Fletchers in $425m buy-up

Fletcher Building will spend $425.2 million on land in suburban Auckland and Queenstown to build housing estates for thousands of people.

The price was disclosed in three Overseas Investment Commission approvals in the latest batch of decisions.

The buyer is Fletcher Residential, New Zealand's largest builder of houses.

It is part of Fletcher Building, the country's third-largest listed company.

The biggest of the deals is the $299.8 million purchase of 60.27ha of former Mt Wellington quarry land from Greg Olliver's company, Landco Mt Wellington, which is the subdivider.

It is the biggest area of undeveloped residential-zoned land in Auckland.

Fletcher Building chief executive Ralph Waters said yesterday the company would finance the purchases from the sale of finished properties in other Fletcher housing estates, rather than paying $425 million in one chunk.

"It's not a big deal," he said.

"New land acquisitions are funded over time by the sale of existing house-and-land packages.

"There's never any one large capital outlay required in buying residential land because we take delivery bit by bit."

He said the deals would provide land to help Fletcher meet demand for six to seven years.

Each year, the firm needed land worth at least $120 million to meet demand for new housing;

In the Mt Wellington deal, Waters is buying back land the company sold a few years ago.

"What did we sell?" asked Waters. "A quarry.

"What are we buying? Suburban sections with roading, sewage, power, lights and council approval.

"We're not a developer. It was the right thing to do, to sell it and buy it back.

"It's totally the wrong message to say to anybody that we sold it for peanuts and we're paying hundreds of millions to buy it back again."

The OIC decision says the Mt Wellington purchase will let Fletcher build on 1722 housing lots and four apartment sites.

"The acquisition is viewed as an expansion of the residential building business," the commission said.

The block spans sites on College Rd, Morrin Rd and Lunn Ave.

The decision follows an approval in 2002 for the company to buy 12ha of the quarry for $42 million.

In the second decision, Fletcher Residential was given permission to pay $80.4 million to two other Greg Olliver companies, Landco Schnapper Rock Rd and Landco Albany, for 17.5ha of freehold land subdivided into 350 residential lots on Schnapper Rock Rd at Albany. 

A third approval is for Fletcher to pay Jacks Point Land Holdings $45 million for 16.1ha of freehold residential land on State Highway 6 at Jacks Point in Queenstown.

The block has 200 lots.

"The vendor is completing the necessary infrastructure for the residential subdivision," the commission noted.

The subdivison is part of a development that includes a golf course, accommodation lodge and residential and commercial development.

Fletcher needed commission approvals because of its level of foreign ownership.

It is 47 per cent New Zealand owned, but 29 per cent is owned by Australians, 12 per cent by Americans and 6 per cent by British investors.

Apart from these deals, Fletcher Residential's largest new developments is Wattle Cove, a $300 million subdivision of 900 houses in Manukau City on the Wattle Downs peninsula.

Growing further

Fletcher Residential is New Zealand's largest builder of houses. It is part of the third- largest company on the sharemarket, Fletcher Building

The land purchases in three deals approved by the Overseas Investment Commission involve 2272 sections in Auckland and Queenstown

The biggest is $299.8 million for 60.27ha of former Mt Wellington quarry land.

Fletcher will make payments for the land in the three deals over years as lots are created and utilities provided.