The Agency again delays Top Level acquisition deal

The Agency again delays Top Level acquisition deal
The Agency again delays Top Level acquisition deal

The option held by Paul Nairdone's publicly listed Perth based estate agency to acquire the east coast Top Level estate agency has been extended yet again.

The managing director of The Agency says it remains "totally committed" to acquiring Top Level, though its plans to secure the burgeoning Bondi Beach based outfit appear hopeful with shares dropping to a record low in today's trade.

The elusive option was taken in January last year, as it envisaged having an combined estate agent of 600 sales representatives nationally.

But it told shareholders this week the agreement to buy the east coast business had been extended by another four months.

Top Level Real Estate, which trades as The Agency under a licence agreement, is run by high commission, ex-McGrath rebels led by Matt Lahood.

The sharemarket was told Agency Group Australia had "entered into an extension to the amended and restated binding option agreement."

It noted a "deed of variation has been entered into by Ausnet Real Estate Services and Top Level’s majority shareholders under which all parties have agreed the option agreement be extended for the period of four months from 11th June 2018 until on or before 5pm AEST on 11th October 2018."

Under the terms of the deed, the completion of a raising of no less than $10 million (a condition precedent under the option agreement) has been extended until 5pm AEST on 11th August 2018 or at a later date agreed to by all parties.

Its recent hopeful plans for a $10 million equity raising at 2¢ a share failed to get anywhere after The Agency parted ways with its Perth underwriter, CPS Capital Group, in April.

No replacement underwriter has since been announced.

"We're totally committed to getting this deal done," The Agency managing director Paul Niardone told The Australian Financial Review.

Its WA-based business generated total revenue of $13.5 million in the year to May with the east coast Top Level network bringing in $16.1 million. Its latest sharemarket advisory claims The Agency Group is "achieving its stated goal of being the fastest growing real estate brand nationally."

Their recent WA acquisition Sell Lease Property (SLP), acquired in March 2018, saw 115 properties settled and 324 listings for the two months to May 2018.

In May 2018, The Agency and Sell Lease Property combined ranked fifth in Western Australia for $ value and fourth in number of sale.

It has advised the company is closing in on claiming number one ranking in WA for number and value of sales when compared with the top groups in the state.

The Agency Group Australia, formerly Ausnet Financial ServicesLimited, has also announced it has acquired Inglewood Estate Agency, further expanding its reach in the Western Australian market.

The transaction adds 80 property managements to The Agency.

Inglewood Estate Agency principal Mark Jewell will join The Agency Group team, with over 30 years’ experience selling properties.

Established in 1960, Inglewood Real Estate is a longstanding family business. The purchase price of $436,180 will be paid in three payments over two year, the first instalment representing 80% of the total purchase consideration which was paid at settlement.

The Agency again delays Top Level acquisition deal

(Agency East Coast from April 1, 2017)

But it has recently borrowed $1.1 million in short-term funding (at annualised interest rate of 18 per cent) as working capital.

Niardone said the commercial loan, to be repaid in three months, would tide it over until the Top Level deal was sealed. 

The $1.1 million is being lent by a private lender, with Niardone declining to reveal the lender’s identity to The Australian.

The Agency real estate sales posted gross commission income of $7.55 million while SLP posted $1.5 million (March – May), totaling $9 million of commission income for YTD May 2018.

The Agency Property Management reported monthly income of $116,000 for May and added 96 new property managements.

Mortgage and Financial Solutions Australia posted a record month of $20 million in loan lodgments while the loan book grew 9.5% against a drop of 18% in the overall Western Australian lending market.

Commenting on the results, The Agency Managing Director Paul Niardone said these were "exceptional results" for its Western Australian operations, especially when considering the market is still down 1.8% in dwelling values to May 2018 and sales turnover, for the same period as last year, was down 5%.

"The numbers also demonstrate that the referral of clients into other business units is working.

"The results illustrate we have a proven model that is disrupting the traditional franchise model by giving power back to the real estate agent and providing a significant value proposition to agents.

"The traditional model has had its time and The Agency has proven this by showing that, combined with Sell Lease Property, we are knocking on the door of claiming number one ranking in WA for number and value of sales."

The group reported recently it had $1.1 million in cash at the end of the March quarter.

It forecast outflows of $4.9 million in the June quarter. Its March quarterly revenue was $4.2 million

The sharemarket values the company at $8 million.

The Agency again delays Top Level acquisition deal

The Company is backed by Finsure Group, one of Australia's fastest growing retail finance brokerages writing over $1 billion in new mortgages every month across 850 brokers.

Ausnet Financial Services Limited, as The Agency Group was then known, advised the sharemarket in early 2017 that its east coast expansion involved as=n option agreement with Aura Principal Investments Pty Ltd (ACN 145 010 653), Top Level Holdings Pty Ltd (ACN 617 021 167) and Daring Investments Pty Ltd (ACN 059 818 807) to acquire 100% of the fully paid ordinary shares in the capital of Top Level Real Estate Pty Ltd.

Ausnet director John Kolenda holds an interest in Top Level via his 50% shareholding in (and directorship of) one of the vendors, Daring Investments Pty Ltd.

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Tags: 
Asx Update The Agency

Comments

Be the first one to comment on this article
What would you like to say about this project?