To make a short story long…I’ve owned SDG for 15 years. Since...

To make a short story long…

I’ve owned SDG for 15 years. Since they announced their controlled sell-off a year ago I’ve spent hundreds of hours combing through years of announcements to try to get a clear picture of Sunland’s assets so that I can model their likely dividends. They don’t make it easy to get a handle on their portfolio position and I believe that is why they have always struggled to get the share price up to NTA over the years.

Below are my dividend estimates. I’m not a financial advisor so please do your own research. If you think I’ve got something wrong, please let me know so I can update my model. I’m assuming they will maintain approx 33% debt to property ratio.

Going off June-2021 financials, but after paying the recent 20c div, SDG has (all numbers in $millions):

Property owned: $499m

Debt: $169m

Other net liabilities: $46m

Plus there is $74m in franking credits

Now, of the $499m of property, $190m is undeveloped land that they are selling and investment properties ($20m). $170m of this is already under contract. The profit on these sales will be approx $47m. That $47m does not currently appear on the balance sheet (assets are carried at the lower of cost and net realisable value). Note: carried forward capital loss of $27m so let’s assume only $7m tax payable on that $47m profit.

The other $309m of property is active or planned development projects. Based on the realisable project values from their Portfolio Presentations, these projects will be sold for a total of $759m. Assuming a 20% profit margin, the cost of these projects will be $608. That means they will spend a further $299m developing these properties. That is $309m curr + $299m spend for $608 total cost. Sell for $759m, giving $151m profit. Note as at 30-June $466m of the $759 was under contract including $118m at Lanes East that has settled since 30-June.

Allowing for admin of $15m per year and tax, I come up with the following dividend schedule:

March 2022: $0.57cps (+0.24 franking credits) – Settling Lanes East, Montaine, Ingleside, Carrum Downs, Marine Pd Coolangatta, Marine Pd Labradore

Sept 2022: $0.67cps (+0.29 credits) – Settling Montaine, first Hedges, Kenmore, Grace, Greenmount, Lanes lot 909

March 2023: $1.17cps (+0.32 credits) – Settling Hedges, Lanes Retail, Montaine, Royal Pines, Lanes lots 915 & 917

Sept 2023: $zero – perhaps some the March 2023 won’t come through until Sept 2023.

March 2024: $0.47cps (+0.04 credits) – settling Lanes West.

Note also the company said they would start doing divs every 3 months so some of these divs will be brought forward a few months.

In total that is $2.82cps of divs plus $0.89cps of franking credits. If you hold on until the end when share price hits zero, you’ll also be left with a capital loss to offset against gains you make elsewhere.

Based on today’s closing price of $2.47, I calculate the IRR as 38.8% before tax.

These numbers are full of guestimates. My biggest guess in all this is a sale price of $87 for Lanes Retail. It would be great if the company would put out some easily consumed details.

Remember, I have no inside knowledge and I’m not a professional. Do your own research.