Desane Group Holdings (ASX: DGH) has agreed to sell its flagship Lilyfield Road property in Rozelle to the New South Wales Government’s Roads and Maritime Services agency for $78 million-plus GST.
Settlement of the inner west Sydney property is expected to occur within 60 days, with the contract giving Desane the first right to repurchase the property should Roads and Maritime Services put the it up for sale in the future.
According to Desane chairman Prof John Sheehan, the sale represents “fair market value” for the site.
News of the sale follows ongoing litigation where NSW’s Roads and Maritime Services lodged a compulsory acquisition of the 5,274 square metre property on Lilyfield Road for stage three of the State Government’s M4-M5 Link of the WestConnex Motorway.
Roads and Maritime Services planned to acquire the property for use as light vehicle parking for its construction staff.
Desane secured a decision from the NSW Supreme Court in May, with final orders stating the compulsory acquisition was “invalid”.
However, the Roads and Maritimes Services appealed the judgement and it was overturned earlier this week, with the appeal decision favouring the Roads and Maritime Services’ compulsory acquisition.
Commenting on the overturned judgement, Prof Sheehan said it was disappointing.
“The prospect of further litigation arising from yesterday’s decision of the court of appeal is not in the best interests of shareholders,” Prof Sheehan said of today’s decision to sell the property.
“We have always maintained that ongoing legal proceedings were never our preferred course of action.”
“I wish to thank shareholders for their continued support of the company over the last two years in relation to the proposed acquisition of its flagship property,” Prof Sheehan added.
Thornton Penrith project
Property investment and development group Desane generated earnings before interest and tax of $1.6 million during the financial year ending June 2018.
Net profit after tax came in at $700,000 for the full year.
During the current financial year, Desane plans to progress rezoning the 1.2 hectare Thornton Penrith property to high density residential status.
According to Desane, the site is “perfectly positioned” to take advantage of the new $8 billion western Sydney airport, upgrades to the local hospital and the 40,000 new jobs that are expected to be created in the area by 2031.
Investors reacted positively to news of the sale, with the company’s share price soaring almost 30% to reach $1.40 in mid-morning trade.