Pilbara apartment project helps drive earnings and profits for WA developer Finbar

Pilbara apartment project helps drive earnings and profits for WA developer Finbar
Pilbara apartment project helps drive earnings and profits for WA developer Finbar

The demand for accommodation in the resource-rich Pilbara region of Western Australia has helped drive earnings at Perth-based developer Finbar.

Finbar reported net profits of $14.07 million for the half-year to December 31 off revenue of $62.2 million with its multi-stage Pelago project (pictured below) in Karratha the largest generator of earnings over this period.


This compares with revenue of just $2 million in the previous corresponding period and a loss of $650,000.

The developer completed 85 settlements at Pelago West in August last year with nine additional lots already sold and anticipated to settle in the second half of  the financial year.

Pelago West, rising eight stories, is the first stage of the $225 million project, which will eventually comprise 292 residential apartments and 22 commercial lots with mining projects in close proximity and offering some residents sweeping views of red desert, the nearby Karratha Hills and Nickol Bay.


One bedroom apartments were priced from above $600,000 when marketing began in 2011.

There are 20 lots still available to purchase, 14 of which are leased to government and large corporate tenants “generating strong rental returns”.

These apartments are now being sold off to individual apartment investors in the open market with prices starting from around $583,000 for a one-bedroom apartment and two-bedroom units priced at $854,000.


Agents promoting these investments quote a "fair and reasonable rent return" of $1,000 per week for a one-bedroom unit, $1,400 per week for a two-bedroom unit and $1,700 per week for a three-bedder – rental yields of around 9%.

Corporate tenants include CHC, one of the world’s largest helicopter transport companies, which agreed a five-year lease on nine one-bedroom apartments at average rent of $1,100 with 4% or CPI increases annually.

Finbar has since begun marketing apartments in Pelago East priced at $604,300 for a one bedroom, one bathroom unit.

Finbar says rental yields are close to 11%.

Pelago East features eight floors of residential and a mixed-use ground floor.

Finbar has also leased 698 square metres of 1,067 square metres of commercial space in Pelago West designated for offices, shops and eateries.

Karratha is within the Shire of Roebourne, which has a gross regional product of $7 billion and representing around 25% of Australia’s exports – iron ore and LNG projects.

Among its Perth apartment projects currently under construction, Finbar reported strong sales in the latter half of the 2012 at ‘Au’ at 208 Adelaide Terrace in East Perth with 176 sales achieved in the 194 lot project.

Ecco at 262 Lord Street has secured 79 sales in the 98 lot project.

Among the other projects the contributed to interim earnings was Lime, featuring residential and office suites in East Victoria Park, Perth, reached practical completion in November with revenues for 20 lots being recognised and contributed to earnings in the six months to December 2012.

A further 68 settlements have occurred in Lime since December 31. All residential lots have now sold out and only 10 commercial lots remain to be sold in the 111 lot project.

Finbar says it is on track to exceed last year’s record profit of $28.3 million after tax.

In July last year, Finbar was selected by the WA state government as the preferred developer of the former Port Hedland Hospital Site, also in Pilbara.

The 3.5 hectare site on Sutherland Street is earmarked to become a major apartment development, overlooking the Spoilbank Marina and directly opposite the Port Hedland Yacht Club.

The proposed Finbar development will comprise 367 short stay serviced apartments along with a considerable element of ground floor commercial office and retail units, which will reflect the requirements for the State Government funded $152 million marina and tourism precinct.

Managing director Darren Pateman said Finbar was “excited” about its interim results and prospects for the company “in what appears to be an improving market”.

“This company is very well positioned to benefit immediately from increased demand as we have continued our development activity unabated so that we will not be captured by the void that can exist in this industry between increased market demand and the long lag time for bringing on new supply."

Finbar will pay investors an interim dividend of 3.5 cents fully franked on April 19.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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