This article is from the Australian Property Journal archive
STOCKLAND and its Thai investment partner Supalai have cleared the final hurdle for their $1.06 billion acquisition of 12 land lease communities from Lendlease, with Stockland upgrading its full-year guidance on the back of the Foreign Investment Review Board (FIRB) approving the deal.
The transaction, first announced in December last year, attracted concerns from the Australian Competition and Consumer Commission (ACCC) that it would remove one of Stockland’s closest and largest competitors in the supply of residential master-planned community (MPC) housing lots in four regions – namely, the Illawarra, North West Perth, Ipswich, and Moreton Bay.
The consumer watchdog gave its own permission for acquisition to go ahead in September after Stockland agreed to offload its existing Forest Reach estate near Dapto, avoiding saturation of the Illawarra market.
Yesterday, the parties said they would work closely have the deal wrapped up in the current December quarter.
Given more certainty around the part-period earnings contribution from the newly acquired communities, Stockland said it now expects FY25 funds from operation (FFO) per security of between 33.0c and 34.0c on a post-tax basis for FY25 – up from between 32.0c and 33.0c – with a larger FFO skew to the second half than in FY24. It said that reflects the timing of the contribution from the transaction along with an underlying second half skew in settlement volumes for Stockland’s existing MPC portfolio.
Stockland expected to see its gearing increase but remain within the target range of 20% to 30% as at the end of December. At the end of June, it was 24.1%.
Stockland expects MPC settlement volumes of between 6,200 and 6,700 lots at an average operating profit margin in the low 20% range. This compares to its previous expectation of 5,300 to 5,700 lots, with the revised target including the part-period contribution from the Lendlease transaction.
FY25 settlement target for the land lease communities business is unchanged at 600 to 650 homes.
Supalai described the acquisition as Australia’s largest-ever acquisition of going concern land subdivisions in a single transaction. It takes the company’s total investment commitment in Australia to in excess of $850 million, with 25 projects together with Australian partners.
Supalai’s founder and chairman, Prateep Tangmatitham had identified Australian residential real estate development as an expansion target for the Bangkok SET listed developer over 10 years ago.
“It is a powerful endorsement by a significant overseas investor of the residential development sector in Australia”, said Supalai’s Australian advisor, Joseph Gersh, executive chairman of Gersh Investment Partners Limited.
“Without such investment, the Government’s ambitious programme to address Australia’s housing shortage cannot possibly be met”.
“We need to do everything possible to make our legal framework and regulatory processes as efficient and transparent as possible if we are to continue to attract the overseas investment we need to meet Australia’s housing needs.”
FIRB approval allows for Lendlease to move further ahead with its $4.5 billion restructuring plans. The ACCC’s pushing back earlier this year of the decision on whether to allow the deal to proceed prompted Lendlease to slash its core operating profit projections for FY24 by nearly a third.
