Listed Developer Englobo Holdings

 

7 March 2013

Prosper Australia today issues its update of ‘Englobo’ holdings of listed property developers (attached), as revealed in their audited half year accounts recently released to the Australian Stock Exchange.

Based on last year’s sales – the current pulse of activity – listed developers hold an average 20.4 years supply, up from 18.4 years a mere six months earlier,” David Collyer Campaign Manager Prosper Australia said today.

Lend Lease holds a remarkable 33.7 years supply. Developer land holdings by time extend well beyond government planning time frames, the classic definition of ‘Landbanking’.

“Sharemarket-listed developers are a minority of developers.  Their lot sales last year were around a tenth of building approvals, but unlike private developers their behavior is publicly visible – and instructive.

This straightforward equation has been criticised by the industry as ‘simplistic’.

“The complexities of land development change nothing,” Collyer said.  “This is their work-in-progress. It is a robust and valid measure.

“Withholding vacant land from use displaces activity and drives up land prices – to the great advantage of all existing landowners.  While developers can rightly argue they are constrained by government planning controls, their complaints are like Brer Rabbit saying ‘Please don’t throw me in dat briar patch!’

“Developers have responded to the falls in sales volumes by further reducing the size of lots and offering non-cash incentives like new cars to maintain consumer ‘anchoring’ to peak prices.

Previous land price downturns have been characterized by developer bankruptcies as banks made margin calls on this traditionally highly-geared industry.

“I note the relatively low borrowing by listed developers, likely secured on their income-producing commercial and industrial properties.  They should withstand a major price correction, though shareholders equity will shrivel mightily.

In the last half, Mirvac wrote down the value of their residential land holdings by $273.2 million and Stockland by $306 million, citing persistent weakness in the residential property market.

“Land in Australia should be dirt cheap.  Outstanding access to land ought be a national advantage, generously conferred by a loving government upon its people.  And it could, with a decent Land Value Tax.

Media comment:  David Collyer 0413 248 193

 

About Prosper:  Prosper Australia is a tax reform lobby group and think tank that is now 120 years old.  It seeks to move the base of government revenues from taxing individuals and enterprise to capturing the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax and

 

 

Listed Developer Land Holdings December 2012

 

  Lots settled[1] Lots in development Disclosed end value Average lot value Land bank Debt/ debt+equity[2]
 

2012

Number

$ Billions

‘000

Years

Australand

1 613

20 370

8.0

330

12.6

38.9%

Sunland

408[3]

3 110

1.3

418

7.6

4.9%

AV Jennings

10 581

33.6%

PEET

2 150

47 263

8.5

179

21.9

45.8%

Mirvac

1 562

31 130

10.9

350

19.9

26.0%

FKP

319[4]

4 525

1.4[5]

309

14.2

37.5%

Lend Lease

2 062

69 561

13.05

187

33.7

26.0%

Stockland

5 264

81 270

22.7[6]

279

15.4

33.1%

 

Totals

13 134

267 810

65.8

2467

20.4[7]

Source: ASX Company reports

 

 

Listed Developer Land Holdings June 2012

 

  Lots settled Lots in development Disclosed end value Average lot value Land bank
 

Year to 6/12

Number

$ Billions

‘000

Years

Australand

1 108

21 300

8.0

531

19.2

Sunland

672

2 889

1.1

380

4.3

PEET

2 052

34 000

6.2

182

16.5

Mirvac

1 807

29 787

10.6

356

16.5

FKP

410

4 725

1.4

287

11.5

Lend Lease

2 059

68 006

13.0

191

33.0

Stockland

5 388

87 900

23.0

338

16.3

 

Totals

13 496

248 607

63.3

Av  18.4

Source: ASX Company reports



[1] For Australand, ‘FY12 Lots Sold’

[2] Includes net derivatives exposure to recognise finance charge

[3] Lots settled in six months to end 2012, annualized

[4] Total lots and built sales, excl Mulpha

[5] At 30 June 2012

[6] At 30 June 1012, less $306m impairment

[7] Excludes AV Jennings

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