The Agency sells off WA rent roll to pay down debt

Despite encouraging results in FY20 with its first full-year EBITDA profit since listing, real estate group The Agency (ASX: AU1) faces the cold reality of a $12 million loan that is due to Macquarie Bank by the end of this month.

A deal announced today is set to pay off 30 per cent of that sum following the $3.6 million sale of The Agency's West Coast rent roll - comprising 1,173 managements - to Managex Funds Management.

Managex was recently established by Future Fund board member and Crown Perth chairman John Poynton and Emerald Capital managing director Kim Slatyer.

The newly formed entity will licence The Agency brand in Western Australia for the property management business and be based out of The Agency's Perth office. The deal also includes a reciprocal referral agreement on sales and property management leads.

The asset to be sold forms part of a total rent roll and loan book the company estimates is worth $27 million, generating an annuity income in excess of $10 million per annum.

After the sale, The Agency will still have 3,665 properties under management as part of its East Coast property management business.

Both companies have announced they will proactively work together to identify future acquisition opportunities, with their strategic partnership expected to drive sales teams and additional property sales from the Managex acquired rent rolls to the Agency.

"The sale of our WA rental roll business is a positive for us, improving our balance sheet and facilitating greater alignment to our core business," says The Agency's managing director Paul Niardone.

"The Agency continues to develop its unique busines model which attracts and incentivises the best real estate sales talent. This sale increases our focus on developing this model while simultaneously increasing our referral power and overall business flexibility.

"The benefit to our sales agents is that they will have access to a larger pool of sales leads from the growing Managex owned rent roll and they will also be rewarded for referrals of property managements."

Managex managing director Kim Slatyer says his company's goal is to acquire, aggregate and manage Australian residential rent rolls.

"This partnership with The Agency is the first in a pipeline of acquisitions for Managex. We are well funded and have the operational expertise to aggressively expand in what we see as a growth market.

"Our strategic alignment with The Agency ensures we have a strong referral partner committed to growing our respective businesses."

Managex secured debt funding for the acquisition from Judo Bank which recently established an office in Perth headed up by managing director for the state, Ben Tuszynski.

The transaction is expected to be completed by end of the third quarter of this calendar year. 

Business News Australia