This article is from the Australian Property Journal archive
JAPAN’S largest private home builder Sekisui House has bought AVJennings contract building business.
AVJennings will receive payments under the arrangements equivalent to the net asset value of the business on the completion date, approximately $18.5 million.
The deal will also see the two companies form an alliance around land and the use of the AVJennings brand, ownership of which will remain with AVJennings Limited.
AVJennings will license to Sekisui House the ‘AVJennings’ brand and associated trade marks for use in the contract building business in return for a cash royalty based on the revenue and profit of the business for an initial three year term.
AVJennings Limited will sell the assets of the contract building division on an ‘as is’ basis which include the division’s freehold and leasehold displays, house designs and the right to manage all existing construction contracts. All contract building staff will be offered employment by Sekisui House.
AVJennings will continue to operate its development division which includes land development, integrated housing and low-rise apartment projects.
CEO Peter Summers said the approach was initiated by Sekisui House and that the company had not been looking to sell its contract building division.
Summers said that whilst the last 12 months had seen considerable improved performance in AVJennings’ contract building division, continued improvement would require additional resources to be invested in it.
He added that the sale of the contract building division now allows AVJennings to fully focus on its core land and integrated housing businesses and the development of residential communities.
The company currently has approximately 9,600 lots under control or management.
“AVJennings returned to profit in the first half of this financial year and we believe this realignment of our core business will further allow the company to grow its integrated housing model and focus its time and capital on land based operations into the future, which are the main profit drivers for the company,” he added.
Sekisui House already has a substantial presence in the Australian property market, having acquired three housing development projects in mid 2009 in Wentworth Point and Camden Hills in New South Wales and Ripley Valley in Queensland, with a total lot yield of approximately 6,600 lots.
The transaction is conditional on the approval of the Foreign Investment Review Board (FIRB) and other regulatory approvals, and subject to obtaining these approvals, is expected to settle on or around 31 July 2010.
Australian Property Journal
