Stockland boosted by surging land sales

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Stockland will increase its distribution as a wave of housing settlements underpins its earnings and its retail town centres bounce back from the pandemic.

The $10.8 billion ASX-listed property developer reported a statutory profit of $350 million for the half year to December, declaring it will re-establish guidance and pay a half-year distribution of 11.3¢ per security fully covered by cash flow.

Stockland’s lot settlements were up 43.7 per cent.Credit:Erin Jonasson

Stockland, the country’s largest house and land developer, is a bellwether for home buyer sentiment.

It owns and develops popular housing estates such as The Gables in Sydney’s north-west and Cloverton in Kalkallo on Melbourne’s northern fringe.

“Our residential business performed strongly, with over 3800 sales representing the strongest half in over four years,” managing director and chief executive Mark Steinert said.

In his last results as Stockland head before he retires,Mr Steinert congratulated the federal and state governments for the policies of JobKeeper, JobSeeker and homebuilder to keep people employed and the economy on track during the global pandemic.

“Credit has got to go to the government and in the policies around builder, its the very specific nature of those policies that kept people tied to their jobs,” he said.

“And to the state government policies to ramp up infrastructure, cut red tape and improve the planning system.” Mr Steinert was chief executive for seven years and will be replaced by the former Lendlease chief finance officer, Tarun Gupta.

In a contrast to the pain felt by real estate trust rivals like Scentre Group and Vicinity Centres, Stockland said its funds from operations – an industry metric that excludes gains or losses from property valuations – rose marginally, to $386 million, compared to the previous corresponding half which was untouched by COVID-19.

“This result is underpinned by strong residential settlements, improved retailer trading, strong rent collection, and resilience in workplace, logistics and retirement living,” Mr Steinert said.

Land lot settlements during the half were up 43.7 per cent as home buyers flocked to master planned communities to take advantage of the government’s HomeBuilder incentives.

The group had 4800 residential sale contracts on hand at the end of January this year and was on track to achieve more than 6000 settlements during the financial year.

The diversified developer also owns and manages multiple shopping centres clustered in housing estates it has constructed.

Last year, its malls suffered most from the pandemic, with significant falls in foot traffic, non-essential store closures and sharp sales declines in specialty stores.

Stockland said it was now seeing a “significant improvement,” with a return of foot traffic close to pre-pandemic levels.

Rental cash collections are heading in the right direction. The group collected 90 per cent of billings during the half year compared to 61 per cent over the six months to June 2020. And abatements for tenants have more than halved from $29 million to $11 million.

But it was not fully out of the woods yet. “Some of our rental income, attributable to a small number of retail small to medium enterprises remains under pressure,” Mr Steinert said.

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