Meriton founder Harry Triguboff targets $400m windfall on apartments

Property magnate Harry Triguboff says apartment sales should recover by mid-2022, but he will make more money on his rental units and serviced apartments in the meantime.

Billionaire Harry Triguboff is making big money renting out his apartments. Picture: James Horan

Harry Triguboff, Australia’s richest property developer, will make $400m from building and keeping apartments for investment this year, more than making up for slow sales during the pandemic.

Accounts lodged by Mr Triguboff’s private Meriton Properties shows profits before tax rose to $267m for the year ending June 30, compared to $27m in 2020.

The documents showed a 15 per cent increase in the number of investment units including serviced apartments on the Meriton books, with the company owning 13,314 units as at June 30.

Meriton owns more units than it sold for the year, which was 12,359 apartments or about 4 per cent less than it sold in 2020.

Mr Triguboff, who said he expected a $400m profit from leasing the units owned by Meriton next year, told The Australian: “I am holding a lot more than I am selling at the moment, and as the value of property goes up the value of what I have kept rises.

“Apartments hadn’t really risen in value a lot since probably 2017, but now they are so it is good for me to keep more of them.”

Mr Triguboff’s remarks came as new figures showed property values across the country rose 1.3 per cent in December, and 22.2 per cent in the last 12 months.

In particular, CoreLogic data shows apartment values rose 15.3 per cent in Sydney this year, and 10.9 per cent in Brisbane.

“The rise in listings and softening of key vendor metrics implies the housing market may be moving through peak selling conditions, however it will be important to see if this trend towards higher listings continues after the festive season,” said CoreLogic research director Tim Lawless.

Mr Triguboff said demand for his apartments was outstripping supply, a problem he blamed on a lack of approvals by local government authorities in NSW and Queensland.

Meriton’s burgeoning apartment portfolio mirrors sector interest in the related build-to-rent sector, with investment bank Macquarie the latest to commit significant funds to the sector.

In November, the bank said it was building a $500m portfolio, and was hoping to have 4000 rental units in all major capital cities within five years.

The fall in unit sales meant a 13 per cent drop in Meriton revenues – to $1.27bn. But the company remains one of the most private vehicles in the country behind Gina Rinehart’s Hancock Prospecting.

Meriton’s after-tax profit was $187m, up from $19m in 2020, when profit slumped almost 95 per cent from $356m in 2019 when the company experienced the first Covid-19 lockdown.

The company also took a $100m hit on the declining value of the listed equities and financial products owned by Mr Triguboff.

The accounts show Meriton ended the financial year with a renewed focus on its core business. While it had about $37m worth of listed company shares, Meriton had exited the structured products market, in which the group previously had holdings of about $130m.

Mr Triguboff’s company now has about $3.17bn worth of investment properties on its balance sheet and another $207m worth of vendor finance loans it has supplied to buyers of its apartments.

Meriton’s accounts show the group owed about $42m to ANZ at June 30, an amount that is understood to have been largely paid off, leaving the group debt free. It has $4.3bn in net assets.

Mr Triguboff said he would like to build more apartments but the rate of Meriton’s output is dependent on council approvals.

“I can only build as much as they will approve. Of course I would like to build more but I would have to become more of a barrister (and take legal action) for that to happen,” he said. “I would like to build more in Surfers Paradise, because it is easier to build there. I’m building in Melbourne now too. But I can only build as much as they will let me.”

Mr Triguboff said Meriton had also been able to withstand “terrible” government policies restricting international student and migrant arrivals – “they are a big part of my business usually” – but hoped that part of the market would pick up in the new year.

He is building thousands of units across Sydney, including in Homebush, Pagewood and North Ryde, has commenced construction of a further 630 luxury apartments on the Gold Coast, and has a pipeline of 11,000 more homes.