Australia's residential property downturn has continued to dent residential developers with ASX-listed Sunland the latest victim posting a 49 per cent decline in net profit to $17.7 million for 2019 and 14 per cent dip in revenue to $283 million.
Sunland managing director Sahba Abedian pointed to softening market confidence and pressure mounting from a decline in investors and foreign buyers as well as tighter lending conditions for the slowing of its business, which centres heavily on apartment development.
The Brisbane-based developer, which has now weighting its residential portfolio towards the owner-occupier market, revealed that revenue was down on the previous financial year, with the group generating $277.6 million from property sales, down from $321.6 million the previous year.
Over the course of the fiscal year the developer secured 382 settlements, down from 487 the year prior.
“The headwinds in Australia’s residential market have had a significant influence on the slowing rate and volume of sales across the property sector during the past financial year,” Abedian said.
“While these are being offset by the introduction of structural reform in the finance sector and historic low rates, it is unlikely that market conditions will improve significantly in the short-term.
“Accordingly, Sunland is focused on strategically positioning the company for the next phase of the cycle through a conservative approach to project delivery and identifying opportunities for replenishment.”
The group currently has 13 active projects along Australia’s east coast and a $3 billion portfolio comprising 4,292 residential homes, urban land lots, multi-storey apartments, and an emerging retail and commercial portfolio.
“Our Queensland projects contributed significant revenue to the full year result and will continue to do so in the year ahead as other projects approach completion,” Abedian said.
Sales at Macpherson Street in Warriewood and The Gardens in Chirnside Park, in NSW and Victoria respectively, also contributed to Sunland's revenue during this period.
The group’s multi-storey segment also contributed to the result from settlements at Marina Concourse on the Gold Coast.
In February, Sunland warned it was unlikely to meet guidance, adding it would take a more conservative approach in the coming year after a softening property market and a write down on its Bayside project in Townsville by $9 million.
“Sunland is focused on delivering a stable, consistent performance during a period of continued adjustment and consolidation in the market cycle,” Abedian said.
“The Group’s mid-rise apartment portfolio will also continue to expand as part of an integrated housing strategy that enables us to mitigate risk through staged delivery.”
Sunland has continued to sound out new projects, purchasing two new development sites, Carrum Downs in Victoria for $13 million and in Maraylya in NSW for $6.8 million.
Sunland reported increased balance sheet capacity, with $19.8 million in cash and $185.4 million in undrawn working capital, and said it had reduced its overall gearing to 24 per cent on a debt-to-assets ratio.
The group said a share buyback had reduced the company’s shares on issue by 58 per cent in the past decade, with the group declaring a final dividend of 4 cents a share due 20 September.