Developer Sunland says it won’t make its profit forecast after a revaluation and soft market

SUNLAND says it will take a more conservative approach in the coming year after a softening property market and a drastic writedown on a major project left it likely to fall short of its profit guidance for the financial year.

The waterfront residences at Sunland Group's Marina Concourse have sold well.

SUNLAND says it will take a more conservative approach in the coming year after a softening property market and a drastic writedown on a major project left it likely to fall short of its $27 million to $30 million profit guidance for the financial year.

Revealing its half-year results today, the developer said the realisable value of its Bayside project at Bushland Beach in Townsville had been slashed by $9 million, taking the company’s net profit to $11.5 million for the six months to December 31 last year.

Shareholders responded to the results positively, sending the company’s price up 1.35 per cent to $1.50 by market close.

Artist impression of The Lanes Residences proposed by Sunland for a site at Clear Island Waters. Picture: Sunland Group

Sunland will deliver its shareholders a franked interim dividend of four cents, down from five cents last year, and retains $33.6 million in cash and $192.9 million in undrawn credit.

The group said it had used funds from project settlements to reduce its debt by $60 million since June.

Managing director Sahba Abedian said Australia’s property market continued to soften, with a significant reduction in foreign purchasers and local investors impacting sales volume.

“This change in the market reflects several factors, including prudential regulation and tightening bank lending criteria, reduced ability for transfer of capital into Australia, state taxes on foreign investors, and pricing of investor lending,” he said.

SUNLAND IS SUING GOLD COAST COUNCIL - AGAIN

Artist impression of Sunland's Hedges Avenue tower 272 Hedges Ave.

Sunland’s residential developments on the Gold Coast, including Marina Concourse, The Lakes Residences, Magnoli Apartments and 272 Hedges Ave, had contributed to the profit.

Sunland said the Bayside writedown reflected a “change in strategy” for the Townsville project as it withdrew from regional markets.

The Townsville house and land project has been pummelled by sinking demand in the North Queensland city and is down the road from Clive Palmer’s shuttered Yabulu Refinery, which once employed more than 500 people.

Mr Abedian said the company had to focus on locations which were most promising.

“Sunland is focused on delivering a consistent underlying performance during a challenging phase of the market cycle,” he said.

“This includes a strategic approach to geographic and portfolio diversification for the group.”

Sunland plans to launch two new projects during the second half of the financial year, including The Lanes Residences on the Gold Coast, and Hyde Residences in Brisbane, in addition to new stage releases at Arbour Residences and The Heights on the northern Gold Coast.

SUNLAND SLASHES SIZE OF `KFC’ DEVELOPMENT

A view over former “Millionaires Ridge” at Townsville’s Bushland Beach where Sunland Group had planned its Bayside project.

Mr Abedian said Sunland would take “a conservative approach to the delivery of our portfolio in line with market conditions”.

“We are cognisant of the need to maintain a conservative balance sheet and will evaluate all future project releases in line with this approach,” he said.

“Our capital management initiatives, strong balance sheet, and access to capital continues to provide a stable platform from which to maintain profitability and deliver sustainable shareholder returns.”