A WA-based group that has operated under the Rental Express banner, RMA Group, is continuing with plans to buy RUN Property for $65 million despite parting ways with Queensland-based Rental Express Pty Ltd.
Rental Express said RMA Group had originally contracted the Qld-based property management group to assist it with acquisitions in WA.
"As part of this arrangement RMA Group has licensed the Rental Express brand from Rental Express Pty Ltd (QLD). Both parties have mutually agreed to terminate the license agreement for RMA Group to use the Rental Express brand on 31 October 2012," a statement from Rental Express Qld said.
RMA Group, while operating under the Rental Express brand, annouced a $65 million acquisition of ASX-listed RUN Property in May this year.
"It has been widely misunderstood that Rental Express Pty Ltd (QLD) contracted to purchase RUN Property, however this is not the case."
"Rental Express Pty Ltd (QLD) had very limited involvement in the proposed acquisition of RUN Property by RMA Group but understands that the transaction is still proceeding and that RMA Group has paid a $4 million deposit to RUN Property."
A RUN Property statement dated September 3 confirmed that the $4 million deposit had been received.
RUN Property CEO Rob Farmer told Real Estate Business that the next hurdle for RMA Group was to show that they could fund the deal. This was due to occur on November 1.
RUN Property manages around $10 billion in properties in Qld, NSW and Victoria, while administration and accounting software Agent Plus is its fully owned subsidiary. Rental Express is the largest privately owned property management company in Qld.
In RUN Corp Limited's annual report for the year to June 30 2012, released late last month, chairman Nathan Cher described the proposed sale as a 'Remington Moment', when one of the company's Agent Plus clients "liking the platform so much they offered to buy the company!".
Mr Cher added that the sale is subject to a number of conditions, and CEO Rob Farmer added that if the sale doesn't proceed, the "$4 million deposit ... will be converted into equity in RUN Corp Limited at 40 cents per share".
RUN Corp Limited, which says it's the largest independent residential property management company in Australia, reported a drop in net debt from $35.6 million to $20.4 million as at June 30. The company aims to reduce debt to $14 million by December this year.
Rental Express Pty Ltd (Qld) managing director Chris Rolls, and the company's management team, said they will not be involved in the management of RMA Group, "nor will they be involved in teh acquisotion of RUN Property as previosuly reported".
Mr Rolls added that the company has what it refers to as a ‘50 – 2020’ target, which equates to reaching 50,000 properties under management by 2020.
Mr Rolls said the company, which currently has around 4,000 properties under management, is a long way from its goal but he firmly believes that it is well placed to grow its business in the months ahead.
“I firmly believe that 10-12 organisations will have rent rolls in excess of 10,000 properties in three to four years’ time,” he told Real Estate Business. “Ultimately someone will reach 100,000 properties under management, and it’s just going to come down to the company that has the systems and procedures in place to do that. Rental Express is well positioned to do that.”
With the business arrangement with RMA now off its plate, the company now had more time to reengage with the market and look for fresh opportunities to grow, he added.