Stockland earnings hit but shares climb
Stockland has kept investors onside by sticking to its promise of paying a 24.4¢ dividend per stapled security for this financial year.
In February, when the company released its interim result, Stockland wrote off $306 million across its residential business.
But outlining a long-awaited strategic review for the nation's second-largest listed property group, new chief executive Mark Steinert said Stockland would boost its focus on the retail and industrial businesses, although it would continue to maintain exposure to the retirement living sector.
Mr Steinert plans to also focus more heavily on reducing costs.
This includes centralising Stockland's human resources, finance and marketing operations, as well as improving efficiency in all operations.
He said the initial costs of the changes would cause the company's earnings per stapled security to drop by 25 per cent this financial year. Even so, Stockland units ended up 1.8 per cent to $3.89, as investors welcomed the commitment to the dividend.
As with Mirvac, Stockland will look at more large mixed-use housing developments such as projects in Sydney's west. Despite the write-downs in its residential business this year, Mr Steinert said the housing market was showing some signs of recovery.
"The residential platform will improve in coming years with the launch of new projects," he told an analyst briefing.
The retail sector was also seen as a growth area, evidenced by the strong performance of several Stockland centres, which had a high weighting to food and supermarkets. Meanwhile, a rise in online retailing had boosted demand for warehouses to provide storage. This would remain a focus for the group's development sector, he added.
A flat outlook for the nation's office market means the group will reduce its exposure so it holds only premium office towers in central business districts.
The group has forecast a return on assets for the sector of about 6.5 per cent this financial year.
Some analysts had been speculating the flat housing market could lead to an eventual exit from the retirement sector but Mr Steinert said joint venture options were being looked at. Stockland holds the first right of refusal over retirement assets with FKP Property and there has been talk of discussions being held about possible joint ventures.
Frequently Asked Questions about this Article…
Stockland warned of a further downgrade to its earnings outlook after reporting an additional $49 million hit from several underperforming projects. That followed an earlier $306 million write-off across its residential business announced in February.
Yes. Stockland has committed to paying a 24.4 cents dividend per stapled security for the financial year, a move that helped lift investor sentiment and saw Stockland units finish up 1.8% to $3.89.
Mark Steinert has outlined a strategy to boost focus on Stockland's retail and industrial businesses while maintaining exposure to retirement living. The group will also pursue more large mixed‑use housing developments, focus on cost reductions, and reduce office exposure to only premium CBD towers.
Stockland plans to centralise human resources, finance and marketing operations and improve efficiency across all operations. Management says the initial costs of these changes will reduce earnings per stapled security by around 25% this financial year.
Despite recent residential write-downs, Stockland's CEO said the housing market is showing signs of recovery. The company expects its residential platform to improve in coming years as it launches new projects and pursues large mixed‑use developments.
Stockland sees growth in retail because several of its centres—especially those weighted to food and supermarkets—performed strongly. At the same time, the rise in online retailing has increased demand for warehouses and storage, making industrial development a priority.
With a flat outlook for the office market, Stockland will reduce its exposure and focus on holding only premium office towers in central business districts. The group has forecast a return on assets for the office sector of about 6.5% this financial year.
Stockland says it will maintain exposure to retirement living but is exploring joint venture options rather than a full exit. The company holds first right of refusal over retirement assets with FKP Property and there has been discussion about possible joint ventures.
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