Stockland on track to meet residential settlements of above 6,000

Developer Stockland said its residential business was on track to meet its full-year target of more than 6,000 settlements and would post operating profit margins of 15-16 percent following the announcement of its third-quarter update.

The developer maintained its FY17 outlook for growth in funds from operations (FFO) per security of 6 percent to 7 percent. 

Stockland managing director and CEO Mark Steinert said the company made good progress in its core businesses.

“Our residential business is benefiting from our well-located projects in high growth corridors, our more diverse and affordable product mix, strong market conditions on the East Coast, and the stabilisation of the Perth market,” he said. 

Stockland said 77 percent of its buyers were owner occupiers in the March quarter while 54 percent were first home buyers.

Its residential business achieved 1,891 net deposits in the quarter and 5,984 net deposits in the financial year to date, compared to a total of 4,844 net deposits up to the corresponding point in time last year. Its 

“We remain focused on providing affordable housing solutions for our customers,” Steinert said. “On average, prices for our house and land packages are more than 15% below the established house prices in the surrounding trade area. 

Stockland said it expected to achieve a FY17 Distribution Per Security (DPS) of 25.5 cents, based on the higher of Total Trust Income (TTI) or 75 – 85 percent of FFO, up 4.1 percent on FY16. 

“In our retirement living business, our resale values are benefitting from the quality of our villages and the strength of the broader residential market. We will continue to improve our long term returns by focusing on new development and the provision of additional services to our residents.” 

Stockland’s retirement living business had 244 net reservations in the quarter and was in line with internal forecasts, it said. 

It said retail had a relatively flat quarter, with our figures impacted by Easter and the Victorian and Queensland school holidays falling in April. 

“We encountered the same headwinds that are affecting the sector with some retail price deflation, above average retailer administrations and a weak start to the calendar year for discount department stores,” Steinert said.

“We’ve continued to invest in our portfolio and remix the centres to deliver good growth of 2.7 percent in specialty sales per square metre across our comparable shopping centre portfolio. Total comparable annual sales across all retail categories were relatively flat at -0.2 percent. We remain on track to achieve Retail FFO growth in line with our guidance of 3 – 4 percent for the full year, driven primarily by specialty stores. 

“We’ve also maintained our momentum in the development and leasing of our logistics and business parks, and our predominantly Sydney-based office portfolio performed strongly,” Steinert added. 

Stockland acquisitions and development update – 3Q17 (and post-date) 

-  Acquired 77 hectares in Craigieburn West to extend Highlands community

-  Acquired 11.5 hectare townhouse development site at Braybrook, 10 km
west of Melbourne CBD

-  Commenced construction of Stamford Park townhouse and apartment
development at Rowville, 26 km south east of the Melbourne CBD

-  Launched Edgebrook residential community at Clyde North, south east
Melbourne

-  Completed Stage One of the $412 million redevelopment and expansion of
Stockland Green Hills Shopping Centre

-  Completed and opened the $30 million Stockland Kensington Shopping
Centre in Bundaberg

-  Achieved practical completion of Oakleigh Logistics Facility, Stage Two,
Melbourne

-  Commenced construction of Warwick Farm Logistics Facility, Sydney

-  Completed and opened Stage Two of The Residences, Cardinal Freeman,
comprising a new clubhouse and 40 apartments, with all but one apartment pre-reserved

Stockland recently listed a 22,800sqm retail development site in its residential community south of Brisbane, Pallara.