Sylvia Park progress wins over Kiwi's doubters

Where once Sylvia Park was at the heart of a battle between powerful institutional investors and the developer, peace prevails.

The row was over the level of development risk Kiwi Income Property Trust was exposing investors to, its debt burden, whether it had a mandate to transform a listed investment vehicle into a developer, what the park might yield as an investment vehicle and how it could depress distributions.

These were all touchy points for institutions and the many retired investors who sacrifice unit price growth for quarterly cash distributions. They depended on the cash payouts and the shopping centre development seemed likely to threaten the level of return.

But now, a year on, the picture is different.

Institutional investor Simon Botherway, of Brook Asset Management, who led the opposition, is somewhat appeased.

"I had a tour of Sylvia Park a week or two ago and it seems impressive. There's a question-mark over retail spend and the capacity to ramp rents up but the project itself is now increasingly de-risked given the level of leasing."

Two analysts are more enthusiastic.

Jeremy Simpson, of Forsyth Barr, has praise Kiwi.

"Sylvia Park is now 70 per cent leased and has a reduced risk profile. Kiwi has confirmed 6220sq m of additional retail and office space and that stage two will open in the third quarter and is almost fully leased. We have upgraded our valuation from $1.29 to $1.33."

Forsyth Barr changed its advice to clients from holding Kiwi units to accumulating them.

Mark Lister, analyst at ABN Amro Craigs, admires Kiwi's work.

"The fact that leasing demand is strong and that the development is progressing on budget and on time is great."

Kiwi is trading around $1.33, up 16 per cent on January 2005.