Raptis Group back in the development game, eying revenue of up to $7.7m

Raptis Group (ASX: RPG), the Gold Coast company that has remained relatively dormant for more than a decade after dominating the city’s development scene during the pre-GFC, looks set to get back into the local development game that could contribute future earnings of up to $7.7 million.

The listed company has been languishing for years despite the Gold Coast’s latest high-rise boom, which has led to a healthy development pipeline for company founder and RPG executive chairman Jim Raptis and his eponymous private company, Raptis.

After moving the company’s focus towards the acquisition of management rights in recent years, RPG has announced it is looking to secure three project management agreements that will take the company back to its development roots. The company had previously revealed its first project management deal would be for the private Raptis company’s planned $160 million development, Pearl Main Beach.

Shareholders voted on this agreement in March, but now the company has revealed its intention to step up activities in the area.

RPG has been exploring a number of options aimed at creating revenue which has been virtually non-existent for years. The key strategy for the company has been the acquisition of management rights that Jim Raptis says will ‘generate stable, low-risk income’ for the group.

RPG shareholders in March approved the $2.8 million acquisition of the management rights to two private Raptis developments - The Gallery Residences at Broadbeach and the proposed Pearl development underway at Main Beach.

Other areas of interest are build-to-rent opportunities on the Gold Coast, with the company actively seeking out potential sites.

However, the company’s March quarterly update reveals a renewed push by RPG to step up its revenue base through three project management agreements, including the already approved contract for Pearl at Main Beach.

The agreements, which will go to a shareholder vote, are forecast to provide a minimum of $516,000 in revenue for RPG this calendar year and potentially $7.7 million between December 2024 and December 2026. That compares with just over $319,000 in income for the first nine months of FY22.

It is unclear whether the additional project management agreements involve private projects currently in train by Raptis, although most of the activities undertaken by RPG since it emerged from administration via a deed of company arrangement (DOCA) have involved developments closely linked to Jim Raptis.

RPG’s progress since emerging from its spectacular collapse in 2008, when it owed creditors almost $1 billion, has been closely followed by the Gold Coast building industry. Many of the creditors were given shares in RPG as part of debt-for-equity deal proposed by the DOCA. It is unclear how many current shareholders are among the original creditors of the company which relisted on the ASX in 2015.

RPG’s quarterly update was issued on Monday after the company was prompted by the ASX which suspended trading in its shares ahead of the release.

The quarterly update has revealed the company is actively exploring potential development sites for a new stand-alone project, following up on its sole development since emerging from administration – a $25 million, 57-lot townhouse development at Springwood in Brisbane’s southern fringe completed in 2018.

“The company has been investigating potential development sites on the Gold Coast that meet the requirements of the current market for residential unit development,” said RPG.

The company has forked out more than $680,000 on feasibility costs including architects, development applications and valuation fees, according to the latest quarterly update. By the end of March, the company's cash position was just $131,833.

RPG says it evaluating sites and working with a potential funding partner to support the development of a build-to-rent project on the Gold Coast. It is also exploring ‘appropriate structures to allow the development and holding of build-to-rent stock’.

The build-to-rent sector has become a keen area of interest for the development industry in recent years, including majors such as Mirvac Group (ASX: MGR) and private developer Tim Gurner who has partnered with property investment house Qualitas to create a $1.2 billion build-to-rent fund.

On the Gold Coast, former Business News Australia Young Entrepreneur of the Year, Ron Bakir, and his private company Homecorp have teamed up with Morgan Stanley to deliver a $200 million build-to-rent project currently under construction at Varsity Lakes.

RPG shares resumed trading on the ASX today, although at the time of writing no volume has yet been traded.