"Dismal" Devine Limited attacked by shareholder for missing the housing boom
Devine’s second-largest shareholder Lyn Brazil has criticised the national property development company for not taking advantage of Australia’s booming property markets.
Lyn Brazil, who owns 9% of the listed residential developer, voted against Devine’s remuneration report at the company’s annual meeting in Brisbane on Wednesday.
But some of the most pointed criticism was directed at the largest shareholder, the contractor Leighton Holdings.
“As we all know with Leighton as majority shareholder they pull the strings, but they have been asleep at the wheel and let all this happen,” Mr Brazil reportedly said.
The company sells new homes mostly in South East Queensland, but is little known for its Victorian, South Australia and NSW ventures, having only had the one press release highlighting buyer opportunities this year, and three since last May on its website.
The Devine masterplanned communities across Melbourne include Eden Brook at Pakenham, Parks Edge at Cranbourne, Stonehill at Bacchus Marsh and Pennyroyal at Kurunjang. In Adelaide there is Orleana Waters, at Evanston Gardens.
Founded in 1983, Devine's apartment projects in Brisbane have seen 3,000 apartments valued at more than $1 billion sold since 1993, after its prior ownership and management by David Devine who left Devine Limited, which still bears his name, in 2010.
Sales at the 111-apartment project, DoubleOne3 located in the prestigious riverside suburb of Teneriffe, are due to be settled by in June.
Devine announced in late 2012 that it would re-enter the NSW market, after securing an option on an 86 dwelling, 5,900 square mete site in Turramurra, heralded as possibly its first project in NSW for nine years. But it was subsequently sold off as a development site. They have since bobbed up exchanging contracts on a 2.25 hectare site in Parramatta, expected to yield over 350 apartments.
Devine is proposing to build a $180 million staged development with several multi-storey buildings on Morton Street, Parramatta with an existing joint venture party. The project is expected to launch in January 2015 with construction to commence the following year.
As at 30 June 2013, Devine’s land and apartment development pipeline included the equivalent of 13,700 future dwellings.
Leighton, which owns 50.6%of Devine, had to provide a $50 million partial guarantee of Devine’s debt facility last year, after the Brisbane-based developer booked a loss and downgraded guidance.
“If we look at the opposing property development companies they are getting good profits,” the Australian Financial Review reported Brazil telling the annual general meeting
He said Devine's results that were “disappointing, dismal and damning”.
“I don’t have any inspiration or any confidence in the team, so from my point of view you should sell the company or sell the assets and give the capital back to shareholders,” Mr Brazil said.
Shares in Devine are tracing at 72¢, less than half its net tangible assets.
Devine chairman Peter Dransfield said he understood Mr Brazil’s views.
The company was now on track to deliver a profit before tax of between $7 million and $10 million for the full year ending December 2014.
The company had sold off $110 million in development sites, mostly in Brisbane, the Devine chief executive David Keir said. It sold a parcel of undeveloped land in North Brisbane for $14 million to private developer QM Properties this month. Last December Queensland property developer Sir John Pidgeon acquired Devine Limited’s Camelot site on Albert Street in the Brisbane central business district.
“Some challenges still remain in selected markets, with uncertain job security impacting on consumer confidence, and some regional markets currently enduring cyclical lows,” David Keir explained.
“We are carefully monitoring these areas and continuing investment is based on appropriate levels of pre-sales before construction commitment is made.”
Last year Morningstar’s Tony Sherlock blame the postcodes of Devine's property projects along with the difficulty of clearing backlogs, especially in stubborn pockets of negative equity, for its dire status.
Peter Dransfield has only been on the Devine board since April 2010 having previously held senior positions with Australand, Walker Corporation, Multiplex Group along with being the director of housing for the NSW Government.
Kier joined Devine as chief executive officer in March 2010 and was appointed managing director in April 2010 having previously been CEO of Delfin Lend Lease where he joined in 1994.
Devine’s board includes former Queensland Treasurer Terry Mackenroth who has been on the board since 2005..
The board saw two Leighton directors retire at the annual meeting, after seven years, replaced by another two Leighton directors, Ian Frost and Jeff Cummings.