This article is from the Australian Property Journal archive
AUSTRALIA’S biggest home builder Metricon will become majority-owned by Tokyo Stock Exchange-listed Sumitomo Forestry, with the partnership agreement paving the way for full control of the company, as major Japanese investors continue to make real estate plays down under.
Metricon will become a consolidated subsidiary of Sumitomo Forestry.
Metricon CEO, Brad Duggan, said that after months of discussions and negotiations, “whilst this strategic partnership marks the beginning of a new chapter, at Metricon it will be business as usual”.
“It will be business as usual at our display homes, building sites, our Studio M selection centres, and offices,” he said, and there will be “minimal” change to its structure, service, market offerings or brand.
“Metricon has worked hard over the past 24 months to return the group to its position of strength, and we are ecstatic that this work has resulted in the establishment of such an important partnership with Sumitomo Forestry,” Duggan said.
“This partnership enhances Metricon’s readiness to respond to the opportunities in the Australian housing market.
“Both Metricon and Sumitomo Forestry see the great advantages that can be harnessed from working together. The Australian housing industry, more than ever, needs strong participants to solve the issues it currently faces, and this partnership will further build Metricon’s market-leading position.”
Duggan told Australian Property Journal in August that Metricon wants to play a “pivotal” role in rebuilding trust in the rebounding construction sector, as it took the unprecedented of releasing its full-year numbers for FY24. Metricon posted a turnaround of nearly $80 million over the year, with EBITDA coming in at $42.2 million, compared to the prior year’s loss of $33.5 million. Deposits surged from 3,303 in FY23 to 5,279 in FY24.
Just two years ago the company appeared on the brink of collapse, requiring a $30 million boost from its owners. Last year, it had terminated fixed-price contracts that had made operations difficult.
HIA last week named Metricon as Australia’s largest residential builder for the ninth year in a row. Also yesterday, it was selected as part of a consortium to deliver 483 new social homes in south-east Queensland’s Moreton Bay and Logan City.
The transaction with Sumitomo is expected to be completed in the coming weeks.
Melbourne-based Metricon was founded in 1976 and is particularly active in Victoria, NSW, South-East Queensland, and South Australia.
Yasuhiro Odagane, Managing Director of Sumitomo Forestry Australia, said, “This acquisition enables our group to expand the business areas in each state, establishing Sumitomo Forestry as the number one builder in Australia and, most importantly, allowing us to make a substantial contribution to the provision of social infrastructure”.
Sumitomo Forestry Group, a proponent of the use of timber products in construction, entered Australia’s housing industry in 2008. Its Australian operations currently include its $1.2 billion build-to-rent joint venture alongside Cedar Pacific, while it is funding Hines’ timber office tower in Melbourne’s Collingwood. It also owns Henley Properties.
More Japanese investment Down Under
Investment from major Japanese players into Australian real estate is growing across a range of sectors.
Last week Australian Property Journal reported that Hankyu Hanshin Properties make a play for a 2,000-apartment project at Melrose Park in a joint venture with Sekisui House Australia. It marks its first residential development in Australia, and comes hot on the heels of its joining forces with a Malaysian investor to invest $536 million in a portfolio of logistics properties across the country.
Also in the logistics space, ESR’s local arm recently partnered with Mitsubishi Estate Asia to develop a $175 million industrial estate in Melbourne’s south-east, while Tokyo-headquartered CREAL made its first overseas investment by providing finance for a $39.5 million self-storage and warehouse development in Kirrawee.
Japan’s largest diversified property developer, Mitsui Fudosan, in June took a majority stake in Mirvac’s $2 billion 55 Pitt Street office development in Sydney
That follows Japanese investors becoming the most active source of offshore capital in Australia throughout 2023, putting $2 billion towards assets down under. That included Mitsubishi Estate’s investment in Mirvac’s $1.8 billion build-to-rent venture and its joint purchase with Ashe Morgan of the 60 Margaret Street office tower in Sydney, while Japan’s largest homebuilder, Daiwa House teamed up with Lendlease to develop a $650 million build-to-rent tower at Lendlease’s Melbourne Quarter project.
