Land & Homes Group Evaluates Sale of Barry Parade Project
LHM (LHM) Share Update November 2024 Friday 1st
Land & Homes Group Seeks Buyers for Barry Parade Project Amid Rising Costs
Land & Homes Group Limited (ASX: LHM) has announced it is evaluating expressions of interest for the sale of its Barry Parade project, as rising development costs make the project economically challenging.
Instant Summary:
- Expressions of interest sought for Barry Parade project.
- High development costs and fixed holding costs are key concerns.
- Marketing campaign conducted by Cushman & Wakefield.
- No substantive business activities during the quarter.
Project Overview
The Barry Parade project has been a focus for Land & Homes Group, but rising development costs have prompted the company to reconsider its strategy. Initially, the company aimed to develop the site, but financial modeling revealed that costs would not decrease in the near term to make the project viable.
As a result, the company decided to seek expressions of interest for the sale of the project and the associated freehold land. This decision was made public in June 2024, and since then, a marketing campaign has been launched by Cushman & Wakefield to attract potential buyers.
Financial Details
During the quarter ending September 30, 2024, Land & Homes Group reported no substantive business or development activities beyond the expression of interest campaign. The company incurred no expenses for the Barry Parade project during this period.
Financially, the company is managing its cash flow carefully. The quarterly cash flow report indicates a net cash outflow from operating activities amounting to $324,000. However, the company secured $127,000 from financing activities, which helped maintain a cash balance of $649,000 at the end of the quarter.
Future Prospects
Land & Homes Group is currently evaluating the expressions of interest received. The outcome of this evaluation will determine the future of the Barry Parade project. The company has not disclosed any timeline for when a decision might be made, but it has committed to providing further updates as necessary.
The decision to seek buyers for the Barry Parade project reflects the challenging economic environment for property development. Rising costs and uncertain timelines make it difficult for the company to proceed with development as initially planned. This strategic shift could impact the company's stock as investors assess the implications of selling a potentially valuable asset.
Investor Reaction:
Analysts may view the decision as a prudent move given the current economic climate. However, there could be concerns about the company's ability to generate future growth without the Barry Parade project. Investor sentiment may hinge on the terms of any potential sale and how the company plans to utilize the proceeds.
Conclusion:
Investors should keep an eye on updates regarding the Barry Parade project sale. The outcome could significantly influence the company's financial position and strategic direction. Staying informed about the company's next steps will be crucial for making informed investment decisions.