Palazzo Versace hotel sale helps lift Sunland interim profits as residential sales slow

Residential property developer Sunland Group has reported a strong rise in interim profits for the half-year to December 31 driven by the sale of the Palazzo Versace hotel on the Gold Coast for $68.5 million at the end of 2012.

This was up from $185,000 in the previous corresponding period.

The fashion-branded hotel was reportedly sold to unnamed Chinese buyers with the deal requiring Foreign Investment Review Board approval.

Sunland declared a 2¢ fully franked special dividend to shareholders on the back of the sale.

Despite the improved result, Sunland continued to warn of “challenging and subdued” market conditions.

Sunland managing director Sahba Abedian said the group would continue to focus on its core market of residential land and housing.

But in contrast to the recent write-downs for residential land banks and apartment projects from listed developers Stockland and Mirvac, Sunland said it would continue to hunt for acquisitions following $37.8 million of them in the first half of the year.

Sunland managed 111 contracted sales over the six month period totalling $59 million with 204 settlements generating $77.4 million – well down from $132 million worth of settlements in the second half of fiscal 2012.

Settlements occurred at Glades, Gardene and Royal Pines on the Gold Coast and Kellyville in Sydney.

In addition, Sunland has 330 pre-sales contracts on hand totalling $183 million.

Sunland reported that sales had “slowed over the period”.

The developer has a land bank pipeline of 3,110 allotments with a potential end value of $1.3 billion, but it could be years before any of these projects come to fruition.

Despite the tough market conditions, Sunland plans to go ahead with off the plan marketing of its Brisbane CBD high rise apartment project previously named Carrington in the second half of 2013 financial year.

During the six month period Sunland acquired residential development sits at North Kellyville in Sydney’s west and Point Cook on the Melbourne fringe.