Lending Association

McGrath Real Estate: From float to flop

The share price performance by listed Sydney real estate operator John McGrath tells us one simple point – as a float its been a complete dud.

It listed in 2o15 in a previous home buying boomlet at $2.10 a share and on Monday it revealed a possible buyout at 60 cents a share.

That $1.50 a share is a fall of more than 70% in value in nearly 9 years -through thick and thin, pandemic, near implosion, unwanted publicity about the founder and lastly, a crushing level of interest rates, and a real estate boom across its main markets in Sydney’s east.

The 60 cents cash compares to a last sale on Friday of 47 cents – the bidders, if they firm up the proposal – will be knocked down in the rush.

McGrath told the ASX on Monday that it is in talks to sell his listed agency to global property giant Knight Frank and Bayleys.

Under the proposed deal, shareholders will have the option to receive 60 cents cash for each of their McGrath share, or an unlisted scrip alternative, or a combination of both.

If the deal goes through, John McGrath will stay on as chief executive of the division, and will take up the offer of unlisted shares for his stake.

With the board of McGrath controlling 48.1% of the issued shares and intending to say yes, the deal is done and dusted.

In a statement to the ASX, McGrath said he was “delighted to have received this offer from a consortium comprising a leading global property firm in Knight Frank, which has a strong residential real estate offering throughout the world, and leading New Zealand full-service real estate agency in Bayleys”.

This mop up bid (which is what it is in effect) also confirms that the only companies making money out of housing property are the banks (the big four especially) and some private real estate agencies, and data operators like REA Group and Domain.