Cedar Woods to raise $30m to fund site buy

WA residential developer taps market after $68m site acquisition in Brisbane.

The Paul Sadleir-led West Australian residential developer Cedar Woods is tapping the market to fund an acquisition of a $68 million site in Brisbane.

Cedar Woods launched a $30m capital raising yesterday through Euroz Securities, RBS Morgans and Blackswan Equities.

The developer’s raising comes after another bumper half-year result in February that led the company to predict a record net profit of about $40m for the full-year.

Cedar Woods will use the fresh capital to acquire a 227ha plot of land in Upper Kedron, 13km west of Brisbane.

It plans to pay for the site across a four-year period with $19m to be paid this month, with a further $10m handed over in May next year.

Cedar Woods will also draw down a further $39m of debt to fund the acquisition in a final payment to be processed in 2018.

The land is expected to yield 1000 lots with an end value of $400m.

Upper Kedron, located next to the popular suburb of The Gap, will be developed across a 10-year period beginning from next year.

The acquisition marks Cedar Wood’s first foray into the southeast Queensland market.

Ahead of the acquisition, it boasted residential developments in Western Australia and Victoria, including its flagship project at Williams Landing in Melbourne’s West.

An investor briefing on the capital raising said the Upper Kedron acquisition “offers a number of similarities” with the Williams Landing project.

According to the briefing document, the Upper Kedron site is the last major housing development site in Brisbane City, with most other sites available for purchase located more than 25km from the Brisbane CBD.

Cedar Woods was long thought to be a potential suitor for its smaller rival, Villa World, though it is understood that despite the companies’ effort no deal was sealed.

Last year, Mr Sadleir, Cedar Woods’ managing director, flagged the company’s entry into the Queensland market saying the company was having a “quiet look” at site acquisitions across the southeast corner of the state.

Yesterday’s raising consists of a $25m institutional bookbuild and a $5m share purchase plan.

The placement of 3.68 million shares for $6.80 represented a 3 per cent discount to the last trading price of $7.01. Its shares will remain in a trading halt until tomorrow when the bookbuild is completed.