This article is from the Australian Property Journal archive
AUSTRALIA'S second largest listed property trust, Stockland, has reported a 60.6% fall in distributable profits and has warned that is unlikely to meet its FY09 EPS guidance.
Shares in Stockland closed 12 cents or 4.26% lower at $2.70.
The group posted an operating profit of $127.9 million after property revaluations losses for the six months ended December 2008, the profit before write-downs was $286.9 million. Stockland’s statutory loss, including asset devaluations (-$388.9 million) and write offs (-$192.5 million) and exchange hedging (-$163.5 million) was $726.9 million, down 208.1%.
Stockland will pay a dividend of 17 cents down from 22.6 cents in the previous corresponding period.
Despite this, managing director Matthew Quinn said maintained the first half operating profit is a good result.
Quinn said Stockland continues to effectively manage its refinancing risk, with all necessary debt refinancing for FY09 completed. Only $18 million is repayable in calendar 2009 and the next maturity of $200 million is not due until June 2010. Gearing increased marginally from 28.9% to 31% whilst total liabilities fell from 39.9% to 38.1%.
“Given the higher cost and scarcity of capital, Stockland has reviewed its development pipeline. All uncommitted development expenditure in commercial property, apartments and the UK has been deferred until markets improve, although work will continue to secure development approvals. Such deferrals result in minimal additional holding costs, as many projects are existing income producing properties,” he continued.
Stockland continues to actively manage its portfolio, with a total of $220.7 million in non-core asset sales achieved in 1H09. Since balance date, a further $85.5 million of non-core asset sales have been settled.
Quinn said the group has good coverage of residential communities profits in the next three years from existing projects. Restocking of residential communities inventory has therefore been significantly scaled back, further boosting the Group’s capital position.
Looking ahead, he predicts residential super lot sales are unlikely to be met with downside profit risk of up to $50 million after tax.
In the commercial property business, there are no major lease expiries, high quality covenants are in place and downside risks to earnings targets are minimal.
Meanwhile the UK business remains on track for a break-even result before write-downs.
But Quinn said FY09 EPS guidance of 35 cents is unlikely to be met given the downside risk from super lot sales, with a potential impact of up to 3.2 cents. Nevertheless, distribution/dividend guidance of 34 cents is unchanged.
Australian Property Journal