MARKETS SPECTATOR: Stockland stocks sale

UBS sold $400 million worth of Stockland shares yesterday, and the property developer plans to make another $100 million available to individual investors.

Individual investors will be able to buy as much as $100 million of Stockland stock at $3.88. At 1328 AEST the property company’s shares were trading down 14 cents, or 3.5 per cent, at $3.84. A Stockland spokesman told Markets Spectator the company has not decided when the share sale to individual investors will commence and end.

UBS sold $400 million of Stockland stock in two and-a-half hours yesterday at $3.88 a share, a 2.5 per cent discount to the stock’s closing price May 21 of $3.98.

Stockland uses a variety of investment banks for advice and capital raising. UBS had been hired to advise on the future strategy of the company, along with other investment banks. But Stockland's retention of UBS to solely manage the $400 million stock sale to onshore and offshore fund managers reinforces the Swiss investment bank’s position as the leading equity capital markets franchise in Australia. UBS last year managed Stockland’s US private bond sale, a buy back and a capital raising in 2008.

Stockland is using the proceeds from its latest share sale to finance about half a dozen shopping mall redevelopments throughout Australia in the next two years. Such redevelopments will cost an estimated $1.5 billion. In the next decade Stockland plans about 17 similar redevelopments.  

Mark Steinert, Stockland’s chief executive, forecasts yields of 7 to 8 per cent as a result of the redevelopments slated for the next two years. Internal rates of return will be 13.8 per cent upon completion of the redevelopments, he says in an ASX statement today.

Stockland’s shares have gained 8.8 per cent in the year to date compared with the 11 per cent gain in the S&P/ASX 200 Index. The index at 1328 AEST was down 19.857 points, or 0.4 per cent, to 5160.20.