Cedar Woods Properties snares 20.2-hectare site directly adjacent to its best-selling project Ariella in Brabham at a purchase consideration of $28.25 million. The acquisition sets the company aside in the real estate industry with the expanded footprints in Western Australian land holdings.
The announcement came late in the evening after the market closed on Wednesday. Brabham located in Western Australia has been a high performing area with relatively low supply and robust and consistent demand mainly due to the north-east growth corridor of the Perth metropolitan area.
Cedar Woods Properties Limited (ASX: CWP
) told that the land is zoned urban and has been acquired with payment on deferred terms and settlement in July 2019 from private landowners Minx Pty Ltd and West Swan Pty Ltd.
On the financial front, the acquisition is expected to be earnings accretive from Fiscal 2021 while the property is estimated to yield approximately 380 lots. The location of the property marks the proximity to major transport routes via Lord Street which is expected to appeal primarily to first and second home buyers.
Cedar Woods’ Western Australian State Manager, Ben Rosser, said the purchase was consistent with the company’s history of counter-cyclical acquisitions and capitalised on significant benefits by being adjacent to an existing estate of the company.
The company further believes that the timing of this acquisition is ideal in terms of both the point in the property cycle and in enabling the extension of the highly successful Ariella project which outlines the company’s strongest performing in a national portfolio of 34 developments.
Cedar’s Ariella Project includes 490 lots in north-east growth corridor with the price range of $175,000 - $290,000. The company witnessed a continued strong growth while the construction of stages 1 to 6 is complete and stage 7 commenced in February 2019.
Across the entire Western Australia region, the company owns 15 projects and more than 5,700 lots or dwellings. The projects cater to a range of buyer types including corporates and home buyers. This purchase will reportedly enable the realisation of significant efficiencies that would not be achieved if the land had been purchased as a stand-alone parcel.
For Fiscal 2019, the company expects low-interest rates, population growth & government incentives will strengthen demand in the market despite the subdued market conditions. Cedar further expects a strong uplift in profit in Fiscal 2019 and beyond due to its long pipeline of quality projects and the ongoing development programs.
Mr Rosser said Cedar Woods is actively pursuing well-located sites and the creation of quality development and community outcomes. More importantly, it has a strong balance sheet with ample capacity to fund new acquisitions and existing projects and is on track of evaluating both land and built-form opportunities across multiple states.
In today’s trading session, CWP
stock dipped 0.926% to last trade at $5.350 on 28 March 2019. Over the past 12 months, the stock has declined by 10.00% despite a positive price change of 9.63% in the past three months.
Also Read: Cedar Woods Releases its Half Year Results for FY 2019
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