Villa World cements Gold Coast presence with $30 million acquisiton

Continued strong demand for new housing in the burgeoning Brisbane-Gold Coast corridor is expected to reap returns for leading residential development company Villa World.The company today confirmed it had secured 25-hectares of residential-zoned land in the northern Gold Coast suburb of Arundel and plans to deliver a mix of new homes and townhouses.The current development approval is for up to 484 dwellings. The company will consider a range of design options before finalising the dwelling yield and product mix for the development.The $30.7 million purchase is among Villa World's largest acquisitions and part of an expected $135-$150 million forecast spend during FY16 on replenishing and expanding its project pipeline.Villa World managing director and chief executive officer Craig Treasure said the size and location of the Arundel site would make it a keystone development among the company's 20 current projects and added further strength to its portfolio in south- east Queensland.With the final stage of its successful Parkside estate, at Coomera, now released for sale, Villa World expects to quickly bring the Arundel development to the residential market and cater for both owner-occupier and domestic investment buyers.The Arundel parcel is vacant, semi-cleared farm land, formerly owned by the O'Brien family for several generations.Mr Treasure said Villa World would offer affordable to mid-priced homes and townhouses at Arundel to cater for a diversifying market."This land has been on the market for more than five years and we're very pleased to have finally bought it," he said."We now have more than double the number of lots in our project pipeline compared to two years ago, and in strategic growth locations."Villa World is well-positioned to support its sustainable growth strategy, having recapitalised and recently secured even greater flexibility though a long-date, staggered maturity debt deal with one of its financiers, ANZ.Strong operating cash flows, as well as the $31.7 million capital raising in January 2015 enabled Villa World to reinvest $102 million in value accretive projects in FY15, and support the company's ongoing capital management strategy to build future earnings and capitalise on market opportunities, such as the Arundel acquisition.The land parcel at Greenacre Drive, Arundel, is less than 10 kilometres from Southport, close to the Pacific Motorway, bus and rail transport.Mr Treasure said continued demand for new housing in the Gold Coast-Brisbane corridor, along with the close proximity to retail, commercial and community services would ensure strong sales at Arundel.As at 30 June 2015, Villa World's portfolio included 5,191 lots, representing approximately five years of sales.It reported an impressive $25.6 million profit after tax for FY15, as well as $134.1 million worth of sales contracts carried forward to FY16. The company has maintained a prudent gearing level (16.9% at 30 June 2015), which is expected to sit within the 15-30% range going forward.Villa World started building homes for Australian families back in 1986 and has grown to become one of the country's leading residential development companies.The company expects to celebrate its 30th year in business with a strong before tax profit of $40.5 million, subject to continued favourable market conditions.