This article is from the Australian Property Journal archive
Diversified developer Stockland is expecting a “material skew” in master-planned communities (MPC) settlement numbers in the second half, as it posted a dip in interim funds from operations (FFO) and announced two new logistics partnerships.
FFO came in at $251 million for the first half, down 5.6%, and on a per security basis at 10.5c. Half year distribution per security was maintained at 8.0c.
Stockland reaffirmed full-year FFO per security guidance of between 33.0c and 34.0c on a post-tax basis. FY25 distribution per security is expected to be around 75% of post-tax FFO.
Statutory profit lifted to $245 million compared with $102 million in the prior corresponding period (pcp).
“The first half result is in line with our expectations, and we are reaffirming our full year guidance. In the past six months we’ve progressed our strategic priorities, and we now have multiple drivers of sustainable growth across our business,” said Stockland’s managing director and CEO Tarun Gupta.
The result reflects strong contributions from the logistics portfolio and higher land lease communities (LLC) settlements, offset by reduced earnings from prior period town centre capital recycling and a material 2H25 skew in master-planned communities settlement volumes, Stockland said.
MPC settlements of between 6,200 to 6,700 are expected with a development operating profit margin in the low 20% range. LLC settlements are expected to be around 600, at the bottom end of previous guidance of 600 to 650, primarily due to weather related delays and lower sales in Victoria. Alongside investment partner Supalai, Stockland has recently acquired a portfolio of 12 MPC from Lendlease $1.06 billion.
“The transaction strategically restocks our pipeline at a favourable point in the residential cycle and positions us to accelerate production,” Gupta said.
Stockland has a circa $49 billion development pipeline.
The development segment – including MPC, LLC, and commercial development – delivered FFO of $36 million, with a stronger contribution from LLC and higher development management gee income more than offset by the second-half MPC settlements skew and no recognition of commercial development profits during the period.
It achieved 1,974 MPC settlements in the half. It has 5,789 contracts on hand at an average price of around 15% above first half settlements. Net sales were 2,371 with continued demand and sustained price growth in Queensland and Western Australia, it said.
“NSW demand remains strong notwithstanding affordability constraints. The pace of recovery in Victoria continues to lag other states.”
Development operating profit margins are expected to be in the low 20% range.
The strong MPC settlement cash inflows expected for the second half are expected to see gearing move towards the midpoint of the 20% to 30% target range. Gearing at the end of the period was 27.9% with liquidity of circa $2.2 billion.
In the LLC business, development operating profit margin was 21.8%, marginally down on the pcp, reflecting launch costs and a mix of settlements following the trade out of some higher margin projects. Net sales were up 13% to 273.
Stockland had around $500 million of logistics developments under construction at period end, with approximately 145,000 sqm of pre-leasing over the half to support future development starts at Yennora and Kemps Creek.
Stockland’s investment management segment delivered FFO of $298 million, own 6.7% on the pcp, reflecting reduced earnings from its town centre portfolio due to prior period non-core asset recycling into higher growth opportunities. Logistics FFO lifted 11.5% to $89 million, driven by positive re-leasing spreads of 33.2% with 159,000 sqm of leasing.
Stockland has secured two new, core and core-plus logistics capital partnerships with global capital partners M&G and KKR, with a combined initial portfolio of over $800 million.
The Stockland M&G Asia Property Trust will be a 50/50 open-ended partnership with M&G Real Estate, seeded by Ingleburn Logistics Park in south-western Sydney, with an initial portfolio gross asset value of $415 million.
The Stockland Logistics Partnership Trust will be an open-ended core-plus partnership with KKR (taking 70%), seeded with three Sydney logistics assets with an initial portfolio value of $388 million.
Stockland’s net tangible assets per security was $4.14, compared with $4.12 six months earlier.
