The Developer - Financial Status
The Resort Group's financial model is based on securing a high level of pre-sales before commencing construction, placing them in a cash-flow positive position throughout the entire construction cycle, removing an over reliance for 3rd party financial assistance.
As at October 2009, The Resort Group has procured in excess of 900 property sales from a total inventory of 1,195 units. This places the developer in a cash flow positive position, irrespective of future sales performance.
The developer’s cash flow assumes a ‘sell-out’ of the remaining properties on Dunas Beach Resort by the end of 2010. Based on their current average monthly performance the physical ‘sell-out’ will be realized by end of April 2010. At the lowest cash flow ebb during the height of construction the developer is showing a cash-flow in excess of €10,000,000 (positive).
Put into perspective, most development companies with projects the size and stature of Dunas and Tortuga Beach Resorts will typically manage a negative cash flow position of €60,000,000 during the height of the construction cycle.
The developer's business model is very risk averse, phasing of the completions is structured in such a way that cash flow is maximized in order to ensure a constant stream of funding is available for later phases.
The Resort Group PLC has also secured commercial funding of €9,000,000 through BANIF Bank’s holding company in the Cayman Islands (approved and notarised in Sept 08).
A ‘Savills’ Red Book Valuation confirms a ‘bare land value’ of €46 million for Dunas Beach Resort (underwritten). This bare land value does not take into consideration the fact the resort is more than 70% sold out and fully contracted to clients. The promissory contract gives clients further security, in addition to what is demonstrated above.
Succession planning is already underway. The Resort Group has acquired a 3rd plot of land measuring 78,500m2 – situated between their two live projects.
Master planning and construction licenses will be finalised and secured before the release of this 3rd resort, although in keeping with The Resort Group’s finance policy to ‘never spread themselves too thinly’ the trigger for release will be determined only when the vast majority of properties on Dunas Beach Resort are sold.
This is expected to be approx October 2010.
