This article is from the Australian Property Journal archive
IN spite of ongoing macroeconomic challenges, property giant Stockland (ASX:SGP) has delivered strong results on its strategic goals in 1Q23.
Across its commercial property portfolio, Stockland reported 98% rent collection for the quarter, maintaining high occupancy levels.
“Our first quarter result demonstrated the strength of our diversified portfolio and the success of the growth drivers enabled by the accelerated execution of our refreshed strategy in FY22,” said Tarun Gupta, CEO and managing director at Stockland.
“We delivered a strong operational performance across our commercial property portfolio, including strong rental growth in the rapidly growing Logistics portfolio and in our Town Centres, where we had double digit sales growth and maintained positive leasing spreads.”
The logistics portfolio currently has a WALE of 3.3 years, leaving it well positioned to take advantage of strong tenant demand and market rent growth.
This has already been demonstrated over the quarter, with over 112,000sqm of leasing activity undertaken, for average rental uplift of 12.1%.
Occupancy was also strong in Q1, maintained at 99.9%, while rent collection was at 99%.
The group also reported progress in its growing $6.4 billion logistics pipeline, with $1.2 billion of active developments currently underway and 88% of the targeted circa $600 million in FY23 development completions.
Stockland’s workplace portfolio also remains resilient despite ongoing hurdles in the sector, with rent collection rates at 98%, occupancy at 90.5% and a WALE of 4.5-years.
While its town centres portfolio is underpinned by a 75% weighting to essentials-based categories, with rent collection at 97% and portfolio occupancy at 99.1%.
In the 11 months post-lockdown to September 2022, total comparable sales in the town centre portfolio were up by 10.3%, with comparable specialty sales up by 12.4%, compared with the 2019—pre-COVID-19—corresponding period.
Compared to the same period in FY22, total comparable sales were up by 36.0%, with comparable specialty sales up by 79.3%.
Meanwhile in Stockland’s masterplanned communities business, the first quarter closed with 6,006 contracts on hand at a circa 13.6% higher average when compared to FY22.
The quarter also saw enquiry levels for the masterplanned communities business return to pre-COVID levels, with sales volumes moderating to 845 lots reflecting rising interest rates.
Stockland’s land lease communities (LLC) platform also saw a strong operational performance, with the established portfolio seeing average rental growth of 6.3%, with both occupancy and rent collections at 100%.
The business had 475 contracts on hand up circa 14.2% higher average pricing on FY22, with the quarter seeing net sales at 63 homesites.
“Stockland is well-positioned for further sustainable growth. Our focus on operational excellence forms the foundation of continued strong performance across our diversified portfolio, and our strategic initiatives provide the drivers of growth across the platform, particularly as we continue to scale our land lease communities business and deliver on our accelerated logistics pipeline,” added Gupta.
Stockland maintained its FY23 FFO per security guidance, ranging between 36.4 to 37.4 cents on a pre-tax basis.
While distribution per security for FY23 is expected to be within the target payout ratio of 75% to 85% of FFO.
“Importantly, the strength of our balance sheet and liquidity position provides resilience in the current macroeconomic environment and flexibility to take advantage of the right opportunities that may arise in,” concluded Gupta.
