02/09/2010 - 00:00

Developers, funds target growth in 2011

02/09/2010 - 00:00

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WA’s stockmarket-listed property investment firms and developers are predicting a bright outlook for the sector.

Developers, funds target growth in 2011

THE 2010 financial year was much kinder on property firms than the previous reporting period, during which the majority of developers and investment funds experienced large losses stemming from massive write-downs in asset valuations.

According to some firms’ results, the plummeting value of property assets that began during the global financial crisis appears to be steadying, and in some cases the strong company performance has lifted asset values.

Perth-based investment and development firm Aspen Group reported updated independent valuations of its entire portfolio had resulted in a 1 per cent downward revaluation.

Aspen Group, fresh from a senior management re-shuffle in June, reported a statutory profit after tax of $12.6 million for FY10, following on from the previous reporting period’s loss of $64.7 million.

The profit was buoyed by a solid result in Aspen’s investment property portfolio, which recorded a 14 per cent increase in net rental income.

Aspen was also served well by its Aspen Living residential subdivision division, which managing director Gavin Hawkins said benefited by the sector’s rebound to a ‘normalised’ residential property market.

“Aspen Living is well placed to further improve its earnings contributions in FY11, with over 60 per cent of forecast lot settlements secured by pre-sales, and each estate now better positioned to release new stock to meet growing market demand,” he said.

One of the nation’s largest residential land developers, Peet, reported a “pleasing” result in FY10, with the number of lots sold across the group’s owned and managed projects increasing by 7 per cent during the past year to 2,567 lots.

Peet’s fund management business also performed well, recording an increase of 20 per cent in EBITDA over the previous corresponding period.

“Peet has a clear strategic focus to further enhance its business model to deliver growth and we will achieve that growth by expanding our syndication platform nationally, improving our market share in existing and new growth corridors and focusing on our residential land development and funds management businesses,” Peet managing director Brendan Gore said in a statement.

Mr Gore said the developer would launch a new 1,500-lot residential syndicate near Yanchep later this month, as improving economic conditions fostered a solid recovery in residential property.

Perth-based residential land developer, Cedar Woods, also performed strongly over the financial year, announcing a net profit of $17.2 million, up 86 per cent.

Cedar Woods managing director Paul Sadleir said the company had performed strongly throughout what was ultimately a recovery period in the property sector.

He said the location of the company’s estates in growth corridors in northern and southern metropolitan Perth boosted profits, while a growing contribution from its Victorian projects helped drive the strong result.

“The result confirms that our business strategy remains appropriate during difficult economic conditions,” Mr Sadleir said.

“We are well positioned, with an excellent product range across two states and strong pre-sales in place for FY2011.”

Mr Sadleir also said Cedar Woods’ strong trading results had resulted in substantial improvements in asset values during the year.

Perth’s leading apartment developer, Finbar Group, announced a record profit of $23.6 million, a 24 per cent increase over the previous corresponding period.

Finbar reported a healthy construction pipeline into FY2011, while saying strong sales would support future revenue and profits.

Over the next financial year the firm is poised to deliver 275 residential apartments at its Edge and Times Two projects, which Finbar reports have already achieved high pre-sales figures.

Finbar executive chairman John Chan said the revenue from Times Two and Edge would underpin FY11 earnings, and produce similar profit levels and place the company in a position to achieve further earnings growth in FY12.

But the positive outlook for the sector was not exclusively the domain of profit-making firms, as even embattled developer Port Bouvard reported it was on track to enter a period of renewed growth, despite a net loss of $25.7 million during FY10.

In July, Port Bouvard completed a $60.2 million capital raising to reduce its debt with St George Bank, provide short-term working capital and $32.2 million for development of infrastructure and stage one of its flagship residential project, Point Grey, near Mandurah.

The firm expects strong sales at its recently completed Oceanique apartments project would provide significant revenue over the next 12-18 months, allowing Port Bouvard to reduce its $167 million debt to St Georges further.

 

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