McGrath has been given more "firepower" to take advantage of predicted consolidation in the sector, through a $10.7 million cash injection, when property developer Aqualand Group bought a 15.5 per cent interest in the company. 

Under the deal, McGrath will have the first right to discuss, for a limited window, being appointed as an agent for new Aqualand projects expected to come to market in future years, or provide property management services in respect of leased apartments within new projects.

The association with Aqualand will also boost McGrath's project marketing business by allowing its agents to work on new developments.

"We now have three prominent property developers as shareholders,  and this arrangement with Aqualand will give us an entrée to upcoming world class developments. It is by no means an exclusive arrangement and our project team will continue to work with other developers.  It really is a win-win for all," chief executive Geoff Lucas told WILLIAMS MEDIA.

The McGrath investment from Aqualand at a glance:

• The Aqualand Group is paying $10.7 million for a 15 per cent stake in ASX-listed real estate group McGrath
• McGrath says the capital could be used for a “strategic acquisition”
• Aqualand and McGrath are also looking at working together on “prestige project” marketing
• The placement of 25,189,880 shares at $0.425 per share will take place in two tranches, with the second tranche of 11,568,042 shares subject to ordinary shareholder approval
• The placement represents a 25 per cent premium to the last closing price and a 16.9 per cent premium to the 60 day VWAP
• Following completion of both tranches and, subject to shareholder approval for the second tranche, Aqualand will be the second largest shareholder of McGrath with a 15 per cent relevant interest

Mr Lucas told WILLIAMS MEDIA the investment signified confidence in the future of McGrath.

"I believe that an investor of this calibre that is a major global player in the property market, to make a strategic investment like this shows not only confidence in the McGrath business and its capability, but also great for the industry as a whole," he said.

“Aqualand is one of Australia’s highest quality property development and investment groups, and its addition as a major shareholder and board representation provides McGrath the opportunity to continue to grow our Project Marketing expertise and develop even stronger ties with the inbound investment," he said.

He said the deal came at a pivotal time for the company.

Pictured: The $2.6 billion Central Barangaroo site, one of Aqualands' 18 development sites. Image supplied by Lendlease.

“The Australian real estate market is becoming more sophisticated and relationships and channels are more important than ever before. Working closely with a major shareholder like Aqualand, which owns some of the best residential development sites in the country, represents a great opportunity to grow our business in project marketing.

"The capital raised in the placement will also allow us to take advantage of any strategic acquisition opportunities that arise over the next couple of years. McGrath is currently in a stabilisation and turnaround program and this transaction and relationship underpin our momentum to return to being Australia’s pre-eminent residential property brand," he said.

Aqualand Capital CEO, Wayne Mo, said, “Aqualand is pleased to enter into this strategic relationship with McGrath. We have observed McGrath for some time and have developed a positive view of the overall business operation and the capability of the McGrath leadership team. We believe McGrath has good potential for future growth and that this growth will only be enhanced by our new strategic relationship," he said.

Pictured: The $2.6 billion Central Barangaroo site, one of Aqualands' 18 development sites. Image supplied by Lendlease.

Proceeds from the placement will be used for general corporate purposes, including business development and potential growth opportunities as they may arise, Geoff Lucas told WILLIAMS MEDIA. 

"This will position our balance sheet very well and give us the firepower for our business, which for the past few months has been stabilising.  We think in the current environment there are still opportunities for some consolidation, but any of our expansion plans would be both strategic and prudent for the business," he said.

Aqualand has 18 development sites in Sydney worth about $5 billion, including the former Navy stores, known as the $173 million Revy apartments at Pyrmont, the $2.6 billion Central Barangaroo site and the soon-to-be-launched $418 million Blue at Lavender Bay, Sydney.

Visit the Aqualand website here to find out more about their development sites.

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