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Menzies takes on second project

PROPERTY developer Menzies Court is to undertake a major inner city property development called Karrinyup Lakes on fifty-four hectares of former market gardens.

Just five minutes north of the Perth CBD, the development will be the company’s first foray outside its land holding in Port Bouvard and is a bid by the company to seek other revenue streams.

Karrinyup Lakes brings together about forty-five separate landholdings which, once approved, will yield 715 lots over a five year period, with a total land value of approximately $140 million.

Menzies Court will be the largest shareholder in the development which is being undertaken in joint venture with private investors.

The company will also act as project and financial manager and selling agent.

The announcement coincided with Menzies Court half year results for the period to 30 December, which showed an after tax profit of $1.68 million from its Port Bouvard project near Mandurah.

Menzies Court executive chairman and managing director Ross Neumann said the result foreshadowed a strong full year profit of more than $11 million.

The half year profit result was more than $200,000 above the profit of the same period last year. However, both this news and the announcement of the Karrinyup Lakes development failed to spark the interest of dot.com-mesmerised investors.

The share price has remained unchanged, hovering at around 17 cents with low volumes being traded.

Menzies Court became involved in Port Bouvard in May 1998 when it took two options worth $13 million over the troubled project held by Wannanup Development Nominees and the Wannanup Development Trust, which were placed under receivership.

In the six years WDN and WDT had held the land, only 120 lots were sold.

About 200 lots have been sold in the past twenty-one months under the direction of Mr Neumann.

When Menzies Court took the project on, it started from scratch and redesigned the whole project.

A big reason for the company’s success stemmed from re-targeting the project to the wealthier baby boomer and making the blocks smaller.

The company is ranked as the eighty-second largest WA-listed company in the latest Business News Book of Lists.

Mr Neumann told Business News he believed the company was grossly undervalued, even without taking into account the profit and development announcements.

“The asset backing per share is about 32 cents and we are currently trading at half that,” he said.

Mr Neumann said one reason for the heavily discounted price was because Menzies was only a one project company. This new development should allay these concerns.

“We have great profits. Our industry standard price-to-earnings ratio is about eight times, we are about three times.

He said demand for lots at Port Bouvard remained strong and the company was continuing to bring developments to the construction phase ahead of schedule.

He said the GST could cause a general slowdown in the property industry, but felt the market which Menzies was targeting would not be affected as much as the general market.

Stage four of Port Bouvard, the biggest development yet undertaken at the site, will be complete by the end of April.

“The centrepiece will be the new Bouvard Island which is an innovative development that brings the best aspects of modern ‘Riviera on the Mediterranean’ design and lifestyle to WA to create a unique island community,” Mr Neumann said.

Marketing of Bouvard Island will commence in May. Stage three is currently 65 per cent sold while stages one and two are sold out.

Construction of an eighteen-hole golf course will begin in April.

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