This article is from the Australian Property Journal archive
STOCKLAND is on track to achieve its FY18 guidance thanks to positive residential trading conditions and improving retail sales. At the same time, the group has set its sights on the social infrastructure sector by starting construction on its first childcare centre.
Stockland is on track to achieve FFO growth of 5.0-6.5% for the full year and targeting a distribution per security of 26.5 cents, representing 4% growth on FY17.
CEO Mark Steinert said Stockland enjoyed another solid quarter, with the diversified business model continuing to deliver growth opportunities.
“It’s particularly pleasing to see positive sentiment and improving sales results across our retail town centres, reflecting the success of our remixing and redevelopment activity.
“Over the quarter we’ve seen comparable speciality sales increase to $9,092 per square metre, up 3.0% since December 2017,” Steinert said.
“In March we opened the third stage of the flagship $414 million Green Hills redevelopment, where on-average sales for existing retailers are up almost 10% since launch and customer visits to the centre exceeded 135,000 in the first three days alone. The project is targeted to deliver accretive returns, with a stabilised FFO yield of 7% and an incremental internal rate of return (IRR) of around 11.9%,” he added.
Stockland’s logistics and business parks portfolio achieved a number of key deals, with 56,000 sqm of space leased during the third quarter.
“We are progressing our $760 million development pipeline. The sale of Stockland Highlands retail town centre (excluding McDonald’s pad site) in Melbourne for $43 million last week achieved a 20% premium to December book value, and we are actively working towards additional asset divestments in the coming months to fund incremental L&BP investment,” he continued.
In the residential business, Stockland remains on track to complete around 6,500 settlements, with an operating profit margin around 17%.
Steinert said the lower quarter-on-quarter net deposits reflect project release timing.
“We look forward to four new projects launching over the next six months, comprising a total 2,400 lots over the life of these projects, including approximately 1,800 lots in Victoria at Grandview and Waterlea, and approximately 600 lots in Queensland at Rothwell and Springview.
“This quarter we completed our first Queensland medium density project, delivering 120 townhomes at North Lakes with all homes sold prior to the project’s completion,”
Steinert said residential trading conditions remain generally positive, particularly in Melbourne and Queensland.
“In line with expectations, Sydney has seen a slight moderation in demand from its peak. Across the country we have strong visibility of earnings over the medium term, with over 6,367 contracts on hand as at 31 March this year,” he said.
The retirement living business remains in line with guidance, which is that it continues to be subdued over the quarter.
“We continue to focus on broadening our customer reach by providing more diverse living options and choice of homes, location and contract models across our growing development pipeline.
“Recently we sold Rosebud Retirement Village in Victoria and continue to assess options to divest other non-core villages, to recycle capital into our development pipeline and focus on scale properties.” Steinert said.
Meanwhile Stockland will start construction this week of its first childcare centre outside of its retail portfolio, as it moves into development of social infrastructure services within its masterplanned communities.
The first in a pipeline of seven centres is located within the diversified group’s Aura community on the Sunshine Coast. The $3.7 million centre will have science, technology, engineering and mathematics (STEM)-based approach to early learning, and which will feature a 952 sqm outdoor playing space.
Stockland will develop and own each of the seven centres, and engage with early education partners to operate them. Goodstart Early Learning will operate the Aura centre, which is expected to open in January 2019 with 132 spaces.
Ibis research shows 1.3 million children will attend some form of child care service over 2017-18.
“With Australia’s birth and population rate consistently on the rise and revenues set to increase by 34.2% to $12.1 billion by 2019-20, we see growth in the sector as a true opportunity,” Stockland’s general manager for medium density and retirement living development, Ben Cantwell said.
The Aura centre will be positioned directly opposite the new Baringa Primary School, which also offers STEM-focussed curriculum.
Aura is the largest masterplanned community undertaken in Australia under single ownership. Over the next 30 years it is slated to bring more than 20,000 new homes across the 24 sq km, with a 200 km network of cycling paths and, a 700ha environmental protection zone and plus two business parks.
Australian Property Journal
