Stockland to weather residential trough with 10 projects in the pipeline

For the year, settlement volumes totalled close to 6000 lots, in line with previous guidance. This was achieved despite volumes being affected by COVID-related construction delays and extreme wet weather, particularly for Stockland’s Queensland projects.

The $9.1 billion ASX-listed Stockland is a diversified company that develops, owns, manages and invests in residential, land lease, office and logistics, malls and large retail town centre assets.

Stockland head of communities Andrew Whitson said that, for the coming year, the group was targeting an average operating profit margin of about 18 per cent and 6000 settlements, with a skew to the second half of the financial year. This is similar to the previous corresponding period.

Whitson said the burgeoning land lease sector, where Stockland owns the land and rents out the property, had performed well, and that at the start of the 2023 year it had 499 contracts on hand at an average price of 18 per cent above that of the previous year.

“This provides us with good visibility for the year ahead,” Whitson said. “We are targeting around 350 home site settlements in the 2023 year, with an average development operating profit margin within the range of 10-15 per cent.”

Moody’s Investors Service vice president Saranga Ranasinghe said that despite pandemic-related disruptions during the period and an uncertain economic environment driven by higher inflation and interest rates, Stockland’s retail, workplace and logistics assets had performed well.

Loading

“Despite our expectations for a moderation in demand for Stockland’s master-planned communities business, we expect the REIT’s credit profile to be in line with our expectations given the stable and predictable earnings derived from its diverse portfolio of commercial properties,” Ranasinghe said.

Stockland’s $6.4 billion development pipeline in the logistics business – including the M_Park at Macquarie Park in Sydney and the planned redevelopment of the Piccadilly centre in the Sydney CBD as well as Affinity Place in North Sydney – will help offset any decline in residential sales.

Stockland declared a final distribution of 14.6¢, payable on August 31. That took the full-year total distribution per security to 26.6¢.