Stockland Group is aiming to raise cash through the sale of its office assets as it focuses on residential and retail, which should help it to keep its forecast 2014 earnings growth of up to 6 per cent.
The diversified group has ear-marked for sale its interest in 135 King Street in Sydney, which includes the Glasshouse mall in Pitt Street and is undertaking an expressions of interest campaign for its 50 per cent interest in 133 Castlereagh Street, Sydney.
If all assets are sold it would reap upwards of $600 million for the company that would be reinvested into the retail, industrial, residential and retirement businesses.
The group has also recently exited from its interest in FKP Property to focus on boosting its own retirement assets.
Stockland's chief executive Mark Steinert said the annual distribution per security would be maintained at 24¢, assuming there was no material decline in market conditions.
Analysts at Moelis & Co said the update showed there was a gradual recovery in residential business.
"While the share price has drifted back a little with broad-based selling in the real estate investment trust sector, we think Stockland has come back to an attractive level and see the share price gradually tracking its way back to the $4 level," the Moelis & Co analysts said.
Mr Steiner said the group, which traditionally had a profit skew to the second half, expected the gains to be driven mainly by residential and retirement living settlements.
The weaker office market conditions have led the group to sell what it considers non-core assets in that sector, while looking at new design and construction works.
"We have clear evidence of an improvement in the housing market. Established house prices are rising in all capital cities, but market conditions for land sales are variable geographically," Mr Steinert said.
"Sydney is the strongest market and demand in Perth remains robust, albeit signs of slight moderation are emerging.
"Volumes in Melbourne have increased materially ... and early signs of price growth are emerging."
Stockland, which was one of the first developers to build smaller homes before the last dip in housing prices, will focus on improving operating profit margin to 11-13 per cent by 2016.
Mr Steinberg said the retail sector was also maintaining its growth forecasts and to that end the group will continue to redevelop centres, such as the $222 million upgrade at Wetherill Park shopping centre.
"Retail sales were relatively flat in the first quarter of the 2014 financial year, while for October, sales growth showed some improvement and we are on track to achieve 2-3 per cent net operating income growth for the 2014 year," Mr Steinert said.