MRE
Sales Push for City Pacific Cash Cow

Receivers have made a renewed push to sell-off one of the most consistent cash generators in the failed City Pacific empire, the bustling Paradise Resort.

The low-brow family destination, which sits near the five-star Marriott Resort in Surfers Paradise, pulls in revenue of $20 million a year thanks to above-average occupancy rates.

The turnover translates into a net holding income of about $3 million a year with the resort's 357 rooms hovering around 83 per cent occupancy.

This compares with the Coast average of 69 per cent.

The 2.5ha property, which fronts Ferny, Norfolk, Oak and Birt avenues, was earmarked by City Pacific offshoot CP1 for a $1 billion four-tower redevelopment during the height of the property boom.

While the appetite for new Gold Coast apartment projects remains light, marketing agents said Paradise Resort was likely to attract land bankers due its strong holding income.

CP1 paid $61 million for the resort in 2004 and, after a failed sale attempt in 2008 during the peak of the financial crisis, receivers are eyeing buyers between $45 million and $55 million.

"It is a very different marketplace today," said Mark Witheriff, the Gold Coast boss of CB Richard Ellis.

Mr Witheriff, along with CBRE Hotels colleague Andrew Jackson, is conducting an expressionsof-interest campaign for Paradise Resort in conjunction with Dan and Sam McVay, of McVay Real Estate.

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The sales campaign follows settlement last month of another distressed City Pacific asset, Pacific Beach, for $81.8 million — a deal also negotiated by the CBRE and McVay team.

Dan McVay said that the lack of finance stymied the sales campaign for Paradise Resort in 2008 even though it drew 'significant interest'.

"Recent transactions indicate the demand for large resort-development sites in Queensland has increased significantly in the last six months," he said.

Approval is already in place for a 30-level apartment tower in the south-western corner of the property.

Mr McVay said a buyer could proceed with the first tower without affecting the existing hotel business.

The entire four-tower project could comprise up to 1700 rooms, he said.

"This is incredibly appealing as you can get under way with building and continue to sell off the plan, while still generating a strong income from the existing resort facility," he said.

"There have been some strong comparable site sales in the last six months, but I can't think of any nationally that have offered such strong cashflows — along with the ability to kick off a staged development program while they continue to generate this strong income."

Expressions of interest close on May 26.