Delays in Dixon Homes new starts blamed on royal commission-induced credit showdown

Delays in Dixon Homes new starts blamed on royal commission-induced credit showdown
Delays in Dixon Homes new starts blamed on royal commission-induced credit showdown

The Brisbane-based, ASX-listed house and land package company Tamawood has cut its profit outlook for the year, after credit delays were holding back construction starts.

Tamawood advised shareholders its net profit after tax for the year to June would be down by $800,000, an 8.8% decline on the $9.1 million reported last year.

The company reported more than half of that the result of delays in construction resulted from customers who couldn't get confirmation of bank loan approvals.

The company makes around 85% of its sales in south-east Queensland, through the Dixon Homes brand.

It said the delays were the result of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

"It's quite a bit," Tamawood executive chairman Robert Lynch told The Australian Financial Review.

"It's just pushing out the profits into next year. It's a slowdown rather than anything else." 

Tamawood is Queensland's seventh-biggest builder with 598 home starts last year.

"the banks are being very careful about every loan," he said.

"The reason for that is they're going through and checking everything again. It's all due to nervousness created by the royal commission."

It also advised its setup costs for its Sydney expansion was above initial expectations.

Tamawood shares closed up 4¢, or 1%, on Friday at $4.04, pointing out there had not been a drop in its dividend over the past 18 years.

The company, listed on the ASX in 2000, has its head office in Brisbane’s south which was recently sold in a $8.5 million deal.

The property at 1821 Ipswich Road, Rocklea (pictured above), sold on an initial yield of 7.4%, with a head lease to Dixon Homes in a 10-year leaseback arrangement.

The property was sold by Rainrose Pty Ltd – an entity linked to Lev Mizikovsky, the founder of Tamawood Limited.

It acquired the Rocklea complex in 2012 for $5.4 million.

The property – once occupied by an indoor go-karting track – is positioned to enable staff to access Dixon Homes’ construction projects and estates throughout south-east Queensland.

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Royal Commission Rocklea

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