shopping centre
Retail accounts for 39% of Stockland’s portfolio. Image – Canva
  • Statutory profit down from $504m to $350m; 30.4% or $156m decrease
  • Funds from operation up 0.4% from $384m to $386m
  • Outgoing CEO still confident about diverse strategy despite Covid

Property developer Stockland (ASX:  SGP) has today released half-yearly results for 2021. The results are a mixed bag with the statutory profit down sharply, however, funds from operations had a slim increase.

1H21 recorded a statutory profit of $350 million, compared to $504 million for 1H20 – representing a 30.4% or $156 million decrease.

Funds from operations, however, saw a very slim increase of 0.4% from $384 million 1H20 to $386 million in 1H21.

Stockland currently has a $5.9 billion project pipeline, which includes development applications for a 2300sqm site at Walker Street in North Sydney.

Rent collections are better for the company, enjoying a rent collection rate of 90%  for 1H21 compared to a stark rate of 61% for 4Q20 as of 30 June 2020. Net collections from this quarter, however, have reached 90% suggesting significant improvements at the speed of rent collection in recent times

In terms of portfolio weighting, Retail Town Centres come out at the top, accounting for 39% of Stockland’s portfolio with a value of $5.66 billion.  Notably, the logistics portfolio weighting has increased by 10% over the past three years to 24% of the total portfolio with this being valued at $1.01 billion.

The company believes that despite the decline in statutory profit, the half-year results are strong, indicating its long-term strategy is working.

“I am pleased to announce a strong half year result which reflects the effectiveness of Stockland’s long-term diversified strategy. This result is underpinned by strong Residential settlements, improved retailer trading, strong rent collection, and resilience in Workplace, Logistics and Retirement Living,” says Stockland CEO Mark Steinert.

The outlook includes FFO per security within the range of 32.5 cents and 33.1 cents with a distribution per security at the lower end of the target payout ratio of 75% to 85%.

The outlook assumes residential settlements for 6,000 lots, residential operating profit margins around 19% and recent rent collection trends are maintained in the commercial property division.

Mr Steinert says Stockland’s strategically prioritises divesting on non-core assets, increasing the workplace and logistics capital allocation and restocking their residential portfolio’s landbank. He says this allows the company to deliver consistent and above-sector average total returns.

“Stockland has a strong foundation to create value through its diversified business strategy. We are committed to positioning the business for the future and remain focused on our purpose, ‘we believe there is a better way to live’.

The report will be the last from Mr Steinert; he announced his retirement back in June last year, having held the CEO and Managing Director roles since 2013.

Lendlease’s Tarun Gupta will take over as CEO on June 1.

His soon-to-be predecessor is nonetheless still confident about the businesses shape despite the impact of the pandemic on profit.

“I am confident the business is in good shape and that the team is well positioned to deliver our strategy given the quality of our portfolio, our capabilities in sustainable development, technology and digital innovation and the quality of our people,” concluded Mr Steinert.

However, today’s investors may not be too happy; Stockland’s share price has fallen 4.97% as of time of publication to $4.28.

The 52-week low for the stock was $1.72 recorded last March amid covid reaching Australian shores, with a high of $5.16 occurring just before that in February 2020.

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