Western Australia developer Finbar to report lowest full-year profit in decade

Western Australia developer Finbar to report lowest full-year profit in decade
Western Australia developer Finbar to report lowest full-year profit in decade

The listed Western Australia developer Finbar will report its lowest full-year profit result in almost a decade, after revealing $13 million of impairments to commercial and residential investment property it owns in Perth and Karratha.

Finbar, which has a $1.84 billion pipeline of apartment projects mainly in Perth, anticipates a 23 per cent slump in operating profit in the year to June, down to $21 million compared with $27.4 million last year. 

After writedowns, Finbar's after-tax net profit will be $8 million, its lowest result since 2007.

While off-the-plan apartment sales remained strong – with the company finishing the year with a record $451 million of pre-sales, up 11 per cent on the previous fiscal year – the investment portfolio bore the brunt of the weaker office rental market in Perth and the collapse in rents and property values in the Pilbara mining region.

Western Australia’s leading apartment development company during FY16 settled 453 apartments with a combined sales value of $318 million across all wholly owned and joint venture projects.

The company has also finished the year with record presales of $451 million, an increase of 11 per cent from the previous year, and the largest year-end pre-sale contract level in the Company’s history.

Finbar Managing Director, Darren Pateman said the year had been a more subdued year with respect to property market activity in Western Australia however our projected result reflects a solid operating performance.

“Notwithstanding the softer local economic and market conditions, we expect to deliver a respectable operating profit finishing the year with a strong balance sheet with no residual debt on stock completed and held for sale.

"The biggest anticipated negative impact on our reported net profit will be the non-cash effects of the revaluations of Finbar property held for investment income purposes.

"Whilst our property occupancy rates are high and rents achieved are above market, the impact of a reduction in prevailing market rents State wide have had a negative impact on external valuations,” Mr Pateman said.

The portfolio, valued at about $120 million in February, comprises more than 7000 square metres of office space in East Perth and nearly 3000 sq m of office and about 8000 sq m of rental apartments at its Pelago complex in Karratha.

The company reported a "distinctly active market for completed stock" as Finbar anticipates good cash flow from the sale of completed stock held for sale and is earmarked for redeployment into FY2017 project commencements at Aire Apartments in West Perth and Civic Heart in South Perth.

Finbar has a $1.84 billion project pipeline with projects currently under construction including, Aurelia in South Perth, Concerto in East Perth, and Motive in West Leederville.

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