30/10/2017 - 13:10

Nicheliving targets growth via IPO

30/10/2017 - 13:10


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The planned listing of Nicheliving Holdings has provided a detailed insight into the state of the business and its future plans.

Nicheliving targets growth via IPO
Paul Bitdorf (left) and Ronnie Elhaj aim to take advantage of cheaper land prices backed by funds from the IPO to purchase and develop more of Perth’s infill sites. Photo: Attila Csaszar

The planned listing of Nicheliving Holdings has provided a detailed insight into the state of the business and its future plans. 

WESTERN Australian property company Nicheliving has launched the next stage of its growth strategy, this month announcing plans to raise up to $12 million and seek listing on the Australian Securities Exchange.

Since its inception in 2002, the business has managed 40 residential developments, specialising in affordable housing within infill locations across the Perth metropolitan area. It claims its current portfolio is valued at more than $400 million.

This includes eight active projects and a further four projects in the approvals phase – the largest number of developments Nicheliving has managed at any one time to date.

Founders, executive chairman Paul Bitdorf and managing director Ronnie Elhaj, told Business News the company’s product and vertically integrated business model had helped set it apart from competitors and carve a niche offering in the WA market.

“We look for tightly held areas often where there’s hardly any land available in that suburb with very little competition, and close to things like transport and schools; these areas we’ve found are in demand,” Mr Bitdorf said.

“It’s a very different model to going to the outskirts of Perth, or creating high-rise developments in the CBD.

“And as a company we’re not one dimensional; we have several sources of income.”

Nicheliving operates under a vertically integrated business model offering land development, construction, real estate sales, property management and financial services.

“It’s a very sustainable, self-generating machine that starts with acquisitions and generates workflow for the rest of the business,” Mr Elhaj said.

“A frustration over the years has been coming across sites and not being able to buy them.

“We have one key objective for the IPO and that’s to grow; it’s all about finding more development opportunities.”

The company has targeted the end of November for its ASX debut and intends to apply the funds largely towards the acquisition and development of infill locations in Perth.

Other objectives include exploring the use of off-site construction techniques, as well as several joint ventures with trades companies including plumbing, electrical and building supplies, to further support its suite of offerings.

Proceeds will also be used to strengthen the group’s balance sheet, which currently includes $5 million of debt and $160,000 of cash. If the minimum $5 million is raised, $2 million will be used to repay debt.

The prospectus shows that Nicheliving’s revenue has fallen from $95 million in FY15 to $29 million in FY17, and is forecast to jump to $51 million the current financial year.

The group incurred a $7.6 million loss in FY15 but has since traded in the black, with a net profit of $7.1 million in FY17 and a forecast of $10.7 million this year.

Projections are based on a 27 per cent increase in the number of land and apartment settlements, to 219, in FY18, as well 107 per cent growth in completed houses and apartments, to 141.

“Consistent with the projections for FY18, the number of new starts and completions are 50 per cent higher than FY17 figures,” Mr Elhaj said.

“We don’t feel as much pain as multi-million dollar companies; our market segment is okay, it’s not at the level that it was at 2014, but at a level where we can do good business.”

“We’re just coming into the upswing of the property cycle, so now is the time to buy sites.”

Mr Bitdorf said the business was not desperate for money. 

“The projects we currently have are fully financed; most in the stages of pre-sales,” he said.

“We’re raising capital to grow, and changing our status to a public company would help us deal with the next layer of capital institutions we don’t have access to today, and could help us deal with government (contracts).”

The company appointed CPS Capital Group as the lead manager to the IPO, a decision Mr Bitdorf said was due to an existing relationship and synergies between both companies, and its presence in the retail investor space.

A similar line of thinking has been applied to the selection of Nicheliving board, which does not have any independent directors.

“We will expand with people we hand pick to add value, not just putting bums on seats,” Mr Bitdorf said.

“They need to be aligned with our vision; we don’t want to do big greenfields developments, we’ve got a niche market and we want to stick to that.”

He said although expansion to the east coast was not out of the question, more immediate plans were to diversify Nicheliving’s affordable living offerings in Perth, with student accommodation and retirement living potential new markets.


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