BUOYED by the partial sale of a sprawling Melbourne project, Gold Coast developer Villa World is now taking a shorter view of the property market in a bid to synchronise its developments with the current economic cycle.

The company last week settled on the first tranche of the previously announced $60 million sale of the Eynesbury project, in which Villa World holds a 50 per cent interest. 

The move to sell is part of an overall strategy by the affordable housing developer to ride the momentum that has developed in the residential market over the past year.

This was highlighted by Villa World announcing in March that it had acquired a new project in Melbourne – a 250-lot subdivision in the booming outer suburb of Plumpton – as part of the restocking of its inventory in the region.

Paulene Henderson, Villa World’s chief financial officer, tells Gold Coast Business News that the company had previously taken a two- to three-year view on projects in recent years, but it is now focusing on projects with a four- to five-year timeframe.

Villa World had been sitting on Eynesbury for more than a decade. It first bought into the project, in partnership with Woodhouse Pastoral Company, in 2003.

The asset has survived through some of Villa World’s darkest years, including the fallout in 2008 of the collapse of its former parent MFS Ltd – a time when the company was known as MFS Diversified Ltd.

Eynesbury is a 2900-lot project comprising housing, retail facilities and a golf course, and has a projected end value of about $1 billion.

Henderson describes Eynesbury as a “very long-dated project” which doesn’t fit with the company’s renewed focus on medium-term projects.

The second tranche of the Eynesbury sale, comprising $30 million, is due to settle in March next year.

Henderson says the first tranche will not be reflected in Villa World’s 2014 financial-year profit result, which the company affirmed last week is on track to land between $20 million and $22 million.

“While it doesn’t have a profit impact, it does release cashflow in FY15 and releases human resourcing,” she says.

Henderson describes 2014 as a “significant year” for Villa World.

"We have done the things we said we were going to do, including lifted our guidance and reinstating dividend payments,” she says.

The forecast full-year profit for 2014 compares with a net loss of $13.5 million for the 2013 financial year, a result that was hit by one-off impairments totalling $25.6 million.

A month ago, Villa World managing director Craig Treasure hinted that the 2014 result could even exceed its latest forecasts, depending on the timing of property settlements.

He says the “planets have aligned” for the company as the property markets in which it operates continue to deliver strong sales and interest rates remain at record lows. 

“We’re at the stage where we’re well down the path of a new era for the organisation,” Treasure tells Gold Coast Business News.

“We have reinvigorated the Villa World business in the past 18 months.

“We’re a strong sales-led organisation now. We’ve bought a lot of new projects and we have benefited from restructuring.”

Treasure says due to the planned exit from Eynesbury, restocking of the landbank remains a priority for Villa World.

“Recent site acquisitions in Queensland and NSW have added 615 residential lots to the development pipeline,” Treasure says.

“A further 560 lots, over five projects in North Melbourne, and in Brisbane’s northern and Bayside suburbs, are under due diligence investigations.”

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