The company behind the $1 billion 'Jewel' development in Surfers Paradise has acquired another slice of the Gold Coast from local developer Sunland Group (ASX: SDG).
Chinese developer Ridong has acquired Mariners Cove Marina, the retail and marina precinct located on the Southport Spit near Marina Mirage and Palazzo Versace, for $28 million.
Sunland Group acquired the site in 2011 for a discounted $13 million, with plans to hold the strategic asset for the long term.
The sale to Ridong is conditional upon the consent of the Queensland Minister for Natural Resources, Mines and Energy because the property is on Crown leasehold.
Once the Minister's consent is obtained and provided the contract for sale proceeds is in accordance with the terms and conditions of the contract, settlement is due 14 days after the consent is obtained but no earlier than 1 September 2020.
The $28 million sale price under the contract for sale represents a profit of $7 million, which Sunland says will be realised in FY21.
Sunland managing director Sahba Abedian says the sale is consistent with the group's strategy to "crystallise" the current market value of non-core assets and inventory which does not firm part of the group's immediate, short term, portfolio requirements.
Mariners Cove Marina is one part of the existing Southport Spit development, comprised of Sea World, Palazzo Versace, and Marina Mirage.
A major redevelopment of The Spit was given the go-ahead in February after the Implementation of The Spit Master Plan Bill 2019 was passed in Queensland Parliament.
The project involves opening up commercial sites in the area near Sea World, as well as creating an ocean park to rival London's Hyde Park in size, pavilion buildings including markets and a superyacht berth.
Sunland to scrap costs as COVID-19 hits
Further, Sunland says it is not immune from market volatility caused by the COVID-19 pandemic.
The company is reviewing costs previously capitalised on various projects, to assess if such costs could be "scrapped".
For example, this may apply where development plans no longer meet changing market demand.
The company has also flagged that completed inventory may prove more challenging to sell in the short to medium term having regard to current market conditions.
"Consequently, Sunland may review the carrying value of certain inventory with a view to making any adjustments to net realisation value in accordance with accounting standards and policies applicable to the Group," says Sunland.
"Despite the risks inherent in, and associated with, the current market conditions and the implications of them for potential adjustments to balance sheet values, directors consider the Group has generated sufficient cash flow for its ongoing requirements and proceeds have directly resulted in a reduction of the Group's working capital debt position during the corresponding period."
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