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Kiwi Income Property Trust, New Zealand's biggest real estate investment trust, led gains in property shares after the Government changed a tax law that makes the trusts more attractive.
Shares of Auckland-based Kiwi Income closed up 10 cents, or 7.1 per cent, to a record $1.50 yesterday.
The changes, approved by Parliament on Wednesday, cap the rate investors in the trusts can be taxed at 33 per cent, the same as for individuals, and removes the requirement to pay more tax on rental income and capital gains.
An index of 10 New Zealand property stocks surged 5.3 per cent yesterday, outpacing a 0.5 per cent gain in the All Ordinaries Index.
The changes created a level playing field for savings investment, said Gavin Parker, chief financial officer at Kiwi Income. Investors in residential real estate can now consider other properties "without tax being a factor in their decision", he said.
AMP NZ Office Trust, the nation's second-largest publicly traded property investor, rose 5 cents, or 4.3 per cent, to a record $1.22. Third-ranked ING Property Trust gained 4 cents, or 3.4 per cent, to $1.21.
Paul Robertshawe, who helps manage the equivalent of $692 million at Tower Asset Management, said the decision "biases the investment market in favour of property" and may lead to the creation of more trusts.
AMP NZ Office on Wednesday said it raised $40 million selling shares to fund the purchase of an office tower in central Wellington. The sale closed early after "very strong support".
- BLOOMBERG
