A developer behind some of the Gold Coast's most iconic buildings such as Palazzo Versace and Q1 is one step closer to winding up, with Sunland Group (ASX:SDG) today flagging it will have "no further or active projects or material business assets remaining" by the end of this financial year.
Founded in 1983 by Soheil Abedian and Foad Fathi, Sunland has made a major impact on skylines around Southeast Queensland and other parts of the country in its almost four decades of existence, but since October 2020 has been plotting the course for divesting its assets and returning cash to shareholders.
The goal was to deliver shareholders returns equivalent to the net asset value at the time of $2.56 per share, even though SDG shares were only trading at around half that level.
The share price has been buoyed ever since as the company cashed in on $40 million worth of assets in FY21, followed by $263.6 million in divestments in FY22.
Sunland's sales of undeveloped inventory and investment properties delivered $61.5 million in profit after tax in FY22, representing almost two-thirds of an NPAT figure of $92.6 million. The other third came from settlements at The Lanes Residences East Village and 272 Hedges Ave on the Gold Coast, as well as Montaine Residences, a medium density housing development in Sydney.
Following this result, project timelines have led Sunland to indicate it will likely have completed its plans to sell off its remaining assets after April 2023 and by 30 June 2023.
"On or about that time, Sunland may take steps to cease operating and in that case de-listing is a likely option, subject to and in accordance with legal and financial advice, regulatory requirements and market conditions," the group said, clarifying no decision had yet been made however.
"Sunland intends to maintain its listing on the ASX whilst the directors continue to assess the most appropriate way to finalise the strategy.
"At this stage Sunland has not made any decision about this and Sunland will consult with its advisors and ASX with respect to the most appropriate way to deliver the optimum outcome for its shareholders."
Completion and settlement are expected by April for 272 Hedges Avenue, The Lanes Residences West Village, and the final two stages of Montaine Residences, while work is ongoing with buyers for undeveloped inventory lots 916, 917 and 918 at The Lakes in Mermaid Waters and Marina Concourse in Benowa.
Sunland has announced it expects to be able to satisfy its debt notes and comply with the obligations of employee retirement and investment funds, as well as paying for staff salaries, employee entitlements, necessary operating expenses, the maintenance of completed projects, ongoing defect rectification as required and in accordance with legislation, contingent liabilities that may come about, and costs relating to finalising its strategy.
Of the $2.56 per share in divestments planned under the scheme announced in October, Sunland has delivered $1.17 in fully franked dividends, and estimate further dividend and capital distributions of $2.21 per share through to the completion of the strategy.
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