Sunland Group relaunches share buyback program to shore up its bottom line

PROPERTY developer Sunland has relaunched a share buyback program to shore up capital.

Sunland group chairman Soheil Abedian and managing director Sahba Abedian. Picture: Glenn Barnes

PROPERTY developer Sunland has relaunched a share buyback program to shore up capital.

Sunland said its buyback program to date had halved the number of shares on issue and boosted its capital base.

Sunland, developer of the Q1 supertower and Palazzo Versace Hotel, will acquire and cancel up to 10 per cent or about 16.4 million of its shares over the next 12 months.

The resumption of the buyback comes after Sunland reaffirmed guidance of $35 million net profit for 2017, an increase of 11 per cent on the group’s FY16 net profit of $31.5 million.

Sunland also reaffirmed it plans to maintain a dividend payment ratio of 40-50 per cent of net operating earnings while the buyback is underway.

Sunland Group managing director Sahba Abedian and founding executive chairman Soheil Abedian said they will not take part in this buyback program.

Sunland launched its first share buyback and stopped paying dividends in 2009 in the wake of the GFC.

The developer resumed paying dividends in 2013 after the sale of the Palazzo Versace hotel for $68.5 million.

Sunland said combined, previous buybacks have bought 163.2 million shares for $146 million, representing an average of 89¢ a share.

Total shares on issue have been reduced by around 50 per cent.

Previous buybacks resulted in reducing the peak number of issued shares from 323.6 million to 160.8 million.

Sunland said the buybacks had doubled earnings per share and greatly enhanced the group’s Net Tangible Asset (NTA) position per share.

Sahba Abedian said the group’s shares continued to trade at a “significant discount to NTA, providing the opportunity for a further strategic buyback program”.

“The board sees this as an excellent opportunity to continue consolidating the group’s issued capital as part of our ongoing capital management strategy, particularly when shares are trading at a discount of 32 per cent below the net tangible asset value,” Mr Abedian said.

He said the latest buyback will be funded by the group’s existing cashflow and working capital.

Sunland is developing its flagship $850 million 42ha masterplanned The Lakes project at Mermaid Waters.

It withdrew an application for a planned $600 million two-tower Mariners Cove project at The Spit.

This was after the Gold Coast City Council announced it was deferring a decision on the controversial proposal for at least 12 months.

Sunland shares closed 5¢, or 3.26 per cent higher, at $1.58.