SUNLAND'S $50M TOP-UP FROM BIG INVESTORS
Written on the 12 November 2015 by Nick Nichols
SUNLAND Group (ASX:SDG) is topping up its cash reserves through a $50 million note issue as the company fires up its high rise development program in south-east Queensland.
The Brisbane-based company says the move is aimed at diversifying into debt capital markets and to provide working capital for new opportunities.
Sunland spent $82 million on site acquisitions in FY15, and while it has already dipped its toe in earnest back into the high-rise market with Abian in Brisbane, it is now gearing up for some of its biggest projects in a decade in both Brisbane and the Gold Coast.
The unsecured note issue is initially targeting $40 million from sophisticated investors, with the capacity to accept an additional $10 million in oversubscriptions. The five-year notes will carry a 7.55 per cent interest rate.
"Sunland's premium development portfolio is the culmination of more than five years of strategic, counter-cyclical efforts and successful capital management," says Sunland managing director Sahba Abedian.
"The note issue, together with Sunland's existing banking arrangements, will assist in funding the group's current pipeline of land, residential and multi-storey developments and provide working capital for other opportunities Sunland may pursue in future."
According to the company's latest financial result, Sunland had debt of $113.4 million at the end of June with a debt to equity ratio of 32 per cent, up from 24 per cent a year earlier.
The company also had $29.8 million in cash and an undrawn credit facility of $107 million.
While Sunland is expecting a raft of property sales to settle in FY16, the company's high rise portfolio is weighted towards FY17 and beyond, beginning with the highly successful Abian.
Settlements of Abian apartments will be staggered between FY17 and FY18, while big-ticket projects such as twin-tower duo Grace on Coronation in Brisbane and Mariner's Cove on the Gold Coast are expected to settle from about FY19.
Of the 6010 residential products in the company's development pipeline, 3518 are on the Gold Coast with an end value of $2.1 billion.
The company began targeting the under-done Gold Coast market after a strong run of projects in Sydney and Melbourne.
Reported by Nick Nichols for Brisbane Business News.
Author: Nick Nichols