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Last week AVID Property Group and Villa World tied the knot, establishing the pairing as one of the top 10 land developers in the country.
The $410 million acquisition of Villa World by AVID, completed last week, will see AVID's portfolio increase from 10 to 37 projects and more than 12,000 residential lots, securing a gross revenue pipeline of $4.7 billion.
The two businesses will continue to operate under both brand names, but AVID CEO Cameron Holt has risen to lead the merged entity.
"All of our leaders share a deep passion for their teams, their customers and for driving quality and innovation, which will support this exciting phase," says Holt.
"Right now, it's 'business as usual' for all teams as we come together - the only difference being that we'll be larger, stronger and provide a greater offering to our customers."
Business News Australia spoke with Holt about the merger, the group's plans for the futue, and how optimistic he is about the Australian residential property market.
Can you talk us through the acquisition process - how did you determine the acquisition of Villa World was the best route for AVID to take?
The move to acquire Villa World was a strategic one where AVID saw the opportunity to acquire a business with a strong staff complement, assets in production, solid pre-sales and early cash and EBITDA - Villa World and AVID are both complementary businesses with recognised brands and market-leading technical and service offerings.
Acquiring Villa World also fell neatly into AVID's growth strategy, a focus of which is to expand our residential portfolio and geographic footprint across Australia's eastern seaboard.
Finally, when thinking about the two companies, this move made sense from a culture-fit perspective as both businesses share a deep passion for their customers, quality and innovation.
The group's pipeline is pretty monumental but I can imagine it's just the start - how will the synergy of these two companies allow AVID to take the next step?
The pipeline has grown significantly - AVID and Villa World's portfolio now includes 37 projects; more than 12,000 residential lots and we've secured a gross revenue pipeline of $4.7 billion.
This move now positions us amongst the top 10 land developers in Australia, and we are really excited by this. The Villa World assets are in different corridors to the AVID portfolio, so the projects are not competing.
Our new status positions us as a key national property industry contributor, and will allow us to offer more housing options for our customers by leveraging Villa World's successful housing platform across the merged business.
From a local business perspective, we'll also be able to combine locally operated businesses, with deep knowledge and understanding of the needs of our customers and the Australian marketplace.
Will the specialisation of a merged Villa/AVID continue to focus on housing projects/communities or does the now larger company intend to expand into other areas of property development?
The combined business will have greater scale and diversity in its product offering, with Villa World's portfolio including medium-density living and masterplanned communities.
AVID will continue to grow and focus on acquisitions in the residential sector but will still look at other opportunistic and related asset classes in key growth corridors.
Why did you decided to continue under two separate brands?
The AVID and Villa World brands both have significant presence in the market, so for the foreseeable future we will continue to operate existing communities across the business under their current brands.
What are some of the key problems being faced by the property industry right now and what are you doing to overcome them?
We are starting to see the recent headwinds in soft residential markets subside with increased enquiry and sales indicating improved conditions for residential property in the next phase of the cycle.
Recent easing of APRA Lending serviceability criteria and improved sentiment toward housing has helped home buyers back into the market but we are yet to see a strong resurgence of home buyers.
We are also continuing to see increased time and uncertainty in the development approval and developer contributions space which can heighten the risk around buying new assets.
AVID has a strategy to accelerate or decelerate projects to meet market conditions and address the cyclical nature of residential property.
AVID allocates considerable time and energy amongst industry associations to continue to press for streamlining of development approvals and increased certainty of developer contributions to enable a broad range of housing solutions.
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