Why developer Sunland has had enough; plans to sell off assets and distribute cash
Shares in the Gold Coast-based property developer Sunland jumped 44 per cent today after it announced it would sell off its assets, repay all debts and return the cash to shareholders through a dividend and capital payments of about $2.56 a share.
The company said in the past 10 years, despite its efforts, the share price of the company had been disappointing because, in part, the inherent value of the business had not been recognised by the market.
The share price had fallen as low as 55 cents a decade ago and was at $2 in March 2015 āand is currently at a level which is materially below the net tangible asset value per share of the Sunland Groupā. It closed today at $1.92.
However, the company, led by Soheil Abedian, suffered a slide in revenue last financial year of 42 per cent.
āThe objective of the strategy is to return to Sunland Groupās shareholders current net asset value, to the maximum extent possible, which is calculated at $2.56 a share by way of progressive dividends and capital distributions,āā the company said in a letter to shareholders.
It is expected the dividends will be fully franked.
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āExecution of the strategy will involve completing the development of part of the groupās portfolio in the usual course, along with a sell-off of certain development land. The board considers this will take approximately three years.ā
āThe proceeds of the sales are intended to repay liabilities and meet other obligations of the Sunland Group and surplus cash is intended to be distributed to shareholders.ā
It said there would limited opportunities for further projects.
Last year the company was able to sell off projects in excess of book value and most recently sold the Mariners Cove site for $28 million, which realised a $7.7 million premium.
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As a result of the strategy the company admitted its operating segments may reduce in size. This would mean various roles may become redundant.
The company was responsible for some of Queenslandās most iconic buildings, such as Q1 and Palazzo Versace. It also developed the $1.3 billion The Lanes project on the Gold Coast.
It said the company intends to continue to develop certain properties within its portfolio and sell off others. About 30 per cent of its inventory is not urrently being developed. These assets will be sold at market price in āan orderly fashionā.
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