The Jim Raptis-led Raptis Group will team with Villa World to build a $220 million retail and apartment tower project on the site of the Dolphin Arcade in the heart of Surfers Paradise.

The two Gold Coast listed developers yesterday announced that they had entered into a non-binding heads of agreement to undertake the joint venture.

The deal involves Raptis purchasing a 50 per cent interest in the site for $30 million, in a deal that would be settled in June, 2007.

The existing four-level Dolphin Arcade, across the road from the Raptis Group built Chevron Renaissance, has two levels of shopping topped by two levels of parking.

The 7053sqm arcade, reconstructed in 1987, was built in the early 1980s.

Villa World bought it in August 2002, for $33 million and last year gained development approval for a two tower project that would house 398 apartments, 3500 sqm of retail space and associated facilities.

In the past year Villa World has twice signed deals to sell the property but both times the sale fell through.

Under the deal announced yesterday the Raptis Group will be responsible for building the towers.

Villa World director and big shareholder John Potter, who brokered the deal during the last eight weeks, said construction would not start until 2008 because of the large number of apartment projects already under way on the Coast.

Under the terms of the deal Raptis will pay an initial deposit of $1 million payable on execution of the formal agreements. Raptis will make a further deposit of $1 million, payable by June 30, 2006, and the group will also be the project manager and be responsible for marketing.

Mr Potter said the Raptis Group may end up changing the design of the project.

He said there was no shortage of potential buyers and he held talks with 'plenty of interested parties' before finalising the Raptis deal. "This agreement is a significant achievement for Villa World," said Villa World chief executive Brent Hailey.

Mr Hailey said because Villa World had decided to enter a joint venture with Raptis instead of a full sale, it would affect the company's profit forecast of about $25 million.

"Villa World had previously announced that it is budgeting for a similar result in 2006 to that achieved in the 2005 year," said Mr Hailey.

"This was based on the full sale of the Dolphin Arcade project," he said.

Mr Hailey said the decision to joint venture the project would cut the company's 2005-06 after tax profit by about $4.8 million but would deliver bigger profits in the long run.


Copyright: Gold Coast Bulletin 2005.

Source: Gold Coast Bulletin, THURSDAY 03 NOVEMBER 2005.