The luxury Queensland property developer, Sunland Group, has announced plans to wind down its business operations.
It will take place over the next three to five years following the completion of its current projects. The objective of the strategy is to return to Sunland Group’s shareholders current net asset value, where possible, of $2.56 per share by way of progressive dividend and capital payments.
It reflects a premium to the 30 day volume weighted average price of $1.33 per share.
The board described its share trading price as lacklustre.
The share price reached a low of $0.55 in July 2011 and a high of $2.00 in March 2015.
The ASX listed company announced to shareholders it would repay it liabilities before the company goes private and potentially ceases operations.
The company is looking to offer shareholders a fully franked dividend payment, with $81 million credit balance available at the end of last financial year.
Sunland has been operating below its net tangible asset value for 11 years after coming through the Global Financial Crisis.
It currently sits at an estimated $2.56 per share.
It created Gold Coast landmarks such as Q1 and the Palazzo Versace.
Sales activity for the recent financial year totalled 357 lots for a value of $236.9 million (FY19: 237 sales for value of $214.6 million).
Its contracted presales for projects released across the development portfolio as at 30 June 2020 totalled 260 lots with a combined value of $296.0 million (FY19: 177 lots for a value of $192.4 million).
The group generated revenue from property sales of $159.8 million (2019: $277.6 million) during the financial year period, generated from settlements of 236 lots (2019: 382).
Following the Tuesday 9.30am announcement, the share price rose to $2 and closed the day at $1.95.
The strategic plan was devised with input from Morgans.
Approximately 70 percent of the group’s inventory value is currently under development and programmed to be completed over the course of financial years ending 30 June 2021, 2022 and 2023.
Sunland currently anticipates there will be a limited number of further projects which will commence development including Lanes Retail and Lanes Residences (West Village), which are both at Mermaid Waters, Queensland and the site at 154 Marine Parade, Coolangatta, Queensland.
“The board does not intend to reinvest surplus cash in replenishing the development portfolio of Sunland Group
“This means various roles associated with certain business segments of Sunland Group may become redundant, in which case the group will be required to pay appropriate entitlements to employees.”
Its balance sheet capacity as at 30 June 2020 was $13.1 million in cash and $139.9 million in undrawn working capital.
Its directors include Ron Eames, Christopher Freeman, Rebecca Frizelle and Vahid Saberi.
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