Struggling listed property developer Sunland has put its flagship Palazzo Versace hotel on the Gold Coast up for sale with price expectations of around $80 million arising from strong expected Asian buying interest.
The decision to sell the hotel comes just seven months after Sunland acquired the hotel outright following a swap arrangement with Dubai development partner the Enshaa Group.
The sales campaign is being handled by father and son real estate agents Dan and Sam McVay from boutique commercial real estate agency McVay Real Estate, which has offices in Brisbane and Sydney.
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Sam McVay told Property Observer he expected the buyer will most likely come from offshore though there will also be interest from high-net-worth individuals in Australia given the hotel’s iconic status.
“We have had a lot of interest in the hotel in the past,” he says.
The hotel will be marketed via a five week expressions of interest campaign with a sale expected to be concluded within three months.
Dan McVay told the Gold Coast Bulletin Asian buyers were “probably at the front of the queue”.
The hotel features 200 rooms, three restaurants, a ballroom, shops, a gymnasium, a spa, a marina and other facilities.
Under the terms of the agreement, Sunland agreed to exchange its joint venture Dubai projects – the Palazzo Versace Dubai and D1 Tower – for 100% ownership of the Palazzo Versace hotel on the Gold Coast.
Enshaa had purchased its 49% stake in the hotel for $42.5 million in 2005.
The Palazzo Versace was the world’s first fashion-branded hotel when it opened in 2000. The Palazzo Versace name will remain until 2020.
Sunland managed interim profits of just $185,000 for the half-year to December 31, with the company taking a hammering from a slowdown in sales in projects in south-east Queensland and Victoria.
The company had forecast profits of $1 million for the half year.
Annual accounts show that the Palazzo Versace contributed revenue of $14.7 million for the year ending June 30, 2011, compared with $13.5 million for the year ending June 30, 2010.
For the half-year to December 31, Sunland sold 219 off-the-plan apartments and house-and-land packages, worth a combined $102 million.
It settled 263 sales over the six-month period, totalling $59 million.
In its results, Sunland notes a significant decline in enquiries, sales activity and subsequent delay in settlements towards the end of the year, particularly in south-east Queensland and Victoria.
It says the continued rate of sales and timing of settlements will be crucial to the full-year result.
Chief executive Soheil Abedian says the results reflect the uncertainty in relation to settlements and a loss of confidence in the market.
Residential projects that contributed to sales over the six-month period were the Queensland townhouse projects Cassia and Gardene, the Boulevarde Residences at the Royal Pines Resort on the Gold Coast as well as the NSW Sedyr project at the entrance to the Georges River.
Sales were also recorded at the master-planned developments of Bushland Beach near Townsville and Bluestone, 35 kilometres from Melbourne.
The future looks brighter, with a significant amount of settlements pushed forward into the second half of the year. Unconditional sales totalled 470 worth $200 million, while settlements worth $130 million are expected in the first half of 2012.
Sunland is forecasting a 30% drop in full-year profits of between $14 million and $15 million.
The interim accounts show the developer has an unused $66 million line of credit and $19.2 million in cash on hand.
This article first appeared on Property Observer.