Estate agent John McGrath considers ASX float
The high-profile real estate agent John McGrath is considering a public float of his 61 office estate agency network.
Discussions had taken place with JPMorgan on an initial public offering of the McGrath Estate Agents business, according to The Australian, but were at a very early stage.
Its chief operating officer Geoff Lucas confirmed the group was intent on considering all options.
"Listing is just one of several options that the McGrath Board is exploring and yet to determine as the company continues its expansion," he said.
Earlier scoping did not eventuate in any float after having been mooted at least twice over the past two decades or so. Property Observer has also heard suggestions that McGrath had also been considering selling equity after an approach from an international property agency.
John McGrath began his career at John O'Brien's Goodhope Realty agency in Paddington in the mid-1980s, which became McGrath Goodhope in 1988.
Some colleagues remain within the group whose website reported annual residential sales turnover of $10.1 billion. The recent annual tally was from 10,574 sales with some 3,334 properties at $1 million or more.
Its most recent official annual report, for the 2012-13 financial year indicated a doubling in profit after providing for income tax to $4,524,301, up from 2011-12 which had a $2,248,459 profit.
Dividends totaling $1,710,000 were declared and paid during the 2012-13 year.
During the 2012-13 year the group expanded its office network to 53 including 45 franchise offices with over $7 billion in residential sales volumes from 7,870 transactions.
The group is chaired by Wendy McCarthy, the executive director of McCarthy Management Pty Limited and founder of McCarthy Mentoring.
The other independent director is Cass O'Connor, a corporate advisor, private equity investor and equities research analyst currently running her own advisory and investment firm. She has previously been a senior advisor with Carnegie, Wylie & Company (now Lazard Australia); dxecutive director with Goldman Sachs Australia LLC; director of Turnbull & Partners Limited and equities research analyst with Bain & Company (now Deutsche Bank).
Over recent years the group has bought rival businesses and rent rolls.
In May 2012, McGrath acquired the sales and rent roll and business of Sarah Lorden Real Estate Pty Limited.
In the same month the company acquired the rent roll business of IC Property Group International Pty Limited, while in December of the same year, McGrath acquired the rent roll businesses of Sellit Investments Pty Ltd and Julia Lerner.
McGrath Limited has bank facilities totalling $7,687,108 with five fully drawn advance facilities - starting with a $2,343,596 facility repayable by March 2017.
Before any float McGrath will need to conclude a serious payroll dispute with the New South Wales Office of State Revenue (OSR) which issued payroll tax assessment notices to McGrath Sales Proprietary Limited in August last year.
The assessments relate to commission income received by conjunction agents during the period 1 July 2007 to 30 June 2012.
McGrath has lodged an objection to the assessments with the OSR in September 2013.
The total amount being disputed is $6,072,810 inclusive of payroll tax, interest and penalty tax.
The directors believe that McGrath Sales Proprietary Limited has no payroll tax obligations, and intends to further challenge the assessments and any future assessments if the objection is dismissed.
The company annual report noted the OSR had not issued a payroll tax assessment notice for the period 1 July 2012 to 30 June 2013 to McGrath Sales Proprietory Limited.