Cedar Woods gets assertive on acquisitions with $50m deal for Melbourne redevelopment site

Perth-based national developer Cedar Woods Properties (ASX: CWP) has struck a $50 million deal to acquire a major redevelopment site in Melbourne's inner north-east with plans to convert the industrial property into a multi-stage residential apartment project.

The 1.16ha site in Fairfield, located between the Yarra River and Merri Creek parklands with direct frontage to Fairfield Park, has been secured from the owner on deferred payment terms, with instalments to be paid in 2027 and 2028.

Cedar Woods says the deal is part of a “more assertive” acquisition strategy aimed at capitalising on a looming apartment shortfall in Melbourne in the wake of stalled project starts across the sector.

It also follows another $50 million acquisition announced last month for a 64.6ha site at Mt Barker near Adelaide where Cedar Woods plans to undertake a master-planned residential project comprising 860 lots.

The Melbourne site, located at the corner of Heidelberg Road and Yarra Bend Road, is earmarked by Cedar Woods for the development of 300 apartments across multiple mid-rise buildings, with the company expecting the planned residences to attract a premium price due to its sought-after location.

Sales for the project are expected to be launched in FY27 and first-stage settlements are expected in FY29 or earlier, subject to approvals and market conditions.

Cedar Woods says the acquisition adds to the company’s current Victorian portfolio which comprises more than 2,400 residential lots and dwellings across 12 projects.

The state portfolio represents almost a quarter of the group’s national portfolio of more than 10,000 lots and dwellings in four states including Queensland, South Australia and Western Australia.

Cedar Woods points to research from Charter Keck Cramer that Melbourne is projected to have a “chronic shortfall” in apartments of around 23,500 in the next few years as apartment starts hit their lowest level in more than 15 years.

“We see Melbourne as an opportunity for counter-cyclic acquisitions of quality sites and are preparing for increased homebuyer demand as purchasers respond to lower interest rates and supportive government policies,” says Cedar Woods’ managing director Nathan Blackburne.

“Cedar Woods will craft a premium design for the site to make the most of its unique park-front location and uninterrupted views of the CBD and local area.”

The Fairfield site, which the company says is zoned for the intended residential use, is located 4.2km from the Melbourne CBD and offers uninterrupted views of the city skyline.

In ramping up its Melbourne portfolio, Cedar Woods says there are more builders available for the project in Victoria than other states, with many able to deliver the project at competitive prices.

“Risks will be mitigated through presales, further builder due diligence and contract structure,” says the company.

The acquisition of the site will be funded from an existing $330 million corporate finance facility which is projected to have more than $120 million in undrawn capacity by 30 June 2025.

The company forecasts it will have ample capacity to finance the transaction while also exploring capital partner options for the project.

“With our strong balance sheet, and favourable macro conditions, Cedar Woods is continuing its strategy of diversification – by product type, price point and location – and strengthening our portfolio with quality sites that we can deploy into an undersupplied market”, says Blackburne.

After a sharp increase in pre-sales across its portfolio in the third quarter, Cedar Woods upgraded its FY25 profit-growth target to 15 per cent year-on-year. This puts the company on track to deliver a net profit of more than $46 million in the current financial year.