20/12/2007 - 15:24

Babcock takes half stake in PRM for $16.1m

20/12/2007 - 15:24


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Investment group Babcock & Brown has paid $16.1 million for a major stake in Steve Robertson's boutique residential development outfit PRM Property Holdings Pty Ltd.

Investment group Babcock & Brown has paid $16.1 million for a major stake in Steve Robertson's boutique residential development outfit PRM Property Holdings Pty Ltd.

Under the terms of the arrangement, Babcock & Brown Residential Land Partners Ltd will acquire a 50 per cent interest in PRM Property Holdings Pty Ltd for $12.8 million.

PRM has joint venture interests in four residential land sub-division projects in Forrestdale, Meve, Banksia Grove and Brennand Road in Dongara.

The PRM acquisition delivers BLP considerable scale and further portfolio diversity with lots on acquisition now totalling over 13,300 in Western Australia.

In addition, BLP will acquire a 60 per cent interest in PRM Property Group Pty Ltd (PRM Group) for $3.3 million, the development manager of the projects.

Following this acquisition BLP's gearing increases to 60 per cent, within the target gearing range of between 50-65 per cent of total assets.

BLP managing director Michael Balkin said he was extremely pleased to be in partnership with Steve Robertson, a Western Australian local and highly regarded developer who founded the company in 1998.

Mr Balkin said Mr Robertson's relationship with key stakeholders in the WA market, and his significant deal pipeline, combined with Babcock & Brown's significant experience in the real estate sector provided PRM with an opportunity to build on its strong platform.

"The fundamentals of the Western Australian property market remain strong. The state is benefiting from high net migration levels and significant public and private infrastructure spending," he said.

The Forrestdale and Dongara projects are in the final stages of the re-zoning process and together with the more mature projects will provide BLP with a WA Portfolio with a life of 10 years.

PRM is a fee for service business and comprises a small team of 8 property professionals with broad skills across all disciplines within the master-planned residential community spectrum.

Mr Balkin said the acquisition of a 60 per cent interest in the development manager, PRM Group, was the first of its kind for BLP and was consistent with its strategy of partnering with highly experienced developers with a track record in their chosen market.

PRM Group also provided BLP with an alternate income stream and a platform to expand its development management capabilities, he said.

PRM Group has exclusive development management rights over Meve, Dongara and Forrestdale and joint-development management rights with Walker Corporation on Banksia Grove.

"The purchase price for PRM Group has been determined on the basis of a discounted cash flow analysis of the forecast development management fees generated from the four existing PRM projects. There has been no goodwill factored into the purchase price and we are confident that this investment will generate strong returns over the life of the projects," Mr Balkin explained.


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