Gold Coast Bulletin – October 21st, 2008

SUNLAND Group has flaunted its financial strength yesterday emerging as the $28 million buyer of the residential and marina precinct at Royal Pines Resort.

It is the Q1 developer’s first Gold Coast property deal since last November and it has indicated further acquisitions are on the horizon.

The purchase comes as fellow Gold Coast developer Jim Raptis shrugs off allegations he could not afford to renew his building licence.

The Chevron Renaissance developer said the group no longer needed the Building Services Authority licence, indicating ‘other parties’ would take over construction of the Hilton Hotel as it concentrates on paying back an immediate debt of $300 million.

Last week, The Bulletin revealed Mr Raptis, who has four companies in receivership, was in talks with construction giant Brookfield Multiplex to take over the proposed Surfers Paradise development.

It is understood a deal is close to being finalised.

While the global credit crunch has seen many developers tighten belts, sell assets and move to pay back bad debt, Sunland said it was well-placed to take advantage of major sales.

The group bought the 19ha lot at Ashmore, adjacent to the RACV-owned resort tower, from US funds manager Morgan Stanley.

It plans to transform the waterfront site into a medium-density community with an end value of $200 million.

The group, which also developed Circle on Cavill, said the buy represented the start of its ‘counter-cyclical investment strategy’.

It said its strong balance sheet enabled the group ‘to acquire premium assets that would strengthen the pipeline and profitability in the future’.

Sunland managing director Sahba Abedian said the group’s financial discipline and the disposal of non-core assets over recent years had placed the company in a position where it could react quickly to opportunities.

“The acquisition of Royal Pines is a prime example of such opportunities,” he said.

“We will purchase the site with surplus cash and continue to have significant capacity to benefit from other acquisition opportunities the market may offer.

“Despite the volatility in the global markets, there are still specific property segments which will perform soundly in the medium term.”

He said the group was ‘assessing’ a number of other potential property deals.

“We are being approached almost on a weekly basis with opportunities and over the next 12 months we will be looking to make further acquisitions,” he said.

It is the group’s first foray in the Gold Coast property market this year.

Before that, its most recent buy was a development site at Merrimac for $5 million.

Mark Witheriff, of CB Richard Ellis, said Sunland’s decision to buy the Royal Pines development was, in this market, a ‘massive statement’.

“This is huge in this current climate,” said Mr Witheriff, who sold the property.

Mr Abedian said the group, which also has strong development interests in Dubai, had been eyeing off the site ‘for some time’.

He said the group’s plans for the site, not yet finalised, would be a mix of commercial retail and residential.

The site is 5km from Surfers Paradise and the marina includes 87 wet berths and 65 dry docks.

“Our acquisition enables us to reap the benefit of more than 20 years’ investment in the existing resort and brand, infrastructure, planning and amenities by the original developer,” he said.

The deal also includes the real estate business, Royal Pines Resort Realty.

The site was placed on the market at the same time as the hotel, which was picked up by RACV two months ago for about $60 million.

Mr Witheriff said Morgan Stanley decided to split the Royal Pines offering in order to achieve a higher price.

The US investment giant bought Royal Pines for $44.3 million in 2005 and undertook a $16.9 million refurbishment in 2006.