AVJENNINGS is moving in a new direction with a chief executive and $200 million residential property fund.
AVJennings has appointed Peter Summers, previously the company’s chief operating officer, as the new CEO following the resignation of Louis Milkovits.
And Summers is also taking the traditional residential property developer, which last year branched into commercial property projects, into funds management with the launch of the AVJennings Residential Property Fund – an unlisted and closed-end vehicle with a target life of 10 years.
Summers said the AVJennings residential Property Fund will aim to raise between $150 million and $200 million of equity.
“The fund will also deliver to the company the capacity to acquire projects on behalf the fund, to take advantage of current market conditions including reducing interest rates and infrastructure levies, increased first home owners grant and reduced competition for assets.
“This will enable the company to reduce reliance on the multi-option facilities and result in smoother revenue streams with a greater portion accruing on a recurring basis,” he added.
AVJennings will own a cornerstone investment in the fund of 15% and will be able to co-invest in new projects acquired by the fund. The Fund will also be chaired by an independent chairman, the Hon. Craig Knowles, a former senior New South Wales Government Minister.
Meanwhile AVJennings has reported an interim after tax loss of $9.7 million for the six month period to December 2008 compared to an interim after tax profit of $6.1 million for the previous corresponding period. Revenue was $242.0 million compared to $265.4 million for the previous corresponding period.
The result includes an unrealised loss of $3.6 million (after tax) on interest rate hedging contracts.
But unlike its peers in the property sector, had no asset write downs. Summers said this was owed to the company’s conservative approach to acquisitions in prior years.
And the company’s main banking arrangement, the multi-option banking facilities, mature on September 2009. At December 2008, the funding available under these facilities which comprise bank overdraft, bank loans and a standby facility was $215 million of which $85 million remaining unutilised.
Summers said the company in the process of examining all areas of the business.
“The review is continuing and recent initiatives have already resulted in improvements to operations and reductions to cost structure. These will benefit the company in future periods, but restructuring costs have negatively impacted the first half and will do so in the second half of the financial year,” he continued.
Meanwhile AVJennings has promoted Mark Henesey-Smith to the role of chief operating officer of development. He was previously executive general manager, Queensland.
Australian Property Journal
