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Nathan Blackburne says Cedar Woods’ diversified offering has enabled it to ride through the tougher times. Photo: Gabriel Oliveira

Cedar Woods builds beyond Perth base

ANNIVERSARY SPECIAL: While half of Cedar Woods’ 30 projects are in its home state of WA, the company has taken opportunities in Victoria, Queensland and SA. This article is part of a special series to mark Business News' 25-year anniversary.

Perth national property developer Cedar Woods Properties was founded in 1987 and listed on the ASX seven years later.

In its 24 years as a listed entity, Cedar Woods has never failed to record a profit, nor failed to pay a dividend, which has helped make it a popular stock for retail investors.

The group has a reputation for tackling difficult and complex sites, starting with the state’s first canal development at Port Mandurah around the time of its listing.

Cedar Woods was managed at the time by major shareholder and current chairman William Hames, a qualified architect and town planner, whose property expertise helped guide the company through its early life.

Current managing director Nathan Blackburne comes from a well-known Western Australian property family and joined Cedar Woods in Victoria in 2001, after working for Blackburne Property Group in Perth and in the property sector in Melbourne.

He said the early projects in WA helped establish Cedar Woods as a company that was not afraid to tackle projects deemed too complicated by rival developers.

“The founders of our company had real vision with a parcel of land that they saw had significant potential for residential development, through a canal development,” Mr Blackburne told Business News.

“Land in that area was swamp-affected, and they are complex projects from an excavation and engineering point of view generally.

“Taking on those types of difficult projects became part of the DNA of our business and is what we have a reputation for.

“We are known for digging up high-quality opportunities in good locations that need a bit of vision and tenacity to realise.”

Cedar Woods has built a reputation for taking on complex projects, such as its canal developments in Mandurah.

In those early days, Cedar Woods was competing against the likes of Stan Perron (development business established in 1963), Satterley Property Group (established in 1980) and Peet (established in 1895 and listed on the ASX in 2004).

The BNiQ Search Engine has Cedar Woods at number six on the land developers’ list, behind more recent entrant Stockland Property Group, Peet, Satterley, Ellenbrook developer LWP Property Group and government agency LandCorp.

During its first decade in business, Cedar Woods focused its efforts on Perth’s southern suburbs, also expanding east, to Helena Valley.

“We built a portfolio on WA, predominantly land subdivision projects, although we did branch out and do some limited industrial subdivision in Balcatta about 13 years ago,” Mr Blackburne said.

The business then made its first move interstate, in 1997, securing a large piece of land from the federal Department of Defence the former Laverton airfield in Victoria, which has become one of the group’s flagship projects Williams Landing.

Similar to the Port Mandurah project in the early days of Cedar Woods, Williams Landing and its ongoing success has helped the group establish itself in Victoria.

“It is relatively close to the city, it is on a major public transport network serviced by both rail and a freeway, and just looking at an aerial map you could see it had enormous potential,” Mr Blackburne said.

“The company bought the site on the basis of an industrial subdivision but in the knowledge there was potentially significant upside to that.

“The state government and local council had their hearts set on the industrial, but it was clear to us from an urban planning and property perspective that there was a higher and better use for the site.

“It would have been grossly underutilised if it had been developed to accommodate 20 large sheds.

“We started to work up the plans for a new town development incorporating four residential neighbourhoods and a large-scale town centre.

“It’s fair to say it has been a solid contributor to the company since we first turned soil about 10 years ago.”

Cedar Woods has several smaller infill projects in Victoria, and has also expanded into Brisbane with two major projects and South Australia, where it has a current project at Glenside, just outside Adelaide’s CBD and a planned project near Port Adelaide.

The Williams Landing development in Victoria was Cedar Woods’ first project outside WA. 

Mr Blackburne said the early successful execution of projects on the east coast reinforced the company’s strategy of growing a national portfolio diversified by geography, product type, and price point.

“We are a truly national developer operating in four states, and in the past decade we have built up to 30 projects and a pipeline of 9,500 lots.

“That strategy has proven successful and significantly explains the strong and consistent return metrics that our business is delivering.”

The Cedar Woods share price 15 years ago sat at less than $1, but is now well north of $5.

“There are WA-focused development companies, but for us, that diversification is a key differentiator and has enabled us to ride through the tougher times,” Mr Blackburne said.

“It’s a testament to our business that 15 of our 30 projects are in WA, and we have still managed to deliver a record profit in seven of the last eight years.”

Cedar Woods remains bullish on the long-term prospects of WA based on renewed positivity in the mining and resources sector and continues to look for opportunities in its home state.

“The population is growing here, and business and consumer sentiment are at six-year highs,” Mr Blackburne said.

“The mining sector is undeniably on the improve and, significantly, Perth has an affordability advantage with the median house price being approximately half that of Sydney’s.

“We shouldn’t underestimate the sentiment, the power of a shift in sentiment.

“Western Australians have been sitting on the fence for some time in terms of property purchases and it won’t take much for the mood to swing in favour of the sector.

“There is widespread confidence that the market has bottomed, and at Cedar Woods we are confident the market will improve over the balance of FY19 and FY20.”

He said recent statistics showed growth of 10 per cent to 20 per cent in prices for blue chip inner western suburbs of Perth, which tend to be a lead indicator for more general house prices across Perth.

“We expect that to progressively flow out to the fringe where our business is mostly focused in Perth.”

Cedar Woods’ projects in South Australia, Victoria, and Queensland are mainly infill projects, which Mr Blackburne is keen to replicate in WA.

“Of our pipeline of 9,500 lots in the portfolio, 3,000 of that are built-form product, predominantly townhouses and apartments,” he said.

“The business has a deep understanding of delivering apartment, townhouse or built-form projects and we are in the process of importing those skills to WA and are actively seeking to acquire built-form projects here in the inner and middle suburbs.”

In this regard, Cedar Woods is keeping a close eye on opportunities that may arise from the government’s Metronet program.

“All of our infill projects in Victoria leverage off significant new infrastructure that the state government there has invested in, and that has served us very well as a company,” Mr Blackburne said.

“Part of our strategy generally with built-form project is to secure projects with a strong amenity or infrastructure story that we think will perform well in a range of market conditions.

“We see some opportunities out of Metronet, we think as a city’s population grows there becomes a greater emphasis on proximity to public transport and therefore property located close to mass transit facilities, such as a train station, becomes increasingly popular.

“Metronet and other infrastructure projects will open up opportunities for the property sector generally, but we need to be cautious on our expectations on the densities achievable on some of the outer elements of Metronet.”


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Share Price

Closing price for the last 90 trading days
Source: Morningstar

BN30 Index

Index = 100 as of 4 Jan 2016
Source: Morningstar

Total Shareholder Return as at 30/11/18

1 year TSR5 year TSR
136thImdex25%14%
306thCedar Woods Properties-1%0%
442ndMMA Offshore-20%-41%
565thSRG Global-39%2%
741 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

15/11/18
$18k Bought
09/11/18
$66k Bought
26/10/18
$5k Issued
Total value as at the date of the transaction
Source: Morningstar

Revenue

24th↑SRG Global$249.5m
25th↑Cedar Woods Properties$242.6m
27th↑Imdex$218.6m
28th↓MMA Offshore$200.9m
239 listed industrial companies ranked by revenue.
Source: Morningstar

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