I have held FRI for a long time, and in recent years I have ceased watching it as closely as I should, so I cannot usefully comment on your post. What I should do is develop a forecast of revenue and NPAT, and when it happens that NPAT gets a sugar hit at both ends of the same financial year, Mr Market may misinterpret that as a long-term performance improvement, and give a nimble investor a skip-out opportunity, and a skip in opportunity, when things look bad, but they are not.
FRI is in a sense a virtual property developer - it outsources most things, and its total staff is very small.On the project financing side, FRI mainly forms 50:50 JVs with folk who own development property in Perth's CBD, and the undeveloped property buys them their share of the JV. FRI assumes the responsibility to fund the development using its own funds, but substantially supported by Tier One banks at relatively low rates of interest.
FRI's ideal is to sell half the units off the plan before it starts the construction. Deposits received from presales, and a long history of presale-to-settlement analytics form part of the business case that it puts to banks. Some times FRI undertakes projects in its own right, and it sometimes commences a project with a very low presales percentage, but it has the experience to know that it can handle those situations. Also, its relationship with the builder, Hannsen Construction is based on getting a keen construction price in return for certainty of work, and I imagine that can be a factor to proceed with a project earlier than usual.
Many of the property owners with whom FRI forms JVs are repeat investors. Similarly, a percentage of the off-the-plan buyers are repeat investors. By creating a small real-estate business a few years ago, FRI can offer a management service to its customers who are investors, and thus facilitate sales of units. By repeatedly investing in and negotiating projects in the same geography (inner and near-city Perth), FRI has the advantage of becoming expert in its field of specialism, and that advantage probably eclipses any negatives that specialisation carries.
All in all, FRI is a well organised business based on a mix of repetition and trust to keep big-money development property investors, Tier One banks, Hannsen, and some investors in apartments returning to do repeat business.
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