Real estate network the Agency brushes aside debt challenge

Prestige real estate group, The Agency, releases record revenue just days after a creditor attempted to have the business placed in administration.

A hearing has been scheduled for February 1 to allow unsecured and secured creditors to come forward.

Prestige real estate group, The Agency, has unveiled record revenues for the first half of the financial year just days after a creditor attempted to have the business placed in administration over a disputed fee of $385,000.

The earnings update is part of efforts by the real estate network to reassure investors and brush aside administration threats, which is currently being challenged in the Federal Court.

The group reported a total half year revenue of $29.1m, up 15 per cent on the prior corresponding period, as well as a 51 per cent increase in the amount of properties sold.

Of the 2407 properties sold, gross commission income was $38.1m.

Unaudited earnings before interest, tax depreciation and amortisation was $1.6m, excluding government benefits like JobKeeper and $2.8m inclusive of them.

The company said its positive operating cashflow for the half year was $1.54m and it had $5.5m in cash and cash equivalents.

Last week creditor Mitchell Atkins of Magnolia Capital called in BDO as voluntarily administrators over parts of The Agency, saying repeated demands for the payment of the debt led to a loss of confidence in the company’s board and financial position.

The Agency said the disputed debt “relates to alleged fees on a mandate entered into for the purpose of securing debt funding where MCL 105 Pty Ltd (Magnolia) was unable to deliver any funding at all.’’

Last Wednesday the Federal Court ordered the administration to stay in place until February 1 but allowed The Agency’s board to retain control of the company, provided they pay $400,000 into a bank account to prove its solvency.

A hearing has been scheduled for February 1 to allow unsecured and secured creditors to come forward. The Agency told staff at the time that day-to-day to operations would not be affected.

In the results update The Agency Group’s Managing Director Paul Niardone said a strong property sales pipeline and new $11m long-term debt funding package meant the company was in a strong financial position.

“In addition to the strong results, we are cash flow positive and well financed having recently received overwhelming shareholder support for a new long-term funding package with private investment company Peters Investments while Macquarie Bank continues to be our primary debt funder for a further two years,” he said.

“Looking forward, the priority of the board and the company is to maintain a healthy balance sheet as well as provide and deliver essential services and support to our agents and customers which will enable a stronger sustainable and financial position in the years ahead for our shareholders.”

The group said its improved cash flow had allowed it to “extinguish” its payroll tax payment plan and “bring up to date the deferred payment terms allowed during the advent of COVID-19.”

The creation of The Agency in late 2016 started one of the most watched splits in Australian real estate history with the defection of key members of rival agency McGrath, including Matt Lahood, Ben Collier and Steven Chen.

The Agency was a marriage between Perth-based Ausnet Financial Services and the independent group led by Mr Lahood.

It attracted agents because of McGrath’s then dropping share price and the higher commissions The Agency offered. But there have since been constant problems with raising capital to support the unique business model.

Shares in The Agency remain under a trading suspension and last traded in December at 5.1c.