McGrath’s cash injection

Real estate group selling further stake to Aqualand

MCGRATH is selling a 15 per cent stake to property developer Aqualand Group, giving the ASX- listed real estate agent a $ 10.7 million cash injection.

Aqualand has already acquired an 8.7 per cent stake in McGrath and will take on a further 6.3 per cent share if the deal is approved by the real estate group’s shareholders.

McGrath has struggled since listing on the share market in 2015 and in March halved its full- year earnings guidance.

It said yesterday that it expected the full- year underlying earnings to be at the lower end of that revised guidance range, at about $ 5 million, and about $ 4 million in one- off cash costs will result in reported earnings of about $ 1 million.

McGrath chief executive officer Geoff Lucas ( right) said building relationships and channels were more important than ever before.

“McGrath is currently in a stabilisation and turnaround program and this transaction and relationship underpin our momentum to return to being Australia’s pre- eminent residential property brand,” he said.

The capital raised would allow the company to take advantage of any strategic acquisition opportunities that arose over the next couple of years, Mr Lucas said.

Aqualand has a portfolio of 18 residential sites in Sydney, worth a gross value of about $ 5 billion.

It will be entitled to a director on McGrath’s board and it will give McGrath first right to discuss being agent to its new projects.

McGrath founder John McGrath, who will remain the company’s largest shareholder, said the addition of Aqualand as a strategic shareholder was a great vote of confidence in McGrath’s future.

Shares in McGrath soared on the news to finish up 9c, or a significant 26 per cent, to 43c at yesterday’s close.

MCGRATH IS CURRENTLY IN A STABILISATION AND TURNAROUND PROGRAM CEO GEOFF LUCAS