18 months by -15 bps. The exception in this bracket is its 1-year rate which has been cut by -20 bps. Smaller cuts apply to two and three year terms.
Westpac matches 2.99% and then goes long
Now Westpac has announced a 2.99% rate for a 2-year fixed ‘special’ home loan rate. That matches ASB for a 2-year term.
But Westpac has staked out a competitive position for fixed term rates that are longer than two years, with the lowest fixed rates of any main bank for all terms out to five years.
In fact, Westpac’s five year rate is a massive -126 bps lower than the equivalent ANZ rate. And it is -30 bps lower than their closest rivals, ASB and BNZ, for a 5-year term
Housing shortage could be soon be over: BNZ
BNZ has sounded alarm for the residential construction industry, saying house prices are likely to fall 12%.
Head of research Stephen Toplis said the bank was very unsure construction would be the economic saviour people were hoping for, given the big obstacles in its way, the biggest being unemployment, affecting people’s ability to borrow..
The bank is forecasting 200,000 people to be out of work by the end of the year, and it would take until late 2022 before employment returned to pre-Covid levels.
Other obstacles affecting housing demand are lower population growth, weaker house prices and a freeing up of AirBnB properties. With tourism on hold, more AirBnB properties would hit the market, boosting the housing supply.
AirBnB freeze bites deep
Barfoot & Thompson agent Cam Paterson is marketing a large, stately building with 37 rooms that is currently being run as an AirBnB.
The building sits on a 1,949m² corner site with three frontages and flexible Mixed Use zoning to 21 metres. Auckland Grammar School, St Peter’s College and Newmarket shopping precinct are all within easy walking distance.
COMMENT: I can only imagine the pain of having a mortgage and 37 empty AirBnB rooms, and having to sell such a trophy property.
NZ citizens migrating home in record numbers
New Zealand citizens are returning to, and staying in, New Zealand in record numbers, as the COVID-19 pandemic spreads, Stats NZ said today.
Annual migrant arrivals of New Zealand citizens are provisionally estimated at 42,800 for the year ended March 2020, with almost half of these arriving between December 2019 and March 2020. This is the highest annual number on record.
Annual migrant departures of New Zealand citizens are provisionally estimated at 35,700 for the year ended March 2020. This is well below the annual average of 52,800 since 2001.
“In recent months, more New Zealand citizens than usual have migrated home, for a number of reasons, including possibly seeing New Zealand as a safe haven,” population insights senior manager Brooke Theyers said.
COMMENT: The same thing happened after the September 11 attacks, following which Auckland’s property market took off. Who knows?
Landlord and family told they must wait until tenants decide to move out
A young Auckland family are having to pay for accommodation on top of their mortgage as new tenancy rules mean tenants decide when they move out of their home.
The family returned from Australia just over a week before the lockdown, planning to move into their home in early April, having given notice to their tenants in February. The tenants responded, accepting the move-out date of April 9.
But new legislation that meant tenants could not be asked to move out during lockdown, unless certain criteria were met, changed all of that. Under the new legislation, unless the parties agreed, tenants could not be asked to leave unless there were rent arrears of at least 60 days and proven “anti-social behaviour”.
The Tenancy Tribunal said it was a “difficult situation” for the landlord and his family – who say they are paying about $1400 a week for temporary accommodation and furniture storage fees – but due to the legislation changes there was nothing it could do.
Tenant kicked out after threatening to blow up landlord’s truck
A Te Aroha tenant has been kicked out of her rental after threatening to push her landlord down stairs and blow up their truck.
The property, one of 6 tightly-located flats owned by the landlord, was rented to a woman and her two children, who moved into the property in January. However, a friend of the tenant was bailed to live there and later, a man also came to live at the property.
The tenant was issued a 42-day termination notice on March 3 after a slew of antisocial behaviour, according to a Tenancy Tribunal decision.
This included neighbours complaining about abusive language, loud music and noise from the flat, an elderly tenant from the block of flats getting in a fight with the woman after complaining about the noise, and a fight between the tenant, her friend and another person, which involved a baseball bat.
Neighbours continuously complained to police and noise control about disturbances, abusive language and breaches of the lockdown rules. They also complained about a visitor bringing an unrestrained dog to the premises and the tenant’s visitors trespassing onto other properties and looking into windows. In one incident the visitor entered a neighbour’s house.
When the termination notice was given the tenant threatened to hit her landlord in the face, push her down the stairs and blow up her truck.
The Tenancy Tribunal told her to leave the unit by midnight on Tuesday 5 May and pay the landlord $1,140.44.
COMMENT: Well done on your Tenancy Tribunal win, but good luck recovering the money!
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