Peet (ASX:PPC) picks 50% stake in Flagstone for $46.2m

Company News

by Melissa Darmawan

Residential property developer Peet (ASX:PPC) has inked a deal to buy Spirit Super’s 50 per cent holding in its Flagstone City project based in Queensland for $46.2 million.

As part of the deal, Peet will pay in four tranches over three years funded by cash and debt with the first payment to start from the 19 January next year, the day of settlement.

Additionally, the company will take on the $21 million of debt which forms part of the project’s development loan.

With the move to take on the debt, Peet’s gearing on its interest-bearing debt is expected to be in the range of 30 per cent to 40 per cent in the coming 18 months. Taking into account the Flagstone and the University of Canberra projects, the range bumps up to 35 per cent to 45 per cent which is within the company’s existing banking covenant. The company’s interest cover ratio is expected to be a strong four to eight times during this period.

Citing these changes, the company’s debt facilities forecast to average around $93 million over the next 18 months which is considered to be strong for Peet.

“This acquisition will give Peet 100% ownership of the more than 10,500 remaining lots with a gross development value of circa $3.4 billion in Flagstone, in Brisbane’s south east growth corridor,” said Peet managing director and chief executive officer Brendan Gore.

Shares in Peet (ASX:PPC) are flat at $1.07.

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