News & Opinion

Whatever the weather ... we're prepared

18 June 2018

Whatever the weather ... we're prepared

 

Read this article and other stories from the country's leading investment and commercial minds in our free 24-page 2018 Commercial Property Thinkbook.

Read More in our Commercial Property ThinkBook

 

Diversification and a conservative approach to debt are just two of the ways PMG look to develop its portfolio to ensure it continues to perform well. CEO, Scott McKenzie shares his thoughts

Whatever the rhetoric of overseas economists and media here and abroad, it’s important to keep in mind that history shows only two out of ten global economic forecasts, get it right. 

There used to be a saying that ‘if the United States, Europe or Britain sneeze, New Zealand’s economy gets the full-blown flu.’   But leading up to and following the GFC in 2008, New Zealand’s economy fared better than these western economic giants.  I caution this by saying New Zealand is certainly not ‘immune’ to global events and there are signs of storm clouds gathering.

Looking at the map, the World Bank is still predicting 3.1% growth, the Federal Reserve Bank is increasing interests this year on the back of inflationary pressure and our own economy is forecast to grow over 3% this year, with our lowest unemployment rates of 4.4% currently in play.  These indicators all point to a strong economic picture.

Yet there is still a lot of debt out there; global liabilities are high.  In our view, it’s really a case of being aware of, and prepared for, a scattered economic pattern. 

Here’s how PMG has set itself up to thrive whatever the weather.

Diversified
We’ve evolved our portfolios by merging many of our single syndicates into funds and portfolios which are diversified by geography and by sector, with multiple properties and multiple tenants in each, providing greater diversification, lower risk, and improved liquidity.

Economies of scale
Our larger portfolios have given us greater economies of scale with our supply agreements and bank funding facilities. We’re also able and ready to acquire assets quickly when opportunities present themselves.

Nimble
Our fund structures provide greater autonomy to anticipate market changes and proactively adapt and ensure we can take advantage of the situation – see how we have evolved our properties recently with the rise of technology impacting the retail sector.

Active managers
Our actions to date have preserved and grown value for investors as the world changes and as all strong fund managers should, we undertake BAU (business as usual) hedging activity around interest rates – we’re never idle.

Business as usual
At PMG we’re invested alongside our investors – we have skin in the game too.  As investors, we would far rather be in a fund structure with conservative gearing across multiple properties and tenants than invested in a standalone property with a single tenant and a high borrowing ratio.

   "At PMG we're invested alongside our investors - we have skin in the game too"

Scott McKenzie, CEO & Director, Property Managers Group

 

Read this article and other stories from the country's leading investment and commercial minds in our free 24-page 2018 Commercial Property Thinkbook.

Read More in our Commercial Property ThinkBook