VILLA WORLD BUILDS ON FINANCIAL MUSCLE WITH NEW DEBT DEAL
Written on the 4 March 2015 by Nick Nichols
VILLA World has gained some extra financial muscle by wrapping up a new $180 million debt facility to help it capitalise on the housing boom in south-east Queensland and Victoria.
The club financing arrangement secured with ANZ and Westpac replaces a $155 million debt facility already in place with ANZ, which was increased from $110 million only a year ago.
Villa World managing director Craig Treasure (pictured) says the new facility was part of a "step change" for Villa World which has made a concerted effort to make the most of strong conditions in its key house and land markets.
"It follows on from our recent capital raising of more than $30 million and will allow the company to increase our construction output to meet increased buyer demand and also take advantage of acquisition opportunities that arise," he says.
Villa World, which has just reported a $13 million interim net profit and is targeting a $28.5 million full-year result, last week announced a $10.5 million land acquisition at Thornlands on Brisbane's bayside.
The site, located near its existing Waterline estate, is being developed as a premium land-only subdivision which is expected to yield 86 lots.
Villa World CFO Paulene Henderson says the new debt facility still maintains the company's low-risk financial strategy while allowing it to capitalise on acquisitions.
"We are pleased to continue our successful working relationship with ANZ while securing additional long-term funding with the introduction of Westpac," she says.
The bank funding combines with $31.7 million raised from investors in separate offers this year. This includes a $5 million share purchase plan to retail investors which closed heavily oversubscribed.
"Our capital management initiatives, including the recent capital raising and this increased debt facility, leave us well capitalised top acquire and develop projects," says Henderson.
"We are well placed to fund the company's growth objectives."
Villa World has previously announced its intention to deliver more than 1000 residential lots to the market a year. Based on the latest quarter, sales are currently tracking around 850 a year.
Under the terms of the new funding arrangements, the $130 million ANZ facility expires in October 2016 while Westpac's $30 million facility expires in March 2018.
Meanwhile, Villa World has announced an extension to settlement of the second tranche of the Eynesbury project in Melbourne to May 1. The settlement was originally due on March 1.
The $60 million sale of Eynesbury, in which Villa World has a 50 per cent interest, was announced last year as the company turned its attention to shorter-term residential projects in its key markets of Melbourne and south-east Queensland.
Author: Nick Nichols