It has been a robust March Quarter for The Agency Group Australia (ASX:AU1) with the high-flying national real estate firm upbeat the property industry is more resilient to the impact of COVID-19 than first anticipated.
In its quarterly report, the group announced an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $209,791 as well positive operational cashflow of $21,000 and combined group revenue of $10.7 million.
The Agency Group Managing Director Paul Niardone said these were significant results particularly given the impact of COVID-19 on the real estate sector from late March and the seasonal lull historically experienced over the Christmas holiday period.
With these measures in place, I am confident our business is prepared and will be well positioned to take advantage of what in time will become an improving market,” he said.
For the quarter, The Agency also reported combined Gross Commission Income (GCI) of $12.1 million, its second-highest quarter for GCI behind the December Quarter 2019 (GCI: $14.1 million) with The Agency (West Coast) delivering a record GCI of $1.79 million highlighting the quality of its sales team.
GCI for the quarter was based on 804 exchanges across the combined group, with The Agency (East Coast) reporting 294 exchanges while West Coast (incorporating The Agency and SLP brands) accounting for 510 exchanges.
The Agency sold a combined $747 million worth of property during the March Quarter. Of this, $500 million worth of property was sold by The Agency East Coast and $247 million for The Agency WA which also reported 177 monthly sales for March valued at $90.3 million.
For the March Quarter, the combined group reported 1,001 listings, which is comparable to the December Quarter, and 760 settlements.
Properties under management (PuM) continued to expand with The Agency’s East Coast and West Coast operations reporting a total management portfolio of 4,737 PuM as at 31st March 2020. As at 21st April 2020, this figure had risen to 4,763 PuM.
COVID- 19 impact: Not all doom and gloom
The Agency also noted that while COVID-19 had no doubt affected the industry nationally it was not all doom and gloom.
“We are cautiously optimistic the industry appears to be more resilient than first anticipated, Mr Niardone said. “However, we need to be ready for the worst-case scenario and a drawn-out, slow recovery.”
Mr Niardone said while there was an immediate reduction in sales activities particularly following the Federal Government’s restrictions on home opens and auctions, in recent weeks there had been a gradual improvement in sales activity particularly from first home buyers and the top end of the market.
“Our west coast agents have witnessed very positive attendance numbers recently at home opens following the easing of restrictions on home opens in Western Australia– which allows for up to 10 people to view a property at one time under strict health controls.
“Meanwhile, our property management figures so far for April exemplify the strength of our rent roll, with minimal impact of COVID-19 on the property management business. As the figures show, we are seeing new business opportunities, a significant improvement in leasing conversions and minimum churn while management fees are largely unaffected,” he added.
The Agency had also seen a number of smaller agencies ask for the company’s property management business to oversee their rent rolls, on a revenue split, during this time as they don’t have the people and/or processes in place to manage rent rolls remotely.
“This not only presents another unique revenue source but is a significant vote of confidence in our team, our business model and our industry-leading service offering,” Mr Niardone said.
At 31st March 2020, the company had $4.6 million cash and significant assets with a rent roll valued at ~ $23.5 million and mortgage book valued at ~$5.2 million.